SURIGAO CONSOLIDATED MINING CO., INC., PETITIONER VS. COLLECTOR OF INTERNAL REVENUE AND COURT OF TAX APPEALS, RESPONDENTS.

This is a petition to review the
decision of the Court of Tax Appeals in Manila Civil Case. No. 4770 dismissing
for lack of merit the. action, of the Susigao Consolidated Mining Company for
the refund of the total amount of P17,051.14 allegedly representing overpayment
of ad valorem tax for the fourth quarter of 1941.

The record shows that before the
outbreak of World War II, the Surigao Consolidated Mining Company (called SURIGAO
CONSOLIDATED, for short), a domestic corporation which then had its principal
office in the city of Iloilo, was operating its mining” concessions in
Mainit, Surigao. Pursuant to section 246 of the Internal Revenue Code, which
prescribes the time and manner of payment of royalties or ad valorem
taxes, it filed a bond and had been regularly filing its returns for minerals
removed from its mines during each calendar quarter and paying ad valorem
tax thereon within 20 days after the close of every quarter. In each case,
computation of the ad valorem tax was based on the market value of the
minerals set forth in the returns, subject to adjustment upon the receipt of
the smelter returns showing the actual market value of the minerals shipped to
the United States.

Due to the interruption of
communications at the outbreak of the war, the principal office of Surigao
Consolidated lost contact with its mines and never received the production
reports for the fourth quarter of 1941. In order to avoid incurring any tax
penalty, said company, on January 19, 1942 deposited a check in the amount of
P27,000.00 payable to and “indorsed in favor of the City Treasurer (of Iloilo) in payment of the ad valorem
taxes (approximate adjustment to be made when circumstances allow it) for the
fourth quarter of 1941.”

After the termination of the war,
Commonwealth Act, No. 722 was enacted, which provided for the filing of returns
for minerals removed during the last quarter of 1941 up to December 31, 1945
and the payment of ad valorem tax on said minerals to February 28, 1946.

Availing of the provisions of the
aforementioned Act, the Surigao Consolidated, on December
28, 1945,
filed its ad valorem tax returns for the fourth quarter of 1941,
declaring as its tax liability the amount of P43.486.54. Applying the amount of
P27,0O0.0O previously deposited with the City Treasurer of Iloilo, the returns
indicated an unpaid balance of P16.486.54 as the “tax subject to
revision.”

However, on February
26, 1946,
the Surigao Consolidated filed an amended ad valorem tax returns, under which
amendment it declared a reduced ad valorem tax in the amount of P37,189.00. And
crediting itself with the amount of P27.000.00 previously deposited with the
City Treasurer of Iloilo, it paid the remaining balance of P10,189.00.

On September
24, 1946,
the Surigao Consolidated again filed a statement of adjustment allegedly
containing figures and data of the complete smelter returns for minerals
shipped to the United States. In the accompanying letter, a
request was made, this time not only for the reduction of tax, but for the
refund of the amount of P18,107.87. On October 19, 1946, another statement of adjustment
was filed reducing the claim for refund to P17,158.01. Finally, on March
15, 1947,
a third statement of adjustment was submitted further reducing the claim for
refund to the amount of P17,051.14.

As the Collector of Internal
Revenue denied the request for the refund of the said P17,051.14 on the ground
that the money already paid as ad valorem tax was legally due to the
Government, the Surigao Consolidated instituted with the Court of First
Instance of Manila a civil action for its recovery. However, upon the enactment
of Republic Act No. 1125 creating the Court of Tax Appeals, the case was
remanded to the latter court for proper disposition.

After hearing the Court of Tax
Appeals, on July 16, 1958 finding that the amount sought to
tie refunded had teen lawfully collected, rendered its decision denying the
claim for refund. The Surigao Consolidated in due time filed a motion for new
trial on the ground that the decision was “not justified by the
overwhelming weight of evidence” and that it was contrary to law. The tax
court, however, denied the motion. Hence, this petition for review.

The question to be resolved is
whether or not Surigao Consolidated, petitioner herein, is entitled to the
refund of ad valorem tax in the total amount of P17,051.14, itemized as
follows: The first item in petitioner’s claim for refund in the amount
of P1,191.46 represents the amount of ad valorem tax paid on minerals
removed, from the mines but alleged to have been lost in transit on account of
the war. The refund is sought under section 1 (d) of Republic Act No. 81, which
provides as follows:

1.	Ad volarem tax on minerals removed from the mines but allegedly lost in transit on account of war	P1,191.46
2.	Ad volarem tax on minerals extracted from the mines but allegedly looted during the Japanese occupation	15609.73
3.	Allege overpayment of ad valorem tax on minerals shipped to the United States	249.95
		____________
		P17,051.14

The first item in petitioner’s
claim for refund in the amount of P1,191.46 represents the amount of ad
valorem tax paid on minerals removed, from the mines but alleged to have
been lost in transit on account of the war. The refund is sought under section
1 (d) of Republic Act No. 81, which provides as follows:

“Section 1. Any provision of
existing law to the contrary notwithstanding:

* * * * * * *

“(d) All unpaid royalties, ad
valorem or specific taxes on all minerals mined from mining claims or
concessions existing and in force on January first, nineteen hundred and
forty-two, and which minerals were lost by reason of the war or circumstances
arising therefrom, are hereby condoned. Provided, That if said minerals had
been or shall be recovered by the miner or producer, such royalties, ad
valorem, or specific taxes on the same shall “be immediately become
due and demandable.”

Petitioner argues that since the
law condones the taxes due from taxpayers who failed to pay their taxes, it
would be unfair to deny this benefit to those taxpayers who had been prompt in
paying theirs. The argument merits careful consideration. At first it would
seem to be sound and logical. But the aforequoted section clearly refers to the
condonation of unpaid taxes only. The condonation of a tax liability is
equivalent and is in the nature of a tax exemption. Being so, it should be
sustained only when expressed in explicit terms, and it cannot be extended
beyond the plain meaning of those terms. It is the universal rule that he who
claims an exemption from his share of the common burden of taxation must
justify his claim by showing that the Legislature intended to exempt him by
words too plain to be mistaken. (Statutory Construction by Francisco, citing
Government of P. I.
vs. Monte de Piedad, 25 Phil. 42).

“The application of a statute
creating an exemption from taxation to taxes already assessed depends upon
whether it is retrospective in its operation. Such a statute has no
retrospective operation, unless by the terms thereof it clearly appears to be
the intention of the legislature that the exemption, shall relate back to taxes
which have already become fixed, as a statute which releases a person or
corporation from a burden common to the whole community should be strictly
construed (Louisville Water Co. vs. Hamilton, 81 Ky. 517, * * * cited in 6
American and English Ann. Cases, p. 438).

Petitioner having failed to point
to Us any portion of the law that explicitly provides for a refund of those
taxpayers who had paid their taxes on the items and under circumstances
mentioned in the abovequoted provision, We are constrained to hold that the benefits
of said provision does not extend to it.

Even assuming arguendo that
the provisions of Republic Act. No. 81 authorizes the refund of taxes already
paid by petitioner, the latter would not still be entitled to the refund sought
for under the first item. It is to be noted that petitioner’s evidence of the
alleged loss in transit as observed by the Court of Tax Appeals, merely
consisted of testimony of witnesses who did not have personal knowledge of the
circumstances which gave rise to the loss. Such evidence cannot, of course, be
considered sufficient to establish that the minerals were in fact lost. Indeed,
to hold otherwise, as remarked by Judge Luciano of the Court of Tax Appeals
during the trial, would be to create a dangerous precedent.

Under the second item, petitioner
seeks to recover the amount of P15,609.73 representing the ad valorem
tax paid on minerals extracted from its mines but alleged to have been looted
during the enemy occupation. In connection with the alleged looting of the
minerals, the Tax Court has this to say:

“We are again confronted with
the case where plaintiff has, to our mind, failed to present adequate evidence
to prove such loss. The evidence if at all, is merely limited to the general
and uncorroborated statements of plaintiff’s officers that the same were lost
in the mines. These testimonies cannot he taken on their full face values,
especially because they had no direct supervision over the handling of such
minerals at the time of the alleged loss. Much less had these officers have
personal knowledge of the loss. Under the circumstances, we can not make the
finding that the minerals were in fact lost.”

Going over the record, We find no
reason to disturb the above findings of the Court of Tax Appeals, there being
no showing that they are not substantiated by the evidence. With this
observation, it would be useless ceremony to delve into the issue of whether ad
valorem should be or should not be paid on minerals extracted from the
mines but not removed therefrom.

One more item in petitioner’s claim
is the alleged overpayment of ad valorem tax in the amount of P249.95 on
the minerals shipped to the United States. It is alleged that an ad
valorem tax in the amount of P20,387.81 was originally paid on the minerals
shipped to the United States with a gross value of P410,299.49, that the
smelter returns from the United States show that the actual market value of the
minerals shipped to the United States was P416,895.28; and that after deducting
all allowable deductions amounting in all to P1,828.34, the true and correct
amount of ad valorem, tax on said minerals was P20,137.86. Petitioner,
therefore claims that the difference between the amount of P20,387.81 and
P20,137.86 is an overpayment.

It is not disputed that, as
indicated above, the amount of ad valorem tax on the minerals shipped to
the United States is subject to adjustment upon the
receipt of the smelter returns showing their actual market value. Petitioner
contends that the statements of adjustment alleged to contain the figures and
data set forth in the smelter returns are adequate evidence of the actual
market value of the minerals shipped to the United States.

The best evidence of the actual
market value of the minerals shipped to the United States are the smelter returns
themselves. These returns are admittedly in petitioner’s possession, but for
unknown reasons, petitioner failed to produce them during the trial. As there
is no credible and satisfactory explanation for the non-production of said
returns, there arises the presumption that if produced they would be adverse to
petitioner. Under the circumstances, the Court of Tax Appeals cannot be said to
have committed error, much less abused its discretion, in refusing to give any
probative value to the statements of adjustment.

It is a settled doctrine that in a
suit for the recovery of the payment of taxes or any portion thereof as having
been illegally or erroneously collected, the burden is upon the taxpayer to
establish the facts which show the illegality of the tax or that the
determination thereof is erroneous. In this case, petitioner failed to show
that the amount of taxes sought to be refunded have been erroneously collected.

Conformably to the above, We are of
the opinion that the Court of Tax Appeals did not commit any error in denying
petitioner’s claim.

WHEREFORE, the decision appealed from is
hereby affirmed. Costs against petitioner.

Bengzon, C.J., Padilla, Bautista
Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal, JJ.,
concur.