2% Royalty Tax — Sand and Gravel

May 29, 1980 BIR RULING NO. 068-80 Daytona Construction & Development Corp. 252 Don Mariano Marcos Avenue Quezon City Attention: Mr . Carlos A . Pilapil Vice-President for Finance Gentlemen : This refers to your letter dated September 4, 1979 stating that you are an organized construction firm granted by the Bureau of Mines an Industrial Permit to Extract and Dispose of Materials for Industrial Purpose (Industrial Permit No. 6, June 29, 1978); that under the said permit, you are authorized to extract sand and gravel from private lands situated in Barrios Laog and Sta. Cruz, Angat, Bulacan for a period of 25 years; that sand and gravel which you extract from said private lands are mixed with cement for specific job orders which you obligated yourselves to undertake; and that bigger size gravel are crashed into smaller sizes before they are used for said purpose. Under the foregoing facts, you are now requesting that the sand and gravel which you extract from the aforesaid private lands be subject to the 2% royalty tax under Section 254(B)(3) of the Tax Code of 1977, as amended. In reply, please be informed that in a verification conducted by an examiner of this Office, it was ascertained that the foregoing facts represented by you are true and correct. Accordingly, inasmuch as under Section 2(f ) of Presidential Decree No. 463 otherwise known as the "Mineral Resources Development Decree of 1974", sand and gravel are minerals, and considering further and that under Section 51 of the same Decree, "the claim owner shall pay the occupation fees, rentals, royalties and taxes on his mining claims and on the minerals extracted therefrom as provided for in the National Internal Revenue Code, as amended, . . .", you are subject to the royalty of 2% of the actual market value of the gross output of the sand and gravel, pursuant to Section 254(B)(3) of the Tax Code of 1977 as amended. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner