Apex Mining Co., Inc. vs. Commissioner of Internal Revenue

The period for filing a motion for reconsideration is non-extendible; a motion for extension of time does not toll the running of the reglementary period, and failure to perfect an appeal in the manner and within the period prescribed by law renders the judgment final and executory.

During the period from January to June 1988, Apex Mining Co., Inc. mined, milled, bought, and sold ores and minerals. It produced its own mineral products and also made purchases from small-scale miners. The Bureau of Internal Revenue assessed Apex for deficiency ad valorem tax at the rate of five per cent on both its own production and the minerals it purchased from small-scale miners, invoking Section 151 in relation to Section 127 of the old Tax Code. Apex protested the assessment on the purchased minerals. The Court of Tax Appeals cancelled that portion of the assessment for lack of legal basis but sustained the tax on Apex’s own production. The Commissioner of Internal Revenue appealed to the Court of Appeals, which modified the tax court’s decision and upheld the assessment on the minerals purchased from small-scale miners. Apex then sought to challenge the Court of Appeals’ decision before the Supreme Court, but a fatal delay in moving for reconsideration before the appellate court became the dispositive issue.

• Nature of Business: From January to June 1988, Apex Mining Co., Inc. was engaged in mining, milling, concentrating, converting, smelting, manufacturing, buying, selling, and otherwise dealing in all kinds of ores, metals, and minerals, as well as their products and by-products. During that period, Apex both produced its own minerals and made purchases from small-scale miners.

• Tax Assessment: The Bureau of Internal Revenue assessed Apex for deficiency ad valorem tax at the rate of 5% on both its own mineral production and on the minerals it purchased from small-scale miners, pursuant to Section 151 in relation to Section 127 of the old Tax Code. A pre-assessment notice was issued on 7 November 1989.

• Protest and Administrative Proceedings: Apex protested the assessment on 17 November 1989. On 11 December 1989, the Commissioner of Internal Revenue demanded payment of ₱3,748,961.21, representing the uncontested deficiency tax on Apex’s own products. Apex further protested the assessment of ₱8,212,983.50 on minerals purchased from small-scale miners on 25 January 1990, while confirming it did not contest the assessment of ₱2,570,863.17 on its own production (exclusive of delinquency increments). The protest on the purchased minerals was denied on 12 March 1990, with the Commissioner demanding payment of ₱10,225,637.87 for the purchased minerals and ₱4,659,368.13 for Apex’s own production.

• Court of Tax Appeals Decision: Apex filed a petition for review with the Court of Tax Appeals on 27 April 1990. The CTA rendered its decision ordering Apex to pay the ad valorem tax due on its own mineral production in the amount of ₱2,570,863.17 plus 25% surcharge and 20% interest per annum from the date of removal from the place of production until fully paid, under Sections 248(a)(3) and 249(c)(3) of the Tax Code. The CTA cancelled the assessment for deficiency excise tax on the minerals purchased from small-scale miners, finding no legal basis for it.

• Court of Appeals Proceedings: On appeal by the Commissioner, the Court of Appeals modified the CTA decision by upholding the assessment on the minerals purchased from small-scale miners and subsequently sold to the Central Bank. The CA reasoned that because the ad valorem tax on locally extracted minerals is based on the actual market value of the gross output at the time of removal from the place of production (Section 151(a)(3)), and the excise tax becomes due upon removal (Section 151(c)), the small-scale miners themselves could not have determined the tax until the minerals were given a value upon sale. The CA concluded that Apex, by purchasing the minerals and causing their removal from the locality where mined and then selling them to the Central Bank with an evident intention to profit, became liable for the excise tax that had accrued while the minerals were in its possession and ownership.

• Procedural Misstep Leading to Finality: Apex received the CA Decision on 11 September 1995. On 22 September 1995, it filed a motion for a 30-day extension to file a motion for reconsideration, and the motion for reconsideration itself was filed on 11 October 1995—30 days after receipt. The CA denied both the motion for extension and the motion for reconsideration in a Resolution dated 27 October 1995 on the ground that they were filed beyond the non-extendible 15-day reglementary period.

• Extension of Tax Provisions Beyond Their Text: Petitioner maintained that the CA’s ruling extending by implication the provisions of Section 127(a) in relation to Section 151 of the Tax Code went beyond what those provisions expressly and clearly declare, thus enlarging the law’s operation by embracing persons—like itself as a mere purchaser—not specifically pointed out as liable for the excise tax.

• Relaxation of Procedural Rules in the Interest of Substantial Justice: Petitioner invoked substantial justice and equity, urging a relaxation of the rule on the non-extendibility of the period for filing a motion for reconsideration. Counsel explained that the delay was caused by the need to travel to the United States to attend to an ailing wife at a hospital, which supposedly constituted an honest mistake and good faith, and that it would have been impossible for another lawyer in his firm to familiarize himself with the case in time to file the motion within the reglementary period. Petitioner argued that rules of procedure are designed to serve, not override, substantial justice.

• Validity of the Tax Assessment: Respondent Commissioner of Internal Revenue insisted on the legality of the deficiency excise tax assessment on the minerals Apex purchased from small-scale miners. The Commissioner’s position, as adopted by the CA, was that the excise tax on extracted minerals becomes due upon removal from the locality where mined, and because Apex caused that removal by purchasing the minerals and later selling them at a profit, it became liable for the tax that had not been paid by the small-scale miners.

• Finality of the CA Decision: Respondent contended that the motion for reconsideration was filed out of time, the 15-day period being non-extendible, and that the CA decision had consequently become final and executory. No exceptional circumstances existed to permit a deviation from the mandatory procedural rules governing appeals.

• Finality of Judgment: Whether the Court of Appeals’ Decision dated August 18, 1995 had become final and executory in view of petitioner’s failure to file a motion for reconsideration within the fifteen-day reglementary period, notwithstanding the prior filing of a motion for extension of time.

• Relaxation of Rules: Whether counsel’s absence abroad to attend to an ailing spouse, combined with an invocation of substantial justice, constituted exceptional grounds to relax the non-extendible period for filing a motion for reconsideration.

• Excise Tax Liability: Whether petitioner Apex Mining Co., Inc. is liable for ad valorem tax on mineral products it purchased from small-scale miners and subsequently sold to the Central Bank under Sections 127 and 151 of the old Tax Code—a substantive issue the Court declined to reach due to the finality of the CA decision.

• Finality of Judgment: The CA Decision had become final and executory. Under the Rules, petitioner had only fifteen days from receipt of the decision on September 11, 1995, or until September 26, 1995, within which to file a motion for reconsideration. The motion for extension filed on September 22, 1995 did not toll the running of that period; the motion for reconsideration was filed only on October 11, 1995, or thirty days after receipt. The rule that the period for filing a motion for reconsideration is non-extendible has been consistently applied since Habaluyas Enterprises, Inc. v. Japzon, and the subsequent filing of the motion for reconsideration could no longer affect a judgment that had already attained finality.

• Relaxation of Rules: The proffered excuse did not justify a deviation from the rules. The right to appeal is purely statutory, and compliance with the statutory period is mandatory and jurisdictional. The fact that a law firm represented petitioner meant that other lawyers could have handled the matter; the claim that no other lawyer could prepare the motion in time was characterized as inexcusable and absolutely unacceptable. The circumstances did not fall within the exceptional cases where the Court had relaxed appeal periods in the name of substantial justice.

• Excise Tax Liability: Because the assailed CA decision had become final and beyond the Court’s power of review, the substantive issue of whether petitioner was properly assessed ad valorem tax on the minerals purchased from small-scale miners was no longer reached.

• Non-Extendibility of the Period to File a Motion for Reconsideration — The period for filing a motion for reconsideration is non-extendible. A motion for extension of time does not suspend or interrupt the running of the reglementary period. This doctrine was established in Habaluyas Enterprises, Inc. v. Japzon and has been strictly adhered to in all subsequent cases. The rule guards against needless delays and ensures the prompt finality of judgments.

• Mandatory and Jurisdictional Nature of Perfection of an Appeal — The perfection of an appeal within the period and in the manner prescribed by law is both mandatory and jurisdictional. Failure to perfect an appeal renders the judgment final and executory. Just as the losing party has the privilege to appeal within the prescribed period, the prevailing party has a correlative right to the finality of the decision in his favor. The Court will relax this rule only in exceptional cases, which must be clearly demonstrated.

• “The rule is and has been that the period for filing a motion for reconsideration is non-extendible.”

• “The filing by petitioners of a motion for extension of time to file motion for reconsideration did not toll the fifteen (15) days period before a judgment becomes final and executory. Since the decision of respondent Court of Appeals … has long become final and executory at the time of the filing of this petition, this court can no longer alter or modify the same.” (quoting Rolloque, et al. v. CA, et al.)

• “The requirements for perfecting an appeal within the reglementary period specified in the law must be strictly followed as they are considered indispensable interdictions against needless delays. Moreover, the perfection of an appeal in the manner and within the period set by law is not only mandatory but jurisdictional as well, hence failure to perfect the same renders the judgment final and executory.”

• “[J]ust as a losing party has the privilege to file an appeal within the prescribed period, so also does the prevailing party has the correlative right to enjoy the finality of a decision in his favor.”

• Habaluyas Enterprises, Inc. v. Japzon, 142 SCRA 208 (1986) — The seminal case establishing that no motion for extension of time to file a motion for new trial or reconsideration may be filed with the Metropolitan or Municipal Trial Courts, the Regional Trial Courts, or the Intermediate Appellate Court (now Court of Appeals). The rule was applied to bar Apex’s motion for extension and the subsequent belated motion for reconsideration.

• Rolloque, et al. v. Court of Appeals, et al., 193 SCRA 47 (1991) — Followed to reinforce that the filing of a motion for extension of time to file a motion for reconsideration does not toll the fifteen-day period before a judgment becomes final and executory.

• Phil. Coconut Authority v. Garrido, 374 SCRA 154 (2002) — Cited for the settled rule that the period for filing a motion for reconsideration is non-extendible.

• Corporate Inn Hotel v. Lizo, 429 SCRA 573 (2004) and Cuevas v. Bais Steel Corporation, 391 SCRA 192 (2002) — Invoked for the principles that the right to appeal is merely statutory and that compliance with the appeal period is mandatory and jurisdictional.

• Section 2, Rule 52, 1997 Rules of Civil Procedure (and its predecessors) — Governs motions for reconsideration in the Court of Appeals and prescribes the fifteen-day period from notice of judgment. The Court applied the settled interpretation that this period is non-extendible, rendering the motion for reconsideration filed beyond it ineffective and the decision final.

• Sections 127 and 151 of the old National Internal Revenue Code (now Section 130 of the Tax Code of 1998) — These were the substantive tax provisions invoked by the Commissioner in issuing the assessment and by the Court of Appeals in upholding it. The Supreme Court expressly declined to rule on their application because the CA decision had already become final and executory.

Panganiban, Sandoval-Gutierrez, Corona, and Carpio Morales, JJ., concurred.