Far East Bank v. Commissioner of Internal Revenue
REITERATIONFacts
The Antecedents: Petitioner Far East Bank & Trust Company (FEBTC) filed an application for a tax credit/tax refund for alleged overpayments of its gross receipts tax (GRT) for the 3rd and 4th quarters of 1994 and the entire 1995, amounting to P14,816,373. Procedural History: Due to the Commissioner of Internal Revenue's (CIR) inaction, FEBTC filed a case with the Court of Tax Appeals (CTA) on October 18, 1996. The CTA denied the claim for lack of evidence, noting FEBTC's failure to file a formal offer of evidence and memorandum. FEBTC filed a motion for reconsideration 22 days after receipt of the decision, which the CTA denied for being filed out of time and for lack of merit. The Court of Appeals (CA) affirmed the CTA decision, dismissing FEBTC's petition. FEBTC's motion for reconsideration with the CA was also denied. The Petition: FEBTC filed a petition for review on certiorari with the Supreme Court, arguing that it appended its formal offer of evidence to its motion for reconsideration before the CTA and asking the Court to relax procedural rules in the interest of justice.
Issue(s)
Whether the Court of Tax Appeals and the Court of Appeals erred in denying FEBTC's claim for tax credit/tax refund. Whether the Supreme Court should relax procedural rules to allow FEBTC's claim for tax refund.
Ruling
The petition is denied. The January 31, 2001 decision and August 23, 2001 resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the issue of the denial of the claim for tax credit/tax refund: The Court reiterated the well-settled rule that courts cannot consider evidence which has not been formally offered. Parties must inform the courts of the purpose of introducing exhibits to assist in ruling on their admissibility. Without a formal offer of evidence, courts are constrained to take no notice of the evidence, even if marked and identified. The failure of petitioner FEBTC to make a formal offer of evidence was detrimental to its cause. The exception in Oñate v. Court of Appeals, where evidence not formally offered was allowed, did not apply because the identified exhibits were not incorporated in the records. Furthermore, a tax refund is in the nature of a tax exemption, which must be construed strictissimi juris against the taxpayer. The taxpayer bears the burden of presenting convincing evidence to substantiate a claim for refund. Without documentary evidence on record, FEBTC failed to discharge this burden, thus the CTA and CA correctly denied its claim. On the issue of relaxing procedural rules: The Court held that if no appeal or motion for reconsideration is filed on time, the judgment or final order becomes final and executory. The records confirmed that FEBTC's motion for reconsideration before the CTA was filed out of time. FEBTC received the CTA decision on August 4, 1998, giving it fifteen days, or until August 19, 1998, to file a motion for reconsideration. By filing its motion on August 26, 1998, the CTA decision had already attained finality. As a final judgment, it had laid the issues to rest, and the appellate courts could no longer review it. Courts are charged with putting an end to controversies, and judgments must become final at definite times fixed by law.
Main Doctrine
A claim for tax refund requires convincing evidence to substantiate it. Failure to formally offer evidence in the trial court, and filing a motion for reconsideration out of time, are fatal to a claim for tax refund.