Commissioner of Internal Revenue v. Investors Finance Corp.

FORMER TWELFTH DIVISION [CA-G.R. SP No. 26758. June 29, 1992.] (C.T.A. Case No. 3780) COMMISSIONER OF INTERNAL REVENUE , petitioner-plaintiff, vs . INVESTORS FINANCE CORPORATION, (FCNB FINANCE) AND THE COURT OF TAX APPEALS , respondents-defendants . D E C I S I O N HERRERA , J p : The Commissioner of Internal Revenue filed this petition for review on certiorari to reverse and set aside the decision of the Tax Court in CTA Case No. 3780 entitled "Investors Finance Corporation (FCNB) vs. Commissioner of Internal Revenue", which ordered the tax refund/credit in favor of private respondent of the amount of P449,581.58 representing allegedly overpaid income tax for 1992. The dispositive portion reads as follows: "Wherefore, respondent is hereby ordered to refund or issue the corresponding tax credit certificate to petitioner in the amount of P449,581.58 pursuant to Section 292 (now Section 230) of the National Internal Revenue Code. No pronouncement as to costs. SO ORDERED. CTA Case No. 3780 entitled "Investor Finance Corporation (FCNB Finance) vs. Commissioner of Internal Revenue" is a simple claim for refund involving overpaid income tax for taxable year 1982 in the amount of P1,660,184.32. In the said case, Investors Finance Corporation (FCNB Finance), as petitioner, alleged that: "3. Ford taxable years 1982, petitioner had a net taxable income of P542,821 and income tax due thereon of P179,987.00. On the other hand, per its 1982 corporate annual income tax return, petitioner had a total creditable income tax withheld of P1,633,275.48. As a result thereof, petitioner's 1982 corporate annual income tax return reflected a refundable amount of P1,453,288.48; 4. However, in said 1982 tax return, the total amount of P206,895.84 representing creditable taxes withheld on petitioner's 1982 reported income was not included therein. In view thereof, petitioner amended the 1982 corporate annual income tax return in order to reflect the correct creditable taxes withheld on its 1982 income, which is P1,840,171.32; 5. Said 1982 amended return which supersedes the return previously filed is the correct return and reflected the correct creditable taxes withheld on petitioner's 1982 income; 6. Inasmuch as petitioner's total 1982 creditable taxes withheld of P1,840,171.32 was in excess of its income tax due of P179,978, a refundable amount of P1,660184.32 resulted. Said refundable amount, which was neither carried forward nor applied as a tax credit in the succeeding taxable quarters of petitioner's succeeding taxable year, is computed as follows: Tax due per return P179,987.00 Total creditable taxes withheld (P1,840,171.32) Overpayment P1,660,184.32 =========== 7. On April 23, 1984, petitioner through its auditors filed with respondent's Appellate Division a claim for refund/tax credit of P1,660,184.32 representing its 1982 overpaid income tax. . . ." On the other hand, Respondent Commissioner of Internal Revenue in his answer admits some and denies the other allegations of petitioner for lack of knowledge or information. The special and affirmative defenses alleged: "4. Any amount claimed to have been withheld must be shown to have been paid to, and received by, the Bureau of Internal Revenue; 5. It is incumbent upon petitioner to show that it has complied with the provision of Section 292 and 295 of the Tax Code; 6. The amount of P1,660,184.32 sought to be refunded was paid in accordance with law and regulations on the matter and therefore, the same is not refundable; 7. In an action for refund, the taxpayer has to show that the taxes paid were erroneously or illegally collected and failure to sustain said burden is fatal to the action for refund; 8. Claims for tax refund/credit are strictly construed against the claimants since they are in the nature of an exemption from taxation (Manila Electric Co. vs. Commissioner of Internal Revenue, G.R. No. L-29987, October 22, 1975, 67 SCRA 351): 9. The petition states no cause of action as it does not allege the date when the tax sought to be refund was said (Manufacturer's Bank and Trust Co., as trustee for General Trust Plans vs. Commissioner of Internal Revenue CTA Case 1659. November 29, 1965); and 10. The claimed for refund/tax credit is pending investigation." Thereafter, petitioner FCNB Finance presented the corresponding Quarterly and Annual Corporation Income Tax Returns, Certificates of Tax withheld at Source and Central Bank Confirmation Receipts to prove its claim refund. Respondent Commissioner did not present any testimonial nor documentary evidences to disprove the claim but merely admitted, denied and objected to some documents either for lack of information, as mere opinion on the part of petitioner, hearsay and self-serving. After going through the documents and evidences presented during the hearing and admitted by the Court of Tax Appeals, decision was rendered reducing the claim for refund from P1,660,184.32 to P449,581.58. Not agreeable with the said decision, the Commissioner of Internal Revenue interposed this petition with the only issue involved: whether or not private respondent is entitled to tax refund/credit of P448,581.58 allegedly representing overpaid income tax for the year 1982. The Court of Tax Appeals scrutinized the exhibits (consisting of Statement or Certificate of Tax Withheld (BIR Form 1743), Central Bank Confirmation Receipts, Certification by withholding agent and other secondary evidence) produced by the respondent and found the same evincing a withholding tax to a total of P927,892.46. Further analysis of the documents even reveal that not all have probative value. Thus, after examination thereof, the Court declared that the allowable creditable withholding tax should only be P6 29,568.58. The refundable amount was therefore reduced as follows: Tax due per return P179,987.00 Less: Creditable Withholding Tax P629,568.58 Refundable Amount P449,581,58 ========== (Decision, p. 4; Rollo, pp. 32-33). The evidence necessary to prove the claim of respondent are purely documentary, and the same was duly presented by private respondent as evidence, It was subjected to scrutiny, evaluation and appreciation by the Court of Tax Appeals. The findings and conclusions of the said Court was therefore based and supported by the evidence on record. and cannot be disturbed on appeal. Thus, in the case of Commissioner of Internal Revenue vs. Tours Specialists. Inc., March 21, 1990, it was held; "The factual findings in the Court of Tax Appeals are binding upon the Supreme Court and can only be disturbed on appeal if not supported by substantial evidence." We believe the documents presented by the petitioners are substantial evidence. Hence, the Court of Tax Appeals admitted the same and from there, made their findings and lay down their conclusion. These conclusions are entitled of respect, absent an improvident exercise of authority. Hence, in the case of Commissioner of Customs vs. Court of Tax Appeals, March 16, 1989, the policy and practice was reiterated: "to respect the conclusion of administrative agencies, such as the Court of Tax Appeals, which, by the nature of its functions, is dedicated exclusively to the study and consideration of tax problems and has necessarily development an expertise on the subject, unless there has been an abuse or improvident exercise of its authority." WHEREFORE, in view of the foregoing, petition is hereby DISMISSED. SO ORDERED. Lapea , Jr . and Austria, JJ ., concur.