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

THIRD DIVISION [CA-G.R. SP No. 25945. February 12, 1992.] (C.T.A. Cases Nos. 3467 and 3825) 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 VICTOR , J p : This is a petition for review of the Decision dated May 31, 1991 of the public respondent Court of Tax Appeals in C.T.A. Cases Nos. 3467 and 3825, entitled "Atlas Consolidated and Mining Development Corporation vs. Commissioner of Internal Revenue", specifically that portion of said decision absolving the private respondent Atlas Consolidated Mining and Development Corporation from deficiency ad valorem taxes on copper and silver for 1975 in the amount of P11,276,540.79 and P12,882,760.86 for 1976. The petitioner Commissioner of Internal Revenue is the official of the Republic of the Philippines charged with the duty of assessing and collecting internal revenue taxes whereas the private respondent Atlas Consolidated Mining and Development Corporation (ACMDC) is a domestic corporation engaged in the business of mining, principally copper, from its mining concessions in Toledo City, Cebu. The facts giving rise to this petition are as follows: RE: C.T.A. Case No. 3467 In 1975, the private respondent ACMDC was investigated by a group of revenue examiners for business tax purposes. After examining the private respondent's accounting records, the revenue examiners submitted their written report of investigation containing their findings and recommendation dated March 11, 1980 (Exh. 1, pp. 304-313, Folder III, BIR rec.) and working papers (Exhs. 2, 3, 4, 5, 6, 7, 9, 10, 12 & 13, pp. 286, 287, 288, 289, 291, 292, 293, 294, 295-54 and 297, Folder III, BIR rec.). On the basis of the foregoing report of the examiners, the petitioner issued a letter dated April 8, 1980, assessing the private respondent business taxes for 1975 in the total amount of P12,391,070.51, inclusive of surcharge and interest, as follows: "1. Ad Valorem Tax copper & silver P11,276,540.79 25% surcharge for late filing of notice of removal of copper & Silver 315,027.30 25% surcharge for late filing of notice of removal of pyrite 53,585.30 Limestone 236,908.75 2. Contractor's Tax 101,996.68 3. Manufacturer's Sales Tax 405,014.59 4. Real Estate Dealer's Privilege Tax 1,997.10 TOTAL AMOUNT DUE P12,391,070.51" The private respondent protested the assessment in a letter of May 5, 1980 (Exh. 15, pp. 325-328, Folder III, BIR rec.). By letter dated January 15, 1982, the petitioner denied the protest (Exh. 16, pp. 99-100, BIR rec. Folder IV). On May 14, 1982, the private respondent filed a petition for review with the Tax Court (Annex "A", Petition). On the same date, the private respondent filed an amended petition for review (Annex "B", Petition). On March 11, 1983, the petitioner filed his answer to the amended petition for review (Annex "C", Petition). Under date of March 14, 1983, the private respondent filed its second amended petition for review (Annex "D", Petition). On November 25, 1983, the petitioner filed his answer to the second amended petition for review (Annex "E", Petition). RE: C.T.A. Case No. 3825 Similarly, a group of revenue examiners audited the accounting records of the private respondent for possible business tax liabilities for taxable year 1976. In due course, a joint report of investigation was submitted thereon dated July 15, 1980 (Exh. 1, pp. 212-219, BIR rec.) together with working papers (Exhs. 2, 3, 4, 5, 6 and 7 pp. 179-188, BIR rec.). The petitioner, thereafter, issued a letter dated September 15, 1980 (Exh. 8, pp. 221-222, BIR rec.) assessing and demanding from the private respondent the amount of P13,531,466.80, as business taxes for 1976, itemized as follows: "1. Ad Valorem Tax a) Copper and Silver P12,882,760.86 b) Gold 260,180.50 c) Pyrite 53,283.69 d) Limestone 183,624.97 2. Contractor's Tax 149,543.40 3. Fixed Tax as Real Estate Dealer 2,073.38 P13,531,466.80 Not contented with the above assessment, the private respondent protested the same through letter dated October 11, 1980 (Exh. 9, pp. 223-226, BIR rec.). On April 25, 1984, the petitioner issued his decision denying said protest (Exh. 10, pp. 238-239, BIR rec.). On August 10, 1984, the private respondent filed a petition for review (Annex "F", Petition). On February 26, 1985, the petitioner filed his answer to the petition for review (Annex "G", Petition). The aforesaid C.T.A. Cases No. 3467 and 3825 were jointly tried. On May 31, 1991, the respondent Tax Court rendered a consolidated decision thereon holding, inter alia , that the private respondent was not liable for deficiency ad valorem taxes on copper and silver for 1975 and 1976 in the respective amounts of P11,276,540.79 and P12,882,760.80. Hence, the present recourse. The petitioner contends that the issue here is: "Whether or not, in computing the ad valorem tax on