G.R. No. 138342. July 8, 2003]
AB LEASING AND FINANCE CORPORATION, petitioner-appellant, vs. COMMISSIONER OF INTERNAL REVENUE, respondent-appellee.
D E C I S I O N
Before this Court is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the October 29, 1998 Decision and the April 19, 1999 Resolution of the Court of Appeals (CA) which upheld the July 2, 1997 Decision and the September 2, 1997 Resolution of the Court of Tax Appeals (CTA).
For taxable year 1993, petitioner AB Leasing and Finance
Corporation had a net income of
Nature of Tax Payments Amount
1. By way of quarterly income tax payments
Second Quarter P 594,484.00
Third Quarter 430,145.00
2. Unused Prior Years Tax Credits 570,127.00
Grand Total P1,594,756.00
Petitioner thus opted to apply its excess payment of
In the third quarter of taxable year 1994, petitioner had a net
Petitioner thereupon indicated in its amended annual income tax
return for calendar year ending December 31, 1994 that it made excess tax
On April 12, 1996, petitioner filed with respondent, Commissioner
of Internal Revenue, a letter-claim for refund of overpaid income taxes for
taxable year 1993 in the amount of
On April 15, 1997, petitioner filed another case with the CTA,
docketed as C.T.A. Case No. 5513, seeking a refund of overpaid income
taxes for taxable year 1994 in the amount of
By Decision of July 2, 1997, the CTA dismissed C.T.A. Case No. 5372 for insufficiency of evidence, drawing petitioner to file a motion for new trial and reconsideration which was denied by the CTA by Resolution of September 2, 1997.3cräläwvirtualibräry
In denying petitioners claim for refund of overpaid income taxes for the year 1993, the CTA noted its failure to present its 1995 income tax return as well as the breakdown of its excess taxes paid for 1994.
Petitioner thereupon filed a petition for review with the CA which, by Decision of October 29, 1998, affirmed the CTA decision and resolution.4 Petitioner filed on November 20, 1998, a motion for reconsideration of the CTA decision.
In the meantime, on February 10, 1999, the CTA rendered a
decision in C.T.A. Case No. 5513 ordering respondent to refund or issue
a tax credit certificate to petitioner in the amount of
By Resolution of April 19, 1999, petitioners motion for reconsideration of the CA Decision of October 29, 1998 (claim for refund of excess tax payments for 1993) was denied, hence, the present petition for review on certiorari, petitioner imputing grave abuse of discretion to the Court of Appeals, viz:6cräläwvirtualibräry
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT DISMISSED THE PETITION FOR REVIEW AND UPHELD THE DECISION OF THE [COURT OF TAX APPEALS] CTA THEREBY AFFIRMING THE COURT OF TAX APPEALS REASONS IN DISMISSING THE PETITIONERS JUDICIAL CLAIM FOR REFUND.
At the outset, it must be stressed that a petition for review on certiorari under Rule 45 of the Rules of Court, like the one at bar, serves to correct a reversible error and not a grave abuse of discretion as imputed by the petitioner.7 This procedural lapse notwithstanding, this Court, in the interest of substantial justice, shall treat the petition as one involving a reversible error.
The dispute arises from the parties conflicting understanding or interpretation of law applicable at the time, Section 69 of the old National Internal Revenue Code (NIRC):
SECTION 69. Final Adjustment Return. Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either:
(a) Pay the excess tax still due; or
(b) Be refunded the excess amount paid, as the case may be.
In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year. (Emphasis supplied)
In affirming the decision of the CTA denying refund, the CA quoted with approval the following portions of the CTA decision:
It is worthy to note that for taxable year 1994, petitioner's Income Tax Return reflected a net loss of P3,450,916.00, the reason why petitioner was not able to utilize as tax credit its 1993 excess tax payment of P973,215.00. However, said 1994 revised Income Tax Return showed a refundable amount of P1,268,498.00 which must have included the sum of P973,215.00 which was declared by the petitioner in the 1994 unamended return. But, petitioner failed to present the components of the P1,268,498.00 excess payment for 1994 so as to apprise the Court that the said amount excludes the P973,215.00 excess payment for 1993 and thus may be a proper subject for refund. The petitioner likewise indicated in its 1994 revised Income Tax Return filed on November 24, 1995 that the entire refundable amount of P1,268,498.00 will be applied as credit to the following year (1995) by marking X on the corresponding box. But petitioner, again, failed to submit its 1995 Income Tax Return for verification whether or not the refundable amount has been actually applied as a tax credit in its income tax liability for the year 1995 or whether it suffered a loss for that year.
The importance of the 1995 Income Tax Return was emphasized by the (sic) Us in the case of AF Holdings and Management Corporation vs. Commissioner of Internal Revenue, C.T.A. Case No. 5099, dated May 9, 1996, having substantially similar acts with those of the above-entitled case, saying:
The document is vital for the resolution of petitioner's claim for refund having opted to use the remedy of carry-over. As we have ruled in our Resolution dated October 21, 1993, in a Motion for Reconsideration presented by the Commissioner of Internal Revenue, in the case of Paseo Realty Development Corporation vs. Commissioner of Internal Revenue, CTA Case No. 4693, pertinent portion of which are quoted as follows:
A punctilious study of the case at bar reveals that indeed there is a cause to reconsider Our previous Decision. We have overlooked the fact that petitioner's 1989 Corporate Income Tax Return (Exh. A) indicated that the amount of P54,104.00 subject of petitioner's claim for refund has already been included as part and parcel of the P172,477.00 which the petitioner automatically applied as tax credit for the succeeding taxable year 1990.
