Thanks to SC decision, mining firm SR Metals cleared in P76M tax case
MANILA, Philippines – The year 2018 is proving to be a sweet one for mining firm SR Metals Incorporated because – thanks to a Supreme Court (SC) decision in October – the Court of Tax Appeals (CTA) decided to cancel and withdraw the supposed tax penalties on the company worth P76.2 million.
“The Final Decision on Disputed Assessment that found petitioner liable for basic deficiency income tax for taxable year 2012 in the amount of P76,199,016.75 is hereby cancelled and withdrawn," said the CTA’s Special Third Division in a decision promulgated on November 14.
Written by Associate Justice Ma. Belen Ringpis-Liban, and concurred in by Associate Justice Esperanza Fabon-Victorino, the CTA adhered to the Supreme Court saying, “it has the last word on what the law is.”
“It appears, therefore, that the final arbiter of controversies, the Supreme Court, has already settled the matter and this Court takes judicial notice of the same,” said the CTA.
The Supreme Court First Division promulgated the decision on October 3, saying SR Metals was entitled to a 4-year tax holiday.
In a separate issue, SR Metals is among the 5 mining firms in the Caraga region that the Commission on Audit (COA) said escaped paying the proper royalties, costing the government P2.6 billion in profits.
Caloocan City 2nd District Representative Edgar Erice, who is with the Liberal Party, is a shareholder of SR Metals Incorporated.
What’s the CTA case? SR Metals, which filed for a new certificate of registration in 2008, was initially granted a 4-year tax holiday.
Tax holidays are typically granted to new projects under the Omnibus Investment Code.
The municipality of Tubay, Agusan del Norte, where SR Metals operated, moved to cancel the company’s tax holiday in 2010, saying that it had violated some of the requirements.
In 2013, the Board of Investments (BOI) canceled the tax holiday, saying SR Metals did not comply with requirements of being a new project when it did not construct a beneficiaton plant.
Beneficiaton is a process in mining that maximizes the economic value of the ore.
Although the Court of Appeals reversed the BOI in 2014, the Bureau of Internal Revenue (BIR) proceeded in 2015 to assess SR Metals and said that it owed the government P76.2 million in taxes.
SR Metals then elevated the case to the CTA, while the BOI went to the SC.
What did the SC say? The SC adopted the CA’s findings and said that constructing a new beneficiation plant was not a requirement to be registered as a new project. Only new projects are granted tax holidays.
Associate Justice Mariano del Castillo wrote the decision, with concurrences from retired Chief Justice Teresita Leonardo-De Castro and Associate Justice Lucas Bersamin.
"Since there was no such requirement under the terms and conditions of both the Project Approval Sheet and respondent's Certificate of Registration as well as in the 2007 Investment Priorities Plan, petitioner cannot use this as ground to withdraw respondent's Income Tax Holiday incentive," said the SC majority.
Associate Justice Marvic Leonen dissented, saying it was SR Metals that committed to building a new beneficiation plant while it was applying for registration as a new project.
Leonen said that SR Metals' promise to build a beneficiation plant was the reason why it was registered as a new project, otherwise it would have been registered under expansion only, and not entitled to a tax holiday.
“It was only upon SR Metals' request for a reconsideration and upon its commitment that it would build a beneficiation plant that the Board of Investments reconsidered its earlier decision and approved SR Metals' application as 'new producer'," said Leonen.
Leonen added that the BOI, being the recognized expert in the field, should be “accorded respect and even finality to the factual findings of administrative bodies.” But he was outvoted.
Mining operations in Caraga are at the center of the land struggle of Lumad communities there. There are also concerns about the true worth of mining operations in the economic growth and general well-being of the region. – Rappler.com