G.R. No. 96262 - COMMISSIONER OF INTERNAL REVENUE, VS. EMBROIDERY AND GARMENTS INDUSTRIES (PHIL.), INC.. D E C I S I O N - Supreme Court E-Library

Ruling

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