Commissioner of Internal Revenue v. Atlas Consolidated Mining and Development Corp.

[CA-G.R. SP No. 19039. March 11, 1992.] (C.T.A. Case No. 4028) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION AND THE COURT OF TAX APPEALS , respondents . D E C I S I O N FRANCISCO , J p : Before Us is a petition for review of the Decision dated April 28, 1989 of the Court of Tax Appeals in its C.T.A. Case No. 4028 entitled "Atlas Consolidated Mining Corporation, petitioner versus Commissioner of Internal Revenue, respondent", the dispositive portion of which reads: "WHEREFORE, petitioner Atlas Consolidated Mining and Development Corporation, is hereby ordered to pay to respondent Commissioner of Internal Revenue the aggregate amount of P9,409,033.77 as deficiency income tax for the years 1975 and 1976 deficiency corporate quarterly income tax for the first, second and third quarters of 1975, plus surcharges and interest incident to delinquency pursuant to the provisions of Section 51 (e) (2) (3) of the National InternalRevenueCode, as amended. SO ORDERED." (Annex C, Petition, p. 21). This petition was originally filed in the Supreme Court under G.R. No. 89395, but was subsequently referred to this Court by the Third Division of the Supreme Court in its Resolution dated September 27, 1989. By Our Resolution dated December 19, 1990, We gave prima facie due course to the petition and required the private respondent to file its Answer. The Answer was filed with prayer that the petition be dismissed. Although the case was assigned to Us on October 18, 1989, We were not able to sooner act to decide the case as the records were forwarded to Us from the court of origin only lately, of which this Court was in receipt on November 27, 1991. The reason for the delay in the transmission of the records, of which We learned only lately was that respondent Atlas Consolidated Mining and Development Corporation had filed a motion for reconsideration with the Court of Tax Appeals (CTA) and said court appeared to have denied the motion by its Resolution dated November 4, 1991. The facts are as follows: Private respondent Atlas Consolidated Mining and Development Corporation (respondent Atlas, for brevity), a domestic corporation established under Philippine laws was registered with the Board of Investments (BOI) under Republic Act No. 5186, otherwise known as the Investment Incentives Act as engaged in the mining and selling of copper concentrates. Petitioner Commissioner of Internal Revenue (CIR), in evaluating private respondent's income tax returns for 1975 and 1976 and its quarterly income tax return for 1975, disallowed several items from the list of deductibles from gross income and included accounts which respondent Atlas failed to report as income as appear herein below as follows: FISCAL YEAR 1975 1. Additional paid-in capital P12,961,999.00 2. Double Deduction of Shipping Cost 14,416,678.00 3. Taxes, licenses and fees 12,135.00 FISCAL YEAR 1976 1. Cost Centers (1) Crushing Plant Cost P169,007.20 Mining Costs 1,054,825.10 Drilling Costs 1,470,679.11 P2,694,511.41 2. Taxes, licenses and fees P6,506.00 3. Accelerated Depreciation 61,282,871.00 4. Unrecorded/Under-recorded Sale of Power 952,141.93 5. Unrecorded other income (Commissions) 407,730.00 6. Loss of Disposal of Assets 439,752.13 In the investigation they conducted, the BIR examiners appeared to have determined that private respondent failed to withhold the 15% tax-at-source on interest on loans obtained from Mitsubishi Metal Corporation, a non-resident Japanese Corporation. Said examiners also found a deficiency interest of 15% on the corporate quarterly income tax of said corporation for the first three quarters of 1975. In computing the income tax liability for the years 1975 and 1976 of Atlas, CIR came up with deficiency income tax assessments, listed as follows: 1975 Deficiency Income Tax Net income per return P7,720,023.00 Add: Disallowance/Additional Income Additional paid-in capital