CTA Case No. 3467 (Decision)

REPUBLI C OF THE PHILIPP INES COURT OF TAX APPEALS QUEZON CITY ATLAS CONSOLIDATED MININB & DEVELOPMENT CORPORATION, Petitioner, - vertiLttl - C.T.A. CASES NOB. 3467 I 3825 COMMISSIONER OF INTERNAL REVENUE, - - - )(- ------ M D E C J: S J: 0 N The Commiat~ione r of Internal Revenue on April 29, 1980 ser~ed ~n at~aeasme nt notiee and demand for payMent of the amount of P12,391,070.51 represent- tawes, ineluding inerements, for the year 1975 against petitioner Atlas Consolidated Mini ~g & Development Corporation <ACMDC>. Simila\'~ly, anothP. r ll\ !Utnsmttnt noti ee with a demand for paym ent o f the amount of P13,531,466.80 repres enting 1976 defi ciency d valor�� tax and bu<Jiness taxes plus P5,000.00 comproMise penalty, was on September 23, 1980 by the CoMMissioner on petitioner. P�titioner protested both assessMents but the protests were denied, and so, the subjeet petitions for review were filed.

DECISION - CTA CASES NOS. 3467 & 382S - 2- The two ca~e~ being identical in most re~pect, eMcept for the taxable periods and the a�ounts invo lved, were eventually consolidated. One issue pres ented by the con~o lidated ca1e~ is whether petition er paid t he correct ad valor�� t xes on copper extr acted fro111 it~ 111ining ~ite in 1975 nd 19 76. It is the view of respondent that "the COI!)t of refinin~ and !l mt!ltinq ~hou ld not be ded1.1cted in arriving at th e final gro!u value of the copper ~oncentrateS 11 f and that the actual �arket value of th e mintn"els from which the ad is "that what petitioner re lized fro111 the sale of the copper concentrate without any deductions fro� �lning, milling, refinin~, tran~portin g, handling, Marketing, or a ny other expe nset~~" . Th of the afort'!mentioned contention by the respondent had already been pa~sed upon previou~ly by thi~ court. As accurately noted by petitioner, the case of Atlas Consolidated Mining and Develop�ent Corporation v. Co��tsstoner of Internal Re venue <C.T.A. Case No. 2842, J nt.U.\ry 23, 1981> is the case in point. The is sue that w s resolved therein was preci~ely deline ted s invo lving the ~uestion of whether, in

DECISION - CTA CASES NOS. 3467 & 3825 - 3- determining the basis or measure of the ad valor�� tax on copper ntinerC\l e xported in 1975 by petitioner to Japan in the form of concentrate, the costs of s111elting and refining should be deducted to arrive at the actual market value of the mineral or mineral prodltct <ACMDC v . Cl'A, �,_'4.(:!!:~.�, p. 15 of Decision). The contention of the respondent was disproved in that earlier case just cited. After careful ly examining all the evidence of pet it ioner, which were not displtted � by re5pondent, as well as the records of thi!S case, . we are 111ore than ever convinced that despite the seeMingly conflicting po s itions taken by the parties, the re i s no real dispute between them on the fundamental principles by which the basis or measure of the ad valor�� tax payable by petitioner on the actual market vallte of the copper minerals exported to Japan or other coltntries is to be computed. f.L_l_Q..i_g_f. t t A.r.Q un.Q___.P..!kJl_ _~i,__QI!.P.~......__p_, __,_!; o v lt~jt_g.,_,__!Htd_____ w.ll..l_ _g,r e a~__.J_t~Rl.tf~_ !l!.la.j; ~-'_r-~,__!_f._~_tH!t yn_c on t r overt � c;i__~.Y_i_g~n_~_'-._Q._f..__p_e t _ll.J. on e.r ...... pot h__g_r~rtd._c;;I_Qg_t,H'!!Jt.n..t.at:.~. . --lr:u;_t~~J n..Q._jtt'-. ~.tf.. P-..Q_, _tt.i.P_n..!.._. _. t ..J:L'-..D___._t o..___I .Q_!-iy_cu.____.J'.-'.P-a n, N~ w Y._qr.k..___U.DJ.J!...'-.Q.____._�..t~ t.Jtt....____.b_o n c:lQ n ,J.___Y.n i t ~d. Kt:OJl.c;tP 111, and ~_ern o, S~Jtr land_,____.._r'- ~-'--d..Yc.!_d . __t,_q_Q.~-~...t~ ....f~.~t...!J~_l__p_r....Q.P-.Q_, j_t..J....QJJ.~___Qr .t....t. t.-Y..4..i.l_g_n...L_!h~J;.__�-���~�r..'-�----�b..!'-..Y.J:!M___g.up_f4~.'--' -- .t_q w1~JL <Und�rscortng supplied> 1. The Mineral Mined or �xtracted by petitioner from its 111ine site in Tol�do City, Ceblt, is copper, <p. 20, BIR Records' see also petition for review, p. 1, CTA reco rds and respondent's meMorandt..un, p. 119, CTA records.> In its raw, un111arketable form, it is � rock call�d copper ore. <Exh. "D", p. 20, BIR . "( :�

