G.R.No.

122480April12,2000
BPIFAMILYSAVINGSBANK,Inc.,petitioner,
vs.
COURTOFAPPEALS,COURTOFTAXAPPEALSandtheCOMMISSIONEROFINTERNAL
REVENUE,respondents.
IftheStateexpectsitstaxpayerstoobservefairnessandhonestyinpayingtheirtaxes,somustit
applythesamestandardagainstitselfinrefundingexcesspayments.Whenitisundisputedthata
taxpayerisentitledtoarefund,theStateshouldnotinvoketechnicalitiestokeepmoneynot
belongingtoit.Noone,noteventheState,shouldenrichoneselfattheexpenseofanother.
TheCase
BeforeusisaPetitionforReviewassailingtheMarch31,1995DecisionoftheCourtof
Appeals
1
(CA)inCAGRSPNo.34240,whichaffirmedtheDecember24,1993Decision
2
ofthe
CourtofTaxAppeals(CTA).TheCAdisposedasfollows:
WHEREFORE,foregoingpremisesconsidered,thepetitionisherebyDISMISSEDforlack
ofmerit.
3

Ontheotherhand,thedispositiveportionoftheCTADecisionaffirmedbytheCAreadsasfollows:
WHEREFORE,in[viewof]alltheforegoing,Petitioner'sclaimforrefundisherebyDENIED
andthisPetitionforReviewisDISMISSEDforlackofmerit.
4

AlsoassailedistheNovember8,1995CAResolution
5
denyingreconsideration.
TheFacts
ThefactsofthiscaseweresummarizedbytheCAinthiswise:
ThiscaseinvolvesaclaimfortaxrefundintheamountofP112,491.00representing
petitioner'staxwithheldfortheyear1989.
InitsCorporateAnnualIncomeTaxReturnfortheyear1989,thefollowingitemsare
reflected:
IncomeP1,017,931,831.00
DeductionsP1,026,218,791.00
NetIncome(Loss)(P8,286,960.00)
TaxableIncome(Loss)(P8,286,960.00)
Less:
1988TaxCreditP185,001.00
1989TaxCreditP112,491.00
TOTALAMOUNTP297,492.00
REFUNDABLE
Itappearsfromtheforegoing1989IncomeTaxReturnthatpetitionerhadatotal
refundableamountofP297,492inclusiveoftheP112,491.00beingclaimedastax
refundinthepresentcase.However,petitionerdeclaredinthesame1989Income
TaxReturnthatthesaidtotalrefundableamountofP297,492.00willbeapplied
astaxcredittothesucceedingtaxableyear.
OnOctober11,1990,petitionerfiledawrittenclaimforrefundintheamountof
P112,491.00withtherespondentCommissionerofInternalRevenueallegingthatit
didnotapplythe1989refundableamountofP297,492.00(includingP112,491.00)
1
toits1990AnnualIncomeTaxReturnorothertaxliabilitiesduetothealleged
businesslossesitincurredforthesameyear.
WithoutwaitingforrespondentCommissionerofInternalRevenuetoactonthe
claimforrefund,petitionerfiledapetitionforreviewwithrespondentCourtofTax
Appeals,seekingtherefundoftheamountofP112,491.00.
TherespondentCourtofTaxAppealsdismissedpetitioner'spetitionontheground
thatpetitionerfailedtopresentasevidenceitscorporateAnnualIncomeTaxReturn
for1990toestablishthefactthatpetitionerhadnotyetcreditedtheamountof
P297,492.00(inclusiveoftheamountP112,491.00whichisthesubjectofthe
presentcontroversy)toits1990incometaxliability.
Petitionerfiledamotionforreconsideration,however,thesamewasdeniedby
respondentcourtinitsResolutiondatedMay6,1994.
6

Asearliernoted,theCAaffirmedtheCTA.Hence,thisPetition.
7

RulingoftheCourtofAppeals
InaffirmingtheCTA,theCourtofAppealsruledasfollows:
Itisincumbentuponthepetitionertoshowproofthatithasnotcreditedtoits1990
AnnualincomeTaxReturn,theamountofP297,492.00(includingP112,491.00),so
astorefuteitspreviousdeclarationinthe1989IncomeTaxReturnthatthesaid
amountwillbeappliedasataxcreditinthesucceedingyearof1990.Havingfailed
tosubmitsuchrequirement,thereisnobasistogranttheclaimforrefund....
Taxrefundsareinthenatureoftaxexemptions.Assuch,theyareregardedasin
derogationofsovereignauthorityandtobeconstruedstrictissimijurisagainstthe
personorentityclaimingtheexemption.Inotherwords,theburdenofproofrests
uponthetaxpayertoestablishbysufficientandcompetentevidenceitsentitlement
totheclaimforrefund.
8

Issue
IntheirMemorandum,respondentsidentifytheissueinthiswise:
Thesoleissuetoberesolvediswhetherornotpetitionerisentitledtotherefundof
P112,491.90,representingexcesscreditablewithholdingtaxpaidforthetaxableyear
1989.
9