xxx xxx xxx
Note should be taken that the amount of P54,104.00 is already part and parcel of P172,477.00 which presumptively was already applied as tax credit to the succeeding taxable year 1990. Such presumption, of course, could have been overturned had the petitioner submitted its Corporate Income Tax Return showing that it did not automatically credit the said amount for the said taxable year 1990. Unfortunately, petitioner failed to submit that vital document which could have unlocked his entitlement for the elusive claim for refund sought for. Failure on the part of the petitioner to sustain his claim is fatal to its cause following the time-tested doctrine that claims for refund are construed strictly against claimant (Commissioner of Internal Revenue vs. Ledesma, G.R. No. L-17509, January 30, 1970, 31 SCRA 95). (Emphasis supplied)
Assailing the foregoing disquisition, petitioner argues that there was no need to present its 1995 income tax return and introduce in evidence the breakdown of the excess taxes paid for the taxable year ending 1994 to prove its claim for refund of its 1993 overpaid income tax, for under Section 69 of the old NIRC, the 1993 excess tax payments could only be used to credit its 1994 income tax liabilities.
Respondent counterargues that petitioners 1995 income tax return
is essential to rebut the legal and disputable presumption that the entire
excess estimated quarterly income taxes paid in 1994 (
Respondents arguments, premised on the assumption that the 1993
excess tax payment of
The law is clear. The function of courts is simple application, not interpretation or circumvention.8cräläwvirtualibräry
As earlier quoted, Section 69 of the old NIRC provides that in case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding year. The carrying forward of any excess or overpaid income tax for a given taxable year then is limited to the succeeding taxable year only. This, the CTA and the CA have repeatedly held.9cräläwvirtualibräry
Since the case at bar involves a claim for refund of overpaid taxes for 1993, petitioner could only have applied the 1993 excess tax credits to its 1994 income tax liabilities. To further carry-over to 1995 the 1993 excess tax credits is violative of above-quoted Section 69 of the old NIRC.
That petitioner had signified its intention to apply the entire
But even assuming that there was a need for petitioner to present
in evidence the 1995 income tax return or the breakdown of its excess taxes
paid for the taxable year ending 1994, the CTA could have taken judicial notice
of the records of C.T.A. Case No. 5513, petitioners claim for refund of
Clearly, the amount of
Petitioner also calls the attention of this Court, as it had done before the CTA, to a Decision rendered by the Tax Court in CTA Case No. 4897, involving its claim for refund for the year 1990. In that case, the Tax Court held that petitioner suffered a net loss for the taxable year 1990 x x x. Respondent, however, urges this Court not to take judicial notice of the said case.
As a rule, "courts are not authorized to take judicial notice of the contents of the records of other cases, even when such cases have been tried or are pending in the same court, and notwithstanding the fact that both cases may have been heard or are actually pending before the same judge."
Be that as it may, Section 2, Rule 129 provides that courts may take judicial notice of matters ought to be known to judges because of their judicial functions. In this case, the Court notes that a copy of the Decision in CTA Case No. 4897 was attached to the Petition for Review filed before this Court. Significantly, respondents do not claim at all that the said Decision was fraudulent or nonexistent. Indeed, they do not even dispute the contents of the said Decision, claiming merely that the Court cannot take judicial notice thereof.
To our mind, respondents' reasoning underscores the weakness of their case. For if they had really believed that petitioner is not entitled to a tax refund, they could have easily proved that it did not suffer any loss in 1990. Indeed, it is noteworthy that respondents opted not to assail the fact appearing therein that petitioner suffered a net loss in 1990 in the same way that it refused to controvert the same fact established by petitioner's other documentary exhibits.
In any event, the Decision in CTA Case No. 4897 is not the sole basis of petitioners case. It is merely one more bit of information showing the stark truth: petitioner did not use its 1989 refund to pay its taxes for 1990. (Citations omitted) (Emphasis supplied)
As in BPI-Family Savings Bank, the decision of the CTA in C.T.A. Case No. 5513 was attached to the petition at bar; and respondent does not claim that said decision was fraudulent or non-existent. This Court thus takes note of the decision in C.T.A. Case No. 5513.
At all events, while the rules of evidence13 and jurisprudence14 do not sanction the grant of evidentiary value to evidence which is not formally offered, it must be stressed that technical rules of procedure are not ends in themselves but are primarily designed to help in the administration of justice.15 Moreover, Section 8 of Republic Act No. 1125 creating the Court of Tax Appeals expressly provides that it shall not be governed strictly by technical rules of evidence.16cräläwvirtualibräry
Substantial justice, equity and fair play are thus on the side of petitioner. Technicalities and legalisms, however exalted, should not be misused by the State to keep money not belonging to it. If it expects its taxpayers to observe fairness and honesty in paying their taxes, it must apply the same standard against itself in refunding excess payments of such taxes.17 It should not enrich oneself at the expense of another.18cräläwvirtualibräry
WHEREFORE, the assailed Decision of October 29, 1998 of
the Court of Appeals in CA-G.R. SP. No. 45372 is hereby REVERSED and SET
The Commissioner of Internal
Revenue is ordered to refund to petitioner the amount of NINE HUNDRED SEVENTY
THREE THOUSAND AND TWO HUNDRED FIFTEEN (
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Corona, JJ., concur.
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