copper and silver, the charges for smelting and refining, and not only freight and insurance, should be deducted from the price of copper concentrate" (Petition, p. 9). The private respondent, on the other hand, posits that the real issue in this case is: "Whether or not, in computing the ad valorem tax on copper and silver, the charges for smelting and refining, and not only the freight and insurance, should be deducted from the London Metal Exchange (LME) price of copper cathode". The bottom line issue here, however, is whether or not the private respondent had paid the correct ad valorem taxes on copper extracted from its mining site in 1975 and 1976. It must be stressed here that the public respondent, in upholding the position of the private respondent, relied on its previous ruling in the case of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue (C.T.A. Case No. 2842, January 23, 1981). In this case, the public respondent sustained the theory of the private respondent that in computing the ad valorem tax on copper mineral, there should be deducted from the LME price of copper cathode (the manufactured copper), the refining and smelting charges in addition to the freight and insurance charges which were admitted by the petitioner as deductible. Thus, the public respondent granted the amount of P2,288,865.23 as a refund to the private respondent representing excess payments of ad valorem tax. In the questioned decision, the public respondent reiterated its ruling therein, in C.T.A. Case No. 2842, viz: "After carefully examining all the evidence of petitioner, which were not disputed by respondent, as well as the records of this case, we are more than ever convinced that despite the seemingly conflicting positions taken by the parties, there is no real dispute between them on the fundamental principles by which the basis or measure of the ad valorem tax payable by petitioner on the minerals exported to Japan or other countries is to be computed. A lot of ground can at once be covered, and it will greatly simplify matters, if the uncontroverted evidence of petitioner, both oral and documentary, including the depositions taken in Tokyo, Japan, New York, United States, London, United Kingdom, and Berno, Switzerland, are reduced to basic factual propositions or situations that are beyond dispute, to wit: 1. The mineral mined or extracted by petitioner from its mine site in Toledo City, Cebu, is copper (p. 20, BIR Records, see also petition for review, memorandum, p. 119, CTA records.). In its raw, unmarketable form, it is a rock called copper ore (Exh. "D", p. 20, BIR records). The mineral rocks or ores are crushed, ground and reduced to powder form known as copper concentrate. While the ores contain about 1/2% copper, the copper concentrate contains about 28-31% copper (TSN, p. 31, hearing on November 15, 1977; p. 8, deposition, Japan, p. 8, deposition London, (Exhibit "A" London). It is the copper concentrate the powdered rocks with copper contents that is exported to foreign buyers in Japan, like the Mitsubishi Metal Corporation, (p. 20, BIR records). xxx xxx xxx "5. With the London Metal Exchange price quotation of electrolytic copper wire bar as starting point, which as discussed above is used by petitioner and Mitsubishi Metal Corporation as reference point, the actual market value of copper mineral or concentrate is determined by the parties by allowing for the deduction from the London Metal Exchange price quotation of copper wire bar at all costs of wire bar. In other words, the actual market value of copper concentrate is ascertained by deducting the freight, insurance, smelting, refining and fabrication charges from the London Metal Exchange (p. 20, BIR records). The remainder, after all these deductions, represents to a reasonable degree the actual market value in the mine site of the copper mineral extracted from the earth, which in its marketable form, is copper concentrate. xxx xxx xxx 9. In paying the ad valorem tax pursuant to Section 243 of the then in force National Internal Revenue Code, petitioner deducted from the London Metal Exchange price quotation of wire bar all costs of fabrication, refining, treatment (smelting) process, freight and insurance. In other words, there being no market price quotation of copper concentrate in the commodity exchanges or markets of the world, which petitioner claims is the mineral or mineral product extracted or produced from its mineral lands in Toledo City, Cebu, it started from a known quantity to determine the actual market value (in Toledo) of copper concentrate. That known quantity is the London Metal Exchange price quotation of wire bar. From this known quantity, petitioner worked backwards by deducting all charges and costs incurred, after the raw copper concentrate has been shipped from Toledo City to the time such copper