Commissioner of Internal Revenue v. A. Soriano Corp.

[CA-G.R. SP No. 29967. January 31, 1994.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . A. SORIANO CORPORATION and THE COURT OF TAX APPEALS , respondents . D E C I S I O N GALVEZ , J p : After sifting the grain from the chaff, we feel that the only issue to be resolved in this petition for review, in the main, is whether the provisions on new trial anchored on newly discovered evidence governing judicial proceedings should be made to apply to the Court of Tax Appeals. The factual backdrop hereof is as follows: (1) On November 27, 1987, private respondent A. Soriano Corporation filed with respondent Court of Tax Appeals a petition for refund of excess tax payments it made to the Bureau of Internal Revenue in the amount of P273,876.05, for the year 1985 and P1,126,065.40 for the year 1986 or a total amount of P1,399.941.45, arriving at the foregoing amount as follows: 1985 Prior years excess income tax payments P3,016,841.00 (Exh. "A") Plus: Taxes Withheld or interest P255,864.00 Rentals, etc. 812,380.00 P1,068.244.00 (Exh. "A") 4,085.085.00 Less: Income Tax P2,620.347.00 1981 tax credit claimed in CTA Case No. 3964 1,190,861.95 3,811,208.95 Excess tax payment 273,867.05 (Exh. "D") 1986 Taxes withheld by withholding Agents P1,126,065.40 (Exh. "C") Total excess tax payments 1,399.941.45 (2) At the hearing before respondent court private respondent. A Soriano Corporation presented evidence to substantiate its claim, to which no objection was interposed by petition except for the purposes for which they were offered. When private respondent rested its case, petitioner, instead of presenting evidence, submitted the case for decision solely upon that adduced by private respondent and the pleadings on record. (3) After the submission of memoranda by the contending parties, respondent court, on August 7, 1991, rendered its decision as follows: "in his memorandum, respondent points out that the amount of P255,864.00 representing taxes withheld form interest income should not be included in computing the income tax for 1985 since it is "evidenced by the Statement of Final Withholding Tax On Interest Income" (Exhibit A-4) executed by the withholding agent Paper Industries Corporation of the Philippines (PICOP)". This seeming error, however, is adequately explained by petitioner, thus: '. . . the interest income of petitioner on its shareholdings in PICOP Debenture bond was included as part of its gross income (as can also be seen in Schedule 5, Interest Not Subject to Withholding Tax, of Exh. A). . . . 'In the preparation of the 1985 annual ITR (Income Tax Return) of petitioner, the interest income on the PICOP debenture bond amounting to P1,705,760.00 was inadvertently included as part of its gross income even if it should not be included anymore as it was already subjected to a final withholding tax of P255,864.00 (Exhibit A-4, No. 1 & No. 2). Since the interest income of P1,705,760.00 (Exh. A-4, No. 1 & 2) was included as part of the gross income, logically, the supposedly final withholding tax of P255,864.00 should also be included as part of domestic tax credit in the 1985 ITR, in order that the interest income will not be subjected to tax twice, that is, a final withholding tax on one hand and corporate income tax on the other, This explains why despite the term "final withholding tax", this tax withheld was still included as part of the tax credit.' Respondent also takes exception to the probative value of evidence of petitioner pertaining to attestations by withholding agents on taxes withheld from petitioner, particularly Exhibit C-4. Official BIR Forms 1743 and 1743.1 should have been used and submitted to the Bureau of Internal Revenue. A statement or return in official form executed by the withholding agent is thought to be the best evidence to prove the withholding of the tax. In the light of the course respondent has chosen to prove his case, the approach turn our short. In a very recent case (Citytrust Banking Corporation vs. Commissioner of Internal Revenue, CTA Case No. 4099, May 28, 1991) we concluded, under similar circumstances: "Respondent did not object to the existence of statements and certificates which were offered by petitioner as proof of the withholding taxes but took exception to their contents and purposes. Despite said reservation, up until the submission of this case for decision, respondent was not heard to complain about the veracity of the contents of these documents or exhibits nor has it shown any irregularity in the same which will taint their reliability or sufficiency as proofs of the taxes withheld despite the fact that it is well within their competence to do so. Respondent is thereby considered to have admitted the truth of the contents of these exhibits. Hence, those amount of withheld taxes which are supported by corresponding statements or certificates of withholding taxes admitted in evidence shall be allowed as tax credits.' Nor does the failure of respondent affect only the subject of 1985 taxes. Against the claimed deductions by petitioner for 1986, which it supported with tax returns as evidence, respondent could only give out the per functory resistance such as that "mere allegation of net loss does not ipso facto merit a refund". But respondent for his part, did not present any evidence that would have disputed the correctness of the tax returns and other material facts therein (Citytrust v. Commissioner of Internal Revenue, supra). As so reiterated in an earlier case. (A. Soriano Corporation, CTA Case No. 3694) the pertinent part of which we find apt to be quoted another time, "The case before Us hardly present a gripping question or require a tortured ratiocination. As thus shown the basis for the claims are not short of specific support in terms of treatable data openly laid and fully disclosed. Going by the records, petitioner's income tax returns for the subject taxable years have shown losses and excess income tax payments. Respondent points to no factual errors nor superfluities which need be abridged. . . . 