DECISION - CTA CASES NOS. 3~67 & 3825 - 4- reco~" dll.) Th e mine~" al rocks or ores are crus hed, grund ~ nd reduced to powder form known as copp er co ncentr~te. While the ores cont ai n ~ b out 1 / 2 ~ copper, t he copper concent r~ t e c ontain s a b out 2a -3 1~ copper. <t.s.n ., p. 31, hearing on Nove111ber 15, 1977 ; p. a, deposition, Jap.-n' p. a, depotdtion , London, E><hibit "A" London.> It is the copper concentr~te the powdered . rocks with copper contents that is e><port ed to foreign buyers in J~pan, like the Mitsubishi Met.-1 Corporation. <p. 20, BIR records.>. )()()( )()()( )()()()( "5. With th e London Metal E><change price q~otation of e lectr olytic copper wire bar as starting po i nt, whi c h as discussed above is used by petitioner a nd Mitsubishi Met~l Corporation as reference point, the actltal market value of copper mineral or concentrate is determined by the partie� by allowing for the deduction fro111 the London Metal E><change price quotation of copper wire bar all costs of manufacturing or processing into copper wire bar. In othen" word s, the act�Jal marke t v~lue of cop per conce ntr ate is as c ertain ed by rlPducti ng th e freig h t, in s urance, sm~ l tinq, refining and f abri c ation charg~6 from th e Lo nd o n Meta l E)(change pri ce q ltot~t ion of c oppe r wi ~" e bau�. <p. 20, B t R Y'ecor d s. > The remainder, aft er al l t h e s e deductions, represents to a reasonable degree the au:tual ma rket value in the mine site of the copper mineral e)(tracted froM the earth, which in its ma r ket able form, is copper concentrate. )()()( )()()( )()()( "9. In paying the ad valorem ta>< purtuant to Section 243 of th� then in force National I nterna l Revenue Code, petitioner deducted from the London Metal E><change price quotation of wire bar all

DECISION - CTA CASES NOS. 3467 & 3825 - 5- costs of fabri cat i on , ref ining, treatme nt <smelting> p r oce s s, fr eight C\ nd insm~ ance. In other wo r'ds, th er e being no market price quotation of copper concen- trate in th e com mo d i t y exchanges o r markets of the wor l d , which petitioner claims is the minera l or mineral product extracted or pro d uc e d fr om its mine ra l l a nds in To l ed o City , Ceb u, i t st arted fr om a ~cnown q1. nt ity to deter min e the ac tual ma r k e t valu e ( i n Tol edci> o f co p p e r co n c entrate. That kn own q uantity i s the Lo n d on Me t 1 Excha n~J e pr i C P. q u o t ation of wi re bar . From this k n o wn quant ity, petitione r w o t~ked backward s by ded�.t c ti n g all charg e s and cost s inc urre d, after the raw copper concentrate has been 11hipped from Toledo City t o t h e ti me such copper concentra~ e has bee n converted in t o saleable copp er me tC\1 ca ll ed wir e b at". These are t h e costs o f f a brication , re fining, smelting, freight and insur- ance. The remai nder, afte r all these items have been deducted from the London Metal Exchange s e 11 i n g pri c e of copper wire bar r e pres e nt s to "" rea11onable d e g r ee, according to p !! titioner, the ac t 1.1al ma r k e t V l!:\ ll.l e in t he mine site o f the copp r c oncentrat e , the co pper miner4' 1 ext racted fro m t he e a t"th in its ma rketll!lbl e fo rm." XXX )()( )( XXX We believe th a t t h is finding should still stand in the absence of any reason the court could have seen or convincing aver�ents that could have those The insistence by the respondent of his reading of Sections 243 and 246, the pertinent provisions involved <of P.O. 69, later, Sections 255 and 257

