Case Summary (G.R. No. L-20194)
Factual Background
The Petitioner reported gross sales amounting to P13,924,415.80 and, based on this figure, the Commissioner of Internal Revenue assessed an ad valorem tax of P190,115.24. This assessment was computed on the basis of gross sales, deducting only the cost of cement bags amounting to P1,188,248.56. The Petitioner paid this assessment under protest and subsequently sought a refund of P174,032.85, arguing that the ad valorem tax should be assessed based on the cost of the raw materials used in the production of cement, which totaled P1,072,159.28.
Procedural History
On May 8, 1961, following the payment of the tax, the Petitioner pursued a refund claim. However, before the claim was resolved, on June 29, 1961, the Petitioner filed a petition in the Court of Tax Appeals. The Court of Tax Appeals denied the refund claim on February 8, 1964, leading the Petitioner to appeal the decision to the Supreme Court.
Legal Issues
The primary issue on appeal is the proper basis for the computation of the 1-1/2% ad valorem tax levied under Section 243 of the Tax Code in relation to cement. The contention arises from differing interpretations: the State posits that the tax should be applied to the gross selling price of cement, while the Petitioner argues for a basis rooted in the underlying costs of raw materials.
Interpretation of Tax Code
The Supreme Court’s interpretation of Section 243 indicates that it cannot be directly applied to cement since, as established in prior decisions, cement is no longer to be viewed as a mineral product in the sense intended by the tax law. The Court clarified that the taxable item under Section 243 is not the finished product (cement itself) but rather the raw minerals (limestone, silica, and shale) utilized in the production process.
Tax Assessment Basis
The Court highlighted that the proper basis for the ad valorem tax should therefore be the market value of the quarried raw materials. However, the Petitioner had initially abandoned this argument before the Tax Court, choosing instead to seek a refund based on what could be determined as the "bin cost&qu
...continue readingCase Syllabus (G.R. No. L-20194)
Case Overview
- Petitioner: Cebu Portland Cement Company (CPC), a government-owned corporation engaged in the manufacturing of APO Portland cement.
- Respondent: Commissioner of Internal Revenue.
- Date of Decision: January 17, 1968.
- Citation: 130 Phil. 80, G.R. No. L-22605.
Factual Background
- CPC's primary product, cement, comprises at least 80% limestone, silica, and shale, which are raw materials sourced from its mineral lands.
- For the period from July 1, 1959, to December 31, 1960, CPC reported gross sales amounting to PHP 13,924,415.80.
- The Commissioner of Internal Revenue assessed an ad valorem tax of PHP 190,115.24 based on CPC's gross sales, after deducting the cost of cement bags (PHP 1,188,248.56).
Procedural History
- CPC paid the tax under protest and subsequently filed a claim for a refund amounting to PHP 174,032.85, arguing that the ad valorem tax should be based on the cost of raw materials (PHP 1,072,159.28).
- Without waiting for the resolution of the refund claim, CPC sought relief from the Court of Tax Appeals.
- On February 8, 1964, the Court of Tax Appeals denied CPC's refund claim, prompting the current appeal.
Legal Issues
- The core issue revolves around the appropriate basis for calculating the 1-1/2% ad valorem tax