Acoje Mining Co., Inc. v. Court of Tax Appeals

SEVENTH DIVISION [CA-G.R. SP No. 20678. August 23, 1990.] ACOJE MINING COMPANY, INC. , petitioner , vs . HON. COURT OF TAX APPEALS , respondent . D E C I S I O N LOMBOS-DE LA FUENTE , J p : The record discloses that a petition for certiorari was on December 24, 1986 filed by Acoje Mining Company, Inc. (hereinafter referred to as Acoje) with the Supreme Court pursuant to Rule 65 of the Rules of Court, assailing the decision dated October 31, 1986 of the Court of Tax Appeals, which affirmed the decision dated July 25, 1985 of the then Acting Commissioner of Customs, which in turn affirmed the decision of the then Acting Collector of Customs, Port of Manila, in Manila Protests Nos. 23-79 and 76-79, entitled "In the matter of protest against payment of customs export and premium duty covered by Export Entries No. 065630-78 and 003677-78, Acoje Mining Co., Inc., Protestant," dismissing the said protests for lack of merit; and that by its resolution of August 19, 1987, the Supreme Court's First Division resolved to give due course to the petition. By Resolution of April 23, 1990, the Supreme Court referred the petition, together with respondent's Comment and petitioner's Rejoinder and Memorandum, to this Court "for consideration and adjudication on the merits." This Court, by Resolution of May 21, 1990, resolved to proceed with the case under Rule 6, section 6, RIRCA (Revised Internal Rules of the Court of Appeals), i.e., as an appeal from a decision of the Court of Tax Appeals. The parties manifested that they were willing to consider the petition filed with the Supreme Court on December 24, 1986 as the appellant's brief, respondent's Comment on the petition as appellee's brief and petitioner's Rejoinder as the reply brief. Hence, the case was deemed submitted to this Court for decision after the records were elevated thereto. Involved in this case are two exportations of chrome concentrates made by petitioner, Acoje, a domestic mining corporation the first, covering a shipment of 10,000 WMT of chrome concentrates on December 14, 1978 and the second, covering a shipment of the same amount, loaded on February 7, 1979, with export duties and premium duties paid under protest. (1) On the first shipment, petitioner paid under protest on January 15, 1979 the amount of P318,361.38 as export duty and P265,485.70 as premium duty, or a total of P583,847.08 (Manila Protest No. 23-79). (2) On the second shipment, petitioner paid also under protest P333,664.85 as export duty and P277,595.75 as premium duty, or a total of P611,260.58 (Manila Protest No. 76-79). Petitioner is claiming a refund of P116,271.12 and P265,485.70 representing the protested excess payments of export and premium duties, respectively, or a total of P381,765.82 for the first shipment; and for the second shipment, a refund of P400,983.38 made up of P123,387.65 and P277,595.73, also as protested excess payments of export and premium duties, respectively. The total amount of the refund sought by petitioner is P782,740.20. On August 7, 1984, the Collector of Customs of the Manila Port, after due hearing, rendered a decision dismissing for lack of merit the two subject protests. On appeal to the Commissioner of Customs, the abovesaid decision was affirmed in the Commissioner's decision dated July 25, 1985. Then, the Commissioner's decision was in turn appealed to the Court of Tax Appeals which affirmed the same in the decision which is the subject of the present appeal. Appellant assails the validity of the two Customs Export Valuation Circulars (CEVS Nos. 106-78 and 16-79) issued by the Bureau of Customs, fixing, among others, the FOB value of the chrome concentrates exported by Acoje on December 14, 1978 and February 7, 1979 at US$115 per DMT instead of at US$73 per DMT. Appellant avers that said circulars embody an erroneous implementation and application to the two shipments in question of section 514 * of the Tariff and Customs Code, as introduced by Presidential Decree No. 230, particularly the provision that the basis of the export duty shall be "the gross FOB. value at the time of shipment based on the prevailing rate of exchange". In this connection, appellant relates these facts: On February 18, 1977, Acoje entered into a contract of sale of chrome concentrates with Philip Brothers Oceanic, Inc. (Philbro) which stipulated inter alia that said contract shall be for a period of three years commencing April 1, 1977 until March 31, 1980; and that the price for the first year shall be US$120 per dry metric ton (DMT) FOB steamer with a deduction of US$5.00 per DMT to cover marketing expenses/supervision fee or US$115 per DMT. Pursuant to this contract, Philbro purchased all the 1977 chrome concentrates of Acoje but totally stopped buying in 1978 and 1979. Hence, as Acoje "needed cash to alleviate its tight financial position," it had no choice but to accept the offer of another purchaser, Marc Rich, of US$73 per DMT in November 1978 or two years after, which was allegedly the best price Acoje could get "at the time of depressed global prices of chrome concentrates." Accordingly, the actual selling price of the two subject shipments of December 14, 1978 and February 7, 1979 to purchaser Marc Rich was US$73 per DMT. Appellant surmises that apparently, the Bureau of Customs, in fixing in the two abovementioned circulars in question the gross FOB. value at the time of shipment , per sec. 514, of the Tariff