Tax Liability of Mr. Carlos Madarang

January 27, 1960 BIR RULING NO. 063-60 The Regional Director BIR Regional District No. 7 Cebu City S i r : This is with reference to the case of Mr. Carlos Madarang which you referred to this Office for an opinion on the legal questions involved therein. It appears from the records of this case that Mr. Carlos Madarang was granted a coal revocable permit on November 26, 1946 under the provisions of Act No. 2719. The question involved in this case is the determination of the taxes to be paid by the taxpayer. Under the provisions of Act 2719 the grantee of a coal revocable permit is not liable for the payment of any royalty or rental. However, section 9 of the permit specifically provides that the grantee shall pay a specific tax of twenty-five (P0.25) centavos per metric ton of coal extracted from the land covered by the permit. In addition to the specific tax of P0.25, the grantee is also required to pay the ad valorem tax of 1- per centum of the actual market value of the coal extracted in accordance with section 243 of the National Internal Revenue Code. However, Republic Act 740, which became effective on June 18, 1952, provides among others, that the grantee of a commercial revocable permit shall pay "a royalty of fifty centavos per ton for the coal mined in lieu of the specific tax on coal." Pursuant to the aforequoted provisions of law, the taxpayer is no longer liable for the payment of the specific tax of twenty five centavos (P0.25) and the ad valorem tax of 1- per centum effective June 18, 1952. In lieu thereof, the taxpayer is required to pay only a royalty of fifty centavos (P0.25) per ton of coal mined. In view of the foregoing, this Office is of the opinion that the taxpayer should pay the following taxes: (1) From November 26, 1946 to June 17, 1952 (a) specific tax of 25 centavos per ton of coal mined (b) ad valorem tax of 1- per centum of the actual market value of the coal mined (2) Effective June 18, 1952 (a) P0.50 per ton of coal mined You are, therefore, instructed to revise the assessment against Mr. Carlos Madarang in accordance with the above ruling. prcd Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue