Commissioner of Internal Revenue v. Jardine Davies Insurance Brokers, Inc.

THIRD DIVISION [CA-G.R. SP No. 34680. November 28, 1997.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . JARDINE DAVIES INSURANCE BROKERS, INC., COURT OF TAX APPEALS , respondents . D E C I S I O N MABUTAS , JR. , J p : Before Us is a petition for review of the decision (dated April 4, 1994) of the Court of Tax Appeals in C.T.A. Case No. 4236. The dispositive portion of the appealed decision is worded as follows: "WHEREFORE, respondent, Commissioner of Internal Revenue, is hereby ordered to refund or grant a tax credit to petitioner in the amount of P593,726.00 representing the refundable amount shown in its 1986 final adjustment return." (page 13 of the Appealed Decision; Rollo, page 33). cdta The antecedent facts of the case, as culled from the petition and the assailed decision, follow: On April 15, 1987, the private respondent herein (Jardine Davies Insurance Brokers, Inc.) filed its 1986 Corporate Annual Income Tax Return with the petitioner's Revenue District Office No. 32-A (Makati-West). The tax return reflected a net loss of P376,021.00 and a nil tax liability. In addition, the respondent herein claimed an alleged creditable tax in the amount of P593,762.00 representing the refundable amount shown in its 1986 Final Adjustment Return. Consequently, in its corporate income tax return, for the first, second and third quarters of 1987, the private respondent herein applied against the tax due the total amount of P882,425.00, representing its refundable amount of P288,633.00 shown in its 1985 final adjustment return and its refundable amount of P593,762.00 shown in its 1986 Final Adjustment Return. On June 26, 1987, the private respondent herein, through its tax manager, filed with petitioner's appellate division, a letter, dated June 19, 1987, requesting for confirmation that the amount of P593,762.00 representing the refundable amount shown in its 1986 final adjustment return, together with the amount of P288,663.00 representing the refundable amount shown in its 1985 final adjustment return, or a total amount of P882,425.00, can be automatically applied against any of its income tax liability for 1987 and succeeding taxable years; or, a refund or tax credit of said total amount of P882,425.00. There being no action on the afore-stated matters, the private respondent herein filed on March 11, 1983 a petition for review with the Court of Tax Appeals praying that it be allowed to credit its refundable taxes in the amount of P593,762.00 and P288,663.00, as shown in its 1986 and 1985 final adjustment returns, respectively. At the same time, it (private respondent) prayed that in the event the refundable taxes are not utilized, the same or any portion thereof should be automatically considered as tax credit. In answer to the petition, the respondent (petitioner herein), aside from the general denial of petitioner's (respondent herein) allegations, averred, as part of its special and affirmative defenses, that (1) the petition states no cause of action because it did not show whether the petitioner actually paid the tax sought to be refunded and the dates of actual payment; (2) this being an action for tax credit or tax refund, the petitioner (private respondent herein) must prove that the subject taxes were erroneously or illegally paid and collected; (3) the mere averment that the petitioner (respondent herein) incurred a net loss of P376,021.00 in 1986 does not ipso facto merit a refund; and, (4) pending investigation by the respondent (petitioner herein), petitioner's (respondent herein) alleged refundable tax in the amount of P593,762.00 for the year 1986, as reflected in its corporate annual income tax return, cannot be automatically applied to his tax liability for the year 1987. aisadc On April 4, 1994, the Court of Tax Appeals rendered its assailed decision, the dispositive portion of which was earlier quoted. The Solicitor-General thereby filed the instant petition with this Court seeking a review of the afore-stated Court of Tax Appeals' decision on the ground that it "is not in accordance with law, jurisprudence and the evidence." (Rollo, page 11). The petitioner interposed the following reasons to justify the allowance of its petitioner: (1) "The Court of Tax Appeals erred in ordering the refund of the amount of P593,762.00 because [the] private respondent's claim for refund was not duly established. (2) "The Court of Tax Appeals likewise erred in appreciating as proof of payment of [the] private respondent's withheld taxes the Certificate of Creditable Income Tax Withhold without presenting Official Receipts issued by representatives of [the] petitioner acknowledging receipt of payment withheld (page 5-6 of the Petition for Review; Rollo, pages 11-12)." A fine filtration of the parties' (petitioner and respondent) arguments (in the petition and the comment thereon) taking note also of the evidence adduced and relevant jurisprudence shows that the petition is devoid