Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 172231 February 12, 2007

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.
ISABELA CULTURAL CORPORATION, Respondent.

DECISION

YNARES-SANTIAGO, J.:

Petitioner Commissioner of Internal Revenue (CIR) assails the September 30, 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 78426
affirming the February 26, 2003 Decision2 of the Court of Tax Appeals (CTA) in CTA Case No. 5211, which cancelled and set aside the Assessment
Notices for deficiency income tax and expanded withholding tax issued by the Bureau of Internal Revenue (BIR) against respondent Isabela Cultural
Corporation (ICC).

The facts show that on February 23, 1990, ICC, a domestic corporation, received from the BIR Assessment Notice No. FAS-1-86-90-000680 for
deficiency income tax in the amount of P333,196.86, and Assessment Notice No. FAS-1-86-90-000681 for deficiency expanded withholding tax in
the amount of P4,897.79, inclusive of surcharges and interest, both for the taxable year 1986.

The deficiency income tax of P333,196.86, arose from:

(1) The BIRs disallowance of ICCs claimed expense deductions for professional and security services billed to and paid by ICC in 1986, to wit:

(a) Expenses for the auditing services of SGV & Co.,3 for the year ending December 31, 1985;4

(b) Expenses for the legal services [inclusive of retainer fees] of the law firm Bengzon Zarraga Narciso Cudala Pecson Azcuna & Bengson for the
years 1984 and 1985.5

(c) Expense for security services of El Tigre Security & Investigation Agency for the months of April and May 1986.6

(2) The alleged understatement of ICCs interest income on the three promissory notes due from Realty Investment, Inc.

The deficiency expanded withholding tax of P4,897.79 (inclusive of interest and surcharge) was allegedly due to the failure of ICC to withhold 1%
expanded withholding tax on its claimed P244,890.00 deduction for security services.7

On March 23, 1990, ICC sought a reconsideration of the subject assessments. On February 9, 1995, however, it received a final notice before
seizure demanding payment of the amounts stated in the said notices. Hence, it brought the case to the CTA which held that the petition is
premature because the final notice of assessment cannot be considered as a final decision appealable to the tax court. This was reversed by the
Court of Appeals holding that a demand letter of the BIR reiterating the payment of deficiency tax, amounts to a final decision on the protested
assessment and may therefore be questioned before the CTA. This conclusion was sustained by this Court on July 1, 2001, in G.R. No. 135210.8 The
case was thus remanded to the CTA for further proceedings.

On February 26, 2003, the CTA rendered a decision canceling and setting aside the assessment notices issued against ICC. It held that the claimed
deductions for professional and security services were properly claimed by ICC in 1986 because it was only in the said year when the bills
demanding payment were sent to ICC. Hence, even if some of these professional services were rendered to ICC in 1984 or 1985, it could not
declare the same as deduction for the said years as the amount thereof could not be determined at that time.

The CTA also held that ICC did not understate its interest income on the subject promissory notes. It found that it was the BIR which made an
overstatement of said income when it compounded the interest income receivable by ICC from the promissory notes of Realty Investment, Inc.,
despite the absence of a stipulation in the contract providing for a compounded interest; nor of a circumstance, like delay in payment or breach of
contract, that would justify the application of compounded interest.

Likewise, the CTA found that ICC in fact withheld 1% expanded withholding tax on its claimed deduction for security services as shown by the
various payment orders and confirmation receipts it presented as evidence. The dispositive portion of the CTAs Decision, reads:

WHEREFORE, in view of all the foregoing, Assessment Notice No. FAS-1-86-90-000680 for deficiency income tax in the amount of P333,196.86, and
Assessment Notice No. FAS-1-86-90-000681 for deficiency expanded withholding tax in the amount of P4,897.79, inclusive of surcharges and
interest, both for the taxable year 1986, are hereby CANCELLED and SET ASIDE.

SO ORDERED.9

Petitioner filed a petition for review with the Court of Appeals, which affirmed the CTA decision,10 holding that although the professional services
(legal and auditing services) were rendered to ICC in 1984 and 1985, the cost of the services was not yet determinable at that time, hence, it could
be considered as deductible expenses only in 1986 when ICC received the billing statements for said services. It further ruled that ICC did not
understate its interest income from the promissory notes of Realty Investment, Inc., and that ICC properly withheld and remitted taxes on the
payments for security services for the taxable year 1986.
Hence, petitioner, through the Office of the Solicitor General, filed the instant petition contending that since ICC is using the accrual method of
accounting, the expenses for the professional services that accrued in 1984 and 1985, should have been declared as deductions from income
during the said years and the failure of ICC to do so bars it from claiming said expenses as deduction for the taxable year 1986. As to the alleged
deficiency interest income and failure to withhold expanded withholding tax assessment, petitioner invoked the presumption that the assessment
notices issued by the BIR are valid.

The issue for resolution is whether the Court of Appeals correctly: (1) sustained the deduction of the expenses for professional and security services
from ICCs gross income; and (2) held that ICC did not understate its interest income from the promissory notes of Realty Investment, Inc; and that
ICC withheld the required 1% withholding tax from the deductions for security services.

The requisites for the deductibility of ordinary and necessary trade, business, or professional expenses, like expenses paid for legal and auditing
services, are: (a) the expense must be ordinary and necessary; (b) it must have been paid or incurred during the taxable year; (c) it must have been
paid or incurred in carrying on the trade or business of the taxpayer; and (d) it must be supported by receipts, records or other pertinent papers.11

The requisite that it must have been paid or incurred during the taxable year is further qualified by Section 45 of the National Internal Revenue
Code (NIRC) which states that: "[t]he deduction provided for in this Title shall be taken for the taxable year in which paid or accrued or paid or
incurred, dependent upon the method of accounting upon the basis of which the net income is computed x x x".

Accounting methods for tax purposes comprise a set of rules for determining when and how to report income and deductions. 12 In the instant case,
the accounting method used by ICC is the accrual method.

Revenue Audit Memorandum Order No. 1-2000, provides that under the accrual method of accounting, expenses not being claimed as deductions
by a taxpayer in the current year when they are incurred cannot be claimed as deduction from income for the succeeding year. Thus, a taxpayer
who is authorized to deduct certain expenses and other allowable deductions for the current year but failed to do so cannot deduct the same for
the next year.13

The accrual method relies upon the taxpayers right to receive amounts or its obligation to pay them, in opposition to actual receipt or payment,
which characterizes the cash method of accounting. Amounts of income accrue where the right to receive them become fixed, where there is
created an enforceable liability. Similarly, liabilities are accrued when fixed and determinable in amount, without regard to indeterminacy merely
of time of payment.14

For a taxpayer using the accrual method, the determinative question is, when do the facts present themselves in such a manner that the taxpayer
must recognize income or expense? The accrual of income and expense is permitted when the all-events test has been met. This test requires: (1)
fixing of a right to income or liability to pay; and (2) the availability of the reasonable accurate determination of such income or liability.

The all-events test requires the right to income or liability be fixed, and the amount of such income or liability be determined with reasonable
accuracy. However, the test does not demand that the amount of income or liability be known absolutely, only that a taxpayer has at his disposal
the information necessary to compute the amount with reasonable accuracy. The all-events test is satisfied where computation remains uncertain,
if its basis is unchangeable; the test is satisfied where a computation may be unknown, but is not as much as unknowable, within the taxable
year. The amount of liability does not have to be determined exactly; it must be determined with "reasonable accuracy." Accordingly, the term
"reasonable accuracy" implies something less than an exact or completely accurate amount.[15]

The propriety of an accrual must be judged by the facts that a taxpayer knew, or could reasonably be expected to have known, at the closing of
its books for the taxable year.[16] Accrual method of accounting presents largely a question of fact; such that the taxpayer bears the burden of
proof of establishing the accrual of an item of income or deduction.17

Corollarily, it is a governing principle in taxation that tax exemptions must be construed in strictissimi juris against the taxpayer and liberally in favor
of the taxing authority; and one who claims an exemption must be able to justify the same by the clearest grant of organic or statute law. An
exemption from the common burden cannot be permitted to exist upon vague implications. And since a deduction for income tax purposes
partakes of the nature of a tax exemption, then it must also be strictly construed. 18

In the instant case, the expenses for professional fees consist of expenses for legal and auditing services. The expenses for legal services pertain to
the 1984 and 1985 legal and retainer fees of the law firm Bengzon Zarraga Narciso Cudala Pecson Azcuna & Bengson, and for reimbursement of the
expenses of said firm in connection with ICCs tax problems for the year 1984. As testified by the Treasurer of ICC, the firm has been its counsel
since the 1960s.19 From the nature of the claimed deductions and the span of time during which the firm was retained, ICC can be expected to
have reasonably known the retainer fees charged by the firm as well as the compensation for its legal services. The failure to determine the exact
amount of the expense during the taxable year when they could have been claimed as deductions cannot thus be attributed solely to the delayed
billing of these liabilities by the firm. For one, ICC, in the exercise of due diligence could have inquired into the amount of their obligation to the
firm, especially so that it is using the accrual method of accounting. For another, it could have reasonably determined the amount of legal and
retainer fees owing to its familiarity with the rates charged by their long time legal consultant.