DECISION - CTA CASES NOS. 3467 & 382S - 6- of P. D. 1158), inspit of what proved to be sound interpretation given by t h is court <as subsequently adopted thro1.1gh B. P . B 1 q. 8 4, Sept em ber 19, 1980) is futile as h is ~ ll eqati o n s leave 111uch to be deair d. The dePision i n C.T ~ A. Case N~. 2842 <ACMDC V. CTA, ~.-~.e.r. i!l) et i 1 b i n g good 1aw, the 1uu1e can likewi s be decitlively applied as to the ~emoved f~om its mini ng sit for the taxable perio d 197 6 . Rtupond!Hlt, i n computing the 2~ ad valor�� tax on the eopper and s i 1ver, shou 1d not include the expens IS fol"' u1elt ing and refining as part of the taxabl base. Respondent a d ded 25~ surcharges to the royalty taxes due agains t petitioner on the extrac ted nd gold i n 1975 and 1976 for failure to pay within the period prescr ibed in Section 2 45, th t is, 1~ � : p o n re111oval of the said u lllinerals from the 111ines. Petitionttr in expl in in ~ its case traees the route ~nd pro oe s llndi:H" ~one by th lllinel"'als and allege'.S that�

DECISION - CTA CASES NOS. 3467 & 382S - 7- "The rock wa s dug out of the earth . It was crushed into powder and trans - formed into the raw mineral product callttd copper concenb"'at e. In the pro- cess of separating the copper �ineral from foreign matter, the mineral called pyrit� w�� separated and collectttd. The copper concentrate was batched or httaped into pile'!. Sa111ples were taken from each batch for assay i'n the pet i - t i on � r' s 1abo rat o ~, y i n To 1 e d o C i t y � I n the assay, the g ade of the co pper was dtttttrmined, including the grade of t he silver and gold content . The'!e two minerals were not ph y sically separated at this stage. The esti 111at ed commercial quantity of th e copper mineral was based on the grade of the ore determined in the al5say. All these data were f�.1rnit1hed to thtt ptttitioner's Head Office in Makati." Despittt the above allegations of petitioner, we see that the imp o~ition of the 25~ surcharge was improperly applied onl y on the copper mineral; and that t he addition of t he 2 5" Sllrcharge'! on the royalty ta~es due on the gold and silver minerals i!l well-founded. Petitioner is abl e to convince the court that practical considerati ons 111ake possible the provisional computation and pay111ent of ad valor�� tax�� for the copper mineral. The practical consid�rations inclltde the Philippine's lack of a smelter of its own and the need to ship the copper concentrate to Japan wher e the smelter was located durinq the periods under review� .150

DECISION - CTA CASES NOS. 3467 & 382S - 8- Petitioner establi~hed that 11 the estiMated comm�rcial quantity of the copper mineral was based on the grade of the (copper> ore deterMined in the �� Sa\Y in i t !I l.abot ~at ory". <Petitioner's Memo- randum, p. 207, Recot'd >. From this appro xiMatl!!d qu ntity petitioner compllted the ad valor�� taxes due on the copper mineral and paid the estiMated taxes tor such minera l in full before actual loading of the shipment in the vessel. <Ibid.>. The respondent would c::onstt"ue and deno111inate said payments as mere "deposit!! with the BIR Collection Agent of Toledo City", an unacceptable substitute for a bond which is the requireMent <Exeminer'� Report, Exh . 1, p. 311, Folder III, BIR Record) � But the filing of a bond takes place only if there is no prepayment of royalties or ad Section 245 of P.O. 69 <Section 256 of P.O. 1158 or the 1977 Tax Code> i<J clear on this point as it provides. S c. 245. Time and manner of payment of royalties or ad valoreM taxes. - The royalties or ad valorem taxes, as the e tU may be, shall be du _nd payable upon the reMoval of th Mineral products from the lcu:::ality where 111ined. However, the output of the mine 111ay be removed fro111 uch locality with out the prepayMent of such royalties or ad valorem taxes if the le ee, owner, or operator shall file .151