of merit. Relative to the first assigned error, the Solicitor General declared: "It is a rule in taxation that claims for losses do not automatically merit a refund of taxes previously paid or collected because claims for refund are considered tax exemption [sic], hence, they must be duly substantiated by incontrovertible evidence." (pages 6-7 of the Petition for Review; Rollo, pages 12-13). The Solicitor General asseverated that the Certificate of Creditable Income Tax Withheld at Source from commission payments are "not conclusive evidence of tax payment and remittance", thus: ". . . the Creditable Income Tax Certificates are not conclusive evidence of payments and remittances of the withheld taxes to petitioner because the Certificates of Creditable Income Tax are mere proof of withheld taxes on private respondents' commission fees and not evidence of payment of remittance of such withheld taxes to petitioner. "Thus, Section 68 of the Government Auditing Code of the Philippines (P.D. No. 1445) provides: 'No payment of any nature shall be received by a collecting officer without immediately issuing [an] official or confirmation receipt in acknowledgment thereof. The receipt may be in the form of postage, internal revenue or documentary stamps and the like, or officially numbered receipts, subject to proper custody, accountability and audit.'" (page 9 of the Petition for Review; page 15 of the Rollo) The Solicitor General's reliance on P.D. No. 1445 is egregiously misplaced. The legislative intendment can be gleaned from a reading of Section 2 thereof, scilicet: "SEC. 2. Declaration of Policy . It is the declared policy of the State that all resources of the government shall be managed, expended or utilized in accordance with law and regulations, and safeguard against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the chief or head of the government agency concerned." cd Moreover, Section 68, as afore-stated, falls under Chapter 3 (Receipt and Disposition of Funds and Property), Title II (Government Auditing) of said statute. Clearly, this appertains to auditing and accounting rules and regulations so as to facilitate the keeping, and enhance the information value, of the accounts of the government (Section 25(4), ibid), and ascertain that earned revenues have been duly recorded and appropriate classifications of revenues have been consistently followed (Section 60, ibid). Nowhere in said statute was it stated that non-compliance with Section 68 of P.D. No. 1445 would proprio vigore result in the denial of a claim for tax refund. The requisites for a tax refund or credit can be summarized in this wise: "The authority of the Commissioner of Internal Revenue to refund or credit taxes erroneously or illegally received or penalties imposed without authority can only be exercised upon compliance by the taxpayer with the following conditions prescribed by law: "(1) The claim for refund or credit must be in writing; "(2) It must be filed with the Commissioner of Internal Revenue within two (2) years after the payment of the tax or penalty (Sec. 204(3), ibid.; see Vda. De Aguinaldo vs. Comm., L-19927, Feb. 26, 1965.); and "(3) It (a) should state clearly the amount being claimed and the ground or grounds relied upon; and (b) should be accompanied with all pertinent papers (e.g., xerox copies of official receipts evidencing payment) in support of the claim, so as to apprise the Commissioner accordingly. (Gonzales vs. C.T.A., L-14532, May 20, 1965.)" (pages 218-219, Hector S. de Leon, Fundamentals of Taxation, 1993 Revised Edition) It is a cardinal precept in legal hermeneutics that: "interpretatio talis in ambiguis semper frienda est, ut evitatur inconveniens et absurdum". (Where there is ambiguity, such interpretation as will avoid inconvenience and absurdity is to be adopted) As regards tax recovery or refunds, the governing statutory guidelines are found in Section 204(3) and 230 of the National Internal Revenue Code (NIRC), which is quoted as follows: "SEC. 204. Authority of the Commissioner to . . . refund/credit taxes . The Commissioner may "xxx xxx xxx "(3) Credit or refund taxes erroneously or illegally received, penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two years after the payment of the tax or penalty." "SEC. 230. Recovery of tax erroneously or illegally collected . No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. "In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." The respondent complied with the requirements under Rev. Regs. No. 6-85, as amended (Re: Revised and Consolidated Expanded Withholding Tax Regulations), the salient provisions of which read: "SEC. 10. Claims for tax credit or refund . Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payor to the payee (BIR Form No . 1743 . 1) showing the amount paid and the amount of tax withheld therefrom . "xxx xxx xxx "SEC. 12. Effectivity . These regulations shall apply to income payments made beginning July 1, 1985 ." (Emphasis supplied). "Tax laws are usually implemented by administrative rules and regulations. The regulations cannot increase nor decrease the requirements of the law, nor embrace matters not covered or intended to be covered by the statute." (pages 48, Jose N. Nolledo, Bar Reviewer in Taxation, 1996 Revised Edition). In order that administrative regulations may be considered valid, the following requisites must be complied with: The regulations must be useful, practical and necessary for the enforcement of the law; They must be reasonable in their provisions; and aisadc They must not be contrary to law. (Interprovincial Auto Bus Co. vs. Collector, 52 O.G. No. 22, p. 791). And under the Revised Administrative Code, such regulations must be duly published in the Official Gazette. (Lim Hoa Ting vs. Central Bank, 104 Phil. 573). Regulations partake of administrative interpretations of tax laws. "The practice and interpretive regulations by officers, administrative agencies, departmental heads and other officials charged with the duty of administering and enforcing a statute will carry great weight in determining the operation of a statute." (2 Sutherland, Statutory Construction, p. 516). "In the construction of a doubtful and ambiguous law, the contemporaneous construction of those who are called upon to act under the law, and were appointed to carry its provisions into effect, is entitled to very great respect." (Edwards Lessee vs. Darby, 12 Wheat, 206, 210). Commenting on the above rule, Erwin N. Criswold of the Harvard Law School, wrote: " Another reason why contemporaneousness is an important factor is its bearing on the need for certainty and predictability in our tax laws . This is where the notion of the Court's function in the scheme of judicial tax administration becomes important. A statute is enacted. A regulation is issued. It will, in the normal course of events, be five or six years, and very likely more, before the construction of the statute, in the light of the regulation, will come before the Supreme Court. In the meantime, people will go on living, and transactions will be conducted under the statute, perhaps all the transactions that are ever to be conducted under the statute. Thus, it seems that a strong argument can be made in favor of giving very great weight to a contemporaneous regulation, so that taxpayers may rely upon it and have some certainty that it will be followed by the courts . . ." (A Summary of the Regulations Problem, 54 Harvard Law Review, p. 398, 406). (Emphasis supplied). The thalweg of the contention asseverated by the petitioner hinged upon the alleged non-compliance by the respondent with Commission on Audit (COA) Memorandum (dated June 15, 1990) which reads (pages 10-11 of the Petition for Review, pages 2-3 of the Reply; Rollo, pages 16-17, 58-59): "MEMORANDUM FOR The Chief Tax Credit/Refund Division Bureau of Internal Revenue "For your information/guidance and as requested in the herein basic communication dated June 14, 1990 or that Division, hereunder are the audit requirements on refund claims on double/overpayment of income tax due, excess corporate quarterly income tax or erroneous payment of revenue taxes, etc., to wit: "1. Copies of Income Tax Return and Financial Statements: "2. Authority for tax refund; "3. Confirmation Receipts/payment/order Revenue Tax Receipt. Original in case of full refund : "4. Certification from the accountant that requirement No. 3 as enumerated above were verified actually remitted to BIR and certified refundable to the claimant; "5. Certification that such tax were not included in the list (sic) of dishonored checks; "6. Summary list of income tax withheld by withholding agents to support requirement No. 3; "7 Xerox copies of Certificates of income tax withheld at source (BIR Form No. 1743 & 1743.1) [;] "8. Delinquency verification slip; "9. Audit Sheet prepared by BIR Examiner assigned. "The above-cited supporting documents are in addition to those that may be required by the Bureau's offices who are directly involved in the processing of refund claims before audit. "Sgd. TERESA F. DEMETILLO "State Auditor III" The respondent sought the tax refund in 1987; a sensu contrario , the aforecited memorandum was issued only in 1990. Even if it be conceded ex gratia that said memorandum was enforceable at the time the claim for refund was filed by the respondent, petitioner's contention is nonetheless untenable. The grant of a refund is founded on the assumption that the tax return in valid, that is, the facts stated therein are true and correct (Commissioner of Internal Revenue vs. Court of Appeals, 234 SCRA 348). Moreover, the respondent faithfully complied with the law, including the regulations kindred therewith, which were operative at the time the refund was sought. Correlatively, the respondent cannot, by any stretch of the imagination, be required to comply with a regulation which happened to be inexistent at the time the claim for tax refund was filed. Turning now to the crux of the issue of entitlement to the tax refund, the crucial question posed is: Was there substantial evidence adduced with which to prove whether or not the tax refund should be granted? The standard of proof defines the degree of persuasiveness which a case must attain before a court may convict a defendant or grant relief in respect of a cause of action, as the case may be. In administrative and quasi-judicial agencies, including the Court of Tax Appeals, the quantum of evidence required is substantial evidence. "Substantial evidence" is more than mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise. (Ang Tibay vs. Court of Industrial Relations, 69 Phil. 635; Lansang vs. Garcia, 42 SCRA 449). The Court of Tax Appeals made the following findings vis-a-vis the evidence presented, viz : "During the hearings of this case, [the] petitioner (respondent herein) presented in evidence its 1986 final adjustment return and certificates/statement of Creditable Income Tax Withheld at source [sic] [BIR Form 1743] (Exhibits "A" and submarkings; Exhibits "B" up to "DD" inclusive), as well as quarterly income tax returns for 1987 (Exhibits "EE", "FF" & "GG"). Ms. Daisy Padolina, Accounting Manager of [the] petitioner, identified the income Tax Returns and Certificates of Income Tax Withheld at source [sic] correspondingly marked as exhibits." (page 4 of the Appealed Decision; Rollo, page 24). In Commissioner of Internal Revenue vs . TMX Sales, Inc . (205 SCRA 184), the Supreme Court held that: "Since the audit, as required by Section 321 (now Section 232) of the Tax Code is to be conducted yearly, then it is the Final Adjustment Return, where the figures of the gross receipts and deductions have been audited and adjusted, that is truly reflective of the results of the operations of a business enterprise. Thus, it is only when the Adjustment Return covering the whole year is filed that the taxpayer would know whether a tax is still due or a refund can be claimed based on adjusted and audited figures." Prescinding from the above, the Court a quo made the following findings, to wit: ". . . petitioner (respondent herein), through its tax manager, filed with respondent's (petitioner herein) Appellate Division a letter, dated June 19, 1987 (Ref. JCC-123/87), requesting for confirmation that the amount of P593,762.00 [,] representing the refundable amount shown in its 1986 final adjustment return, together with the amount of P288,663.00, representing the refundable amount shown in its 1985 final adjustment return, or a total amount of P882,425.00 can be automatically applied against any income tax liability of petitioner [respondent herein] for 1987 and succeeding taxable years and, in the alternative sought a refund or tax credit of said total amount of P882,425.00. "Respondent [petitioner herein] did not take action on the matters raised by petitioner." (page 3 of the Appealed Decision; Rollo, page 23). The Court a quo correctly ruled that there is no automatic tax credit under Section 69 of NIRC; rather, the approval of BIR is required. Authorities also agree with the foregoing dictum of the Court of Tax Appeals in the case at bench. (Page 1115, Nolledo, Bar Reviewer in Taxation, 1996 Revised Edition) cdt In San Carlos Milling Co . , Inc . vs . Commissioner of Internal Revenue (228 SCRA 135), the Supreme Court stamped its imprimatur on the decision of this Court in CA-G.R. SP No. 22346, dated 23 December 1991, which reads: ". . . 'once a taxpayer opts for either a refund or the automatic tax credit scheme, and signified his option in accordance with the regulation, this does not ipso facto confer on him the right to avail of the same immediately. An investigation, as a matter of procedure, is necessary to enable the Commissioner to determine the correctness of the petitioner's returns, and the tax amount to be credited." The Supreme Court added that: "Prior approval by the Commissioner of Internal Revenue of the tax credit under then section 86 (now section 69) of the Tax Code would appear to be the most reasonable interpretation to be given to said section. An opportunity must be given the internal revenue branch of the government to investigate and confirm the veracity of the claims of the taxpayer. The absolute freedom that petitioner seeks to automatically credit tax payments against tax liabilities for a succeeding taxable year, can easily give rise to confusion and abuse, depriving the government of authority and control over the manner by which the taxpayers credit and offset their tax liabilities, not to mention the resultant loss of revenue to the government under such a scheme." The foregoing ratiocination is justified by the omnipresent necessity of government funding, immortalized in the maxim that taxes are the life-blood of the government. Vectigalia norvi sunt rei publicae taxes are the sinews of the state. (Ferdinand R. Marcos II vs. Court of Appeals, et al, [G.R. No. 120880, June 5, 1997]). Also, settled is the rule that the factual findings of the Court of Tax Appeals are binding upon this Honorable Court and can only be disturbed on appeal if not supported by substantial evidence. (Aznar vs. Court of Tax Appeals, 58 SCRA 519; Manila Wine Merchants vs. Commissioner of Internal Revenue, 127 SCRA 483; La Suerte Cigar and Cigarette Factory vs. Court of Tax Appeals, L-36130 and Alhambra Industries vs. Court of Tax Appeals, L-36131, January 17, 1985, 134 SCRA 29.) This Court finds no reason to deviate from the findings of the Court a quo . As a matter of principle, this Court will not set aside the conclusion reached by an agency such as the Court of Tax Appeals which, by the very nature of its function, is dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority (Reyes vs. Commissioner of Internal Revenue, 24 SCRA 198), which is not present in the instant case. The respondent included in its claim for refund in 1987 its claim for automatic tax credit, as reflected in its 1985 final adjustment return (page 5 of the Appealed Decision; Rollo, page 25) notwithstanding the pendency of a case thereon, scilicet: Jardine Davies Insurance Brokers, Inc. vs. Commissioner of Internal Revenue (CTA Case No. 4126). The foregoing case was decided last May 28, 1992 and the decretal portion thereof reads: "Wherefore, respondent Commissioner of Internal Revenue is hereby ordered to refund or grant a tax credit to petitioner the refundable amount of P288,663.00 shown in its income tax (final adjustment) return for 1985." On appeal (Commissioner of Internal Revenue vs. Court of Tax Appeals and Jardine Davies Insurance Brokers, Inc. [CA-G.R. SP No. 31934, October 4, 1993)], this Court ruled in this wise: cd "Acting on the petitioner's manifestation stating "that after a circumspect study of the facts and the law of the case, petitioner believes that the questioned decision is in accordance with the law and is no longer pursuing the appeal, the instant petition for review is DEEMED WITHDRAWN and is hereby DISMISSED." (page 6 of the Appealed Decision; page 26 of the Rollo). The corresponding entry of judgment was issued on October 11, 1993 hence the aforequoted resolution has become final and executory. Further, the Court a quo committed no reversible error when it said that: "The ratio decidendi in CTA Case No. 4126 [,] which has become a ruling case law insofar as this Court is concerned, is in [sic] all fours with the present case." (id.). Indeed, the general rule is that once a judgment becomes final and executory, said judgment can no longer be disturbed, altered, or modified. That principle, however, admits of exceptions as in cases where, because of supervening events, it becomes imperative, in the higher interest of justice, to direct its modification in order to harmonize the disposition with the prevailing circumstances (Seavan Carrier, Inc. vs. GTI Sportswear Corp., 137 SCRA 580) or whenever it is necessary to accomplish the aims of justice (Pascual vs. Tan, 85 Phil. 164; Central Textile Mills, Inc. vs. United [CMC] Textile Workers Union-TGWF, 94 SCRA 883; Galindez vs. Rural Bank of Llanera, Inc., 175 SCRA 138). The rule must be adhered to regardless of any possible injustice in a particular case, for we have to subordinate the equity of a particular situation to the overmastering need of certainty and immutability of judicial pronouncements (Manning vs. National Labor Relations Commission, 195 SCRA 155; Vide Nunal vs. Court of Appeals, 221 SCRA 26). It is the sense of this Court that the BIR, represented herein by petitioner Commissioner of Internal Revenue, was denied its day in court by reason of the mistakes and/or negligence of its officials and employees. The Court of Tax Appeals said that: "Respondent did not submit any evidence in support of its special and affirmative defenses or to controvert the claim of petitioner. Instead, she submitted her case on the basis of the records and pleadings. Respondent further manifested that she will not file any memorandum in support of her case." (pages 4-5 of the Appealed Decision; Rollo, pages 24-25). The Court a quo supported its view on this score by citing its previous decisions, scilicet: ". . . Under the circumstances and in the light of [the] previous rulings of this Court, more particularly in the cases of Sun Life Insurance Office Ltd. vs[.] the Acting Commissioner of Internal Revenue, CTA Case No. 3205 [1989], Jardine Fleming (Phils.), Inc. vs[.] Commissioner of Internal Revenue, CTA Case Nos. 4041 and 4125 [1991], Philippine Commercial Capital[,] Inc. vs[.] Commissioner of Internal Revenue, CTA Case No. 4274 [1991], Paseo Realty and Development Corporation vs. The Commissioner of Internal Revenue, CTA Case No. 4148, and lately, Jardine Davies Insurance Brokers, Inc. vs[.] Commissioner of Internal Revenue, CTA Case No. 4126 [1992], respondent is considered to have unqualifiedly admitted petitioner's entitlement to the claim for refund." (pages 12-13 of the Appealed Decision; pages 32-33 of the Rollo). Where a respondent submitted the case based on pleadings and records, the Supreme Court in Commissioner of Customs vs . Delgado Shipping Agency (184 SCRA 579) held thus: ". . . No trial on the merits was conducted by this Court (Tax Court). One who prays for judgment on the pleadings without offering proof as to the truth of its own allegations, and without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant allegations of the opposing party and to rest his motion for judgment on these allegations taken together with such of his own as are admitted in the pleadings. (Bauermann vs. Casas, 10 Phil. 836; Evangelista vs. De la Rosa, et al., 76 Phil. 115). "And even more, proceedings before the Court of Tax Appeals is a trial de novo . If petitioner desired to present evidence in addition to those already filed in the Customs records forwarded to this Court [Tax Court], it could have easily done so instead of submitting this case based on the pleadings. (C.F. Sharp & Co., Inc. vs. Commissioner of Customs, No. L-23803, February 26, 1968, 22 SCRA 760)." The petitioner, in a belated attempt to stymie private respondent's claim, asserts that the latter's failure to present the confirmation receipts (page 2 of the Petitioner's Reply; Rollo, page 58) negates the latter's claim for refund. We disagree. Besides, raising this defense for the first time on appeal would not compensate for such procrastination. May an issue which has not been raised in the administrative protest in the BIR be raised for the first time on appeal? This question was resolved in the case of Commissioner of Internal Revenue vs . Wander Philippines, Inc ., (160 SCRA 573) wherein it was ruled that: ". . . To allow a litigant to assume a different posture when he comes before the court and challenge the position he had accepted at the administrative level, would be to sanction a procedure whereby the Court which is supposed to review administrative determinations would not review, but determine and decide for the first time, a question not raised at the administrative forum. . ." What about issues or defenses which are not raised in the lower court, such as the CTA, is the rule the same? The same rule has been stressed in decided cases. In the case of Aguinaldo Industries Corporation (Fishing Nets Division) vs . Commissioner of Internal Revenue (112 SCRA 136), the Supreme Court said that issues not raised in the lower court cannot be raised for the first time on appeal. Similarly, the same rule was highlighted in Plaridel Surety & Insurance Company vs . Commissioner of Internal Revenue (21 SCRA 1187). Although the Supreme Court deviated from this rule in Commissioner vs . Procter & Gamble PMC (169 SCRA 560), in a subsequent resolution (Commissioner of Internal Revenue vs. Procter & Gamble Philippine Manufacturing Corporation, et al., 204 SCRA 377), however, the Supreme Court reversed its opinion on the question as to whether or not the government could raise for the first time on appeal the issue relative to the right of a withholding agent to claim the refund of allegedly overpaid tax on dividends earned in the Philippines by a non-resident foreign corporation. The Court said: "We believe that the Bureau of Internal Revenue ('BIR') should not be allowed to defeat an otherwise valid claim for refund by raising this question of alleged incapacity [of the withholding agent to file the refund claim] for the first time on appeal before this Court. This is clearly a matter of procedure. . . It is commonplace that in the absence of explicit statutory provisions to the contrary, the government must follow the same rules of procedure which bind private parties. . . "More importantly, there arises here a question of fairness should the BIR, unlike any other litigant, be allowed to raise for the first time on appeal questions which had not been litigated either in the lower court or on the administrative level. For, if petitioner had at the earliest possible opportunity, i.e., at the administrative level, demanded that P&G-Phil. produce an express authorization from its parent corporation to bring the claim for refund, then P&G-Phil. would have been able forthwith to secure and produce such authorization before filing the action in the instant case. . ." Said pronouncement by the High Tribunal ought to be adhered to in accord with the Latin maxim which runs thus: " Judiciis posterioribus fides est adhibenda " (Credit is to be given to the latest decisions). The rule that the failure of the Commissioner of Internal Revenue to raise its objections against respondent's claim for tax refund cannot prejudice the government should not be taken absolutely and literally. If it were, the government would never lose any litigation. The well-entrenched principle in tax law enforcement is: the Government is not estopped by the mistakes or errors of its agents; erroneous application and enforcement of law by public officers do not block the subsequent correct application of statutes (E. Rodriguez, Inc. vs. Collector of Internal Revenue, 28 SCRA 1119; Commissioner of Internal Revenue vs. Burroughs Limited, 142 SCRA 324). cd Be that as it may, the issue involved here is not merely one of procedure. It is also one of fairness whether the government should be subject to the same stringent conditions applicable to an ordinary litigant. Broadly speaking, tax refunds (or tax credits) are based on the legal principle of quasi-contract or solutio indebiti . The pertinent rules governing this principle are found in Articles 2142 and 2154 of the Civil Code which are quoted, as follows: "Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another." "Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises." A principal scriptural passage used in conjunction with many discussions of Christian stewardship describes Jesus' encounter with the Pharisees when He said, "Render to Caesar the things that are Caesar's, and to God the things that are God's" (Mark 12:17, The Holy Bible). It is axiomatic that:" Nihil infra regnum subitos magis conservat in tranquilitate et concordia quam debita legum administratio ." (Nothing more preserves in tranquility and concord those subjected to the Government than a due administration of the laws). Nevertheless, it is equally important that the Government comes within the ambit of the solutio indebiti principle, which is premised upon the axiom: " Nemo debet locupietari ex alterius incommodo ". As stated by the Supreme Court in Ramie Textiles, Inc . vs . Mathay, Sr . (89 SCRA 586): "The quasi-contract of solutio indebiti , is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the expense of another. Hence, it would seem unedifying for the government, that knowing it has no right at all to collect or to receive money for alleged taxes paid by mistake, it would be reluctant to return the same." To be sure, the testimony of Daisy Padolina, the account manager of the private respondent (page 3 of the private respondent's Comments; page 45 of the Rollo) would not suffice to substantiate the claim for tax refund. Such self-serving declarations cannot constitute factum probandum with which to buttress such claim. Padolina is not the independent CPA within the contemplation of the Tax Code who should audit the books of accounts of the company in order to lay the basis for the tax refund in question. Section 232 of the National Internal Revenue Code (NIRC) provides that: "SEC. 232. (A) Corporations, companies, partnerships, or persons required to keep books of accounts . All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger, or their equivalents: . . . And Provided, further, That in the case of corporations, companies, partnerships, or persons whose gross quarterly sales, earnings, receipts or output exceed twenty-five thousand pesos, shall have their books of accounts audited and examined yearly by independent Certified Public Accountants and their income tax returns accompanied with certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding incomes therefrom and other relevant statements ." (Emphasis supplied). cdt Further, it is generally recognized that before an accountant can make a certification on the financial statements or render an auditor's opinion, an audit of the books of accounts has to be conducted in accord with generally accepted auditing standards. Consistent with Revenue Regulations (Rev. Regs.) No. V-1, as amended by Rev. Regs. No. V-20, Section 232(b) of the NIRC and Pres. Decree No. 692 (the Revised Accountancy Law), an "independent certified public accountant" is one who is in fact independent. In other words, an accountant will not be considered independent with respect to any person in whose business he has any financial interest, direct or indirect, or in which he is, or was during the period of report, connected as promoter, underwriter, voting trustee, director, officer or employee. Corollarily, a certified public accountant whose work is subject to the control and supervision of the taxpayer, or who is employed to keep the books of accounts or to supervise the keeping of the said accounts, cannot audit the latter's books of accounts. He must, therefore, be employed exclusively to audit the books of accounts of the taxpayer and not for any other purpose, nor bear to him any business or professional relationship which may in any way affect the independence of his professional actuations. Pursuant to Revenue Regulations No. 3-90, it is provided that: "SEC. 2. Additional Requirements . In certifying as to the compliance of taxpayer-client with these requirements, the independent CPAs shall review the tax returns and perform the necessary procedures to determine the correct tax obligation of the taxpayer-client. In this respect, the independent CPAs shall certify to the following: "i) That, substantially, the withholding taxes due on income payments, whether final or creditable, except on salaries and wages, have been withheld, reconciled with the financial statements attached to the return, and remitted to the Bureau of Internal Revenue; "xxx xxx xxx "The foregoing information shall be contained in one certification to be called Certification of Taxpayer Compliance (CTC) separate from the standard certification being issued by independent CPAs. "xxx xxx xxx." Parenthetically, it has also been provided that: "The BIR has adopted the package audit policy in the examination of the various tax liabilities of the taxpayer. Package audit involves the examination at the same time of all returns filed by a business or a taxpayer or all of his business transactions for the same taxable period. If two or more authorities are issued for different years to different examiners, the examiners assigned the latest year shall be given the right to consolidate the investigation." (Par. VII[A], Rev. Adm. Order No. 12-70). In order for books of accounts to be admissible, it must appear that they are books of original entry that the entries were made in the ordinary course of business, contemporaneously with the facts recorded, and by one who had knowledge of the facts. In tax cases, however, the court appears not to place too high a probative value on them. Books of accounts do not prove per se that they are veracious. In fact, they may be more consistent than truthful. Indeed, books of accounts may be used to carry out a plan of tax evasion. (Consolidated Mines, Inc. vs. Court of Tax Appeals, 58 SCRA 618). The Commissioner of Internal Revenue is granted by Sections 7 and 16 of the Tax Code certain powers relative to tax audit and examination. Section 16 of the NIRC provides, inter alia : "SEC. 16. Power of the Commissioner to make assessments and prescribed additional requirements for tax administration and enforcement. "xxx xxx xxx "(b) Failure to submit required returns, statements, reports and other documents. When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by law or regulation or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable ." (Emphasis supplied). aisadc If a taxpayer fails to submit the required returns, statements, reports and other documents, the BIR Commissioner shall assess the proper tax-using the correct method of computation in determining the taxpayer's liability. If no document of any kind is available, a comparative determination of reasonable business expense incurred by the other taxpayers under a similar kind of business should be ascertained to arrive at a reasonable determination of the deductible business expenses. (BIR Ruling No. 031-94, Jan. 31, 1994). Notwithstanding the foregoing disquisition, the fact remains that the documentary and testimonial evidence established a prima facie case in favor of the private respondent. Accordingly, the onus probandi was thus shifted to the petitioner to refute the same. Unfortunately, the petitioner failed to do so. Worse, the petitioner submitted this case based solely on the pleadings. Verily, had the petitioner been forthright earlier and required from the respondent proof of its entitlement to the tax refund other than the returns the respondent would doubtless have been able to adduce the same. By any account, it would be rank injustice now at this late stage to require the respondent to submit such proof. The petitioner has only himself to blame for the quagmire he found himself in. Apposite herein is the euphuistical language of Justice Florenz Regalado: "The Court cannot end this adjudication without observing that what caused the Government to lose its case in the tax court may hopefully be ascribed merely to the ennui or ineptitude of officialdom, and not to syndicated intent or corruption. The evidential cui-de-sac in which the Solicitor General found himself once again gives substance to the public perception and suspicion that it is another proverbial tip in the iceberg of venality in a government bureau which is pejoratively rated over the years. What is so distressing, aside from the financial losses to the Government, is the erosion of trust in a vital institution wherein the reputations of so many honest and dedicated workers are besmirched by the acts or omissions of a few. . ." (Commissioner of Internal Revenue vs. Court of Appeals (234 SCRA 348). We see, therefore, no reason to impute any splotch to the decision of the Court of Tax Appeals in granting the tax refund to the private respondent. Be that as it may, in view of the peculiar circumstances of this case, prudence dictates that the financial statements of the private respondent should be examined by an independent Certified Public Accountant (CPA) for the audit, report and recommendation to the appropriate division of the Bureau of Internal Revenue. Unquestionably, the tax refund appertaining to the 1985 Final Adjustment Return (P288,633.00) should be granted inasmuch as the same had already been passed upon by this Court in its decision in Commissioner of Internal Revenue vs . Court of Tax Appeals and Jardine Davies Insurance Brokers, Inc . (CA-G.R. No. SP-31934), which decision had acquired finality. WHEREFORE, premises considered, the judgment appealed from is hereby AFFIRMED. No pronouncement as to costs. SO ORDERED. Cui and Aquino, JJ . , concur.