P12,961,999.00 Double deduction of shipping cost P14,416,678.00 Taxes, licenses and fees 12,135.00 27,390,812.00 Net Income per investigation P35,110,835.00 Income tax due thereon 12,278,792.00 Less: Amount already assessed 2,692,008.00 B a l a n c e P9,586,784.00 Add: 14% int. p.a. 4/15/76-4/15/79 4,026,449.28 TOTAL AMOUNT DUE AND COLLECTIBLE P13,613,233.28 =========== 1976 Deficiency Income Tax Net income per return P99,321,516.00 Add: Disallowance/Additional Income Various costs 2,694,511.41 Taxes, licenses and fees 6,506.00 Accelerated depreciation 61,282,871.00 Income from sale of power 952,141.93 Other income (unrecorded) 407,730.00 Loss on disposal 439,752.13 P65,783,512.47 Net Income per investigation 165,105,023.47 Income tax due thereon 57,776,760.00 Less: Amount already assessed 34,752,530.00 B a l a n c e P23,024,230.00 Add: 14% int. fr. 4/15/77-4/15/80 9,670,176.60 TOTAL AMOUNT DUE AND COLLECTIBLE P32,694,406.60 ============ 1975 Deficiency Corporate Quarterly Income Tax 1st Quarter Taxable income per investigation P30,219,430.00 Corporate quarterly income tax due thereon 10,574,300.00 Less: Amount paid P3,849,612.00 20% allowance for errors 2,114,860.00 5,964,472.00 B a l a n c e P4,609,828.00 Add: 15% fr. 5/30/75-4/15/76 606,223.95 T o t a l P5,216,051.95 Less: Amount already assessed 4,609,828.00 AMOUNT STILL DUE AND COLLECTIBLE P606,223.95 =========== 2nd Quarter Taxable income per investigation P11,521,227.00 Corporate quarterly income tax due thereon 4,029,929.00 Less: Amount paid P 20% allowance for errors 805,986.00- 805,986.00 B a l a n c e 3,223,943.00 Add: 15% fr. 8/30/75-4/15/76 300,754.13 T o t a l P3,524,697.13 Less: Amount already assessed 3,223,943.00 AMOUNT STILL DUE AND COLLECTIBLE P300,754.13 =========== 3rd Quarter Taxable income per investigation P14,011,239.00 Corporate quarterly income tax due thereon 4,901,434.00 Less: Amount paid P 20% allowance for errors 980,287.00 980,287.00 B a l a n c e 3,921,147.00 Add: 15% fr. 11/30/75-4/15/76 219,154.51 T o t a l P4,140,301.51 Less: Amount already assessed 3,921,147.00 AMOUNT STILL DUE AND COLLECTIBLE P219,154.51 GRAND TOTAL P1,126,132.59 =========== 1975 and 1976 Deficiency Withholding Tax-at-Source 3rd Quarter 1975 Interest due on foreign loans P1,666,436.00 Withholding tax at source due thereon 249,965.40 Add: 25% surcharge 62,491.35 14% int. fr. 10/25/75-10/25/78 104,985.46 Compromise late payment 50.00 TOTAL AMOUNT DUE AND COLLECTIBLE P417,492.21 =========== 4th Quarter Interest due on foreign loans P1,574,145.18 Withholding tax at source due thereon 236,121.78 Add: 25% surcharge 59,030.44 14% int. fr. 1/25/76-1/25/79 99,171.14 Compromise late payment 50.00 TOTAL AMOUNT DUE AND COLLECTIBLE 394,373.36 =========== 1st Quarter Interest due on foreign loans P1,491,434.47 Withholding tax at source due thereon 223,715.17 Add: 25% surcharge 55,928.79 14% int. fr. 4/25/76-4/25/79 93,960.37 Compromise late payment 50.00 TOTAL AMOUNT DUE AND COLLECTIBLE 373,654.33 ========== 2nd Quarter Interest due on foreign loans P1,399,317.98 Withholding tax at source due thereon 209,897.69 Add: 25% surcharge 52,474.42 14% int. fr. 7/25/76-7/25/79 88,157.02 Compromise late payment 50.00 TOTAL AMOUNT DUE AND COLLECTIBLE P350,579.13 =========== 3rd Quarter Interest due on foreign loans P1,307,937.13 Withholding tax at source due thereon 196,190.56 Add: 25% surcharge 49,047.64 14% int. fr. 10/25/76-10/25/79 82,400.03 Compromise late payment 50.00 TOTAL AMOUNT DUE AND COLLECTIBLE P327,688.23 ========== 4th Quarter Interest due on foreign loans P1,219,223.33 Withholding tax at source due thereon 182,883.49 Add: 25% surcharge 45,720.87 14% int. fr. 1/25/77-1/25/80 76,811.06 Compromise late payment 50.00 TOTAL AMOUNT DUE AND COLLECTIBLE P305,465.42 GRAND TOTAL P2,169,252.68 =========== The total deficiency in the income tax liability of Atlas for the fiscal years 1975 and 1976 was P49,603,025.15 broken down as follows: 1975 Deficiency Income tax 13,613,233.28 1976 Deficiency Income tax 32,694,406.60 1975 and 1976 Deficiency Withholding Tax-at-Source 2,169,252.68 1975 Deficiency Corporate Quarterly Income Tax 1,126,132.68 T O T A L P49,603,025.15 ============ In a letter dated December 19, 1980, CIR informed Atlas of the above-mentioned deficiency income tax assessment. On February 11, 1981, protested the assessment but CIR, on December 11, 1985, denied said protest. On February 5, 1986, Atlas filed with the Court of Tax Appeals (CTA) a petition for review therein docketed as C.T.A. Case No. 4028 concerning CIR's denial of petitioner's protest with the prayer that it be declared not liable to the assessment by the CIR (Annex A, Petition). On June 17, 1986, CIR Filed his Answer to said petition (Annex B, Petition). On April 28, 1989, the Court of Tax Appeals rendered its Decision (Annex C, Petition) where it appeared to have excluded some items from the assessment made by the CIR resulting in a reduction from P49,603,025.15 to P9,409,033.77 of the CIR's assessment. The items which CTA excluded from CIR's computation of the deficiency income tax of Atlas are as follows: For the year 1975 1) Double deduction of shipping cost P14,416,678.00 2) Taxes, licenses and fees 12,135.00 For the year 1976 1) Taxes, license and fees P6,506.00 2) Accelerated depreciation 61,282,871.00 3) Unrecorded other income 407,730.00 4) Loss of disposal 439,752.13 The CTA also cancelled CIR's assessment for the 1975 and 1976 Deficiency Withholding Tax-at-source of Atlas totalling P2,169,252.68 but retained the assessment for 1975 deficiency corporate quarterly income tax. The Court of Tax Appeals made the following computations of Atlas' 1975 and 1976 Deficiency Income Tax as well as its Deficiency Corporate quarterly Income Tax Return, to wit: 1975 Net Income per return P7,720,023.00 Add: Additional income: Additional paid in capital 12,961,999.00 Net income per decision P20,682,022.00 Income tax due thereon 7,238,708.00 Less: Amount paid 2,692,008.00 Balance of the tax due 4,546,700.00 Add: 14% int. fr. 4/15/76-4/15/79 1,909,614.00 TOTAL AMOUNT DUE & COLLECTIBLE P6,456,314.00 =========== 1976 Net income per return P99,321,516.00 Add: Disallowance/ Additional income Various costs P2,694,511.41 Income from sale of power 952,141.93 3,646,653.34 Net income per decision P102,968,169.34 Income tax due thereon P36,038,859.27 Less: Amount paid 34,752,530.00 Balance of tax due P1,286,329.18 Add: 14 int. fr. 4/15/77- 4/15/80 540,258.18 TOTAL AMOUNT DUE & COLLECTIBLE P1,826,587.18 =========== (Annex C, pp. 19-20) In summary, the total amount collectible is: 1975 Deficiency Income tax 6,456,314.00 1976 Deficiency Income tax 1,286,329.00 1975 Deficiency Corporate Quarterly Income Tax 1,126,132.68 T O T A L P9,409,033.77 =========== CIR then filed the instant petition for review and raised the issues: "1. Whether Atlas' liability for its 1975 deficiency income tax is in the amount of P13,613,233.28 which the CIR had assessed or in the lesser amount of P6,456,314 determined by the CTA in its questioned decision; 2. Whether Atlas' liability for the 1976 deficiency income tax is in the amount of P32,694,406.60 or in the lesser amount of P1,826,587.18; 3. Whether Atlas is liable for P2,169,252.68 as deficiency withholding tax-at-source for 1975 and 1976" (Petition, pp. 16-17)." The petition appeared to be confined only to the items excluded by CTA in the computation of the deficiency income tax and the cancellation of the assessment for 1975 and 1976 deficiency withholding tax-at-source. On the first issue, CTA reduced the 1975 deficiency income tax assessment from P13,613,233.28 to P6,456,314.00 by excluding in the computation thereof (1) Double deduction of shipping cost, and (2) Taxes, licenses and fees. 1) Double deduction of shipping cost P14,416,678.00 Section 3 of Presidential Decree No. 667 provides: "Sec. 3. Enterprises that are registered with the Board of Investments shall be allowed to deduct from their taxable income two hundred