concentrate has been converted into saleable copper metal called wire bar. These are the costs of fabrication, refining, smelting, freight and insurance. The remainder, after all these items have been deducted from the London Metal Exchange selling price of copper wire bar represents to a reasonable degree, according to petitioner, the actual market value in the mine site of the copper concentrate, the copper mineral extracted from the earth in its marketable form." And then the public respondent held: "We believe that this finding should still stand in the absence of any reason the court could have seen or convincing averments that could have come from those offered by respondent. The insistence by the respondent of his reading of Section 243 and 246, the pertinent provisions involved (of P.D. 69, later, Section 255 and 257 of P.D. 1158), inspite of what proved to be sound interpretation given by this Court (as subsequently adopted through B.P. Blg. 84, September 19, 1980) is futile as his allegations leave much to be desired. The decision in C.T.A. Case No. 2842 (ACMDC v. CTA, supra ) still being good law, the same can likewise be decisively applied as to the correctness of the ad valorem taxes assessed against petitioner on the copper concentrate it removed from its mining site for the taxable period 1976. Respondent, in computing the 2% ad valorem tax on the copper and silver, should not include the expenses for smelting and refining as part of the taxable base." Note that herein petitioner did not appeal the decision in C.T.A. Case No. 2842, hence, it became final and irreversible. While the issue therein was whether or not the private respondent was entitled to the refund of excess ad valorem taxes paid, its resolution necessarily required a prior determination by the public respondent of the correct ad valorem taxes due. In arriving at such correct ad valorem tax liability, the public respondent had to resolve the question raised therein, i.e., whether or not the charges for smelting and refining should also be deducted from the LME price of the copper wire bar. We find that this issue in C.T.A Case No. 2842 is the same subject matter involved in C.T.A Cases Nos. 3467 and 3825 from which this petition originated. We hold, therefore, that the decision of the public respondent in C.T.A Case No. 2842 which became final and unappealable as it upheld the private respondent's argument that in computing the ad valorem tax on copper and silver, the charges for smelting and refining should likewise be deducted from the LME price of copper wire bar, constitutes res judicata in C.T.A Cases Nos. 3467 and 3825 insofar as said issue is concerned. This Court will not choose to disturb an issue that has long been decided and has attained a character of finality. It is well-settled that parties ought not to be permitted to litigate the same issue more than once, otherwise, there will be no end in every litigation. Apropos here is the following doctrinal principle: "It has been held that it is a general rule common to all civilized system of jurisprudence, that 'the solemn and deliberate sentence of the law, pronounced by its appointed organs, upon a disputed fact or a state of facts, should be regarded as a final and conclusive determination of the question litigated, and should forever set the controversy at rest. Indeed, it has been well said that this maxim is more than a mere rule of law; more even than an important principle of public policy; and that it is not too much to say that it is a fundamental concept in the organization of every jural system.' Public policy and sound practice demand that, at the risk of occasional errors, judgments of courts should become final at some definite date fixed by law. The very object for which courts were constituted has to put an end to controversies (Moran, Comments On the Rules of Court, Vol. 2, 1979 ed., p. 349, citing decided cases). Moreover, the petitioner's claim that the decision of the public respondent in C.T.A. Case No. 2842 is inapplicable here on the ground that the incumbent Commissioner of Internal Revenue is not bound by the decisions or rulings of his predecessor when he finds that a different construction of the law should be adopted (Hilado vs. Com. of Internal Revenue, 100 Phil. 288) is patently unmeritorious. The case of Hilado is clearly not controlling because it involves decisions/rulings of the Commissioner's predecessors. In stark contrast, this case involves a court decision, that of the public respondent, which was not appealed by the Commissioner, hence, constitutes part of the law of the land and must be respected. WHEREFORE, finding no reversible error in the questioned decision, the instant petition for review is hereby DENIED due course and accordingly DISMISSED. No costs. SO ORDERED. Kapunan and Chua, JJ . , concur.