As previously stated, the accrual method presents largely a question of fact and that the taxpayer bears the burden of establishing the accrual of an
expense or income. However, ICC failed to discharge this burden. As to when the firms performance of its services in connection with the 1984 tax
problems were completed, or whether ICC exercised reasonable diligence to inquire about the amount of its liability, or whether it does or does
not possess the information necessary to compute the amount of said liability with reasonable accuracy, are questions of fact which ICC never
established. It simply relied on the defense of delayed billing by the firm and the company, which under the circumstances, is not sufficient to
exempt it from being charged with knowledge of the reasonable amount of the expenses for legal and auditing services.

In the same vein, the professional fees of SGV & Co. for auditing the financial statements of ICC for the year 1985 cannot be validly claimed as
expense deductions in 1986. This is so because ICC failed to present evidence showing that even with only "reasonable accuracy," as the standard
to ascertain its liability to SGV & Co. in the year 1985, it cannot determine the professional fees which said company would charge for its services.
ICC thus failed to discharge the burden of proving that the claimed expense deductions for the professional services were allowable deductions for
the taxable year 1986. Hence, per Revenue Audit Memorandum Order No. 1-2000, they cannot be validly deducted from its gross income for the
said year and were therefore properly disallowed by the BIR.

As to the expenses for security services, the records show that these expenses were incurred by ICC in 1986 20 and could therefore be properly
claimed as deductions for the said year.

Anent the purported understatement of interest income from the promissory notes of Realty Investment, Inc., we sustain the findings of the CTA
and the Court of Appeals that no such understatement exists and that only simple interest computation and not a compounded one should have
been applied by the BIR. There is indeed no stipulation between the latter and ICC on the application of compounded interest. 21 Under Article 1959
of the Civil Code, unless there is a stipulation to the contrary, interest due should not further earn interest.

Likewise, the findings of the CTA and the Court of Appeals that ICC truly withheld the required withholding tax from its claimed deductions for
security services and remitted the same to the BIR is supported by payment order and confirmation receipts. 22 Hence, the Assessment Notice for
deficiency expanded withholding tax was properly cancelled and set aside.

In sum, Assessment Notice No. FAS-1-86-90-000680 in the amount of P333,196.86 for deficiency income tax should be cancelled and set aside but
only insofar as the claimed deductions of ICC for security services. Said Assessment is valid as to the BIRs disallowance of ICCs expenses for
professional services. The Court of Appeals cancellation of Assessment Notice No. FAS-1-86-90-000681 in the amount of P4,897.79 for deficiency
expanded withholding tax, is sustained.

WHEREFORE, the petition is PARTIALLY GRANTED. The September 30, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 78426, is AFFIRMED
with the MODIFICATION that Assessment Notice No. FAS-1-86-90-000680, which disallowed the expense deduction of Isabela Cultural Corporation
for professional and security services, is declared valid only insofar as the expenses for the professional fees of SGV & Co. and of the law firm,
Bengzon Zarraga Narciso Cudala Pecson Azcuna & Bengson, are concerned. The decision is affirmed in all other respects.

The case is remanded to the BIR for the computation of Isabela Cultural Corporations liability under Assessment Notice No. FAS-1-86-90-000680.

SO ORDERED.

G.R. No. 159991 November 16, 2006

CARMELINO F. PANSACOLA, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

DECISION

QUISUMBING, J.:

For review on certiorari is the Decision1 dated June 5, 2003 of the Court of Appeals in CA-G.R. S.P. No. 60475. The appellate court denied
petitioners availment of the increased amounts of personal and additional exemptions under Republic Act No. 8424, the National Internal Revenue
Code of 19972 (NIRC), which took effect on January 1, 1998. Also assailed is the appellate courts Resolution3 dated September 11, 2003, denying
the motion for reconsideration.

The facts are undisputed.

On April 13, 1998, petitioner Carmelino F. Pansacola filed his income tax return for the taxable year 1997 that reflected an overpayment of 5,950.
In it he claimed the increased amounts of personal and additional exemptions under Section 35 4 of the NIRC, although his certificate of income tax
withheld on compensation indicated the lesser allowed amounts5 on these exemptions. He claimed a refund of 5,950 with the Bureau of Internal
Revenue, which was denied. Later, the Court of Tax Appeals also denied his claim because according to the tax court, "it would be absurd for the
law to allow the deduction from a taxpayers gross income earned on a certain year of exemptions availing on a different taxable year"6 Petitioner
sought reconsideration, but the same was denied.7

On appeal, the Court of Appeals denied his petition for lack of merit. The appellate court ruled that Umali v. Estanislao,8 relied upon by petitioner,
was inapplicable to his case. It further ruled that the NIRC took effect on January 1, 1998, thus the increased exemptions were effective only to
cover taxable year 1998 and cannot be applied retroactively.

Petitioner, before us, raises a single issue:

[W]hether or not the increased personal and additional exemptions under [the NIRC] can be availed of by the [p]etitioner for purposes of
computing his income tax liability for the taxable year 1997 and thus be entitled to the refund.9

Simply stated, the issue is: Could the exemptions under Section 35 of the NIRC, which took effect on January 1, 1998, be availed of for the taxable
year 1997?

Petitioner argues that the personal and additional exemptions are of a fixed character based on Section 35 (A) and (B) of the NIRC10 and as ruled by
this Court in Umali, these personal and additional exemptions are fixed amounts to which an individual taxpayer is entitled. He contends that
unlike other allowable deductions, the availability of these exemptions does not depend on the taxpayers profession, trade or business for a
particular taxable period. Relying again in Umali, petitioner alleges that the Court of Appeals erred in ruling that the increased exemptions were
meant to be applied beginning taxable year 1998 and were to be reflected in the taxpayers returns to be filed on or before April 15, 1999.
Petitioner reasons that such ruling would postpone the availability of the increased exemptions and literally defer the effectivity of the NIRC to
January 1, 1999. Petitioner insists that the increased exemptions were already available on April 15, 1998, the deadline for filing income tax returns
for taxable year 1997, because the NIRC was already effective.

Respondent, through the Office of the Solicitor General, counters that the increased exemptions were not yet available for taxable year 1997
because all provisions of the NIRC took effect on January 1, 1998 only; that the fixed character of personal and additional exemptions does not
necessarily mean that these were not time bound; and petitioners proposition was contrary to Section 35 (C)11 of the NIRC. It further stated that
petitioners exemptions were determined as of December 31, 1997 and the effectivity of the NIRC during the period of January 1 to April 15, 1998
did not affect his tax liabilities within the taxable year 1997; and the inclusive period from January 1 to April 15, 1998, the filing dates and deadline
for administrative purposes, was outside of the taxable year 1997. Respondent also maintains that Umali is not applicable to this case.

Prefatorily, personal and additional exemptions under Section 35 of the NIRC are fixed amounts to which certain individual taxpayers (citizens,
resident aliens)12 are entitled. Personal exemptions are the theoretical personal, living and family expenses of an individual allowed to be deducted
from the gross or net income of an individual taxpayer. These are arbitrary amounts which have been calculated by our lawmakers to be roughly
equivalent to the minimum of subsistence,13 taking into account the personal status and additional qualified dependents of the taxpayer. They are
fixed amounts in the sense that the amounts have been predetermined by our lawmakers as provided under Section 35 (A) and (B). Unless and
until our lawmakers make new adjustments on these personal exemptions, the amounts allowed to be deducted by a taxpayer are fixed as
predetermined by Congress.

A careful scrutiny of the provisions14 of the NIRC specifically shows that Section 79 (D)15 provides that the personal and additional exemptions shall
be determined in accordance with the main provisions in Title II of the NIRC. Its main provisions pertain to Section 35 (A) and (B) which state,

SEC. 35. Allowance of Personal Exemption for Individual Taxpayer. -

(A) In General.-For purposes of determining the tax provided in Section 24(A) of this Title,16 there shall be allowed a basic personal exemption as
follows:

xxxx

For each married individual 32,000

xxxx

(B) Additional Exemption for Dependents.There shall be allowed an additional exemption of Eight thousand pesos (8,000) for each dependent
not exceeding four (4). (Emphasis ours.)

Section 35 (A) and (B) allow the basic personal and additional exemptions as deductions from gross or net income, as the case maybe, to arrive at
the correct taxable income of certain individual taxpayers. Section 24 (A) (1) (a) imposed income tax on a resident citizens taxable income derived
for each taxable year. It provides as follows:

SEC. 24. Income Tax Rates.

(A) Rates of Income Tax on Individual Citizen

(1) An income tax is hereby imposed:

(a) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B),17 (C),18 and (D)19 of this
Section, derived for each taxable year from all sources within and without the Philippines by every individual citizen of the Philippines residing
therein; (Emphasis ours.)

Section 31 defines "taxable income" as the pertinent items of gross income specified in the NIRC, less the deductions and/or personal and
additional exemptions, if any, authorized for such types of income by the NIRC or other special laws. As defined in Section 22 (P),20 "taxable year"
means the calendar year, upon the basis of which the net income is computed under Title II of the NIRC. Section 4321 also supports the rule that the
taxable income of an individual shall be computed on the basis of the calendar year. In addition, Section 45 22 provides that the deductions provided
for under Title II of the NIRC shall be taken for the taxable year in which they are "paid or accrued" or "paid or incurred."

Moreover, Section 79 (H)23 requires the employer to determine, on or before the end of the calendar year but prior to the payment of the
compensation for the last payroll period, the tax due from each employees taxable compensation income for the entire taxable year in accordance
with Section 24 (A). This is for the purpose of either withholding from the employees December salary, or refunding to him not later than January
25 of the succeeding year, the difference between the tax due and the tax withheld.

Therefore, as provided in Section 24 (A) (1) (a) in relation to Sections 31 and 22 (P) and Sections 43, 45 and 79 (H) of the NIRC, the income subject
to income tax is the taxpayers income as derived and computed during the calendar year, his taxable year.

Clearly from the abovequoted provisions, what the law should consider for the purpose of determining the tax due from an individual taxpayer is
his status and qualified dependents at the close of the taxable year and not at the time the return is filed and the tax due thereon is paid. Now
comes Section 35 (C) of the NIRC which provides,

Sec. 35. Allowance of Personal Exemption for Individual Taxpayer.

xxxx
(C) Change of Status. If the taxpayer marries or should have additional dependent(s) as defined above during the taxable year, the taxpayer may
claim the corresponding additional exemption, as the case may be, in full for such year.

If the taxpayer dies during the taxable year, his estate may still claim the personal and additional exemptions for himself and his dependent(s) as if
he died at the close of such year.

If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully
employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such
dependents married, became twenty-one (21) years old or became gainfully employed at the close of such year.

Emphasis must be made that Section 35 (C) of the NIRC allows a taxpayer to still claim the corresponding full amount of exemption for a taxable
year, e.g. if he marries; have additional dependents; he, his spouse, or any of his dependents die; and if any of his dependents marry, turn 21 years
old; or become gainfully employed. It is as if the changes in his or his dependents status took place at the close of the taxable year.

Consequently, his correct taxable income and his corresponding allowable deductions e.g. personal and additional deductions, if any, had already
been determined as of the end of the calendar year.

In the case of petitioner, the availability of the aforementioned deductions if he is thus entitled, would be reflected on his tax return filed on or
before the 15th day of April 1999 as mandated by Section 51 (C) (1).24 Since the NIRC took effect on January 1, 1998, the increased amounts of
personal and additional exemptions under Section 35, can only be allowed as deductions from the individual taxpayers gross or net income, as the
case maybe, for the taxable year 1998 to be filed in 1999. The NIRC made no reference that the personal and additional exemptions shall apply on
income earned before January 1, 1998.

Thus, petitioners reliance in Umali is misplaced.

In Umali, we noted that despite being given authority by Section 29 (1) (4)25 of the National Internal Revenue Code of 1977 to adjust these
exemptions, no adjustments were made to cover 1989. Note that Rep. Act No. 7167 is entitled "An Act Adjusting the Basic Personal and Additional
Exemptions Allowable to Individuals for Income Tax Purposes to the Poverty Threshold Level, Amending for the Purpose Section 29, Paragraph (L),
Items (1) and (2) (A), of the National Internal Revenue Code, As Amended, and For Other Purposes." Thus, we said in Umali, that the adjustment
provided by Rep. Act No. 7167 effective 1992, should consider the poverty threshold level in 1991, the time it was enacted. And we observed
therein that since the exemptions would especially benefit lower and middle-income taxpayers, the exemption should be made to cover the past
year 1991. To such an extent, Rep. Act No. 7167 was a social legislation intended to remedy the non-adjustment in 1989. And as cited in Umali, this
legislative intent is also clear in the records of the House of Representatives Journal.

This is not so in the case at bar. There is nothing in the NIRC that expresses any such intent. The policy declarations in its enactment do not indicate
it was a social legislation that adjusted personal and additional exemptions according to the poverty threshold level nor is there any indication that
its application should retroact. At the time petitioner filed his 1997 return and paid the tax due thereon in April 1998, the increased amounts of
personal and additional exemptions in Section 35 were not yet available. It has not yet accrued as of December 31, 1997, the last day of his taxable
year. Petitioners taxable income covers his income for the calendar year 1997. The law cannot be given retroactive effect. It is established that tax
laws are prospective in application, unless it is expressly provided to apply retroactively.26 In the NIRC, we note, there is no specific mention that
the increased amounts of personal and additional exemptions under Section 35 shall be given retroactive effect. Conformably too, personal and
additional exemptions are considered as deductions from gross income. Deductions for income tax purposes partake of the nature of tax
exemptions, hence strictly construed27 against the taxpayer28 and cannot be allowed unless granted in the most explicit and categorical
language29 too plain to be mistaken.30 They cannot be extended by mere implication or inference.31 And, where a provision of law speaks
categorically, the need for interpretation is obviated, no plausible pretense being entertained to justify non-compliance. All that has to be done is
to apply it in every case that falls within its terms.32

Accordingly, the Court of Appeals and the Court of Tax Appeals were correct in denying petitioners claim for refund.1wphi1

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated June 5, 2003 and the Resolution dated September 11, 2003 of the Court
of Appeals in CA-G.R. S.P. No. 60475 are hereby AFFIRMED.

SO ORDERED.

SYSTRA PHILIPPINES, INC., VS CIR G.R. No. 176290

CORONA, J.:

This resolves petitioner Systra Philippines, Inc.s (1) motion for leave to file a second motion for reconsideration and (2) second motion for
reconsideration of the Courts March 28, 2007 resolution.

On March 9, 2007, petitioner filed a petition for review on certiorari assailing the January 18, 2007 decision[1] of the Court of Tax Appeals (CTA) in
CTA EB Case No. 135. The Court denied the petition in its March 28, 2007 resolution on the following grounds:

(a) failure of petitioners counsel to submit his IBP[2] O.R.[3] number showing proof of payment of IBP dues for the current year (the IBP O.R. No.
was for 2006, i.e., it was dated November 20, 2006);

(b) submitting a verification of the petition, certification of non-forum shopping and affidavit of service that failed to comply with the 2004
Rules on Notarial Practice with respect to competent evidence of affiants identities and

(c) failure to give an explanation why service was not done personally as required by Section 11, Rule 13 in relation to Section 3, Rule 45 and
Section 5(d), Rule 56 of the Rules of Court.
On July 5, 2007, petitioners motion for reconsideration was denied with finality as there was no compelling reason to warrant a modification of the
March 28, 2007 resolution. Thus, the present motions.

Petitioner claims that this Court has granted second and even third motions for reconsideration for extraordinarily persuasive reasons. It avers that
this Court should look into the importance of the issues involved in deciding whether leave to file a second motion for reconsideration should be
granted or not. It prays that its petition should not be denied on the basis of procedural lapses alone and points out that the substantial amount
involved in the petition justifies relaxation of technical rules. It asserts that there is an important legal issue involved in this case: whether the
exercise of the option to carry over excess income tax credits under Section 76 of the National Internal Revenue Code of 1997, as amended (Tax
Code) bars a taxpayer from claiming the excess tax credits for refund even if the amount remains unutilized in the succeeding taxable year. Finally,
it contends that the assailed CTA decision was contradictory to the decisions of the Court of Appeals (CA)[4] in Bank of the Philippine Islands v.
Commissioner of Internal Revenue[5] and Raytheon Ebasco Overseas Ltd. Philippine Branch v. Commissioner of Internal Revenue [6] which involved
the same issue as that in this case. According to petitioner, in view of those CA decisions, it is unjust to deprive it of the right to claim a refund.

We deny petitioners motions.

A SECOND MOTION FOR

RECONSIDERATION IS

PROHIBITED

The denial of a motion for reconsideration is final. It means that the Court will no longer entertain and consider further arguments or submissions
from the parties respecting the correctness of its decision or resolution.[7] It signifies that, in the Courts considered view, nothing more is left to be
discussed, clarified or done in the case since all issues raised have been passed upon and definitely resolved. Any other issue which could and
should have been raised is deemed waived and is no longer available as ground for a second motion. A denial with finality underscores that the
case is considered closed.[8] Thus, as a rule, a second motion for reconsideration is a prohibited pleading. [9] The Court stressed in Ortigas and
Company Limited Partnership v. Velasco:[10]

A second motion for reconsideration is forbidden except for extraordinarily persuasive reasons, and only upon express leave first
obtained.[11] (emphasis supplied)

It is true that procedural rules may be relaxed in the interest of substantial justice. They are not, however, to be disdained as mere technicalities
that may be ignored at will to suit the convenience of a party.[12] They are intended to ensure the orderly administration of justice and the
protection of substantive rights in judicial proceedings.[13] Thus, procedural rules are not to be belittled or dismissed simply because their non-
observance may have resulted in prejudicing a partys substantive rights. [14] Like all rules, they are required to be followed except only when, for the
most persuasive of reasons, they may be relaxed to relieve a litigant of negative consequences commensurate with the degree of thoughtlessness
in not complying with the prescribed procedure.[15]

In this case, contrary to petitioners claim, there was no compelling reason to excuse non-compliance with the rules. Nor were the grounds raised by
it extraordinarily persuasive.[16]

Moreover, petitioner can neither properly nor successfully rely on the decisions of the CA in the Bank of the Philippine Islands and Raytheon Ebasco
Overseas Ltd. Philippine Branch cases. First, the CA and the CTA are now of the same level pursuant to RA 9282.[17] Decisions of the CA are thus no
longer superior to nor reversive of those of the CTA. Second, a decision of the CA in an action in personam binds only the parties in that case. A
third party in an actionin personam cannot claim any right arising from a decision therein. Finally and most importantly, while a ruling of the CA on
any question of law is not conclusive on this Court, all rulings of this Court on questions of law are conclusive and binding on all courts including the
CA. All courts must take their bearings from the decisions of this Court.[18]

ON THE SUBSTANTIVE ASPECT, THE PETITION HAS NO MERIT

The antecedents of this case are as follows:

On April 16, 2001, petitioner filed with the [Bureau of Internal Revenue (BIR)] its Annual Income Tax Return (ITR) for the taxable year ended
December 31, 2000 declaring revenues in the amount of [P18,252,719] the bulk of which consists of income from management consultancy
services rendered to the Philippine Branch of Group Systra SA, France. Subjecting said income from consultancy services of petitioner to 5%
creditable withholding tax, a total amount of [P4,703,019] was declared by petitioner as creditable taxes withheld for the taxable year 2000.

For the same period, petitioner reflected a total gross income of [P3,752,129], a net loss of [P17,930] and a minimum corporate income tax (MCIT)
of [P75,043]. Said MCIT of P75,043 was offset against its total tax credits for the year 2000 amounting to [P4,703,019] thereby leaving a total
unutilized tax credits of [P4,627,976], computed as follows:

Gross Income P3,752,129.00

Less: Deductions P3,770,059.00

Net loss P 17,930.00

Minimum Corporate Income Tax Due P75,043.00

Less: Tax Credits

Prior years excess credits P -

Creditable taxes withheld P4,703,019.00 P4,703,019.00

during the year

Tax Overpayment P4,627,976.00

Petitioner opted to carry over the said excess tax credit to the succeeding taxable year 2001.

For the taxable year ended December 31, 2001, petitioner filed with the BIR its Annual ITR on April 12, 2002, reflecting a total gross income of
[P4,771,419] and a total creditable taxes withheld of [P1,111,587] for consultancy services. It likewise declared a taxable income of [P1,936,851]
with corresponding normal income tax due in the amount of [P619,792]. After deducting the unexpired excess of the previous year MCIT [1999 and
2000] in the amount of [P222,475] from the normal income tax due for the period, petitioners net tax due of [P397,317] was applied against the
accumulated tax credits of [P5,739,563]. Said reported tax credits comprised of prior years excess tax credits in the amount of [P4,627,976] and
creditable taxes withheld during the year 2001 in the sum of [P1,111,587]. These excess tax credits were utilized to pay off the income tax still due
of [P397,317] resulting to an overpayment of [P5,342,246], computed as follows:

Gross Income P4,771,419.00

Less: Deductions P2,834,568.00

Taxable Income P1,936,851.00

Income Tax Due at the Normal Rate of 32% P 619,792.00

Less: Unexpired Excess of Prior Years MCIT

Over Normal Income Tax Rate P 222,475.00 P 397,317.00

Income Tax Still Due

Less: Tax Credits

Prior years excess credits P4,627,976.00

Creditable taxes withheld

during the year 1,111,587.00 P5,739,563.00

Tax Overpayment P5,342,246.00

Petitioner indicated in the 2001 ITR the option To be issued a Tax Credit Certificate relative to its tax overpayments.

On August 9, 2002, petitioner instituted a claim for refund or issuance of a tax credit certificate with the BIR of its unutilized creditable withholding
taxes in the amount of P5,342,246.00 as of December 31, 2001.

Due to the inaction of the BIR on petitioners claim for refund and to preserve its right to claim for the refund to its unutilized CWT for CYs 2000 and
2001 by judicial action, petitioner filed a petition for review with the Court in Division on April 14, 2003. [19]

In its August 3, 2005 decision, the First Division of the CTA partially granted the petition and ordered the issuance of a tax credit certificate to
petitioner in the amount of P1,111,587 representing the excess or unutilized creditable withholding taxes for taxable year 2001. The CTA, however,
denied petitioners claim for refund of the excess tax credits for the year 2000 in the amount of P4,627,976. It ruled that petitioner was precluded
from claiming a refund thereof or requesting a tax credit certificate therefor. Once it was made for a particular taxable period, the option to carry
over became irrevocable.

Petitioner moved for reconsideration but it was denied. Petitioner elevated the case to the CTA en banc which rendered the assailed decision.
Thus, this petition.

As already stated, petitioner formulated the issue in this petition as follows: whether the exercise of the option to carry-over excess income tax
credits under Section 76 of the Tax Code bars a taxpayer from claiming the excess tax credits for refund even if the amount remains unutilized in
the succeeding taxable year. Petitioner contends that it does not.

We disagree.

Section 76 of the Tax Code provides:

SEC. 76. Final Adjustment Return. Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable
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 balance of tax still due; or

(B) Carry-over the excess credit; or

(C) Be credited or refunded with the excess amount paid, as the case may be.

In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its
final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the
succeeding taxable years. Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable
quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application
for cash refund or issuance of a tax credit certificate shall be allowed therefor. (emphasis supplied)

A corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes paid has two options: (1) to carry over the excess
credit or (2) to apply for the issuance of a tax credit certificate or to claim a cash refund. If the option to carry over the excess credit is exercised,
the same shall be irrevocable for that taxable period.

In exercising its option, the corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR form)
its intention either to carry over the excess credit or to claim a refund. To facilitate tax collection, these remedies are in the alternative and the
choice of one precludes the other.[20]

This is known as the irrevocability rule and is embodied in the last sentence of Section 76 of the Tax Code. The phrase such option shall be
considered irrevocable for that taxable period means that the option to carry over the excess tax credits of a particular taxable year can no longer
be revoked.

The rule prevents a taxpayer from claiming twice the excess quarterly taxes paid: (1) as automatic credit against taxes for the taxable quarters of
the succeeding years for which no tax credit certificate has been issued and (2) as a tax credit either for which a tax credit certificate will be issued
or which will be claimed for cash refund.[21]

In this case, it was in the year 2000 that petitioner derived excess tax credits and exercised the irrevocable option to carry them over as tax credits
for the next taxable year. Under Section 76 of the Tax Code, a claim for refund of such excess credits can no longer be made. The excess credits will
only be applied against income tax due for the taxable quarters of the succeeding taxable years.

The legislative intent to make the option irrevocable becomes clearer when Section 76 is viewed in comparison to Section 69 of the (old) 1977 Tax
Code:

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 tax credit or 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.

Under Section 69 of the 1977 Tax Code, there was no irrevocability rule. Instead of claiming a refund, the excess tax credits could be credited
against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year, that is, the immediately following year
only. In contrast, Section 76 of the present Tax Code formulates an irrevocability rule which stresses and fortifies the nature of the remedies or
options as alternative, not cumulative. It also provides that the excess tax credits may be carried over and credited against the estimated quarterly
income tax liabilities for the taxable quarters of the succeeding taxable years until fully utilized.

Furthermore, this case is closely similar to Philam Asset Management, Inc. v. Commissioner of Internal Revenue.[22] In that case, Philam Asset
Management, Inc. had an unapplied creditable withholding tax in the amount of P459,756.07 for the year 1998. It carried over the said excess tax
to the following taxable year, 1999. In the next succeeding year, it had a tax due in the amount of P80,042 and a creditable withholding tax in the
amount of P915,995. As such, the amount due for the year 1999 (P80,042) was credited to its P915,995 creditable withholding tax for that year.
Thus, its 1998 creditable withholding tax in the amount of P459,756.07 remained unutilized. Thereafter, it filed a claim for refund with respect to
the unapplied creditable withholding tax of P459,756.07 for the year 1998. The Court denied the claim and ruled:

Section 76 [is] clear and unequivocal. Once the carry-over option is taken, actually or constructively, it becomes irrevocable. Petitioner has
chosen that option for its 1998 creditable withholding taxes. Thus, it is no longer entitled to a tax refund of P459,756.07, which corresponds to its
1998 excess tax credit. Nonetheless, the amount will not be forfeited in the governments favor, because it may be claimed by petitioner as tax
credits in the succeeding taxable years. (emphasis supplied)

Since petitioner elected to carry over its excess credits for the year 2000 in the amount of P4,627,976 as tax credits for the following year, it could
no longer claim a refund. Again, at the risk of being repetitive, once the carry over option was made, actually or constructively, it became forever
irrevocable regardless of whether the excess tax credits were actually or fully utilized. Nevertheless, as held in Philam Asset Management, Inc., the
amount will not be forfeited in favor of the government but will remain in the taxpayers account. Petitioner may claim and carry it over in the
succeeding taxable years, creditable against future income tax liabilities until fully utilized.[23]

WHEREFORE, petitioners motion for leave to file a second motion for reconsideration and the second motion for reconsideration are
hereby DENIED. No further pleadings shall be entertained. Let entry of judgment be made in due course.

SO ORDERED.

CIR VS BPI

CHICO-NAZARIO, J.

This is a Petition for Review assailing the Decision[1] dated 29 April 2005 and the Resolution dated 20 April 2007 of the Court of Appeals in
CA-G.R. SP No. 77655, which annulled and set aside the Decision dated 12 March 2003 of the Court of Tax Appeals (CTA) in CTA Case No. 6276,
wherein the CTA held that respondent Bank of the Philippine Islands (BPI) already exercised the irrevocable option to carry over its excess tax
credits for the year 1998 to the succeeding years 1999 and 2000 and was, therefore, no longer entitled to claim the refund or issuance of a tax
credit certificate for the amount thereof.

On 15 April 1999, BPI filed with the Bureau of Internal Revenue (BIR) its final adjusted Corporate Annual Income Tax Return (ITR) for the
taxable year ending on 31 December 1998, showing a taxable income of P1,773,236,745.00 and a total tax due of P602,900,493.00.

For the same taxable year 1998, BPI already made income tax payments for the first three quarters, which amounted
to P563,547,470.46.[2] The bank also received income in 1998 from various third persons, which, were already subjected to expanded withholding
taxes amounting to P7,685,887.90. BPI additionally acquired foreign tax credit when it paid the United States government taxes in the amount of
$151,467.00, or the equivalent of P6,190,014.46, on the operations of formers New York Branch. Finally, respondent BPI had carried over excess
tax credit from the prior year, 1997, amounting to P59,424,222.00.

Crediting the aforementioned amounts against the total tax due from it at the end of 1998, BPI computed an overpayment to the BIR of
income taxes in the amount of P33,947,101.00. The computation of BPI is reproduced below:

Total Income Taxes Due P602,900,493.00

Less: Tax Credits:
Prior years tax credits P59,424,222.00
Quarterly payments 563,547,470.46
Creditable taxes withheld 7,685,887.90
Foreign tax credit 6,190,014.00 636,847,594.00
------------------- -------------------
Net Tax Payable/(Refundable) P(33,947,101.00)

BPI opted to carry over its 1998 excess tax credit, in the amount of P33,947,101.00, to the succeeding taxable year ending 31 December
1999.[3] For 1999, however, respondent BPI ended up with (1) a net loss in the amount of P615,742,102.00; (2) its still unapplied excess tax credit
carried over from 1998, in the amount of P33,947,101.00; and (3) more excess tax credit, acquired in 1999, in the sum of P12,975,750.00. So in
1999, the total excess tax credits of BPI increased to P46,922,851.00, which it once more opted to carry over to the following taxable year.

For the taxable year ending 31 December 2000, respondent BPI declared in its Corporate Annual ITR: (1) zero taxable income; (2) excess
tax credit carried over from 1998 and 1999, amounting to P46,922,851.00; and (3) even more excess tax credit, gained in 2000, in the amount
of P25,207,939.00. This time, BPI failed to indicate in its ITR its choice of whether to carry over its excess tax credits or to claim the refund of or
issuance of a tax credit certificate for the amounts thereof.

On 3 April 2001, BPI filed with petitioner Commissioner of Internal Revenue (CIR) an administrative claim for refund in the amount
of P33,947,101.00, representing its excess creditable income tax for 1998.

The CIR failed to act on the claim for tax refund of BPI. Hence, BPI filed a Petition for Review before the CTA, docketed as CTA Case No.
6276.

The CTA promulgated its Decision in CTA Case No. 6276 on 12 March 2003, ruling therein that since BPI had opted to carry over its 1998
excess tax credit to 1999 and 2000, it was barred from filing a claim for the refund of the same.
 The CTA relied on the irrevocability rule laid down in Section 76 of the National Internal Revenue Code (NIRC) of 1997, which states that
once the taxpayer opts to carry over and apply its excess income tax to succeeding taxable years, its option shall be irrevocable for that taxable
period and no application for tax refund or issuance of a tax credit shall be allowed for the same.

The CTA Decision adjudged:

A close scrutiny of the 1998 income tax return of [BPI] reveals that it opted to carry over its excess tax credits, the
amount subject of this claim, to the succeeding taxable year by placing an x mark on the corresponding box of said return
(Exhibits A-2 & 3-a). For the year 1999, [BPI] again manifested its intention to carry over to the succeeding taxable period the
subject claim together with the current excess tax credits (Exhibit J). Still unable to apply its prior years excess credits in 1999 as
it ended up in a net loss position, petitioner again carried over the said excess credits in the year 2000 (Exhibit K).

The court already categorically ruled in a number of cases that once the option to carry-over and apply the excess
quarterly income tax against the income tax due for the taxable quarters of the succeeding taxable years has been made, such
option shall be considered irrevocable and no application for cash refund or issuance of a tax credit certificate shall be allowed
therefore (Pilipinas Transport Industries vs. Commissioner of Internal Revenue, CTA Case No. 6073, dated March 1, 2002;
Pilipinas Hino, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 6074, dated April 19, 2002; Philam Asset Management,
Inc. vs. Commissioner of Internal Revenue, CTA Case No. 6210, dated May 2, 2002; The Philippine Banking Corporation (now
known as Global Business Bank, Inc.) vs. Commissioner of Internal Revenue, CTA Resolution, CTA Case No. 6280, August 16,
2001. Since [BPI] already exercised the irrevocable option to carry over its excess tax credits for the year 1998 to the succeeding
years 1999 and 2000, it is, therefore, no longer entitled to claim for a refund or issuance of a tax credit certificate.[4]

In the end, the CTA decreed:

IN VIEW OF ALL THE FOREGOING, the instant petition for review is hereby DENIED for lack of merit. [5]

BPI filed a Motion for Reconsideration of the foregoing Decision, but the CTA denied the same in a Resolution dated 3 June 2003.

BPI filed an appeal with the Court of Appeals, docketed as CA-G.R. SP No. 77655. On 29 April 2005, the Court of Appeals rendered its
Decision, reversing that of the CTA and holding that BPI was entitled to a refund of the excess income tax it paid for 1998.

The Court of Appeals conceded that BPI indeed opted to carry over its excess tax credit in 1998 to 1999 by placing an x mark on the
corresponding box of its 1998 ITR. Nonetheless, there was no actual carrying over of the excess tax credit, given that BPI suffered a net loss in 1999,
and was not liable for any income tax for said taxable period, against which the 1998 excess tax credit could have been applied.

The Court of Appeals added that even if Section 76 was to be construed strictly and literally, the irrevocability rule would still not bar BPI
from seeking a tax refund of its 1998 excess tax credit despite previously opting to carry over the same. The phrase for that taxable period qualified
the irrevocability of the option of BIR to carry over its 1998 excess tax credit to only the 1999 taxable period; such that, when the 1999 taxable
period expired, the irrevocability of the option of BPI to carry over its excess tax credit from 1998 also expired.

The Court of Appeals further reasoned that the government would be unjustly enriched should the appellate court hold that
the irrevocability rule barred the claim for refund of a taxpayer, who previously opted to carry-over its excess tax credit, but was not able to use the
same because it suffered a net loss in the succeeding year.

Finally, the appellate court cited BPI-Family Savings Bank, Inc. v. Court of Appeals[6] wherein this Court held that if a taxpayer suffered a
net loss in a year, thus, incurring no tax liability to which the tax credit from the previous year could be applied, there was no reason for the BIR to
withhold the tax refund which rightfully belonged to the taxpayer.[7]

In a Resolution dated 20 April 2007, the Court of Appeals denied the Motion for Reconsideration of the CIR.[8]

Hence, the CIR filed the instant Petition for Review, alleging that:

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDING THAT THE IRREVOCABILITY RULE UNDER SECTION 76
OF THE TAX CODE DOES NOT OPERATE TO BAR PETITIONER FROM ASKING FOR A TAX REFUND.

II

THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT REVERSED AND SET ASIDE THE DECISION OF THE COURT OF TAX
APPEALS AND HELD THAT RESPONDENT IS ENTITLED TO THE CLAIMED TAX REFUND.

The Court finds merit in the instant Petition.

 The Court of Appeals erred in relying on BPI-Family, missing significant details that rendered said case inapplicable to the one at bar.

In BPI-Family, therein petitioner BPI-Family declared in its Corporate Annual ITR for 1989 excess tax credits of P185,001.00 from 1988
and P112,491.00 from 1989, totaling P297,492.00. BPI-Family clearly indicated in the same ITR that it was carrying over said excess tax credits to
the following year. But on 11 October 1990, BPI-Family filed a claim for refund of its P112,491.00 tax credit from 1989. When no action from the
BIR was forthcoming, BPI-Family filed its claim with the CTA. The CTA denied the claim for refund of BPI-Family on the ground that, since the bank
declared in its 1989 ITR that it would carry over its tax credits to the following year, it should be presumed to have done so. In its Motion for
Reconsideration filed with the CTA, BPI-Family submitted its final adjusted ITR for 1989 showing that it incurred P52,480,173.00 net loss in
1990. Still, the CTA denied the Motion for Reconsideration of BPI-Family. The Court of Appeals likewise denied the appeal of BPI-Family and merely
affirmed the judgment of the CTA. The Court, however, reversed the CTA and the Court of Appeals.

This Court decided to grant the claim for refund of BPI-Family after finding that the bank had presented sufficient evidence to prove that
it incurred a net loss in 1990 and, thus, had no tax liability to which its tax credit from 1989 could be applied. The Court stressed in BPI Family that
the undisputed fact is that [BPI-Family] suffered a net loss in 1990; accordingly, it incurred no tax liability to which the tax credit could be
applied. Consequently, there is no reason for the BIR and this Court to withhold the tax refund which rightfully belongs to the [BPI-Family]. It was
on the basis of this fact that the Court granted the appeal of BPI-Family, brushing aside all procedural and technical objections to the same through
the following pronouncements:

Finally, respondents argue that tax refunds are in the nature of tax exemptions and are to be construed strictissimi
juris against the claimant. Under the facts of this case, we hold that [BPI-Family] has established its claim. [BPI-Family] may have
failed to strictly comply with the rules of procedure; it may have even been negligent. These circumstances, however, should
not compel the Court to disregard this cold, undisputed fact: that petitioner suffered a net loss in 1990, and that it could not
have applied the amount claimed as tax credits.

Substantial justice, equity and fair play are on the side of [BPI-Family]. Technicalities and legalisms, however exalted,
should not be misused by the government to keep money not belonging to it and thereby enrich itself at the expense of its law-
abiding citizens. If the State expects its taxpayers to observe fairness and honesty in paying their taxes, so must it apply the
same standard against itself in refunding excess payments of such taxes. Indeed, the State must lead by its own example of
honor, dignity and uprightness.[9]

It is necessary for this Court, however, to emphasize that BPI-Family involved tax credit acquired by the bank in 1989, which it initially
opted to carry over to 1990. The prevailing tax law then was the NIRC of 1985, Section 79[10] of which provided:

Sec. 79. 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. (Emphases ours.)

By virtue of the afore-quoted provision, the taxpayer with excess income tax was given the option to either (1) refund the amount; or (2)
credit the same to its tax liability for succeeding taxable periods.

Section 79 of the NIRC of 1985 was reproduced as Section 76 of the NIRC of 1997,[11] with the addition of one important sentence, which
laid down the irrevocability rule:

Section 76. 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 years. Once the option to carry-over and apply the excess quarterly income tax
against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be
considered irrevocable for that taxable period and no application for tax refund or issuance of a tax credit certificate shall be
allowed therefor. (Emphases ours.)
 When BPI-Family was decided by this Court, it did not yet have the irrevocability rule to consider. Hence, BPI-Family cannot be cited as a
precedent for this case.

The factual background of Philam Asset Management, Inc. v. Commissioner of Internal Revenue,[12] cited by the CIR, is closer to the
instant Petition. Both involve tax credits acquired and claims for refund filed more than a decade after those in BPI-Family, to which Section 76 of
the NIRC of 1997 already apply.

The Court, in Philam, recognized the two options offered by Section 76 of the NIRC of 1997 to a taxable corporation whose total quarterly
income tax payments in a given taxable year exceeds its total income tax due. These options are: (1) filing for a tax refund or (2) availing of a tax
credit. The Court further explained:

The first option is relatively simple. Any tax on income that is paid in excess of the amount due the government may
be refunded, provided that a taxpayer properly applies for the refund.

The second option works by applying the refundable amount, as shown on the [Final Adjustment Return (FAR)] of a
given taxable year, against the estimated quarterly income tax liabilities of the succeeding taxable year.

These two options under Section 76 are alternative in nature. The choice of one precludes the other. Indeed,
in Philippine Bank of Communications v. Commissioner of Internal Revenue, the Court ruled that a corporation must signify its
intention -- whether to request a tax refund or claim a tax credit -- by marking the corresponding option box provided in the
FAR. While a taxpayer is required to mark its choice in the form provided by the BIR, this requirement is only for the purpose of
facilitating tax collection.

One cannot get a tax refund and a tax credit at the same time for the same excess income taxes paid.[13] x x x

The Court categorically declared in Philam that: Section 76 remains clear and unequivocal. Once the carry-over option is taken, actually
or constructively, it becomes irrevocable. It mentioned no exception or qualification to the irrevocability rule.

Hence, the controlling factor for the operation of the irrevocability rule is that the taxpayer chose an option; and once it had already done
so, it could no longer make another one. Consequently, after the taxpayer opts to carry-over its excess tax credit to the following taxable period,
the question of whether or not it actually gets to apply said tax credit is irrelevant. Section 76 of the NIRC of 1997 is explicit in stating that once the
option to carry over has been made, no application for tax refund or issuance of a tax credit certificate shall be allowed therefor.
The last sentence of Section 76 of the NIRC of 1997 reads: Once the option to carry-over and apply the excess quarterly income tax
against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for
that taxable period and no application for tax refund or issuance of a tax credit certificate shall be allowed therefor. The phrase for that taxable
period merely identifies the excess income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer. In
the present case, the excess income tax credit, which BPI opted to carry over, was acquired by the said bank during the taxable year 1998. The
option of BPI to carry over its 1998 excess income tax credit is irrevocable; it cannot later on opt to apply for a refund of the very same 1998 excess
income tax credit.
The Court of Appeals mistakenly understood the phrase for that taxable period as a prescriptive period for the irrevocability rule. This
would mean that since the tax credit in this case was acquired in 1998, and BPI opted to carry it over to 1999, then the irrevocability of the option
to carry over expired by the end of 1999, leaving BPI free to again take another option as regards its 1998 excess income tax credit. This construal
effectively renders nugatory the irrevocability rule. The evident intent of the legislature, in adding the last sentence to Section 76 of the NIRC of
1997, is to keep the taxpayer from flip-flopping on its options, and avoid confusion and complication as regards said taxpayers excess tax
credit. The interpretation of the Court of Appeals only delays the flip-flopping to the end of each succeeding taxable period.
The Court similarly disagrees in the declaration of the Court of Appeals that to deny the claim for refund of BPI, because of
the irrevocability rule, would be tantamount to unjust enrichment on the part of the government. The Court addressed the very same argument
in Philam, where it elucidated that there would be no unjust enrichment in the event of denial of the claim for refund under such circumstances,
because there would be no forfeiture of any amount in favor of the government. The amount being claimed as a refund would remain in the
account of the taxpayer until utilized in succeeding taxable years,[14] as provided in Section 76 of the NIRC of 1997. It is worthy to note that unlike
the option for refund of excess income tax, which prescribes after two years from the filing of the FAR, there is no prescriptive period for the
carrying over of the same. Therefore, the excess income tax credit of BPI, which it acquired in 1998 and opted to carry over, may be repeatedly
carried over to succeeding taxable years, i.e., to 1999, 2000, 2001, and so on and so forth, until actually applied or credited to a tax liability of BPI.

Finally, while the Court, in Philam, was firm in its position that the choice of option as regards the excess income tax shall be irrevocable,
it was less rigid in the determination of which option the taxpayer actually chose. It did not limit itself to the indication by the taxpayer of its option
in the ITR.
Thus, failure of the taxpayer to make an appropriate marking of its option in the ITR does not automatically mean that the taxpayer has
opted for a tax credit. The Court ratiocinated in G.R. No. 156637[15] of Philam:
 One cannot get a tax refund and a tax credit at the same time for the same excess income taxes paid. Failure to
signify ones intention in the FAR does not mean outright barring of a valid request for a refund, should one still choose this
option later on. A tax credit should be construed merely as an alternative remedy to a tax refund under Section 76, subject to
prior verification and approval by respondent.

The reason for requiring that a choice be made in the FAR upon its filing is to ease tax administration, particularly
the self-assessment and collection aspects. A taxpayer that makes a choice expresses certainty or preference and thus
demonstrates clear diligence. Conversely, a taxpayer that makes no choice expresses uncertainty or lack of preference and
hence shows simple negligence or plain oversight.

x x x Despite the failure of [Philam] to make the appropriate marking in the BIR form, the filing of its written claim
effectively serves as an expression of its choice to request a tax refund, instead of a tax credit. To assert that any future claim
for a tax refund will be instantly hindered by a failure to signify ones intention in the FAR is to render nugatory the clear
provision that allows for a two-year prescriptive period.[16] (Emphases ours.)

Philam reveals a meticulous consideration by the Court of the evidence submitted by the parties and the circumstances surrounding the
taxpayers option to carry over or claim for refund. When circumstances show that a choice has been made by the taxpayer to carry over the excess
income tax as credit, it should be respected; but when indubitable circumstances clearly show that another choice a tax refund is in order, it should
be granted. Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it and
thereby enrich itself at the expense of its law-abiding citizens.
Therefore, as to which option the taxpayer chose is generally a matter of evidence. It is axiomatic that a claimant has the burden of proof
to establish the factual basis of his or her claim for tax credit or refund. Tax refunds, like tax exemptions, are construed strictly against the
taxpayer.[17]
In the Petition at bar, BPI was unable to discharge the burden of proof necessary for the grant of a refund. BPI expressly indicated in its
ITR for 1998 that it was carrying over, instead of refunding, the excess income tax it paid during the said taxable year. BPI consistently reported the
said amount in its ITRs for 1999 and 2000 as credit to be applied to any tax liability the bank may incur; only, no such opportunity arose because it
suffered a net loss in 1999 and incurred zero tax liability in 2000. In G.R. No. 162004 of Philam, the Court found:

First, the fact that it filled out the portion Prior Years Excess Credits in its 1999 FAR means that it categorically availed
itself of the carry-over option. In fact, the line that precedes that phrase in the BIR form clearly states Less: Tax
Credits/Payments. The contention that it merely filled out that portion because it was a requirement and that to have done
otherwise would have been tantamount to falsifying the FAR is a long shot.

The FAR is the most reliable firsthand evidence of corporate acts pertaining to income taxes. In it are found the
itemization and summary of additions to and deductions from income taxes due. These entries are not without rhyme or
reason. They are required, because they facilitate the tax administration process.[18]

BPI itself never denied that its original intention was to carry over the excess income tax credit it acquired in 1998, and only chose to
refund the said amount when it was unable to apply the same to any tax liability in the succeeding taxable years. There can be no doubt that BPI
opted to carry over its excess income tax credit from 1998; it only subsequently changed its mind which it was barred from doing by
the irrevocability rule.
The choice by BPI of the option to carry over its 1998 excess income tax credit to succeeding taxable years, which it explicitly indicated in
its 1998 ITR, is irrevocable, regardless of whether it was able to actually apply the said amount to a tax liability. The reiteration by BPI of the carry
over option in its ITR for 1999 was already a superfluity, as far as its 1998 excess income tax credit was concerned, given the irrevocability of the
initial choice made by the bank to carry over the said amount. For the same reason, the failure of BPI to indicate any option in its ITR for 2000 was
already immaterial to its 1998 excess income tax credit.

WHEREFORE, the instant Petition for Review of the Commissioner for Internal Revenue is GRANTED. The Decision dated 29 April
2005 and the Resolution dated 20 April 2007 of the Court of Appeals in CA-G.R. SP No. 77655 are REVERSED and SET ASIDE. The Decision dated 12
March 2003 of the Court of Tax Appeals in CTA Case No. 6276, denying the claim of respondent Bank of the Philippine Islands for the refund of its
1998 excess income tax credits, is REINSTATED. No costs.

Succession

HKO AH PAO, HENRY TENG VS TING G.R. No. 153476

AZCUNA, J.:

This is a petition for review[1] of the decision and resolution of the Court of Appeals (CA), dated January 31, 2002 and May 7, 2002, respectively, in
CA-G.R. CV No. 47804, entitled Hko Ah Pao, et al., v. Laurence Chua Ting, et al.

The controversy involves two feuding families of the same clan battling over a piece of property registered in the name of respondents. Petitioners
claim that the property was bought by their patriarch, the late Teng Ching Lay, who allegedly entrusted the same to his son from a previous
marriage, Arsenio Ting, the deceased father of herein respondents.

The antecedents[2] are as follows:

On June 12, 1961, the spouses Aristeo Mayo and Salud Masangkay sold for P70,000 the property subject of this case which is located at 1723
Vasquez St., Malate, Manila to Arsenio Ting. Transfer Certificate of Title (TCT) No. 63991 was subsequently issued in the name of Arsenio Ting
on June 14, 1961.

Arsenio Ting was the son of Teng Ching Lay by his first marriage. At the time of the sale, Arsenio was a practicing lawyer and, being a Filipino, was
qualified to acquire and own real property in the Philippines. Arsenio was likewise the manager and controlling stockholder of Triumph Timber, Inc.
in ButuanCity. Teng Ching Lay, on the other hand, was a Chinese citizen, and although his name did not appear in the corporate records of Triumph
Timber, Inc., he was the one making business decisions for the company.[3] He became a naturalized Filipino citizen on January 18, 1966.

A colonial-style house was standing on the disputed lot when it was bought. Teng Ching Lay occupied the same, together with his second wife,
petitioner Hko Ah Pao, and their children, petitioners Henry and Anna Teng. Arsenio also stayed in the same house.

Several years later, Arsenio married Germana Chua. They moved to a new house that was erected on the same lot behind the old colonial
house. Germana bore three sons, respondents herein, namely, Laurence, Anthony and Edmund, all surnamed Ting.

Later, Arsenio and his family relocated to Butuan City but they would stay in their old house in Malate whenever they came to Manila. A caretaker
was hired to oversee it. Teng Ching Lay also transferred to Butuan City. Petitioners remained in the colonial house, and Teng Ching Lay would join
them each time he went to Manila.

Arsenio died in 1972, predeceasing his father, Teng Ching Lay, and leaving as compulsory heirs, the surviving spouse, Germana, and respondents
who were all minors at that time.

In the intestate proceedings for the settlement of Arsenios estate before the Court of First Instance (CFI) of Agusan del Norte and Butuan City, the
court issued an Order on October 23, 1975 approving the project of partition which included, among others, the property in question which was
adjudicated in favor of respondents.

On February 4, 1976, Germana filed a petition for guardianship with the City Court of Butuan over the persons and properties of her minor
children. The court appointed her as guardian on November 21, 1978.

In view of the Order of the CFI adjudicating the disputed property in favor of respondents, TCT No. 63991 was cancelled and in lieu thereof, TCT No.
134412 was issued in the name of respondents on July 3, 1979.

Two years later, trouble brewed between Teng Ching Lay and his daughter-in-law, Germana, concerning the properties in Manila and Butuan City,
as well as the stocks of Triumph Timber, Inc. which involved millions of pesos. On April 28, 1981, Teng Ching Lay filed before the City Court
of Butuan a motion to recall Germanas guardianship over her minor children for her failure to give him, as the paternal grandfather of the minors,
notice of the guardianship proceedings pursuant to Articles 344 and 355 of the Civil Code.[4] He added that Germana sought the guardianship
merely to seek authority to sell the properties of the wards. On her part, Germana averred that Teng Ching Lay had raised this issue only as a
leverage against her in their case before the Securities and Exchange Commission (SEC) pertaining to the liquidation of the assets of Timber
Triumph, Inc.

On July 21, 1987, the court rendered a decision revoking the letters of guardianship of Germana, from which she appealed. On January 30,
1989, TengChing Lay died. His surviving heirs, however, decided not to contest any further the letters of guardianship previously granted
to Germana. Hence, on November 3, 1989, the case was ordered terminated.[5]

An estate tax return signed by petitioner Anna Teng was filed for the estate of Teng Ching Lay whose given address when he was alive was
in Buhangin, Butuan City. The residence of petitioners who were listed as heirs was stated to be on A. Vasquez Street, Ermita, Manila, which is the
property in question. Appearing on the dorsal side of the estate tax return was a list of properties belonging to Teng Ching Lay. The only properties
that were listed, however, were those located in Cavite and Butuan City.

On May 27, 1991, respondents, through counsel, sent a demand letter to petitioners to vacate the property in question. When the latter refused,
respondents instituted an ejectment case against them in the Metropolitan Trial Court (MeTC) of Manila.

Petitioners, in turn, on January 21, 1992, filed a complaint for the cancellation of title and partition with damages and prayer for a restraining order
and/or preliminary injunction against respondents before the Regional Trial Court (RTC) of Manila. Petitioners, who have been residing in the
property since 1961, demanded the reconveyance of its title in their favor on the ground that Arsenio merely held the property in trust
for Teng Ching Lay.

According to petitioners, Teng Ching Lay purchased the property from the spouses Aristeo Mayo and Salud Masangkay but it was made to appear
in the contract of sale that Arsenio was the vendee because of the constitutional prohibition against aliens owning land in the Philippines. They
claim that they became aware of the TCT in the name of respondents only when the latter instituted an ejectment suit against them, and
notwithstanding the efforts on their part to settle the dispute, respondents refused to recognize their ownership of the property.

Petitioners principal witness was Angel Sembrano, corporate accountant of Triumph Timber, Inc., and Teng Ching Lays personal accountant.
According to Sembrano, he met Arsenio when he was hired as an accountant of Triumph Timber, Inc. in 1959. As Teng Ching Lays personal
accountant from 1960 to 1989, he prepared the latters income tax returns and purchases. In June of 1961, Arsenio allegedly told him that his father
was going to buy a house in Manila, and directed him to prepare a voucher and a check of the corporation for P200,000 payable to Teng Ching Lay.
Said voucher and check, however, along with the other records of the corporation, were allegedly lost during the flood that hit Butuan City in 1981.

Sembrano likewise stated that when he went to Manila in November of 1961, Teng Ching Lay brought him to the house that he purportedly bought
but since he was a Chinese national at that time, the title to the property was placed in the name of Arsenio.[6]
On cross-examination, Sembrano mentioned that he did not know who the vendor of the property was but the purchase price, as he was
supposedly told by Arsenio, was P150,000; that not all the documents of the corporation were presented in the proceedings at the SEC; that he did
not know where the proceeds of the check went; and, that Teng Ching Lay filed income tax returns for 1961 and 1962. He insisted
that Arsenio informed him that the check was intended for the purchase price of the house and lot in Manila, and that he even saw the unsigned
deed of conveyance.[7]

Respondents, on the other hand, contended that the property was paid for and legally acquired by their father, Arsenio, and that it was among
those adjudicated to them by virtue of a special proceedings before the CFI of Agusan del Norte and Butuan City. They asked for the dismissal of
the complaint, and filed a counterclaim that prayed for damages as well as compensation for the use of a portion of the property by petitioners.