TheCourt'sRuling
ThePetitionismeritorious.
MainIssue:
PetitionerEntitledtoRefund
Itisundisputedthatpetitionerhadexcesswithholdingtaxesfortheyear1989andwasthusentitled
toarefundamountingtoP112,491.PursuanttoSection69
10
ofthe1986TaxCodewhichstates
thatacorporationentitledtoarefundmayopteither(1)toobtainsuchrefundor(2)tocreditsaid
amountforthesucceedingtaxableyear,petitionerindicatedinits1989IncomeTaxReturnthatit
wouldapplythesaidamountasataxcreditforthesucceedingtaxableyear,1990.Subsequently,
petitionerinformedtheBureauofInternalRevenue(BIR)thatitwouldclaimtheamountasatax
refund,insteadofapplyingitasataxcredit.WhennoactionfromtheBIRwasforthcoming,
petitionerfileditsclaimwiththeCourtofTaxAppeals.
TheCTAandtheCA,however,deniedtheclaimfortaxrefund.Sincepetitionerdeclaredinits1989
IncomeTaxReturnthatitwouldapplytheexcesswithholdingtaxasataxcreditforthefollowing
year,theTaxCourtheldthatpetitionerwaspresumedtohavedoneso.TheCTAandtheCAruled
thatpetitionerfailedtoovercomethispresumptionbecauseitdidnotpresentits1990Return,which
2
wouldhaveshownthattheamountindisputewasnotappliedasataxcredit.Hence,theCA
concludedthatpetitionerwasnotentitledtoataxrefund.
WedisagreewiththeCourtofAppeals.Asarule,thefactualfindingsoftheappellatecourtare
bindingonthisCourt.Thisrule,however,doesnotapplywhere,interalia,thejudgmentispremised
onamisapprehensionoffacts,orwhentheappellatecourtfailedtonoticecertainrelevantfacts
whichifconsideredwouldjustifyadifferentconclusion.
11
Thiscaseisonesuchexception.
Inthefirstplace,petitionerpresentedevidencetoproveitsclaimthatitdidnotapplytheamountas
ataxcredit.DuringthetrialbeforetheCTA,Ms.YolandaEsmundo,themanagerofpetitioner's
accountingdepartment,testifiedtothisfact.Itlikewisepresenteditsclaimforrefundanda
certificationissuedbyMr.GilLopez,petitioner'svicepresident,statingthattheamountofP112,491
"hasnotbeenand/orwillnotbeautomaticallycredited/offsetagainstanysucceedingquarters'
incometaxliabilitiesfortherestofthecalendaryearendingDecember31,1990."Alsopresented
werethequarterlyreturnsforthefirsttwoquartersof1990.
TheBureauofInternalRevenue,foritspart,failedtocontrovertpetitioner'sclaim.Infact,it
presentednoevidenceatall.Becauseitoughttoknowthetaxrecordsofalltaxpayers,theCIR
couldhaveeasilydisprovedpetitioner'sclaim.Torepeat,itdidnotdoso.
Moreimportant,acopyoftheFinalAdjustmentReturnfor1990wasattachedtopetitioner'sMotion
forReconsiderationfiledbeforetheCTA.
12
Afinaladjustmentreturnshowswhetheracorporation
incurredalossorgainedaprofitduringthetaxableyear.Inthiscase,thatReturnclearlyshowed
thatpetitionerincurredP52,480,173asnetlossin1990.Clearly,itcouldnothaveappliedthe
amountindisputeasataxcredit.
Again,theBIRdidnotcontroverttheveracityofthesaidreturn.Itdidnotevenfileanoppositionto
petitioner'sMotionandthe1990FinalAdjustmentReturnattachedthereto.IndenyingtheMotionfor
Reconsideration,however,theCTAignoredthesaidReturn.Inthesamevein,theCAdidnotpass
uponthatsignificantdocument.
True,strictproceduralrulesgenerallyfrownuponthesubmissionoftheReturnafterthetrial.1wphi1The
lawcreatingtheCourtofTaxAppeals,however,specificallyprovidesthatproceedingsbeforeit
"shallnotbegovernedstrictlybythetechnicalrulesofevidence."
13
Theparamountconsideration
remainstheascertainmentoftruth.Verily,thequestfororderlypresentationofissuesisnotan
absolute.Itshouldnotbarcourtsfromconsideringundisputedfactstoarriveatajustdetermination
ofacontroversy.
Inthepresentcase,theReturnattachedtotheMotionforReconsiderationclearlyshowedthat
petitionersufferedanetlossin1990.ContrarytotheholdingoftheCAandtheCTA,petitioner
couldnothaveappliedtheamountasataxcredit.InfailingtoconsiderthesaidReturn,aswellas
theotherdocumentaryevidencepresentedduringthetrial,theappellatecourtcommitteda
reversibleerror.
Itshouldbestressedthattherationaleoftherulesofprocedureistosecureajustdeterminationof
everyaction.Theyaretoolsdesignedtofacilitatetheattainmentofjustice.
14
Buttherecanbeno
justdeterminationofthepresentactionifweignore,ongroundsofstricttechnicality,theReturn
submittedbeforetheCTAandevenbeforethisCourt.
15
Torepeat,theundisputedfactisthat
petitionersufferedanetlossin1990accordingly,itincurrednotaxliabilitytowhichthetaxcredit
couldbeapplied.Consequently,thereisnoreasonfortheBIRandthisCourttowithholdthetax
refundwhichrightfullybelongstothepetitioner.
Publicrespondentsmaintainthatwhatwasattachedtopetitioner'sMotionforReconsiderationwas
notthefinaladjustmentReturn,butpetitioner'sfirsttwoquarterlyreturnsfor1990.
16
Thisallegation
iswrong.Anexaminationoftherecordsshowsthatthe1990FinalAdjustmentReturnwasattached
totheMotionforReconsideration.Ontheotherhand,thetwoquarterlyreturnsfor1990mentioned
byrespondentwereinfactattachedtothePetitionforReviewfiledbeforetheCTA.Indeed,torebut
respondents'specificcontention,petitionersubmittedbeforeusitsSurrejoinder,towhichwas
3
attachedtheMotionforReconsiderationandExhibit"A"thereof,theFinalAdjustmentReturnfor
1990.
17

CTACaseNo.4897
PetitioneralsocallstheattentionofthisCourt,asithaddonebeforetheCTA,toaDecision
renderedbytheTaxCourtinCTACaseNo.4897,involvingitsclaimforrefundfortheyear1990.In
thatcase,theTaxCourtheldthat"petitionersufferedanetlossforthetaxableyear1990...
."
18
Respondent,however,urgesthisCourtnottotakejudicialnoticeofthesaidcase.
19

