Philippine Associated Smelting and Refining Corp. v. Commissioner of Internal Revenue

FORMER SPECIAL FOURTH DIVISION [CA-G.R. SP No. 54909. July 26, 2002.] PHILIPPINE ASSOCIATED SMELTING and REFINING CORPORATION , petitioner , vs . THE HONORABLE COMMISSIONER OF INTERNAL REVENUE , respondents . AMENDED DECISION ROSARIO, JR. ,, J p : For resolution is petitioner's "Motion for Reconsideration" of Our Decision, dated March 30, 2001, the dispositive portion of which states: "WHEREFORE, finding no error on the part of the Court of Tax Appeals, the instant petition is hereby DENIED, and the Decision of the Court of Tax Appeals partially denying petitioner's claim for tax refund, is AFFIRMED. No pronouncement as to costs." This Court's Decision affirmed the Court of Tax Appeal's (CTA) Decision, dated August 17, 1999, which denied: (1) petitioner's "Motion for Reconsideration" of the CTA's May 6, 1999 Decision, which awarded the amount of P1,498,716.45, out of petitioner's total claim for refund in the amount of P3,019,071.00 representing its alleged excise taxes paid on petroleum products purchased from Petron Corporation for the period October, 1992 to March, 1994, and (2) petitioner's "Motion for New Trial", dated May 26, 1999, based on additional nineteen (19) invoices which were not presented during the trial. caIACE In its "Motion for Reconsideration", petitioner alleges that: (1) contrary to this Court's decision that petitioner did not exert due diligence to locate all the invoices pertaining to the amounts claimed for refund, the evidence shows that it did so, taking into consideration that petitioner is a large corporation with hundred (sic) of employees and several departments, such that, given the magnitude of its operations, its records and documents are certainly voluminous; (2) that per corporate accounting and management policy, all such invoices should be lodged with the Budget/Capex department, but it turned out that the Budget/Capex Department did not have possession of all the pertinent invoices, and which were not discovered despite efforts to search them in other departments; (3) that it was only when an early retirement/separation program was conducted in the 1st quarter of 1999, or after the case has been submitted for decision before the CTA, that nineteen (19) more invoices were found among the files and documents surrendered by some retiring employees. In fine, petitioner argues that the nineteen (19) additional invoices necessary to substantiate its claim for refund for the additional amount not awarded by the CTA, should be deemed newly discovered evidence and should be allowed to be presented in a new trial. Petitioner insists that the nineteen (19) additional invoices should be deemed newly discovered evidence since the same had not been found despite petitioners' exercise of due diligence. In addition, petitioner maintains that having been granted two (2) opportunities to present said invoices, is not a sufficient reason for the CTA's denial of petitioner's second motion for new trial. 1 Respondent, on the other hand, maintains that the additional invoices cannot be considered newly discovered evidence since herein petitioner was aware, through its counsel, that these invoices were crucial to its cause, as it was the absence of these invoices which caused the CTA to initially dismiss its claim. Inspite of this, petitioner was satisfied to submit only the available invoices, without searching for the missing ones, which according to petitioner, were merely misplaced in one of their offices. 2 Clearly, and contrary to petitioner's claim that the additional nineteen (19) invoices are newly discovered evidence, they are merely "forgotten evidence". After carefully weighing the parties' arguments, We find merit in petitioner's "Motion for Reconsideration", and it should be, as it is hereby, GRANTED. Newly discovered evidence, to warrant a new trial, (a) must have been discovered after trial, (b) could not have been discovered and produced at the trial despite due diligence, and (c) if presented would probably alter the result of the action. 3 The only issue to be resolved is whether or not petitioner exercised diligence in searching for the additional invoices. In Our Decision dated March 31, 2001, We ruled that petitioner failed to prove that it exercised due diligence in looking for the additional invoices. In its "Motion for Reconsideration", petitioner reiterates that pursuant to the ruling in TUMANG vs. COURT OF APPEALS, 4 it is quite reasonable to assume that the party who found the newly discovered evidence would have exerted all efforts to locate the evidence at the required time since it was clearly in such party's interest and to their advantage to have presented said evidence during the trial had the same in fact been effectively available to them. In the case at bar, petitioner insists that the foregoing ruling should likewise be applied in their case considering that the nineteen (19) additional invoices were found to be in the custody of a retiring employee, who should not have been keeping said invoice s. Thus, petitioner explains, it was during this employee's retirement program that he surrendered these invoices to the official custodian. In TUMANG vs. COURT OF APPEALS: 5 "In the case at bar, the receipts which the Court of Appeals considered newly discovered evidence were found by respondent Daniel del Mundo, according to his affidavit of merit attached to the Motion for Reconsideration and for Motion for New Trial, on 4 October 1986 in their residence at No. 3905 Marigold Road, Paraaque, Metro Manila, when, in the course of a "general cleaning and rearrangement" of their house necessitated by floods caused by heavy rains, he happened to look into an old desk in his "study cubicle". He sorted out various items "such as old cards, letters, memorabilia, pamphlets, brochures, and similar miscellaneous things accumulated through the years". He found in the "bottom back portion of a drawer in said desk an old envelope containing "a bunch of documents" among which, it turned out were the receipts issued by petitioner Dr. Georgia Tumang to respondent spouses. The latter had believed "these receipts to have been lost and no longer existing," having been unable to locate them "despite diligent effort[s] to search all documents and files in our possession. We agree with the Court of Appeals that the receipts submitted by respondents spouses are properly regarded as newly discovered evidence warranting the grant of new trial. The receipts previously thought lost and gone forever and found in the "bottom back portion" of a drawer in an old and unused desk, could hardly have been located with the exercise of average or reasonable diligence; indeed, it was in the course of a "general (house) cleaning and re-arrangement" of the respondents' house that they were found once again. This is what the Court of Appeals in effect held. We think that the respondent spouses' explanation has the ring of truth; it certainly is entirely plausible. It seems quite reasonable to assume that the respondents would have exerted all efforts to locate the receipts earlier; it was clearly in their interest and to their advantage to have presented them during the trial had they in fact been effectively available to them at that time, since the receipts appear to contradict petitioner's express denial of receipt of any money in connection with the transfer of 9/10 of her interest in the property involved. The receipts also appear to support respondent spouses' defense that the three (3) documents nullified by the trial court were not simulated merely to avoid possible anti-corruption charges against respondent Daniel del Mundo but had in fact been executed for value. The receipts are, in other words, apparently of such import that a reasonably prudent man would have most diligently searched for them." In the case at bar, and similar to what transpired in the aforequoted case, petitioner had no idea that the subject invoices were in the possession of an employee who was not supposed to have custody of said invoices. Cognizant as to the importance of these invoices to their claim for refund, petitioner searched for them in the place where they should properly be, in the Budget/CAPEX Department, in accordance with company policy. Since the invoices were not in the custody of the proper document, it is understandable on the part of petitioner to consider these invoices as lost and could not be found, even in the exercise of reasonable diligence. It is further understandable that petitioner did not even think of asking all of its employees if they have in their possession the missing invoices, considering that it has hundreds of them. In order that a particular piece of evidence may be properly regarded as "newly discovered" for purposes of a grant of new trial, what is primordial is that petitioner exerted reasonable efforts to locate these invoices in the place where they should properly be, in the Budget/CAPEX Department. AHSaTI Further, the additional nineteen (19) invoices cannot be considered "forgotten evidence". "Forgotten evidence" refers to evidence already in existence or available before or during trial, which was known to and obtainable by the party offering it and 6 which could have been presented and offered in a seasonable manner were it not for the oversight or forgetfulness of such party or his counsel. 7 As discussed above, the subject invoices were misplaced and could not reasonably be found by petitioners. Anent the fact that petitioner had already been given a new trial, which is considered by respondents as an impediment to the granting of another new trial to herein petitioner, suffice it to state that a second new trial is expressly authorized by the rules if based on a ground not existing nor avoidable when the first motion was made . 8 As long as there is adequate justification for petitioner's failure to make the additional invoices available during the original trial, and even in the new trial previously allowed by the CTA, a second new trial is allowed under the rules. We find as adequate justification the fact that the additional invoices were considered lost and misplaced by herein petitioner when they could not be found in the Budget/CAPEX Department. Finally, the CTA has emphatically ruled 9 that herein petitioner has established a clear legal ground for its claim for refund, the only question is how much of that claim can be substantiated by petitioner. Having thus established a clear right to claim a tax refund, it would certainly serve the ends of justice if petitioner is allowed, through a new trial allowed under the Rules of Procedure, to present the nineteen (19) additional invoices to substantiate such claim. WHEREFORE, premises considered, the instant "Motion for Reconsideration" is GRANTED, Our Decision dated March 31, 2001 is hereby SET ASIDE. The instant case is REMANDED to the Court of Tax Appeals for the reception of petitioner's evidence, consisting of nineteen (19) additional invoices, to support its claim for a tax refund, and thereafter render a decision in accordance with law and the evidence presented. SO ORDERED. Guerrero and * Sabio, Jr., JJ ., concur. Footnotes * Vice J. Alicia Santos. 1. Citing CLEOFAS vs. ST. PETER MEMORIAL PARK, G.R. No. 84905, February 1, 2000. 2. Respondent's Comment to Petitioner's "Motion for Reconsideration", Rollo, pp. 162-163. 3. Decision dated March 30, 2001, citing National Shipyard Corporation vs. Asuncion, et al., 103 Phil. 67. 4. 172 SCRA 328. 5. Supra. 6. Bersabal vs. Bernal, 13 Phil. 463. 7. Manila Railroad vs. Mitchel, 49 Phil. 801. 8. Section 5, Rule 37 of the 1997 Rules of Civil Procedure. Second Motion for New Trial. A motion for new trial shall include all the grounds then available and those not so included shall be deemed waived. A second motion for new trial, based on a ground not existing nor available when the first motion was made, may be filed within the time herein provided excluding the time during which the first motion had been pending. 9. Decision of the CTA, dated February 17, 1998, Rollo, p. 53.