DECISION - CTA CASES NOS. 3467 & 3825 - '3 - a bond in th9 fo t" m an d amount and with �uch �ureties a s th9 Com�issioner of Internal Reven ue ma y r equire, conditioned upon the payment of s uch royalties or ad valorttm ta><e�, i n which case, it shall be thtt duty of every 1essee, owner, or op e ra t o r o f a mi ne to mak e a true a nd complttte retu rn in d 1.tp1i c a t e under o a th stttting forth th e q ua nt i ty and the actual I!Ulrket value of the output of hill �ine removed during eac h calenda~ quarter and pay the royalties or ad valoreM ta><es due ther eon within twenty days after the close of said quarter. )()()( )()()( )()()( There being pr epaym ent s made by petitioner of ad valor�� ta><es fo r th e c opper Mineral, the filing of a bond has necessarily been dispensed with. The tentative paym e nt of ad valor�� ta><es, as had been said, is justified by th e fact that the final and precise qua ntity of copper cannot be known until after the s me lting and refining which is done in Japan. It is t hill recognition of the characte r of ma n ufac t u r e and t rade of copp e r that Section 256 of the 1'377 Tax Cod e ( f or�er ly Section 245 of P.O. 6 9 > was am e nded b y B.P . Blg. 84 to read thus, in part 1 Section 256. Time, manner and place of payMent of royaltie�.- )()()( )()()( )()()(

DECISION - CTA CASES NOS. 3467 & 382S - 10 - "Howev~tr, the output of the mine may be removed from ~ueh loeality without the prepay111ent of s�..teh roya lty taxes if the lessee, owner, or oper�tor sh� ll file a bond in the form and a mount and with sueh sureties as the ComMissioner may require, eondit ioned upon the payment of sueh royalty taxes. It ~Shall be the duty of ev ry le15 see, owner, or operat or to mak� a true and eomple te t~eturn in duplieate setting forth the quant ity an~ the aetual market value o f th e minerals or 11ineral produets or quarry resouree~ reMoved d1..1ring eaeh ealendar quarter, Q.f.......tb .e. !;> ~.1 ~n~.�.s .......tf.....J~.n.Y..s......J.n - ~ ~-~ ~��'-- .....wJuu: EL. P~.Y..~., _v.j;..r?. ~-r.:.e��---"-'~.Q-~ ....- ..IJP.QJJ �.....�rem.OV.i!l\..1.,._ and pay the royalty taxes due thereon with in twenty days after the end of eae h quarter to the revenue , distri et offieer, eolleetion agent, or the treasurer of the eity or munieipality of the p1aee whe r e the Mine is loeated." (Underseoring supplied) XXX XXX the iMposition of t 25~ sureharge for late payment of the ad \ 1 lare tax and late notiee of removal for 11 i 1 vtn " nd gold by poi nting o�.'t"t th t the silver and go '' c:. n n o t be ~eparated phy~ically fro� the eopper 0 tra te until the p~oe ~sses we\"'e done in th e s i ter an d refining pl\in �ts in Japan 11 � � T u 15, II t n notiee of ""��oval, that �ubMitted fo\"' t he C O \ �E r~ c o neentY'ate sut'fieittntly �� ~atisfi~td the equirf' r' ,� . of the law and served notiee of rem c- al t , \ 0 the~e two �initrals. tf ~llll&ly fot" eoppev- , t: �~ same notiee was ti111ely too

DECISION - CTA CASES NOS. 3467 & 382~ - 11 - for- the silver- and gold contained in the copper- concentr-ate ... We disagr-ee with this contention of the We see it th at e v en if the silver- and gold cannot as yet be physically separ-ated fr-om the copper- concentr-ate until the pt~ocess of smelting and r-efining was completed , the COIIIIIIer-cial quantity of the silver and gold could have been de~er-mined in m�J c h the same way that petitioner is able to estimate the commercial quantity of copper- dur-ing the assay. If, as stated by petitioner, it is to the commercial quantity of the copper- based on the grade of the copper- ore, and it has deterMined the grade not only of the opper but also thos e of the gold and silver during the assay <Petitioner's MemorandLim, p. 207, Record>, ergo, the est i�ated commercial quantity of the silver and gold subject to ad valor�� tax coLild have also been det er� i ned and pr-ovisionally paid as for- copper-. "' A 25 sur-char-ge on ad val or-e� taxes due on the sale of pyr-ite was also iMposed by r-�spond�nt on petitiontr- for- late filing of notic� of r-e�oval of the pyr-it� fr-o� the 111ines and lat� pay111ent of

DECISI ON - CTA CASES NOS. 3467 & 3825 - 12 - said taxes . It is the htpression of petitioner that even as to the quantit y that was used by its sister coMpany Atlas Fertilizer Corporation <AFC> ther e is 11 no re moval as cont empl at ed by the 1 aw because the AFC plant is located inside the mineral concession of the petit ioner in Sangi , Tole.do ". Petitioner apparently attaches to the phrase "re111oval of the mineral products from t he locality where mined" in Section 245 of the Ta x Code an excessively prosaic interpretatiof,l so ac.s to believe that the Mineral product need be transferred or re111oved to a different "locality " or "p lace" from that of the mine ra l conce ssion for the a d valorem tax on the pyrite used by AFC to be due and payable. The above construction suggested by petitioner is inaccurate and erroneo us. The surcharge is justified. The second to the last paragraph of Section 242 and the 1ast paragraph of Section 243 of the Tax Code should gu ide us to the manner of interpreting the phras e " l oca lity where 111ined" as it 111ere 1 y provides that "Before the 111 i nerals or of Internal Revenue or his representatives shall first be notified of such r �e�oval on a form prescribed for the purpose"

() DECISION - CTA CASES NOS. 3~67 A 3 25 - 13 - <Unde~seo~ing ou~s). Th eonst~uetio n to be g i ve n to the ph~i\~~ "locality whe~ mined" should b e c:lo ely ht,.led to the definitions that have b een assiRn d to. th wo~d "min " The Tax Code o~ t h e Revenue do not p~ovtde fo~ it 'I definition/s but A~e~ican ju~isp~udenc:e as a sou~e e is available. In i t s "p~iwta ry nd ~est~ioted Meaning", "!!line" 1,.\!!ii..Hl'lly ~efers to t.mderg\"'ound excavat io ns and open WO'I"~iflgtS whe~e mi n e~als or deposits a~e 861' 867 ) . ~� found <Id. >. Veri 1 y, the'I"~~Pfo~e, the eonstruet ion of the term admits of va~iation d pending on the eirc:uMs t anc es . In the instant e e, to �Rree to the inter'p~etatio n suggest d by petiti on .r wo uld make for inefficient wh t'e the r�ecordat ion and paym@nt of ad v~l orem t M for pyrit would be l eft entirely to th conven :1. enee of pet 1t :1. oner. Wh at should have been done is that, before pyrite is transpo'l"t d, froll! the pl ee whe'l"e it is ex tra cted during the flotation process to the point of destin tion, whethe~ it be in the AFC p lant inside .1F' h

- DECISION - CTA CA~ES NOS. 34~7 & ~n ? ~ nf 1' -, ' r h rnn hv the re rnOI/i'\l Of rnf'[>f'l ' f' nT C I"fl"\:t' i'\\;P fnt' "\:hP l nl;t: Pt' i c; ~ct 't i'\ 1 1 y t t ' i'\n o:; [""~ ' H~ !: rrl n r t- 11P r 11 n r' p o:; o:; i 1>11 ;::~ t o ri t h .,. ro n r: e s s i on i'l t ' P i'l n t ' o:; I d I' p e d t n n t h P.t' l o c i'l t i. n n 5 � With respect to ()1_\ t nf t.hP concession p e t i t i o n e t ' d nPc; not mF\ I<o i'lny a 1 1 e q C'\ t i on t hat i t h "" s f i. 1 P rl t h "' t ' P q 1_1 i c; :i. t P n P t i r: o "l'f''l t' ~'>mn vPt l n o:; 1� " 'l'lit ' Prl. Peti+:innPr could only [H ' PtPnrl e r mo v C'\ 1 o f t h P. p y t �' i t n f t ' n m t 11 P f ' n n r ' P o:; c; i n n .::~ t ' P ;::>, � thO Se IJ5P.d by thP nrr~. <F><h. "Z", Fo ]rlP t' T, P.TR Record ) . A s t o t h P rl "' f P 11 c; e- r f r� t, P s c t ' i r' t i n n "" v '" i 1 P d n f b y f1 P t i t. i o n e r t o s h i "' 1 d �j I; s P. 1 f f t n m 1- h P .=~ o:; r, o c; c; m e n 1:: 5 r (' i S S 1J f? d f 0 r S h i p ffi P. fl t c; n fl f' fl P l r 11 I) r ' P 11 t t ' i'\ t P ci1 It' j n Q

DECISION - CTA CASES NOS. 3467 I 382S - 15 - we find i t to be unavailing und er the circumstances. The effect is, of course, now lim ited to the surcharges for late pay111en t imposed against th e pertinent shipment s of silver and gold or pyrite considering the discussion above already 111ad e. The surcharges should, nonetheless, be illlpos d since the defense of prescription was raised only durinq the appea l, as correctly noted by re!ipondent. The case of Aguinaldo Indust ries Corporation v,~ Coa�issloner of Internal Reven ue , G. R. No. L-29790 , February 25, 1'382, 112 SCRA 136, 140) c:::ited by respondent is appropriate a� it was t here said: "To allow a litigant to as5ume a different post u~"� whe n he c:::ome5 before the court 4\nd chal len ge th e position he had ec:::epted at the a dministrative level, would be to sanc tion a pr ocedure whereby the eourt - which is uppo� �d to review adMinistrative determinati ons would not r view, but deter111ine and decide for the firr.t ti111 e, e. tl'..utstion not raise d t the ad111inistratlv foru111. This cannot be ~erlllitted , for the same reason that .underlies the requirt�ent of prior WHhaustion of adMinistrative reMedies to give adMinist~ativ e auth orlti�� the prior , opportUnity to decide wittHh it� eoltpe- tenee, and in 111ueh the ���� ~ay that, on the j ud ic:::i�U 1 eve 1, i ��u�� noi: rat sed in the lower court e nnot be r�t�fd for the first tiMe on appal." ~nd, even if a ease in this co urt stands for t�rial de novo, the effect is st i 11 sub.jec:::t to the

DECISION - CTA CASES NOS. 3467 & 382~ - 16 - li111itation laid for appeals from different courts, and applicable in our court that the parties cannot allege in their new pleadings causes of action or defenses that have not been pleaded initially <Bernardo v. Benato, 11 Phil. 603, 605, [1908]' Beeeh v � .Jt.aenez, 12 Phil. 212, 218 t1908J). We have noted, however, that certain shipaents already covered in C.T.A. 3467 were inadvertently still included by respondent in C. T. A. Case No. 3825. When we referred to the worksheets for11ing part of the evidence for the computation of the ta~es to be iMposed against petitioner, this error was, accordingly, taken due of. There were other assessMents Made against petitioner. Another involves liability for ad valorea ta~ on 1 imestone plutJ 25" tJurch at~ge for late payMent. It is the position of petitioner that it is not engaged in the butJiness of Mining liMestone. For the respondent, the 1 iMestone or not ��rely incidental to its business of ainirig copper. This issue is not new. In a ca!U decided by this court involving the same parties herein

DECISION - CTA CASES NOS. 3467 & 3825 - 17 - <C.T.A. Case No. 2778, February 16, 1988>, w~ found for petitioner on such an issue. Th~ Court of App~als in Co��tssioner of Internal Revenue v. CTA & ACMDC, <C. A. - G. R. S. P. NO. 15429, January 20, 1989) subseq1.1ent 1y affirmed our ruling by "The utilization of waste liMestone by petitioner, which is engaged in Mining copper ore, by conv~rting such waste into lime as a cleansing reagent in the conversion of copper ore into a copper concentrate, was merely incidental to its mining cbpp~r ore operat ion for which it is adequately t~>ie d <p. 64, Rollo). XXX XXX Further, that1 This i s also c lear f r om t he follow- ing ruling of th e Supreme Court� "Pursuant to the provision of Sec- tion 243 of th e Tax Code, the a d valorem tax is computed on the actua l market value of th e minera ls or mineral products extracted or produced from all Mineral Ianda. In other words, the aase'I!SMent shall b~ bas~d, not upon the costs of production or extraction of said �inerals or mineral products, but on the price which the same before' or without undergoing a pro c~ ss of Manufacture would COIIMand in the ordinary course of busines�,... <Republ ic C���nt Corporation vs. Co��lssione~ of Int�rnal Revenue, 23 SCRA 967). In the case of ATLAS, however, the li11eatone reMoved fro� its Mineral landa together with other surface Materials like soil and rocks has no "actual Market

