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

FIRST DIVISION [CA-G.R. SP No. 34081. March 30, 1995.] (C.T.A. Case Nos. 2840, 3091, 3491, 3696) ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION , petitioner , vs . THE COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS , respondents . D E C I S I O N IMPERIAL , J p : This is a petition seeking the review of the Resolution of the Respondent CTA, granting the claim for partial tax refund of Petitioner under the provisions of Section 5 of Republic Act No. 1435 but reducing the amount of specific taxes to be refunded by Respondent Commissioner from THIRTY-FOUR MILLION FOUR HUNDRED THIRTY-THREE THOUSAND FIVE HUNDRED SIXTY THREE and 94/100 PESOS (P34,433,563.94) to ONE HUNDRED ONE THOUSAND SIX HUNDRED SEVENTY-EIGHT and 88/100 (P1,101,678.88), without interest. The antecedent material and relevant facts and the case are as follows: (1) Petitioner is a domestic corporation engaged in the business of mining copper from its mineral land and concessions in Toledo City, Cebu. During the periods under review, beginning from September 1974 through July 1983, Petitioner purchased from its suppliers, Petrophil Corporation and Mobil Oil Philippines, referred to hereinafter respectively as Petrophil and Mobil Oil, quantities of manufactured oil and other fuels, like diesel and coco-diesel. It actually used these oils and fuels in its mining operations to run various items of machinery and equipment, motors and vehicles; (2) Petrophil and Mobil Oil paid the specific taxes imposed by Sections 153 and 156 (formerly Section 142 and 145) of the 1977 National Internal Revenue Code (NIRC) on all the oils and fuels they manufactured from which was drawn the quantity sold to the petitioner for use in its operations; (3) On June 14, 1956, Republic Act No. 1435, an act to provide means for increasing the highway discretion funds, granted in Section 5 thereof, a refund of 25% of the specific taxes paid on oil products used by miners and forest concessionaires in their operations, to wit: "The proceeds of the additional tax on manufactured oils shall accrue to the road and bridges funds of the political subdivision for whose benefit the tax is collected; provided, however, that whenever any oils mentioned above are used by miners of forest concessionaires in their operations, twenty-five per centum (25%) of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon submission of proof of actual use of oils under similar conditions enumerated in subparagraphs one and two of Section one hereof, amending section one hundred forty-two of the InternalrevenueCode; Provided, further, that no new road shall be constructed unless the routes or location thereof shall have been approved by the Commissioner of Public Works and Highways after a determination that such road can be made part of an integral and articulated route in the Philippine highway System, as required in section twenty-six of the Philippine HighwayAct of1953." 4. Invoking Section 5 of Republic Act 1435, petitioner filed with the Court of Tax Appeals several petitions seeking the refund of 15% of specific taxes paid on oil products which it purchased and used in its mining operations at various times in the following amounts: C.T.A. Case No. Amount Claimed Period Covered 2840 P3,928,614.19 Sept. 1971-June 1976 3091 10,311,887.34 May 1978-Feb. 1980 3426 8,972,165.34 Jan. 1982-July 1983 T o t a l P34,433,563.94 =========== (5) The aforesaid cases were consolidated. On December 24, 1991, the Tax Court rendered a Decision denying the claims for refund on the basis of the Decision of the Supreme Court in Commissioner of Internal Revenue vs. Rio Tuba Nickel Mining Corporation and Court of Tax Appeals , G.R. Nos. 83583-84, September 30, 1991, wherein it was held that the refund privilege granted by Section 5 of R.A. 1435 was impliedly repealed with the issuance of Presidential Decree No. 711, which took effect on July 1, 1975, abolishing all special and fiduciary funds; (6) Petitioner appealed the Tax Court's Decision to this Court under CA-G.R. Sp. No. 27676, entitled " Atlas Consolidated Mining and Development Corp. vs. Commissioner of Internal Revenue and Court of Tax Appeals ." On March 31, 1993, the Eleventh Division of this Court rendered a Decision setting aside the Tax Court's Decision and remanding the cases to the Tax Court for proper determination of the total amount of specific taxes paid and the corresponding tax refund or credit to which petitioner is entitled; (7) The decision of this Court was based on a Supreme Court Resolution dated March 25, 1992 and a Resolution dated June 15, 1992 modifying the Decision in RioTuba (supra), in that the refund privilege granted under Section 5 of R.A. 1435 was available up to 1985 since the Highway Special Fund was abolished only in 1986. Furthermore, said Resolutions ruled