and Customs Code, supra , of the chrome concentrates exported by Acoje in December 1978 and February 1979, relied solely on the price of US$115 per DMT which was prevailing in February 1977, as gathered from the old contract of Acoje with Philbro, totally disregarding the actual selling price of US$73 per DMT received by Acoje when the subject chrome concentrates were shipped out of the country. Appellant submits that the phrase "gross FOB. value at the time of shipment" as used in sec. 514, supra , should be interpreted to mean the actual selling price of the product at the time of shipment, considering that the phrase "gross value in money" has a well-defined meaning in our tax statutes, as equivalent to the "gross selling price or the total amount of money or its equivalent which the purchaser pays to the vendor to receive or get the goods." This very issue was duly passed upon and resolved by each of the offices/tribunals which respectively rendered the assailed decisions. Thus, the then Acting Collector of Customs for the Port of Manila had the following to say on said issue: "Aforesaid Section 514 states, among others, that the basis of the assessment will be the gross FOB. value at the time of the shipment . It is noted that according to the Senior Export Trade Assessor, Export Coordination Division, the basis of assessment of export duty and premium duty is the pertinent Customs Export Valuation Circular issued by the Commissioner of Customs periodically from time to time according to the gross FOB value of particular article at the time of shipment, which is in accord with the aforecited provision of the law. Suffice it to state that despite representation by Acoje Mining Co., Inc. with the Ministry of Finance and other authorities that the existing export valuation were not realistic, said officials did not heed the same. This strongly indicates that protestant failed to establish its cause and that the existing export valuation was in accordance with the law." Agreeing with the Collector, the then Acting Commissioner of Customs observed in his decision affirming the Manila Collector's decision, viz: "Protestant likewise claims that the "gross FOB. value at the time of shipment" exclusively refers to the actual selling price agreed upon between parties in the sales contract, in this case, US$73/DMT (FOB.), at the time the chrome concentrates were shipped out of the country. This Office does not subscribe with protestant's conclusion. Section 514 of the Tariff and Customs Code, as amended, is clear and explicit when it provides that export duty on the gross FOB. value shall be levied, assessed and collected at the time of the shipment based on the prevailing rate of exchange. Thus, the imposition of export duty on subject chromite concentrates accrue from the moment the articles are actually shipped out and or exported out of the country, not on the date the contract of sale was perfected at US$73.00/DMT. Definitely, at the time of the shipment, Customs Export Valuation Circulars Nos. 106-78 and 16-79 were in effect. "To pave way to protestant's claim is to support its contention which this Office cannot equitably uphold. The recognition by this Office of any attempt to read into the statute any diversion, would be contrary to the pervasive spirit as well as the clear language of the aforesaid law. Any diversion in the interpretation of said provision at one's will and discretion in its favor without adhering to the pure intention of the law is contrary to public policy. Thus, the basis in the collection and imposition of export duty and premium duty is not dependent on a contract entered into by and between private parties but rather on the mandate of the law, and in the absence of any excessiveness, harshness and absurdity in the imposition of export and premium duties, the same should be upheld." And then, the Court of Tax Appeals, sustaining the foregoing rulings of the two abovesaid Customs officers, gave its justification therefor, to wit: "We do not think any different conclusion, ought be reached as we find nothing cryptic in the language of Section 514, ibid , as to pose any ambiguity in its application." xxx xxx xxx "This has to be, otherwise by such an expediency the enforcement of Customs' laws can be flouted with impunity and the efficacy defused in a cul de sac of impotency, so to speak. It is hardly necessary to stress that consideration of the convenience of the petitioner, or any taxpayer for the matter, stands as an aberration from the otherwise intended imperative. Obviously, we cannot substitute and indulge in any amorphous rule as to leave solely to petitioner's own indulgence a valuation upon which to base the assessment and altogether suffer the cornerstone of effective collection to dissipate in the quicksand of self-interest." We agree, We are fully convinced that in the present case the "gross FOB. value at the time of shipment" refers to the value fixed in Customs Export Valuation Circulars Nos. 106-78 and 16-79, said circulars having been in effect at the time of the shipments of the chrome concentrates (on December 14, 1978 and February 7, 1979), and not to the actual selling price (US$73/DMT) agreed upon between the parties (Acoje and Marc Rich) in the sales contract covering the shipments in question, as submitted by appellant. We can see that if appellant's abovesaid posture were to be sustained, this will open the door to skillful and insidious management/control of prices advantageous to the exporter-taxpayer but prejudicial to the government. Indeed, it is in the public interest that the basis for the collection of taxes be determined by law rather than by contracts between private parties. Moreover, there is no evidence that the gross FOB. value of chrome concentrates fixed at US$115 per DMT in Customs Export Valuation Circulars No. 106-78 and 16-79 had been made arbitrarily, whimsically or capriciously. Even the coincidence that the gross FOB. value of US$115 per DMT, fixed in the circulars in question, is the same purchase price provided for in the 1977 contract between Acoje and Philbro is not a sure indication that such determination had been arrived at capriciously or without reason. Besides, it bears emphasis that under section 2 of P.D. No. 230 (by virtue of which Section 514, inter alia , was inserted in the Tariff and Customs Code), the Bureau of Customs, subject to the approval of the Secretary of Finance, is authorized to implement sec. 514, supra , thru the promulgation of the necessary rules and regulations; and that the two CEV Circulars in question were issued in the exercise of that authority. It is an all too familiar rule in statutory construction that the contemporaneous interpretation attached to the provisions of a particular statute by the administrative agency or office of the government charged with the implementation of the statute deserves respect and recognition by the courts unless such an interpretation is palpably contrary to the law or arbitrary. The fixing of the gross FOB. value at US$115 per DMT for chrome concentrates in the two CEV circulars in question is an instance of one such contemporaneous implementation of the subject provision of sec. 514 of the Tariff and Customs Code, and this deserves sustenance by this Court as it has not noted in such implementation any arbitrariness or illegality. Anent appellant's submission that subject circulars are invalid because they had not met the approval of the Secretary of Finance, as required by section 2, supra , of P.D. No. 230. We note, as the Collector of Customs at the Manila Port and the Commissioner of Customs likewise noted, that on June 7, 1978, Acoje had submitted to the Minister of Finance a request to use US$73 per DMT as basis for the computation of the export duties on its chrome concentrate shipments, pointing out that the existing export valuations were not realistic; but the request was not favorably acted upon. This is a clear indication, as the Court of Tax Appeals aptly observes, that the Minister of Finance "affirms that the value of $115.00/DMT stated in the CEVCS should be followed." The foregoing resolution necessarily determines the resolution of the other issue raised by appellant assailing the imposition of premium duty, in addition to the basic duty, on the shipments in question pursuant to Executive Order No. 425, issued on February 17, 1974. This order provides insofar as pertinent: "In addition to the export duties, herein referred to as basic rate, levied under Section 514, Title III, Book I of R.A. No. 1937, as amended by P.D. No. 230, there shall be levied, assessed and collected a premium duty on the difference between the current price as established by the Bureau of Customs and the base price of the products as established in Section II hereof in accordance with the following schedule: xxx xxx xxx MINERAL PRODUCTS : (1) Metallic ores and concentrates xxx xxx xxx (c) Chromite 20%" Appellant submits that the levy on the two shipments in question of premium duty is not in accordance with section 1 of the same Executive Order, to wit: "Should the current price of any export product be below the established base price, then only the basic rate prescribed under P.D. 230 shall be applied." According to appellant, considering that in the present case, the price of US$73 per DMT which was the current price of the chromite concentrates at the time the goods were shipped out of the country in December 1978 and February 1979 was less than the basic price of US$95.82 per DMT established by the NEDA, no premium duty should have been imposed on the two shipments in question, pursuant to section 1 of Executive Order 425, above-quoted. This submission is rendered untenable by the ruling in the assailed decisions which we sustain that the proper gross FOB. value is US$115 per DMT of chrome concentrates. As this value is above the NEDA established base price of $95.82. per DMT, the two shipments in question are subject to premium duty, contrary to appellant's claim. On the premises, we find that the Court of Tax Appeals committed no error in affirming in its decision of October 31, 1986 the subject of the present appeal the decision of the then Acting Commissioner of Customs dated July 25, 1985 which in turn affirmed the decision of the then Acting Collector of Customs at the Port of Manila, dismissing protests Nos. 23-79 and 76-79. WHEREFORE, the decision under appeal should be, as it is hereby, affirmed in toto . Costs against appellant. SO ORDERED. Elbinias and Victor, JJ ., concur. Footnotes * Sec. 514. Export Products Subject to Duty and Rates . There shall be levied, assessed and collected a duty on the gross FOB. value at the time of shipment based on the prevailing rate of exchange, of the following products in accordance with the following schedule: WOOD PRODUCTS: xxx xxx xxx MINERAL PRODUCTS: (1) Metallic ores and concentrates xxx xxx xxx (c) Chromite 4%