DECISION - CTA CASES NOB. 3467 & 382~ - 18 - v a lue 11 , 4!1'1 is cle a r from the e viden ce and at found by respondent court <p. 56, Rollo) HHX XXX In sho l'"' t, th e extr--action or re111ovel by respondent At l ~ ~ o f lime�tone from its mineral lands is ~ me t"' e i n ci.dent to its copper ore mining oper ~ tion for which it is alr eady properly and adeq~ately taxed' hence , respondent Atlas shoul d not be further taxed for such incidental activ- ity, 8'1 aptly held by the respondent C.T.A. <p . 65, Rollo>. To impo!le on it another set of t~x on said liMestone which has no commercia l value would be tantaMount to double taxation. XXX XXX The High Court has laid down the doctr in e applicable to the situation involved in this caue as early as 1955, to wita Where a person or corporation is engaged in 1!\ distinct bus ine s'l and, as a f�ature thtn"'eof', in an �ctivity ��rely incidental which !lerves no other per'lon or bl.ttiness, the inc idental c!lnd res- tricted activity is not to be considered at intended to be separate ly or addi- tiona lly taxed." <Standard Vacu�.tlll Oil Co., vs. Antiq1e , 96Phi l. 909). XXX XXX XX X In a final effort to support his case, petitioner <herein respondent> Co��issioner finally argues that th� extraction of li �ttst one although incidental to Atlas' �ain business, should be subjected to thtt tax in qU~Ition, since the provision of law i�posing said tax Makes no exception nor qualification in ter�s of whttther the extraction is incidttntal or essential to the taxpa yer's main busine!u, <p . 21 , .1 ~.1

DECISION - CTO CA~ES N~S . ~i1~ 7 ~ .AP~ l r'l Rollo). l�lldlP ,.,r ndm i.t �r r"'�t: il: ionPt ' 'c; ,. PA) in tt~ y'inq t-n t ;~ i c;n t <"'/ Pil11P rnt ' t h e gove>t'nmr>nt, ��"r> r ~ ,,,,,,n t r n�tn~� PTtnnr ~p "'n illegF.-\ 1 t<'\H co ll l"' r ~ tirll\ II �~" rn��lnl nf t ){ r t ~ 1'\ i 0 n <:: h n II 1 ri I 'n r ( p t ' C' i .., ..... f I y � I ' "'' . p I I 1 1 ~d p 1 y, .;\ n d f ~ 1 P ~' l v '"' i t-It i " 1-- It "' l i m i I- At i 0 n o f t: 11 P r n 1-1 P t \l'l lli r It m-"' v h '"' v P c; t- f' rl o !l A g o v e t ' T1m n t A 1 "' q P n r ~~ O< at h l e en C i. t r u ~ Land Co. v. Ci y of ~kP l And, tF-9 Sn. 356, 1 24 t-' lA . f;;-;q, fVf ! ". j . c; . lt :-'i ) ." WP. find pn I; i I. i n n Pt , ;" rr1c;r> thi~ question . r r h ad t' (:> p @. l 1:1 d I; I p t; rl )( n ' l t- l ' p <; 1 p n r p l p r t: t . i f ' n ~�I p I . ' nst th i.t. Upon t tH~ ot 1\ "'t' ,, "' Tirl' .=~r..r..Pr..c; m n nt nf not e n gaged in thf' car rier. The tAMable .=~rtivity i s sper ifi ed ~s t h e act of lea s ing persona property to others. It is eno r..tqh, for pur�poses of thE> in S e c t i o n 19 1 o f P � n� {; C) t; It �"' t p e t i -t; i n n P. t ' p P t ' f n t' ms t h e .1 ~ ?