that the amount of specific taxes refundable should be computed on the basis of the rates of specific tax prescribed under Sections 1 and 2 of R.A. 1435 and not on the increased rates mandated under Section 153 and 156 of the Tax Code; (8) Thus, this Court said: "Thus, the respondent court's decision of December 24, 1991 should be SET ASIDE. The instant tax cases should be remanded to the respondent court for proper evaluation of the petitioner's evidence to determine the total amount of specific taxes and the 25% refund or tax credit based on the specific tax rates prescribed in Sections 1 and 2 of RA 1435 in view of the allegation of the petitioner in the instant petition of the petitioner in the instant petition that the respondent court failed to consider certain exhibits or cited wrong exhibits" (emphasis ours) (9) On April 29, 1993, an Entry on Judgment was issued in CA-G.R. SP No. 27676 stating that the Decision therein had already become final and executory; (10) On April 18, 1994, after hearing, the Tax Court issued a Resolution computing the 25% specific tax refund based on the rates of specific tax prescribed in Sections 1 and 2 of RA 1435 and came out with the following amounts refundable: 1) CTA Case No. 2840 P208,129.57 2) CTA Case No. 3091 358,864.83 3) CTA Case No. 3426 270,369.02 4) CTA Case No. 3696 264,315.46 Total P1,101,678.88 Thus, the instant petition. The petition is without merit. First, petitioner's cause of action is barred by prior judgment. A reading of CA-G.R. SP No. 27676, shows that this Court had already ruled that the amount of specific tax refund which petitioner is entitled should be computed on the basis of the rates of specific tax prescribed in Sections 1 and 2 of Republic Act No. 1435. Since said ruling had become final and executory, petitioner can no longer question it by way of the second appeal on the ground that the computation on the amount of specific tax refundable should be based not as prescribed in Sections 1 and 2 of Republic Act 1435 but instead on the increased rates mandated by Sections 153 and 156 of the Tax Code under which petitioner paid his specific tax on products. If petitioner did not agree with the ruling of this Court in CA-G.R. SP No. 27676, it should have appealed the decision to the Supreme Court. The present petition is, therefore, bared by prior judgment of this Court and the doctrine of res judicata applies. Second, as earlier stated in the statement of facts, this Court based its decision in CA-G.R. SP No. 27676 on Supreme Court resolution dated March 25, 1992 and Supreme Court resolution in Rio Tuba dated June 15, 1992. Thus, it has been correctly argued by respondents, through counsel, in their answer to the petition as follows: "RioTuba NickelMining Corporation is engaged in mining. During the periods from June 1, 1980 to May 31, 1982 and from May, 1992 to March, 1983, it purchased various oil products which were used in its mining operations. Specific taxes imposed under Sections 153 and 156 (formerly Section 142 and 145) of the 1977TaxCode were paid on said oil products. Pursuant to Section 5 of R.A.1435, RioTuba filed a claim for refund of 25% of the specific taxes paid on oil products which it purchased during the aforesaid periods. "In its Decision dated September 30, 1991, the Supreme Court held that the refund privilege under Section 5 of R.A.1435 had been legislated out of existence by Presidential DecreeNo.711, effective July 1, 1975. Said decree abolished all special and fiduciary funds since, R.A.1435 was passed by Congress precisely to provide means of increasing the Highway Special Fund. "Acting on the motion for reconsideration filed by RioTuba, the Supreme Court, in a Resolution dated March 25, 1992, modified its earlier decision by ruling that the refund privilege under Section 5 of R.A.1435 was available up to 1985. This is so because, despite the mandate of P.D.711, the Highway Special Fund was maintained for ten more years after the effectivity of said decree and that said fund was abolished only in 1986. "Furthermore, the Supreme Court noted that the specific taxes on oils which RioTuba paid from 1980 to 1983 were no longer based on the rates specified in Sections 1 and 2 or R.A.1435 out on the increased rates mandated under Section 153 and 156 of the 1977TaxCode the provisions of which do not specifically allow a refund. Hence, the Supreme Court ruled that RioTuba is not entitled to the whole amount which it claims as refund and ordered that the claim for refund be computed on the basis of the amounts deemed paid under Sections 1 and 2 of R.A.1435, thus: 'We, therefore, modify our decision in this case and rule that mining and logging companies are entitled to the refund privilege granted by R.A.No.1435 on specific taxes paid up to 1985 on manufactured and diesel fuel oils. 