FIRST DIVISION
[G.R. No. 96262. March 22, 1999]
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.
EMBROIDERY AND GARMENTS INDUSTRIES (PHIL.), INC., respondent.
D E C I S I O N
PARDO, J.:
The case is an appeal via certiorari
from a decision of the Court of Appeals[1] affirming that of the Court of Tax Appeals[2] absolving respondent from liability for deficiency
income tax and advance sales tax in the amounts of P2,756,241.68,
and P3,500,798.47, respectively, for the years 1959 to
1961.
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
respondent’s offices.
On January 4, 1966, petitioner
assessed respondent the sum of P436,846.44, inclusive of 75% surcharge
and penalty as advance sales tax for the years 1959 to 1961 and, on March 23,
1966, assessed deficiency income tax in the sum of P4,799.641.95,
inclusive of 50% surcharge and ˝% monthly interest for the years 1960 and 1961.
Respondent protested the
assessments, and on December 9, 1970, petitioner issued to respondent a revised
assessment requiring the latter to pay the amount of P2,756,241.68,
inclusive of 50% surcharge and ˝% monthly interest as deficiency income tax for
the years 1959 to 1961. On December 22,
1970, petitioner required respondent to pay P3,500,798.47, as advance
sales tax and 75% surcharge corresponding to the same years.
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 respondent’s execution of a waiver of the statute of limitations.
On September 14, 1971, petitioner
denied respondent’s 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 informant’s 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 women’s 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.[3]
On November 9, 1990, the Court of
Appeals promulgated its decision affirming the appealed decision of the tax
court.[4]
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.[5]
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.[6]
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.[7]
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 parties[9] and upon this Court,[10] which will not be reviewed[11] 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 speculations[13], 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.
No costs.
SO ORDERED.
Davide, Jr., CJ., (Chairman), Melo, and Kapunan, JJ., concur.
[1] CA -G.R. NO. SP No. 20813, prom. on November
9, 1990.
[2] CTA
Case No. 2334, prom. on January 15, 1990.
[3] Docketed
as CA-G.R. SP No. 20813.
[4] Annex “B”, Petition, Rollo, pp.
86-98.
[5] Annex “C”, Petition, Rollo, pp.
99-100.
[6] Rollo, pp. 28-55.
[7] Petitioner’s
Memorandum, Rollo, pp. 135-159, at p. 140.
[8] Rule 45, Section 1, 1997 Rules of Civil
Procedure; Pagobo vs. Court of Appeals, 280 SCRA 870; Policarpio vs. Court of Appeals, 269 SCRA 344.
[9] Fortune
Motors (Phils.) Corporation vs. Court of Appeals, 267 SCRA 653.
[10] First Philippine International Bank vs.
Court of Appeals, 252 SCRA 259.
[11] Atillo vs. Court of Appeals, 266 SCRA 596;
Yobido vs. Court of Appeals, 281 SCRA 1.
[12] Guerrero vs. Court of Appeals, 285 SCRA 670.
[13] Philippine Deposit Insurance Corporation vs.
Court of Appeals, 283 SCRA 462.
[14] Lustan vs. Court of Appeals, 266 SCRA 663;
Yobido vs. Court of Appeals, 281 SCRA 1.
[15] Misa vs. Court of Appeals, 212 SCRA 217; Golangco vs. Court of
Appeals, 283 SCRA 493, 503; Fule vs. Court of Appeals, 286 SCRA 698, 710;
Halili vs. Court of Appeals, 287 SCRA 465, 470; Remalante vs. Tibe, 158
SCRA 138; Ayala Corporation vs. Ray Burton Development Corporation, G.R. No.
126699, August 7, 1998.