Excise Tax

January 15, 1993 BIR RULING NO. 036-93 EXCISE TAX 151 (a) (1) 000-00 036-93 Bermudez and Associates Certified Public Accountants 2nd Floor, IRC Building Sen. Gil Puyat Avenue Makati, Metro Manila Attention: Mr . Prem J . Bernadez Managing Partner This refers to your letter dated April 7, 1992, requesting for an opinion as to the applicability of excise taxes on the coal mining industry. It is noted that your query bears directly on whether your client, Bagacay Development Corporation (BADECO) is subject to the excise tax on coal imposed by Section 151(a)(1) of the Tax Code, as amended. According to you, BADECO was organized in 1990 with the primary objective of mining and trading coal in the Philippines and is presently operating in Samar with PNOC Coal Corporation as its major client; that it is paying income tax, real property tax and operating licenses to the government and 3% royalty fee specially payable to the Office of Energy Affairs; and that BADECO is now being required by the Excise Tax Area in Palo, Leyte to pay the excise tax on coal. You contended that under Section 16 of P.D. No. 972 otherwise known as the Coal Development Act of 1976, coal operators are exempt from all taxes except income tax; and that while some provisions of said P.D. No. 972 were repealed by the Local Government Code of 1991, the exemption of coal operators from the excise tax remains. In reply, please be informed that your above contention has no legal basis. Section 29 of E.O. No. 273 which took effect on January 1, 1988 expressly provides that the provisions of any law, whether general or special, rules and regulations and other issuances or parts thereof which are inconsistent with this Order (E.O. 273) are hereby repealed, amended or modified accordingly. Section 16 of P.D. No. 972 exempting coal operators from all taxes except income tax runs counter to the provisions of Section 151 of the Tax Code, as amended, which imposes excise tax on mineral, mineral products and quarry resources at the rates therein specified. Such being the case, the provisions of P.D. No. 972 insofar as it exempts coal operators from the excise tax are therefore considered repealed. Contrary to your allegation, Section 16 of P.D. No. 972 was also expressly repealed by the Local Government Code when it provides in Section 534(e) thereof, viz: "Sec. 534. Repealing Clause . "(e) The following provisions are hereby repealed or amended in so far as they are inconsistent with the provisions of this Code: ... and Section 16 of P.D. No. 972, as amended, and (Emphasis ours) xxx xxx xxx Accordingly, our Excise Tax Area of Palo, Leyte, is correct in subjecting your client, Bagacay Development Corporation (BADECO) to excise tax of P10.00 per metric ton of coal, pursuant to Section 151(a)(1) of the Tax Code, as amended. aisadc JOSE U. ONG Commissioner of Internal Revenue