'Since the private respondents claim for refund covers specific taxes paid from 1980 to July 1983 then we find that the private respondent is entitled to a refund. It should be made clear, however, that RioTuba is not entitled to the whole amount it claims as refund. 'The specific taxes on oils which RioTuba paid for the aforesaid period were no longer based on the rated specified by Sections 1 and 2 of R.A.No.1435 but on the increased rates mandated under Sections 153 and 156 of the National InternalRevenueCode of1977. We note, however, that the latter law does not specifically provide for a refund to these mining and lumber companies of specific taxes paid on manufactured and diesel fuel oils. 'In Insular Lumber Co. vs. Court of Tax Appeals , (104 SCRA 710 [1981], the Court held that the authorized partial refund under Section 5 of R.A.1435 partakes of the nature of tax exemption and therefore cannot be allowed unless granted in the most explicit and categorical language. Since the grant of refund privilege must be strictly construed against the tax payer, the basis for the refund shall be the amount deemed paid under Sections 1 and 2 of R.A.No.1435. 'ACCORDINGLY, the decision in G.R. Nos. 83583-84 is hereby MODIFIED. The private respondent' CLAIM for REFUND is GRANTED, computed on the basis of the amounts deemed paid under Sections 1 and 2 of R.A.No.1435, without interest.' "Likewise, acting on the motion for clarification filed by Rio Tuba , the Supreme Court, in its Resolution dated June 14, 1992, further explained the above ruling in this wise: 'A careful consideration of RioTuba's motion for clarification shows that it prays for a 'clarification' favorable to it or a modification of our resolution granting the claim for refund but only on the amounts deemed paid under Sections 1 and 2 of Republic Act(RA) No.1435. The motion for clarification is actually a motion for reconsideration. 'RioTuba' contention that the refund should be based on the rates effective at the time the specific tax was paid is without merit. Section 1 of RA1435 amended Section 142 of the National InternalRevenueCode providing for increased rates on specific taxes. Section 142 of the NI agriculture and aviation . Section 4 of RA1435 provided for a refund privilege on specific taxes on manufactured oils paid by miners or forest concessionaires . There is a difference in the refund privileges of those engaged in agriculture and aviation on one hand, and miners or forest concessionaires on the other. Since the refund privilege of the former is incorporated in Section 142, then upon any amended of Section 142 increasing the tax rates the basis for the refund will accordingly be adjusted. 'Significantly, the refund privilege granted to miners or forest concessionaires is not incorporated in Section 142 but is found in Section 5 of RA1435. There is thus an intent on the part of the legislature to use the specific tax rated provided notwithstanding future rate increases. 'All the Sections of RA1435 must be read as a whole. In the absence of any express provision of law, the refund privilege granted to miners and forest concessionaires in Section 5 must be construed as base on the specific tax rates provided in Section 1.'" Moreover, the latest ruling of the Supreme Court on the matter is its Decision dated May 10, 1994 in Commissioner of Internal Revenue vs. Hon. Court of Appeals and Atlas Consolidated Mining and Development Corporation , G.R. No. 106913. This also involves petitioner's claim for refund of 25% of specific taxes paid on oil products used in its mining operations for the periods July-December 1976, January-December 1977 and January-May 1978, pursuant to Section 5 of R.A. 1435. The Supreme Court, applying RioTuba, held: "We rule, therefore, the since Atlas's claims for refund cover specific taxes paid before 1985, it should be granted the refund based on the rates specified by Sections 153 and 156 of the TaxCodeof 1977, provided the claims are not yet barred by prescription." The case at bar is no different from RioTuba and the aforecited G.R. No. 106913. Hence, the instant petition is devoid of merit. Notably, therefore, the decision of the Supreme Court in Insular Lumber Co. vs. CTA (G.R. No L-31057, 29 May 1981) and in Commissioner of Internal Revenue vs. Atlas Consolidated Mining and Development Corporation, et al. (G.R. No. 93631, 12 November 1990) have been superseded by the decision of the Supreme Court in Commissioner or Internal Revenue vs. Rio Tuba Nickel Mining Corp. and the Court of Tax Appeals (G.R. Nos. 83583-84, Sept. 30, 1991) and the more recent case of Commissioner of Internal Revenue vs. Hon. Court of Appeals and Atlas Consolidated Mining and Development Corp. (G.R. No. 106913, dated May 10, 1994). WHEREFORE, the petition is hereby DISMISSED and the judgment appealed from hereby AFFIRMED in full. SO ORDERED Somera and Vasquez , Jr ., JJ ., concur.