COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. EMBROIDERY AND GARMENTS INDUSTRIES (PHIL.), INC., Respondent.
D E C I S I O N
The case is an appeal via certiorari
from a decision of the Court of Appeals1 affirming that of the Court of Tax Appeals2 absolving respondent from liability for deficiency
income tax and advance sales tax in the amounts of
The facts may be related as follows:
On September 22, 1964, on the basis of a sworn report of an informer, the Courts of First Instance of Manila and Bulacan issued search warrants for the seizure of certain documents from the offices of respondent Embroidery and Garments Industries (Phil.), Inc. in Manila and Valenzuela, Bulacan. Armed with the warrants, agents of the Anti-Technical Smuggling Unit, Bureau of Internal Revenue, seized various business records and documents from respondents offices.
On January 4, 1966, petitioner
assessed respondent the sum of
Respondent protested the
assessments, and on December 9, 1970, petitioner issued to respondent a revised
assessment requiring the latter to pay the amount of
On January 7, 1971, respondent filed with the Bureau of Internal Revenue a protest disputing the revised assessments and requesting further investigation. On the same date, petitioner denied the protest.
On January 20, 1971, respondent requested petitioner to reconsider the denial of its protest. On January 29, 1971, petitioner granted the request upon respondents execution of a waiver of the statute of limitations.
On September 14, 1971, petitioner denied respondents protest on the disputed assessments.
On October 14, 1971, respondent filed with the Court of Tax Appeals a petition for review of the disputed tax assessments.
On March 29, 1972, respondent filed its answer to the petition praying for its dismissal.
On January 15, 1990, the Court of Tax Appeals rendered decision finding respondent not liable for deficiency income tax and advance sales tax assessed against it, accordingly, reversed the BIR decision. In its decision, the Court of Tax Appeals held that the assessments were of doubtful validity as they were based on incompetent evidence consisting of an informants report and the sworn statement of a disgruntled former general manager of respondent that in the years in question respondent sold all its dollar quotas to local Chinese textile traders at an overprice or premium on the dollar value of textile importation of 80% for suiting materials and 70% for womens clothing materials and faked its invoices to reduce its costs of importation. On the other hand, respondent adduced evidence consisting of official records of the Bureau of Customs that its tax-free importations had been re-exported to their suppliers in accordance with the Embroidery Law and cleared by the Bureau of Customs. The tax court ruled that the assessments must be based on actual facts and proved by competent evidence, not imposed based on unverified information supplied by an informant, or disputed presumptions.
On June 13, 1990, petitioner filed with the Court of Appeals a petition for review of the decision of the Court of Tax Appeals.3cräläwvirtualibräry
On November 9, 1990, the Court of Appeals promulgated its decision affirming the appealed decision of the tax court.4cräläwvirtualibräry
On December 4, 1990, petitioner filed a motion for reconsideration of the Court of Appeals decision.
On February 7, 1991, the Court of Appeals denied the motion.5cräläwvirtualibräry
On March 18, 1991, within the extended time granted, petitioner filed with the Supreme Court a petition for review on certiorari of the decision of the Court of Appeals.6cräläwvirtualibräry
In the petition, the Commissioner of Internal Revenue submits that the Court of Appeals erred:
(1) in not holding that respondent is liable for deficiency income tax and advance sales tax in view of its failure to declare its income realized for the years 1959 to 1961 from the sales of its dollar quota to local Chinese textile dealers at a premium of 70% to 80% of the dollar value, which dollar quota rights were allocated by the Central Bank of the Philippines to enable respondent to import tax-free textile raw materials to be manufactured into finished products for re-export pursuant to the provisions of the Embroidery Law (R.A. No. 3137), and
(2) in not holding that the imposition of 50% surcharge for fraud was legal and justified.7cräläwvirtualibräry
The issues raised are clearly factual and must be resolved on the basis of the evidence adduced before the tax court. The case tarried too long in the tax court. In the meantime, the star witness had died, and the needed originals of documentary evidence could no longer be located.
What is more, it is a fundamental rule that an appeal via certiorari from a decision of the Court of Appeals to the Supreme Court may raise only questions of law, which must be distinctly set forth.8 Findings of fact of the Court of Appeals and even of the tax court are final, binding or conclusive on the parties9 and upon this Court,10 which will not be reviewed11 or disturbed on appeal unless these findings are not supported by evidence,12 with certain well recognized exceptions, such as (1) when the conclusion is grounded entirely on speculations13, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial courts;14 (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the Court of Appeals overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.15 This case does not come within any of the exceptions.
WHEREFORE, the Court hereby AFFIRMS the appealed decision of the Court of Appeals in CA-G.R. SP No. 20813.
Davide, Jr., CJ., (Chairman), Melo, and Kapunan, JJ., concur.
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