Far East Bank and Trust Co. v. Commissioner of Internal Revenue

SPECIAL THIRD DIVISION [CA-G.R. SP No. 44383. October 28, 1999.] FAR EAST BANK and TRUST COMPANY , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and COURT of TAX APPEALS , respondents . D E C I S I O N CARPIO MORALES , J p : The present petition for review assails the decision of February 6, 1997 and Resolution of May 19, 1997 rendered by the Court of Tax Appeals in CTA Case No. 4832, " Far East Bank and Trust Corporation vs . Bureau of Internal Revenue ", upholding the tax assessment made by the Bureau of Internal Revenue against herein petitioner Far East Bank & Trust Company (FEBTC) and denying the lifting of the Warrants of Distraint/Levy and Garnishment and accordingly rendering judgment the dispositive portion of which reads: WHEREFORE, in view of all the foregoing, this petition is hereby DISMISSED. The decision of the Respondent dated July 15, 1992, denying the request for reconsideration and the lifting of the Warrant of Distraint/Levy and Warrant of Garnishment is hereby affirmed. The demand for payment as embodied in respondent's letters dated February 11, 1992 and March 12, 1992 addressed to the petitioner are hereby upheld. The MICI Bond No. G(16)1241 posted by petitioner, issued on April 24, 1992 by Makati Insurance Company, Inc., in the amount of P4,350,327.60 representing unpaid withholding taxes on compensations for January, March, May and July 1991, inclusive of penalties and incident to delinquency is hereby declared forfeited in favor of the respondent, Commissioner of Internal Revenue. Petitioner and the Makati Insurance Company, Inc., as surety, are jointly and severally liable for the said amount and the additional delinquency interest at the rate of twenty per cent (20%) per annum from March 12, 1992, date of demand, until the total amount is fully paid should be collected from the petitioner. The antecedent facts of the case are as follows: On three separate occasions, FEBTC, through its payroll agent L.C. Diaz & Company, filed with Revenue Region No. 25 of the Bureau of Internal Revenue (BIR) Manila its Monthly Remittance Return on Income Taxes Withheld on Employees' Compensation for the months of January, March and May of tax calendar year 1991. Accompanying the monthly remittance returns were Confirmation Receipt (CR) Nos. B21052434 (p. 244, Records), B21590124 (p. 243, Records), and B22086398 (p. 245, Records) allegedly issued by the Port Are Branch of Philtrust Bank Corporation (Philtrust), BIR-authorized agent bank to accept payments, and BIR-issued Payment Order (PO) Nos. C9572126 (p. 248, Records), C9986513 (p. 247, Records), and C11002052 (p. 246, Records) authorizing payment to an authorized agent bank. The BIR later advised petitioner that the CRs purportedly issued by the Philtrust and the POs purportedly issued by it (BIR) were found to be spurious, hence, it demanded that petitioner pay its " delinquent account " amounting to P3, 245, 386.12 inclusive of surcharges and penalties. Petitioner questioned the demand for payment, it claiming that the questioned POs were all issued by BIR Supervising Revenue Collection Officer Remedios C. Sandoval (Sandoval) of Revenue District No . 25, BIR Manila on the basis of which it, through its payroll agent L.C. Diaz & Company, deposited with Philtrust Bank (Port Area Branch) the following manager's checks, to wit: 1. BPI Manager's Check No. 680442 (p. 93, Records) 2. BPI Manager's Check No. 680744 (p. 96, Records) 3. BPI Manager's Check No. 681002 (p. 94, Records) representing its withholding tax payments on employees' compensation for the months being assessed, which checks in the total amount of P1,854,515.70 bearing a notation "for the account of Far East Bank & Trust Co. c/o L.C. Diaz & Co., 2nd flr. LCD & Co. Union Bldg. A. Bonifacio Drive, Port Area, Manila Tel. # 86-43-25" had been cleared and credited by Philtrust bank as collecting bank to the account of the BIR. By letter of March 12, 1992 which petitioner received on March 23, 1992, the BIR informed petitioner that its PO and CR for the month of July 1991 amounting to P616,684.54 were likewise spurious, hence, its total delinquent account amounting to P4,350,327.60 should be settled within ten days. Petitioner claimed, however, that its payroll agent likewise deposited BPI Manager's Check No. 7477380 (p. 95, Records) with Philtrust Bank (Port Area Branch) and was issued CR B22100983 (p. 153, BIR Records) by said bank and machine validated PO No. C11478877 (p. 153, BIR Records). Petitioner subsequently filed a formal protest with the Office of the BIR Commissioner, maintaining that its payroll agent validly paid its withholding taxes. Pending resolution of petitioner's protest, the BIR issued a Warrant of Distraint and Levy (WDL) against petitioner. Petitioner moved for a reconsideration of the issuance of the WDL and for the referral of its motion to the BIR Appellate Division. Petitioner's reserve requirement deposit with the Central Bank amounting to P4,350,327.00 was later garnished and deposits to a "Demand Deposit In-Trust for the BIR" in compliance with a Warrant of Garnishment (WOG) issued by the BIR to satisfy petitioner's delinquent account. The BIR later denied petitioner's request for referral of its motion for reconsideration case to the BIR's Appellate Division on the ground that the BIR has no jurisdiction to act on cases involving "fake receipts", prompting petitioner to file at the CTA a petition, docketed as CTA Case No. 4832, "Far East Bank and Trust Company versus Commissioner of Internal Revenue ", praying, inter alia , that judgment be rendered declaring the BIR's action taken on its case null and void. LLpr Finding that the manager's checks claimed by petitioner to have been deposited at Philtrust Port Area Branch, were actually deposited at PNB-Mandaluyong by Rosario S. Beltran of RDO 31, now 41, of the BIR Mandaluyong for the " Account of the Treasurer of the Philippines ", and taking into account the BIR's Comparative Data on Documents Gathered showing that 1) the machine-validated CRs issued by Philtrust Bank (Port Area) submitted by petitioner were issued to different taxpayers, to wit: Exhibit Confirmation Payment CB Amount Taxpayer Receipt Order issued confirmation Issued On to the receipt Taxpayer 3-c (BIR 2-8-91 C9572163 B21052434 150.00 Unified Res. Records Dev't Inc. p.167), "6" p.203, Records) 3-b 4-08-91 C9986758 B21590124 622.60 Jimmy (BIR G. Sy Records, (p.168), 7 (p.204, Records) 3-d 6-7-91 C11004506 B22086398 656.63 Queens Int'l (BIR Placement Records, Center Inc. (p.166), 8 (p. 205, Records) 4-D 8-7-91 C11479054 B22100983 4,009.35 Security (BIR Bank Records, p. 141), and 2) the POs "allegedly issued" by Revenue Officer Sandoval to petitioner were issued to the following taxpayers and covered by different CRs, to wit: Exhibit Payment Confirmation Name of Taxpayer Amount Nos. Orders Receipt Issuing Issued On Officer 5 (BIR C9572126 B-21558039 Luz N. Rentel 180.71 Records dtd 2-11-91 Cayanan RD Brokerage, p.148) Issued by 25-S Mla Inc. PHILTRUST Port Area Br. 5 (BIR C9986513 B-21590122 Remedios House of 68,647.43 Records dtd 4-8-91 C. Sandoval Investment p.148) Issued by RD 25-S c/o L.C. PHILTRUST Mla Diaz & Co. Port Area Br. 5 (BIR C11002052 B-22990158 Remedios Islands 5,837.50 Records dtd 6-6-91 C. Sandoval Integrated p.148) Issued by RD 25-S Offshore UCPB Mla Services UN Br. Inc. 5 (BIR C11478877 B-23372465 Luz N. Job's 550.00 Records dtd 2-11-91 Cayanan Int'l Corp p.148), Issued by RD 25-S UCPB Mla UN Br. and coming up with its own findings as follows: 1. The signature of Remedios Sandoval appearing in the questioned documents are from the naked eye noticeably different from her signature appearing in the standard documents issued by the Central Bank. LexLib 2. The paper type and texture of the CB standard documents and the questioned CRs are different in color and printing methods in the questioned CRs unlike the standard documents. 3. The serial numbers appearing in the questioned CRs and POs are imprints of an electrical typewriter and were not printed altogether with the document itself unlike the standard documents. 4. The front size of the serial numbers appearing in the questioned POs and CRs when compared to the standard PO's and CR's were smaller and thicker. 5. The font of the number 4 appearing in the questioned Confirmation Receipt No. B21590124 is different from the rest of the numbers in said CR, the CTA held that indeed there were irregularities in petitioner's documentary evidence-basis of its claim of payment and accordingly dismissed petitioner's petition and upheld the action taken by the BIR. Hence, the present petition for review. LibLex Raised in issue by the parties are the following: 1. Whether or not petitioner can assail the jurisdiction of the Court of Tax Appeals over CTA Case No. 4832 "Far East Bank and Trust Corporation vs. Bureau of Internal Revenue". 2. Whether or not the BIR demand letters were valid tax assessments? 3. Whether or not CTA erred in finding the questioned confirmation receipts and payment orders submitted by petitioner spurious? 4. Whether or not the BPI manager's checks with the phrase "for the account of Far East Bank & Trust Co. c/o L.C. Diaz & Co" were actually deposited by petitioner's its payroll agent in Philtrust Bank (Port Area Branch)? 