Asarule,"courtsarenotauthorizedtotakejudicialnoticeofthecontentsoftherecordsofother
cases,evenwhensuchcaseshavebeentriedorarependinginthesamecourt,and
notwithstandingthefactthatbothcasesmayhavebeenheardorareactuallypendingbeforethe
samejudge."
20

Bethatasitmay,Section2,Rule129providesthatcourtsmaytakejudicialnoticeofmatters
oughttobeknowntojudgesbecauseoftheirjudicialfunctions.Inthiscase,theCourtnotesthata
copyoftheDecisioninCTACaseNo.4897wasattachedtothePetitionforReviewfiledbeforethis
Court.Significantly,respondentsdonotclaimatallthatthesaidDecisionwasfraudulentor
nonexistent.Indeed,theydonotevendisputethecontentsofthesaidDecision,claimingmerely
thattheCourtcannottakejudicialnoticethereof.
Toourmind,respondents'reasoningunderscorestheweaknessoftheircase.Foriftheyhadreally
believedthatpetitionerisnotentitledtoataxrefund,theycouldhaveeasilyprovedthatitdidnot
sufferanylossin1990.Indeed,itisnoteworthythatrespondentsoptednottoassailthefact
appearingthereinthatpetitionersufferedanetlossin1990inthesamewaythatitrefusedto
controvertthesamefactestablishedbypetitioner'sotherdocumentaryexhibits.
Inanyevent,theDecisioninCTACaseNo.4897isnotthesolebasisofpetitioner'scase.Itis
merelyonemorebitofinformationshowingthestarktruth:petitionerdidnotuseits1989refundto
payitstaxesfor1990.
Finally,respondentsarguethattaxrefundsareinthenatureoftaxexemptionsandaretobe
construedstrictissimijurisagainsttheclaimant.Underthefactsofthiscase,weholdthatpetitioner
hasestablisheditsclaim.Petitionermayhavefailedtostrictlycomplywiththerulesofprocedureit
mayhaveevenbeennegligent.Thesecircumstances,however,shouldnotcompeltheCourtto
disregardthiscold,undisputedfact:thatpetitionersufferedanetlossin1990,andthatitcouldnot
haveappliedtheamountclaimedastaxcredits.
Substantialjustice,equityandfairplayareonthesideofpetitioner.Technicalitiesandlegalisms,
howeverexalted,shouldnotbemisusedbythegovernmenttokeepmoneynotbelongingtoitand
therebyenrichitselfattheexpenseofitslawabidingcitizens.IftheStateexpectsitstaxpayersto
observefairnessandhonestyinpayingtheirtaxes,somustitapplythesamestandardagainst
itselfinrefundingexcesspaymentsofsuchtaxes.Indeed,theStatemustleadbyitsownexample
ofhonor,dignityanduprightness.
WHEREFORE,thePetitionisherebyGRANTEDandtheassailedDecisionandResolutionofthe
CourtofAppealsREVERSEDandSETASIDE.TheCommissionerofInternalRevenueisorderedto
refundtopetitionertheamountofP112,491asexcesscreditabletaxespaidin1989.Nocosts.1wphi1.nt
SOORDERED.
10
Sec.69.FinalAdjustmentReturn.EverycorporationliabletotaxunderSection24
shallfileafinaladjustmentreturncoveringthetotaltaxableincomeforthepreceding
calendarorfiscalyear.Ifthesumofthequarterlytaxpaymentsmadeduringthesaid
taxableyearisnotequaltothetotaldueontheentiretaxablenetincomeofthatyearthe
corporationshalleither:
(a)Paytheexcesstaxstilldueor
4
(b)Berefundedtheexcessamountpaid,asthecasemaybe.
Incasethecorporationisentitledtoarefundoftheexcessestimatedquarterly
incometaxespaid,therefundableamountshownonitsfinaladjustmentreturnmay
becreditedagainsttheestimatedquarterlyincometaxliabilitiesforthetaxable
quartersofthesucceedingtaxableyear.