Meanwhile, on February 24, 1993, the MeTC rendered a decision in the ejectment case ordering petitioners to vacate the premises. Petitioners
appealed to the RTC of Manila but the RTC affirmed the decision of the MeTC, stating that petitioners failed to take earnest efforts to reach a
compromise agreement with respondents prior to the filing of the ejectment case.

On September 30, 1994, the RTC, in the aforestated civil case, rendered its decision dismissing the complaint filed by petitioners on the
ground that petitioners failed to prove that Arsenio was merely holding the subject property in trust for his father, Teng Ching Lay, thus:

WHEREFORE, judgment is rendered dismissing the complaint, with costs against plaintiffs.

SO ORDERED.[8]

On appeal, the CA affirmed the decision of the RTC on January 31, 2002, thus:

WHEREFORE, premises considered, the appealed Decision of the lower court in Civil Case No. 92-60333 is hereby AFFIRMED in toto by this Court.

SO ORDERED.[9]

Petitioners filed a motion for reconsideration but the same was denied by the CA.

Hence, this petition raising the following issues:

I. WHETHER THE RULE ON LACHES MAY BE APPLIED TO THIS CASE.

II. WHETHER SECTION 42 (2ND SENTENCE), RULE 130 OF THE REVISED RULES OF EVIDENCE AND THE HOLDINGS IN SEVERAL CASES MAY
BE APPLICABLE TO THE TESTIMONY OF ANGEL SEMBRANO RELATIVE TO THE DECLARATION, AS WELL AS ACTION, OF THE LATE TENG
CHING LAY THAT THE LATTER OWNED THE PROPERTY IN QUESTION.

III

WHETHER SECTION 38, RULE 130, OF THE REVISED RULES OF EVIDENCE MAY BE APPLICABLE TO THE TESTIMONY OF ANGEL SEMBRANO AFFECTING
THE DECLARATION TO HIM OF ARSENIO TING, I.E. BIBILI SI TATAY NG BAHAY SA MAYNILA AS AN EXCEPTION TO THE HEARSAY RULE.

IV

WHETHER THE HOLDING IN PEOPLE V. ULPINDO, 256 SCRA 201 AND PEOPLE V. LIAN, 255 SCRA 532 MAY BE APPLIED TO ANGEL SEMBRANOS
TESTIMONY AS CONTAINED IN THE TSN.

WHETHER SECTION 34, RULE 130, OF THE REVISED RULES OF EVIDENCE MAY BE APPLICABLE TO RESPONDENT ANTHONY TINGS ADMISSION AS
EXTANT IN THE RECORD TO SHOW SPECIFIC INTENT, HABIT AND THE LIKE ON THE PART OF TENG CHING LAY IN HAVING HIS SON, ARSENIO TING,
ACT AS HIS TRUSTEE OF SEVERAL PROPERTIES.

VI

WHETHER SECTION 26, RULE 130 OF THE REVISED RULES OF EVIDENCE (ON ADMISSION AGAINST INTEREST) AND SECTION 4, RULE 129 (ON
JUDICIAL ADMISSION) OF THE SAME RULES MAY BE APPLIED TO RESPONDENT ANTHONY TINGS ADMISSION AS EXTANT IN THE RECORD, I.E., THE
PROPERTY IN QUESTION WAS OWNED BY TENG CHING LAY.

VII

WHETHER, AS APPLIED TO THE UNDISPUTED FACTS OF THE CASE, THE RULE ON BURDEN OF EVIDENCE, I.E., TO SHOW THAT ARSENIO TING PAID
THE PRICE OF THE SUBJECT PROPERTY, BEING CAPABLE OF DOING SO, WAS SHIFTED TO RESPONDENTS AFTER PETITIONERS HAD SUCCESSFULLY
PROVEN, BY TESTIMONIAL EVIDENCE, THAT THE PURCHASE PRICE OF THE PROPERTY WAS PAID BY TENG CHING LAY AND MERELY ENTRUSTED THE
SAME TO HIS SON, ARSENIO TING, AS THE FORMER WAS THEN A CHINESE CITIZEN WHO WAS NOT ALLOWED TO OWN REAL ESTATE PROPERTY
(1935 CONSTITUTION) LET ALONE THE FACT THAT THE FORMER, BY PREVIOUS CONDUCT, HAD ALREADY ENTRUSTED TO HIS SON SEVERAL
PROPERTIES UNDER THE SAME REASON.

The Court notes that while the petition had been filed under Rule 45, the issues and the contentions advanced herein have been presented in a
manner that a resolution of such will require this Court to re-examine the findings of fact of both the RTC and the CA.
The basic rule is that factual questions are beyond the province of this Court in a petition for review [10] because only questions purely of law may be
raised in such a petition. One test to determine if there exists a question of fact or law in a given case is whether the Court can resolve the issue
that was raised without having to review or evaluate the evidence, in which case, it is a question of law; otherwise, it will be a question of fact.
Thus, the petition must not involve the calibration of the probative value of the evidence presented.[11] In addition, the facts of the case must be
undisputed, and the only issue that should be left for the Court to decide is whether or not the conclusion drawn by the CA from a certain set of
facts was appropriate.[12]

In the present case, however, the circumstances surrounding the ownership of the property that is central to the parties disagreement are put at
issue. A resolution of this point will require a re-evaluation of the evidence on record. In an appeal via certiorari, the Court may not review the
factual findings of the CA,[13] and petitioners have not shown that this case falls under any of the recognized exceptions to this rule.[14]

Nonetheless, even if the Court were to exercise utmost liberality and veer away from the rule, the records will show that, indeed, petitioners failed
to establish their case by a preponderance of evidence.

In civil cases, the burden of proof to be established by a preponderance of evidence is on the party who is asserting the affirmative of an
issue.[15]Preponderance of evidence means probability of truth. It is evidence that is more convincing to the court as worthy of belief than that
which is offered in opposition thereto.[16]

Petitioners primarily rely on Angel Sembranos testimony to substantiate their claim. The latters testimony, however, consists mainly of hearsay,
which carries no probative value.[17] He did not have personal knowledge as to the execution of the contract of sale between Arsenio and
the Masangkay spouses nor the alleged agreement between the former and Teng Ching Lay. He could only testify as to what the deceased had
allegedly told him. Thus, any evidence, whether oral or documentary, is hearsay if its evidentiary weight is not based on the personal knowledge of
the witness but on the knowledge of some other person not on the witness stand. [18]

Even if the alleged statement of Arsenio to Sembrano relating to the fact that his father, Teng Ching Lay, was buying a house in Manila, can be
admissible in evidence as a declaration against his pecuniary interest under Section 38 of Rule 130 of the Rules of Court, [19] still, the veracity as to
whether the deceased actually made this statement is subject to scrutiny. Clearly, the RTC and the CA cast doubt on Sembranos credibility, and the
Court does not find any reason to hold otherwise.

Time and again, the Court has held that it will not interfere with the trial courts assessment regarding the credibility of witnesses, absent any
showing that it overlooked, misapplied or misunderstood some facts or circumstances of weight and substance or that it gravely abused its
discretion. Here, both the RTC and the CA were not convinced of the truthfulness of Sembranos bare testimony. He did not present any
documentary proof to support his statements, particularly with regard to the P200,000 check that he supposedly gave to Arsenio for the payment
of the property in question.

Furthermore, Sembranos testimony on behalf of petitioners is about an alleged declaration against an interest of a person who is dead in an action
that is in effect a claim against his estate. Such a testimony if coming from a party would be barred by the surviving parties rule, or the dead mans
statute, in the Rules of Court:

Section 23, Rule 130. Disqualification by reason of death or insanity of adverse party. Parties or assignors of parties to a case, or persons in whose
behalf a case is prosecuted, against an executor or administrator or other representative of a deceased person, or against a person of unsound
mind, upon a claim or demand against the estate of such deceased person or against such person of unsound mind, cannot testify as to any matter
of fact occurring before the death of such deceased person or before such person became of unsound mind.

And while Sembrano is not a party, he is practically a surrogate of petitioners since he was the personal accountant of their predecessor-in-interest
and the corporate accountant of the corporation he controlled.

At any event, the issues propounded by petitioners have been discussed lengthily and ruled upon by the RTC and the CA in their respective
decisions. Hence, the Court does not deem it necessary to further delve into these matters. The evidence on record supports the assailed findings
and conclusions specifically with regard to the ownership of the property in question that is reflected in the Torrens title[20] which was issued in the
name of Arsenio pursuant to the deed of sale.

As a rule, the findings of fact of the trial court, especially when adopted and affirmed by the CA, are final and conclusive and may not be reviewed
on appeal to this Court.[21] This Court is not a trier of facts and generally does not weigh anew the evidence already passed upon by the
CA.[22] Absent any showing that some facts of certain weight and substance were overlooked which, if considered, would affect the outcome of the
case, the Court, as in this case, will uphold the findings of the RTC and the CA.

Consequently, since petitioners failed to prove that Teng Ching Lay was the real owner of the property involved herein, their proposition that a
constructive trust exists must likewise fail.

WHEREFORE, the petition is DENIED. The decision and resolution of the Court of Appeals, dated January 31, 2002 and May 7, 2002, respectively, in
CA-G.R. CV No. 47804, are AFFIRMED.

Costs against petitioners.

SO ORDERED.