per centum (200%) of shipping costs incurred in the transport of their product and raw materials to or from foreign part, provided that shipments are made on board vessels of Philippine registry." Respondent Atlas, a BOI-registered enterprise sought to avail of the incentive given by PD 667. But petitioner CIR disallowed the deduction. CTA reversed the findings of the petitioner and allowed the deduction stating that Atlas being a BOI-registered corporation, should be allowed a double deduction of its shipping costs of goods transported on vessels of Philippine registry. CIR now contends that CTA gravely erred in so allowing the double deduction of shipping costs claiming that private respondent failed to prove the propriety of said deduction. To avail of the incentive offered under Section 3 of P.D. No. 667, two requisites must be present. Firstly, the enterprise must be registered with the Board of Investments and secondly, the shipments of goods must be on board vessels of Philippine registry. These requisites are present in the instant case so the contention of CIR that Atlas is not entitled to a double deduction of shipping costs is not well taken. As CTA, determined in its decision, Atlas used six (6) vessels in the shipment of goods, four (4) of which were vessels of Philippine registry (Petition, p. 19). Atlas had adequately justified the double deduction of its shipping cost made by the CTA. Well-settled is the rule that findings of fact by the Court of Tax Appeals are entitled to great respect and may not be disturbed on appeal unless such findings have no support in the evidence presented or that there has been an abuse of discretion on the part of the CTA (Nasiad, et al., vs. CTA, 61 SCRA 328 (1974); Raymundo vs. de Joya, et al., 101 SCRA 495 (1980); Commissioner of Internal Revenue vs. Arnoldus Carpentry Shop, Inc. et al., 159 SCRA 199 (1988) cited in CIR vs. Mitsubishi Metal Corp., 181 SCRA 214, p. 220). The Court of Tax Appeals, by the nature of its function, is dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject and its findings and conclusions are afforded highest respect unless there is a showing of grave abuse of improvident exercise of its authority (Reyes vs. CIR 24S 198, p. 205 cited in Commissioner of Customs vs. CTA, G.R. 82618, March 16, 1989). 2) Taxes, licenses and fees P12,135.00 Petitioner CIR disallowed this deduction since this was claimed as business expense under the title "Mineral Claims". Petitioner's examiners treated the amount as part of the exploration and development expenses subject to depletion and not as a direct charge to expense. However, on appeal, public respondent CTA reversed the findings of the petitioner and allowed its deduction considering that as a rule, all taxes of whatever nature are deductible except those which the law does not allow to be deducted. CTA further ruled that at the time said taxes accrued, private respondent Atlas was no longer at its exploratory or development stage but was already well in existence. We agree with CTA that said amount should be allowed as deduction. Section 30 (c) (1) of NIRC, as amended, provides: "Sec. 30. Deductions from Gross Income . In computing net income, there shall be allowed as deductions xxx xxx xxx (c) Taxes: (A) The income tax provided for under this Title; (B) Income, war-profits, and excess-profits taxes imposed by the authority of any foreign country; but this deduction shall be allowed in the case of a taxpayer who does not signify in his return his desire to have to any extent the benefits of paragraph (3) of this Subsection (relating to credit for taxes of foreign countries); (C) Estate, inheritance and gift taxes; (D) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed; and (E) Electric energy consumption tax imposed by Batas Pambansa Blg. 36." Since the said amount does not fall within the exceptions in the aforesaid provision, it should be allowed as deduction under the principle of "(E)xpressio unius est exclusio alterious". The fact that said item was included under the title "Mineral Claim" does not change its character as a tax expense which may be deducted from gross income. Proceeding from the foregoing discussions, We find the deficiency income tax assessment of Atlas for 1975 in the amount of P6,456,314.00 as correct. On the second issue, CTA reduced the 1976 deficiency income tax assessment from P32,694,406.60 to P1,826,587.18 by excluding from the computation of the following items: (1) Taxes, licenses and fees; (2) Accelerated depreciation; (3) Loss on disposal of Assets; (4) Unrecorded other income. 1) Taxes, license and fees P6,506.00 As earlier ruled, this item should be allowed as deduction from gross income. 2) Accelerated depreciation P6,506.00 Section 7(b) of R.A. 5186, as amended, provides: "(b) Accelerated Depreciation . At the option of the taxpayer and in accordance with the procedure established by the Bureau of Internal Revenue, fixed assets may be (1) depreciated to the extent of not more than twice as fast as normal rate of depreciation if expected life is ten years or less; or (2) depreciated over any number of years between five years and expected life if the latter is more than ten (10) years; and the depreciation thereon allowed as a deduction from taxable income; Provided , that the taxpayer notifies the bureau of Internal Revenue at the beginning of the depreciation period which depreciation rate allowed by this Section will be used by it." CIR disallowed this deduction for Atlas' alleged failure to comply with the requirements set forth in the above-quoted provision when it, (Atlas), at the beginning of the depreciation period, failed to notify the Bureau of Internal Revenue as to which depreciation rate it will use. CTA however found that Atlas, in a letter dated January 6, 1975, received by the Investment Incentive Group, Bureau of Internal Revenue, had informed said office of its intention to avail of the incentive benefits under Section 7(b) of R.A. 5186, as amended (Exh. Q). We find that respondent Atlas had duly complied with the requirements of Section 7(b) of R.A. 5186 as amended in that Atlas notified the Bureau of Internal Revenue which depreciation rate it will use as shown by Exh. Q. 3) Loss of disposal P439,752.13. CTA allowed this as a proper deductible item on the strength of the testimony of a witness of respondent Atlas that the demolition of its old buildings was not intended to give way to the construction of new structures (tsn, pp. 44-47, September 17, 1986). Hence, the loss incurred therein is a closed transaction which is to be allowed as a deduction. We disagree. Contrary to the findings of the CTA, there is ample proof that the demolition of the old buildings was intended to pave the way for the construction of new and bigger structures, as shown by the journal vouchers p. 77 BIR rec., Folder II, to wit: "DATE PARTICULARS JV NO. AMOUNT Feb. 28 Transfer of aggregate plant 2-309 P218,016.26 Dascon to Frank Pits Sept. 30 Demolition of old Main 9-308 33,073.27 Office & Bodega to give way for installation of Dascon Ball Mill Nov. 30 Write off various equipment 11-307 164,891.55 in Dascon no longer operational or non-existing due to relocation. Nov. 30 Same explanation as above 11-307 955.40 Nov. 30 Same explanation as above 11-309 22,815.65 T O T A L P439,752.13" ========= Under the BIR ruling dated November 2, 1956 citing Commissioner vs. Appleby Estate, 41 USTC par. 9773, 123 F(2d) 700), losses are recognized only when they result from a closed transaction. If a building had been demolished because it is unsuitable for further use, the transaction with respect to the building is closed and the taxpayer may take his loss. But if demolition of the building is to make way for the construction of a new structure, what thereby deemed to happen is merely the substitution of a more valuable asset for something less valuable and the loss from the demolition may be considered as part of the cost of the new asset and to be depreciated during its life as if it were a broker's commission for negotiating a lease. In view of said BIR ruling shown by the journal vouchers, We hold that the item, "Loss of Disposal", should not be allowed as deduction. 