'We see no reason and none is vouchsafed why these simple cases where fact and fabrication are no longer indistinguishable, should remain curiously unperturbed. It may be necessary to repeat what this Court said in what so plainly apply to the cases at bar that, 'But as should be expected, the action could maintained on the basis of the pleadings, admission and affidavit unsettling questions nor involves material factual issues genuinely in dispute.' WHEREFORE, the petition is hereby GRANTED. Respondent is ordered to issue a tax credit memorandum to petitioner in the sum of P1,399,941.45 to be used as payment for its internal revenue tax liabilities. SO ORDERED." (4) On September 17, 1991, petitioner filed his motion for reconsideration of the aforequoted judgment. (5) On September 18, 1991, the Bureau of Internal Revenue official who investigated private respondent's claim for refund, submitted his report, the pertinent portion of which reads: "Barring and assuming presentation of the requested documents and taking into consideration the certification of creditable income tax withheld issued by the Chief, Withholding Tax Division (See Annex "B" and B-1 and B-2) that only the total amount of P414,292.06, and P414,772.99 creditable income taxes withheld from A. Soriano Corporation (ANSCOR) for the taxable year 1985 and 1986, respectively, the maximum amount that can be favorably subjected to a tax credit memo for the two (2) taxable year will only be P34,697.10, computed as follows: Balance of the accumulated tax credit as of 1985 after credit under CTA Case No. 3694 P1,825,979.05 Add: 1985 Creditable Tax Withheld per Certificate by the Withholding Tax Division 414,292,06 Total 2,240,271.11 Less: Tax Due per return 1985 2,620,347.00 Difference 380,075.89 Less: Creditable Taxes Withheld for 1986 per Certification by withholding tax Division 414,772.99 Excess Tax Credit which may be subjected to a Tax Credit Memo P34,697.10 (6) On the basis of the foregoing report, on September 27, 1991, petitioner filed a supplemental motion for reconsideration, praying inter alia , that he be allowed to present said report. (7) On December 9, 1991, respondent court issued its resolution denying petitioner's motion for reconsideration and supplemental motion for reconsideration, pointing out that (1) the grounds set forth in petitioner's motion for reconsideration are reiterations of the same ones earlier raised which had already been disposed of by respondent court in its decision; (2) the defense of prescription cannot be raised for the first time in a motion for reconsideration and the failure of petitioner to do so amounts to a waiver of such defense; (3) petitioner cannot be allowed to present the BIT report of September 18, 1991 earlier adverted to in this decision because such report was in the personal physical possession of a subordinate of petitioner during the trial and could not therefore be considered as newly discovered evidence but merely as "forgotten evidence." By reason of the foregoing, petitioner now comes to this Court on petition for review asking that the decision and resolution of respondent court appealed from be reversed and set aside and that the case be reopened to allow petitioner to submit in evidence the report of the BIR agent dated September 17, 1991. We find no merit in the petition. It bears stressing that in this present petition for review, we are not expected to reweigh the findings of fact of respondent court absent manifest showing of a misapprehension of such facts or grave abuse of discretion on the part of said court (Santos vs. IAC, 145 SCRA 592; Premier Ins. & Surety Corp. vs. IAC, 141 SCRA 423). This should be so because under Section 8 of Supreme Court Circular No. 1-91, the findings of fat of respondent court, when supported by substantial evidence, should be final. And substantial evidence has been defined to be "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court to determining wherein lies the weight of evidence, or what evidence is entitled to belief" (Velasquez vs. Nery, 211 SCRA 28, 34-35). Given the foregoing premises, we see no cogent ground to set aside the decision of respondent court of August 7, 1991. The only issue therefore, that we should resolve in this petition is whether respondent court committed a grave abuse of discretion in denying the plea of petitioner to reopen C.T.A. Case No. 4201 to enable petitioner to submit and offer in evidence the report of the BIR Examiner submitted on September 18, 1991 only, or more than a month after respondent court rendered its decision. Respondent court denied petitioner's supplemental motion for reconsideration because such reports is not newly discovered evidence but merely forgotten evidence. It is now the submission of petitioner that the provisions of the Rules of Court governing new trial anchored on newly discovered evidence should not be made to apply to respondent court in the light of Section 8 of R.A. 1125 which provides that proceedings before the Court of Tax Appeals shall not be governed strictly by technical rules on evidence, invoking Purakan Plantation vs. Domingo, 15 SCRA 151 to battress its posture. While we agree that indeed, technical rules on evidence should not be made to control proceedings before respondent court, what is being sought by petitioner in this case however, is much more than the relaxation of the rules on evidence. He seeks to set aside a decision already rendered, on the ground that he has additional evidence which he failed to present during the hearing. Section 5, Rule of 13 of the Rules of the Court of Tax Appeals states that the provisions of Rule 37 of the Rules of Court shall apply to motions for reconsideration filed with respondent court. Accordingly, said court is bound by jurisprudence governing new trials which requires that the newly discovered evidence to be presented, cannot, with reasonable diligence, have been discovered and produced during the hearing, and which if presented would probably alter the result. To accept the contrary view of petitioner would give rise to a dangerous precedent in that there would be no end to a hearing before respondent court because, every time a partly is aggrieved by its decision, he can have it set aside be asking to be allowed to present additional evidence without having to comply with the requirements of a motion for a new trial based on newly discovered evidence. Rule 13, Section 5 of the Rules of the Court of Tax Appeals should not be ignored at will and at random to the prejudice of the orderly presentation of issues and their just resolution. To do so would affect, to a considerable extent, the principle of stability of judicial decisions. The report sought to be introduced in evidence by the petitioner had long been in the possession of the Bureau of Internal Revenue and no reason was advanced, why, during the four years that C.T.A. Case No. 4201 had been pending, such report was not submitted. IN VIEW OF THE FOREGOING, the petition is DENIED DUE COURSE and accordingly DISMISSED. SO ORDERED. Benipayo and Verzola, JJ ., concur.