5. Whether or not Monthly Remittance Return of Income Taxes Withheld (BIR Form W1-A) is evidence of payment? 6. Whether or not petitioner presented evidence to show that BIR personnel committed tax fraud, collusion, and/or diversion of funds? The petition is bereft of merit. Petitioner is estopped from assailing the CTA's jurisdiction, it being the party which sought redress from it. A party "cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction" ( Sia v. Court of Appeals, 272 SCRA 141 [1997]). Anent petitioner's averment that the BIR demand letters did not amount to a valid tax assessment because they do not conform to "formal assessment notices". Assessment may be incorporated in a notice to the effect that the amount therein stated is due from a taxpayer ( Benjamin Aban, Laws of Basic Taxation in the Philippines, 1994 edition, p. 108), or in a demand letter ( Republic v . Limaco & De Guzman Commercial Co . , Inc ., 5 SCRA 990 [1962]) or in a form known as the assessment notice ( Basilan Estates Inc . v . Commissioner, 21 SCRA 17 [1967]). Hence, the demand letters to petitioner demanding settlement within a given period sufficed. On petitioner's submission that the rebuttal testimony of its expert witness, Atty. Desiderio Pagui, an "expert of long experience and impeccable standards", that the CRs were "genuine" and that the POs were issued by Revenue Collection Officer Sandoval, rebutted the finding of alleged irregularities: The CTA is not bound by the findings of Atty. Pagui, his qualifications notwithstanding, given the contrary findings of the NBI arrived at by Document Examiner Carolyn M. Moldez-Pitoy, Chief Arcadio A. Ramos and Deputy Director Manuel Roura who all concurred that: 1. The questioned and standard CB CRs were not printed from one and the same source as shown by the absence of security watermarks and fluorescence reaction of serial numbers under the UV light in the questioned CRs and the difference in the sizes of the letters and printing lay-out. 2. The questioned and standard BIR PO's were not printed from one and the same source as shown by the difference in the quality of print, printing lay-out, ink reaction, and other printing defects; and 3. The questioned CB CRs and BIR POs were not altered. For a court may either accept or refuse admission of an expert's testimony ( Justice Ricardo Francisco, Evidence, 1994 edition, p. 357). The signatures on a questioned document can be sighted by a judge himself, and he can and should exercise independent judgment on the issue of authenticity thereof ( Gamido v . Court of Appeals, 251 SCRA 101). This Court itself finds that the questioned documents appear spurious and marked with the above-stated irregularities detected by the CTA. The findings of the CTA being supported by substantial evidence then, same will not be set aside ( Bonifacia Sy Po v . CTA & Commissioner of Internal 164 SCRA 524 [1988]). With respect to petitioner's argument that assuming that its payroll agent submitted spurious documents, still, the BIR had no legal basis in issuing tax assessment against it since the amounts stated in the manager's checks were all credited to the BIR's account: Contrary to petitioner's claim the checks were deposited at PNB Mandaluyong Branch by Beltran of RDO 31, now 41, BIR Mandaluyong, for the account of the Treasurer of the Philippines representing payment of documentary stamps purchased by different taxpayers. dctai Finally, petitioner posits that the irregularities present in the questioned documents can be attributed to personnel who have custody and safekeeping thereof: This position does not lie given the presumption that a "public officer is presumed to have acted in the regular performance of duties" ( Suarez v . COA, GR No. 131077, August 7, 1998) which petitioner failed to overcome with clear and convincing evidence. The rule that tax assessments of the BIR are prima facie correct, in the absence of proof of any irregularities in the performance of duties of its officials who made the assessments, will not thus be disturbed, all presumptions being in favor of their correctness ( Bonifacia Sy Po v . CTA & Commissioner of Internal 164 SCRA 524 [1988]) WHEREFORE, the assailed judgment of February 6, 1997 and resolution of May 19, 1997 rendered by the Court of Tax Appeals in CTA Case No. 4832, "Far East Bank and Trust Corporation vs. Bureau of Internal Revenue", upholding the tax assessment made by the Bureau of Internal Revenue against herein petitioner Far East Bank & Trust Company and denying the lifting of the Warrants of Distraint/Levy and Garnishment are hereby AFFIRMED. SO ORDERED. Abesamis and Umali, JJ ., concur.