4) Unrecorded other income P407,730.00 This item stemmed from private respondent Atlas' standby Letter of Credit No. 106/2771 for US$2,000,000.00 with Hongkong Shanghai Banking Corporation in favor of Mitsubishi Metal Mining Co. Ltd. on which Atlas paid commissions varying from 1/8% to 1 1/2%. On April 6, 1976, the Hongkong Shanghai Banking Corporation elected to waive its fees/commissions from September 1, 1973 to August 31, 1975 in the amount of P407,730.00. According to CIR, since this amount has been treated in the books as expenses and upon being waived by HSBC, it is deemed not having been incurred as expense, hence, it should be credited back as income. We agree with public respondent CTA that imputation of income must be based on the actual fact and not on mere assertions. As CTA found, respondent Atlas did not deduct such commission expense in 1976 and hence there is no item which should be credited back to income. In summary, the total income tax deficiency for 1976 is as follows: Net Income per return P99,321,513.00 Add: Disallowance/Additional income Various costs P2,694,511.41 Income from sale of power 952,141.93 Loss of Disposal 439,752.13 4,086,405.40 Net income per decision P103,407,921.40 Income tax due thereon P36,182,773.49 Less: Amount paid 34,752,530.00 Balance of tax due P1,430,243.49 Add: 14% int. fr. 4/15/77-4/15/80 600,702.21 TOTAL AMOUNT DUE & COLLECTIBLE 2,030,945.70 ========== On the third issue, which is whether or not Atlas is liable for P2,169,252.68 as deficiency withholding tax-at-source for 1975 and 1976, the answer is in the affirmative. Public respondent CTA cancelled the assessment for the 1975 and 1976 deficiency withholding payments on loans amounting to P2,169,252.68 on interest payments on loans secured by private respondent Atlas from Mitsubishi Metal Corporation following its ruling in C.T.A. No. 2801 entitled "Mitsubishi Metal Corporation and Atlas Consolidated Mining and Development Corporation vs. CIR". It held that interest payments made by Atlas on loans secured from Mitsubishi Metal Corporation are exempt from withholding tax-at-source since the actual and ultimate creditor is the Export-Import Bank of Japan, a Japanese government owned financing institution, which is exempt from taxation pursuant to section 29 (b) (7) of the old Tax Code, now Section 29 (c) (8a) of NIRC as amended, which provides as follows: "Sec. 29. Taxable Net Income . . . . (c) Exclusions from Gross Income . The following items shall not be included in gross income and shall be exempt from taxation under this title: xxx xxx xxx (8) Miscellaneous Items . (A) Income received from their investments in the Philippines, in loans, stock bonds, or other domestic securities, or from interest on their deposits in banks in the Philippines by (1) foreign governments, (2) financing Institutions owned, controlled, or enjoying refinancing from them, and (3) international or regional financing institutions established by governments." The decision of respondent CTA in its CTA Case No. 2801 was the subject of a petition for review filed by petitioner CIR in the Supreme Court under G.R. No. 54908 entitled "Commissioner of Internal Revenue, petitioner vs. Mitsubishi Metal Corporation, et al., respondent". On January 22, 1990, the Supreme Court in that case reversed CTA's decision and held: "A thorough analysis of the factual and legal ambience of these cases impels us to give weight to the following argument of petitioner: 'The nature of the above contract shows that the same is not just a simple contract of loan. It is not a mere creditor debtor relationship. It is more of a reciprocal obligation between ATLAS and MITSUBISHI where the latter shall provide the fund in the installation of a new concentrator at the former's Toledo mine in Cebu, while Atlas in consideration of which, shall sell to Mitsubishi, for term of 15 years, the entire copper concentrator. 'Suffice it to say, the selling of the copper concentrate to Mitsubishi within the specified term was the consideration of the granting of the amount of $20 million to Atlas. Mitsubishi, in order to fulfill its part of the contract, had to obtain funds. Hence, it had to secure a loan or loans from other sources. And from what sources, it is immaterial as far as Atlas is concerned. In this case, Mitsubishi obtained the $20 million from the Eximbank of Japan and the consortium of Japanese banks financed through the Eximbank of Japan. 'When Mitsubishi therefore secured such loans, it was in its own independent capacity as a private entity and not as a conduit of the consortium of Japanese banks or the Eximbank of Japan. While the loans were secured by Mitsubishi primarily 'as a loan to and in consideration for importing copper concentrates from Atlas', the fact remains that it was a loan by Eximbank of Japan to Mitsubishi and not to Atlas. 'Thus, the transaction between Mitsubishi and Eximbank of Japan was a distinct and separate contract from that entered into by Mitsubishi and Atlas. Surely, in the latter contract, it is not Eximbank that was intended to be benefitted. It is Mitsubishi which stood to profit. Besides, the Loan and Sales Contract cannot be any clearer. The only signatories to the same were Mitsubishi and Atlas. Nowhere in the contract can it be inferred that Mitsubishi acted for and in behalf of Eximbank of Japan nor of any entity, private or public, for that matter. 'Corollary to this, it may well be stated that in this jurisdiction, well-settled is the rule that when a loan is completed, the money ceases to be the property of the former owner and becomes the sole property of the obligor (Tolentino and Mario vs. Gonzales Sy, 50 Phil. 558). 'In the case at bar, when Mitsubishi obtained the loan of $20 million from Eximbank of Japan, said amount ceased to be the property of the bank and became the property of Mitsubishi. 'The conclusion is indubitable: Mitsubishi, and not Eximbank, is the sole creditor of Atlas, the former being the owner of the $20 million upon completion of its loan contract with Eximbank of Japan. 'The interest income of the loan paid by Atlas to Mitsubishi is therefore entirely different from the interest income paid by Mitsubishi to Eximbank of Japan. What was the subject of the 15% withholding tax is not the interest income paid by Mitsubishi to Eximbank but the interest income earned by Mitsubishi from the loan to Atlas. . . ." ( Rollo , G.R. No. 54908, pp. 23-26 adopted in CIR vs. Mitsubishi Metal Corporation, et al., 181 SCRA 214, pp. 221-222). In view of the Supreme Court's ruling, We, therefore, reinstate the 1975 and 1976 deficiency withholding tax-at-source assessment. In summary, the total deficiency income tax assessments for the years 1975 and 1976 are as follows: 1975 Deficiency Income tax 6,456,314.00 1976 Deficiency Income tax 2,030,945.70 1975 and 1976 Deficiency Withholding Tax-at-Source 2,169,252.68 1975 Deficiency Corporate Quarterly Income Tax 1,126,132.68 P11,782,644.00 WHEREFORE, premises considered, the decision of the court of Tax Appeals is hereby MODIFIED in the sense that private respondent Atlas Consolidated Mining and Development Corporation is required to pay the Commissioner of Internal Revenue the sum of P11,782,644.00 (not P9,409,033.77 as the CTA had held) comprising the deficiency income tax for the years 1975 and 1976, the deficiency withholding tax-at-source for 1975 and 1976, and deficiency corporate quarterly income tax for the first, second, and third quarters of 1975, plus surcharges and interests incident to delinquency pursuant to the provisions of Section 51(e) (2) (3) of the National Internal Revenue Code, as amended. SO ORDERED. Martinez and Cui, JJ ., concur.