Ayala General Insurance Corp. v. Commissioner of Internal Revenue

SIXTEENTH DIVISION [CA-G.R. SP No. 60413. January 15, 2001.] AYALA GENERAL INSURANCE CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N REYES , JR. , A. , J p : Before the Court is a Petition for Review under Rule 43 of the 1997 Rules of Civil Procedure assailing the 07 June 2000 Decision of the Court of Tax Appeals in CTA Case No. 5905, the dispositive portion of which reads as follows: "IN THE LIGHT OF ALL THE FOREGOING, the instant Petition for Review is DENIED for insufficiency of evidence." The antecedent facts: It appears that the instant case arose out from the representation of Ayala General Insurance Corporation that it had paid twice for the payment of documentary stamp tax in connection with its incorporation with the Securities and Exchange Commission (SEC). It had discovered the same when Ayala Land, Inc. (ALI) sent a Statement of Account asking petitioner to reimburse the former of the amount of P750,000.00 paid as Documentary Stamp Tax on the letter's behalf. Thus, on 09 July 1999, petitioner filed an administrative claim for refund of the amount of P750,000.00 representing the amount of documentary stamp tax paid twice on several dates: 08 January 1997 and 09 July 1997. On 07 June 2000, public respondent issued the assailed Decision, the relevant portion of which, reads: "It is a basic rule in an action for tax refund/credit that the party claiming the tax refund/tax credit has the burden of proving it. Claims for the refund or tax credit of taxes are in the nature of tax exemptions and being so, they are construed that in strictissimi juris against the taxpayer and in favor of the taxing authority . . . In general, there is no disagreement that a claimant has the burden of proof to establish the factual basis of his or her claim for tax refund. Tax refunds, like tax exemptions, are construed strictly against the taxpayer . . . In doing so, Petitioner must rely on the strength of its evidence and not on the weakness of that of its opponent. In the case at bar, Petitioner failed to support its claimed "double payment" of DST by substantial evidence . Substantial evidence has been construed to mean not necessarily preponderant proof as is required in an ordinary civil action, but such kind of 'relevant evidence as a reasonable man might accept as adequate in support of a conclusion' . . . The evidence presented by Petitioner established that the latter indeed paid on July 9, 1997 the amount of P750,000.00 as DST for the 7,500.000 shares of stocks it issued to its stockholders thru the DST metering machine of ALI . . . but failed to establish that on January 8, 1997 it earlier paid the same amount of P750,000.00 to the Respondent as payment for Petitioner as evidence (Exhs. B to B-2) to support its claim of payment of DST on January 8, 1997 are not conclusive proof that Petitioner had paid the subject DST to the Respondent. The said Exhibits B to B-1 can only confirm the fact that there was a request for a preparation of a check amounting to P750,000.00 for DST on stock certificates and that a cash voucher was prepared for that amount without mention that it is for the DST of the subject certificates of stocks. Thus, the doubt on the alleged 'first payment.' The best evidence that Petitioner should have presented to support its claimed "first payment" of DST was the Authority to Accept Payment (ATAP), which is necessary before payment of documentary stamp tax can be effected. Petitioner not only failed to present such document; it also failed to explain the loss thereof, assuming they had existed before. The bank validation on the ATAP and the ATAP itself will serve as Petitioner's official receipt that will prove that indeed the amount of P750,000.00 allegedly constituting the 'first payment' of DST was paid and remitted to the Government. As stated earlier, tax refunds partake of the nature of tax exemptions, as such, they are regarded as in derogation of sovereign authority and is to be construed strictly against the person or entity claiming the refund, hence, the burden of proof is upon the claimant to establish its claimed refund. In the case at bar. Petitioner failed to discharge this burden, thus, this Court has no other recourse but to deny the claim for refund. xxx xxx xxx." (Emphasis supplied) On 30 June 2000, petitioner interposed a Motion for New Trial before the respondent Court of Tax Appeals on the ground of newly discovered evidence based on the Certification dated 04 January 2000 issued by the Revenue Accounting Division, National Office of the Bureau of Internal Revenue. On 09 August 2000, public respondent rendered a Resolution , the pertinent portion of which, reads: cISDHE "It seemed to the Court that the 'Certification' which petitioner sought to present at the new trial does not qualify as 'newly discovered evidence' but is merely 'forgotten evidence.' The 'Certification' was dated January 4, 2000 and during this time the case was still on trial. With the exercise of reasonable diligence, the same could have been produced and presented by petitioner during the trial of the case. Presumably, such evidence has been in existence since January 4, 2000, waiting only to be presented by Petitioner. More so, Petitioner failed to adduce any evidence to prove that the same could not have been discovered and produced during trial despite the exercise of reasonable diligence. Only after the denial of its claim that it was able to get a copy of said certification. Thus, since Petitioner failed to comply with the requisites, for the grant of new trial with 'newly discovered evidence' as ground, particularly letter (b) thereof which states 'such evidence' could not have been discovered and produced at the trial with reasonable diligence,' the Court has no other recourse but to deny the instant motion. ACCORDINGLY, Petitioner's instant 'Motion for New Trial' is hereby DENIED for lack of merit. SO ORDERED." Hence, this petition with the following assignments of error, to wit: I WHETHER OR NOT THE HONORABLE COURT OF TAX APPEALS ERRED IN NOT FINDING THAT THE PETITIONER WAS ABLE TO PROVE BY SUBSTANTIAL EVIDENCE NOT ONLY THE FACT OF THE "SECOND PAYMENT" BUT ALSO OF THE "FIRST PAYMENT" OF DOCUMENTARY STAMP TAX IN THE AMOUNT OF P750,000.00; II WHETHER OR NOT THE HONORABLE COURT OF TAX APPEALS ERRED IN NOT GRANTING PETITIONER'S MOTION FOR NEW TRIAL ON THE GROUND OF "NEWLY DISCOVERED EVIDENCE" AND IN NOT REVERSING ITS DECISION CONSIDERING THAT THE "CERTIFICATION" DATED JANUARY 04, 2000 ISSUED BY THE REVENUE ACCOUNTING DIVISION OF THE BUREAU OF INTERNAL REVENUE UNQUESTIONABLY, UNEQUIVOCALLY AND UNDOUBTEDLY PROVED THE FACT OF THE "FIRST PAYMENT" AND CONSIDERING FURTHER THAT THE SAID "CERTIFICATION" WAS NOT CHALLENGED, DISPUTED OR QUESTIONED BY THE RESPONDENT HIMSELF; III WHETHER OR NOT THE PRINCIPLE OF SOLUTIO INDEBITI IS APPLICABLE TO THE INSTANT CASE IN VIEW OF THE FACT THAT THE ERRONEOUS "DOUBLE PAYMENT" OF DOCUMENTARY STAMP TAX IN THE AMOUNT OF P750,000.00 FOR THE SAME TRANSACTION WAS UNDOUBTEDLY, UNQUESTIONABLY AND UNEQUIVOCABLY SHOWN TO HAVE BEEN REMITTED TO THE BIR. The Court finds the petition meritorious. To begin with, Section 1, Rule 37 of the 1997 Rules of Civil Procedure states: " Grounds of and period for filing motion for new trial or reconsideration . Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party: (a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or (b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result. xxx xxx xxx." In Gloria G. Tumang v. Court of Appeals, G.R. No. 82072, April 17, 1989, 172 SCRA 328, the Supreme Court elucidates the parameters of the phrase "newly discovered evidence," to wit: "Newly discovered evidence under prevailing jurisprudence need not be newly created evidence: newly discovered evidence, in other words, may and does not commonly refer to evidence already in existence prior or during the trial but which could not have been secured and presented during the trial despite reasonable diligence on the part of the litigant offering it or his counsel. Newly discovered evidence, again, is not limited to evidence which, though already in existence before or during the trial was not known to the offering litigant. So-called "forgotten" evidence may, upon the other hand, be seen to refer to evidence already in existence or available before or during trial which was known to and obtainable by the party offering it and which could have been presented and offered in a reasonable manner were it not for the oversight or forgetfulness of such party or his counsel. In the case at bar, petitioner explained that the reason why it cannot introduce the subject Certification is due to the fact that the same was in the possession of the subordinate of herein Respondent. The controversial Certification, reads: "January 4, 2000 CERTIFICATION This is to certify that the collection listed hereunder was verified against the Tax Returns/ ATPs Batch Control Sheet on file with this Division as to Taxpayer's Name, BCS No., Date of Payment, Bank Code and Amount and verified remitted per CRDC and Central Bank Credit Advice. The kind of tax paid is not indicated in the source documents. Name of Taxpayer: AYALA GENERAL INSURANCE BANK LIST OF 12.50 BCS NO. DATE CODE AMOUNT VERIFIED 97-00006 01-08-97 010-63 750,000.00 01-97-05/97 This is to further certify that the collections listed above representing payment of taxes were not included in the schedules of dishonored checks on file with this Division. Kindly furnish us a clear photocopy of validated return for the other tax payment covered by the request for verification. This certification is issued upon the request of Mr. Edmundo A. Vasquez, Revenue District Officer, RDO#50 (South), Makati City . xxx xxx xxx." (Emphasis, supplied) Clearly, then, as the subject Certification itself stated that the same is being requested by the Revenue District Officer, it follows that this piece of evidence was indeed in the possession of herein respondent; and its existence could possibly not be known to the petitioner considering that it (petitioner) is not the requesting party. Therefore, as enunciated by the Highest Magistrate in Tumang (supra), the Certification could be considered as "newly discovered evidence." Neither can we discern any tenability as to the theory of public respondent the petitioner was negligent for its failure to introduce the controversial Certification during the trial. In Tumang (supra), citing Velasco v. Ortiz, G.R. No. 51973, April 16, 1990, 184 SCRA 303 , the Supreme Court clarified as to what constitutes reasonable diligence, thus: "In order that a particular piece of evidence may be regarded as "newly discovered" for purposes of a grant of new trial, what is essential is not so much the time when the evidence offered first sprang into existence nor the time when it came to the knowledge of the party now submitting it; what is essential is, rather, that the offering party had exercised reasonable diligence in seeking to locate such evidence before or during trial but nonetheless failed to secure it. Thus, a party who, prior to the trial, has no means of knowing that a specific piece of evidence existed and was in fact obtainable, can scarcely be charged with lack of diligence . It is commonplace to observe that the term "diligence" is a relative and variable one, not capable of exact definition and the contents of which must depend entirely on the particular configuration of facts obtaining in each case." In sum, the Court finds the subject Certification as newly discovered evidence within the contemplation of Section 1, Rule 37 of the 1997 Rules of Civil Procedure. WHEREFORE, premises considered, the petition is hereby GRANTED; and the challenged 07 June 2000 Decision and the 09 August 2000 Resolution of the respondent Court of Tax Appeals be SET ASIDE. Let the case be REMANDED to the respondent Court of Tax Appeals for new trial. No costs. SO ORDERED. DECSIT Adefuin-De La Cruz and De Guia-Salvador, JJ . , concur.