DECISION - CTA CASES NOS. 3467 382S - 20 - activity enumerated for price , that is, lease of thing~ (~~ defin d in Article 1643, New Ci vi l Co de> without regard to wheth r gain or income is deri ved or that pet i tiPnQr i~ not engaged in the l ecu e Th ~"e thO\.I ld not al!.o be any prob l em II'Jith the adlflisaibi l ity of the'ie findings as they a~& ad~quately tupport d by oth r documents on reeat"d \E:x.MJ. '' 12 & 13", E><hs. "1 & 6"' pp. 294- 295, p. 160 and 213, respectively, BIR Record III Ap it is, the dental by petitioner ' s witne~s and the aforestated argumen ts were not enough ta ov reome th se evid nee. We can not hold likewise, however, on the real Tha working p pers s�Jbmitted by t'4U pondent 111ere ly contain ~ plain c omputation of the real e~tat e de~l r'l t x allege dl y due devoid of any supporti ng baai s. And $0 9 whil p titian r with regard to the to defend ii\g a inJ.t i ts imposition, t his ������ ��nt was left to fi'\i~nd on its legs if i t h as a ny. It IIIUI!It rest on faet 'l but th �� iUt1e1u111ent s do not appear to h ve factual basis. A~ropo the 111 nuf etur r�s sales ta >< c o Mputed

DECISION - CTA CASES NOS. 3~67 & 382S - 21 - against petitioner, we find the same well-grounded. The records show th at !Some of the grinding ball!!! which were Man ufactured by petitioner originally fo r its own us e were , in effect, so ld by petitioner to � some of its com petit ot~ 5 1 ike Ma rcoppet'. The natu re of the tr a nsacti o n as one of " !S al e" is not d i 111 i n i shed by t h e d e c 1 /?\ t' at i o n o f p e t i t i on e r that "ACMDC agreed to shat"' e its grinding balls at cos t" (E)(h. "U", p. 131, Record> The intention of de riving profi t is not ma tet"' ial i n a "sale" . The respondent found the value of the consideration in the books of accounts of ACMDC, and, rightfully, based the ta)( fro111 th e qross value of the consideration in the a bs e n c e of other factors <E)( h . a, "Y". p. p. 3 0 6 BI R Re cot' d , F oldet"' III>. WHEREFORE, petitioner �hould and i� h�r�by ORDERED to PAY the total a�oun t o~ th� ~ollo"i n g� a) P297, 900.39 a� 2S" �urcharge on �ilv�r �>etracted during the period Nove�b�r 1, 1974 to D�c��b�r 31, 1975. b) P161,027.S3 a� 2S" �urcharg� on stlv�r �>etract�d ~or th� taMable v��r 1976. �� C) P31S,027.30 2S" surcharg� on gold

DECISION - CTA CASES NOS. 3467 & 382S - 22 - eHtracted during the pttriod Nc:�ve�ber 1, 1974 to De~e�ber 31, 1975. d) Pe60,180~3S as 25~ surehar e on gold duri g th� tAKAble y�ar 1976. e) P53,58S.30 �� 23~ surcharge on pyrite extraeted during the period Nave�ber 1, 1974 to Dece�ber 31, 197S. f) PS3,28 3.69 as ~ sureharge on pyrite eMtraeted during th e t aKable year 1976. g) P,316, 117.. 53 �� defi e teney �anufaet urer' � sales taH and sureharge during the taMable year 1975; plus 1 4~ interest fro� January 21, 1976 until fully paid �� provided under Secti on 183 of P.O. No. 6 " dut"ing th taKabltt year 197St plus 14" i nt er est frog January 21, 1976 until fully paid a s provided under Boetton 183 of P.D. No. 69. dur i n g i: he t axabl e y ear 19761 plu� 14" tntlrest f r oe April 2 1, 1976 unti l fully paid as provided under B ~tton 183 of P.O. No. 69� .1 ~s

.' DECISION - CTA CASES NOS. 3467 & 382S - 23 - With costs again t p�ttttoner. SO ORDERED. c".- --- N ROAQUI tnoc:iat � Judgtt WE CONCURa ~~40-~ � ERN�STO'Il. ACOSTA Associate Judge CE RT I F l CAT I 0 N I here by eP.rtify that this dtteision was re ehed after du eon5ultati on among the m mbers of the Court of Tax Appeal s in accordance with Section 13, Article VIII of the Constitut ion. ~-..z~ Presid ing Judg� Court of Tax Rpp�als