BIR Ruling No. 071-64

December 21, 1964 BIR RULING NO. 071-64 Messrs. Meer, Meer & Meer Attorneys-at-Law Singson Bldg., Manila Gentlemen : This refers to your letter dated September 11, 1964 requesting reconsideration of BIR Ruling No. 64-0049 dated July 31, 1964 holding sheet and window glass produced by your client, Republic Glass Corporation, hereinafter referred to as Republic, as ordinary manufactured product subject to sales tax. LibLex In the ruling in question, it was our position that mineral products are generally products produced by the application of ordinary mining treatment processes. Section 246 of the Tax Code, as amended by Republic Act No. 1299 defines "mineral products" as follows: "The term 'mineral products' shall mean things produced by the lessee, concessionaire or owner of mineral lands at least 80% of which things must be minerals extracted by such lessee, concessionaire or owner of mineral lands." After reexamining the foregoing definition very carefully, we are inclined to subscribe to the view that to produce the mineral product, the processes to be applied are not limited to ordinary mining treatment processes but include any and all processes necessary to bring about the end product. This is for the reason that if the concessionaire, lessee, or owner of the mineral land is required to extract only 80% of the minerals to produce the mineral product, then the processes he will apply in bringing about the mineral product cannot possibly be limited to ordinary mining treatment processes because ordinary mining treatment processes normally constitute of processes applied directly to the mineral extracted whereas to produce the mineral product the lessee, concessionaire, or owner of the mineral land is allowed to use any other material procured from whatever source which he mixes with the minerals he extracted. Therefore in producing the mineral product he must necessarily have to apply such other processes to both the minerals he extracted and other materials procured from other sources. In effect, he may apply ordinary manufacturing processes and still his product remains a mineral product provided that 80% of the product constitute of minerals of his own extraction. This view in fact was sustained in CTA Case No. 345 where the Court held that while cement is a manufactured product subject to sales tax before Republic Act 1299, thereafter, it shall be treated and taxed as a mineral product. Therefore, in determining whether or not the sheet and window glass manufactured by your client is a mineral product, there only remains to be established whether or not the materials of which the glass is made constitute at least 80% of minerals of its own extraction. LexLib According to investigation, Republic is a lessee of mineral lands where it extracts silica sand, dolomite, feldspar, and limestone. Out of the minerals extracted and other materials procured from other sources, it produces sheet and window glass. The glass produced constitute of an average of 80.15% of minerals of its own extraction. Such being the case, the window and sheet glass produced by Republic is a mineral product. Being a mineral product, it is exempt from the sales tax pursuant to Section 188(c) of the Tax Code. Ruling No. 64-0049 is hereby superseded. cdt Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue