Taganito Mining Corporation (TMC) is a domestic corporation expressly granted a permit by the

government via an operating contract to explore, develop and utilize mineral deposits found in a
specified portion of a mineral reservation area located in Surigao del Norte and owned by the
government. In exchange, TMC is obliged to pay royalty to the government over and above other taxes.
During July to December 1989, TMC removed, shipped and sold substantial quantities of Beneficiated
Nickel Silicate ore and chromite ore and paid excise taxes in the amount of Php6,277,993.65 in
compliance with Sec. 151 (3) of the Tax Code. The 5% excise tax was based on the amount and weight
shown in the provisional invoice issued by TMC. The metallic minerals are then shipped abroad to
Japanese buyers where the minerals were analyzed allegedly by independent surveyors upon unloading
at its port of destination. Analysis abroad would oftentimes reveal a different value for the metallic
minerals from that indicated in the temporary / provisional invoice submitted by TMC. Variance is in the
market values in the provisional invoice and that indicated in the final calculation sheet presented by
the buyers. Variances occur in the weight of the shipment or the price of the metallic minerals per
kilogram and sometimes in their metallic content resulting in the discrepancies in the total selling price.
It is always the price indicated in the final invoice that is determinative of the amount that the buyers
will eventually pay TMC. TMC had no quarrel with the price they would receive from the clients for the
metallic minerals sold, but claims that there has been overpayment of excise tax already paid to the
government declaring that the 5% excise tax were based on the amount indicated in the provisional
invoice, and if the excise tax would be based on the final invoice, they would be paying less.

TMCS CONTENTION: TMC is entitled to a refund because the actual market value that should be made
the basis of the taxes is the amount specified in the independent surveyor abroad.

COMMISSIONER DEFENSE: 1. Claim for refund is subject pending administrative investigation; (2) tax
was collected in accordance with law; (3) burden of proof is upon the taxpayer to established the right
to refund ; (4) mere allegations of refundability do not ipso facto merit refund claimed; (5) claims for
refund of taxes are construed strictly against claimant; it being in the nature of an exemption; (6)
TMCs right to claim for refund is already barred after falling to file it within the 2 year prescription
period, which should be counted from the time specified by law for payment and not on the date of
actual payment.