COMMISSIONER OF INTERNAL REVENUE v. NORKIS TRADING COMPANY, INC.

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY En Bane COMMISSIONER OF INTERNAL CTA EB NO. 1766 REVENUE, (CTA Case No. 8862) Petitioner, Present: -versus- RINGPIS-LIBAN, APJ, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES,JJ NORKIS TRADING COMPANY, Promulgated: INC., X ----------------------------------R--e--s-p-o--n-d--e-n-t-.---N--O--V----2--4----2-=~ - -~ -~-��-~ -------�-~X . RESOLUTION MODESTO-SAN PEDRO, J.: Before the Court is petitioner's Motion for Reconsideration [re: Decision dated 13 June 2025}, filed on July 2, 2025, with respondent' s Opposition to the Motion for Reconsideration [Re: Decision dated 13 June 2025] dated July 2, 2025, filed on August 18, 2025. Petitioner assails this Comt En Bane's Decision, dated June 13, 2025, by arguing that (1) as respondent fai led to overturn petitioner's prima facie evidence of the falsity of respondent's tax return, the extended 10-year period for assessments is applicable here; and (2) the Court should consider the Indemnity Agreement as it was included in the Bureau of Internal Revenue ("BIR") Records, which had been elevated to the Court during proceedings before the Court in Division. Respondent counte rs the above by contending that ( 1) the Motion is a rehash of petitioner's previous arguments; (2) petitioner fai led to actually prove that respondent substantially underdeclared its income; (3) assuming arguendo that thej

RESOLLTIO:\ CTA F:R l\o. ! 766 (CTA Case 1\o. 886::!) Page 2 of3 Indemnity Agreement is admissible in evidence, the same does not prove that petitioner earned income; and (4) the regular three-year prescriptive period applies here, so petitioner's assessment had prescribed when he issued it. We find no merit in the Motion. Petitioner's insistence that the Indemnity Agreement is admissible in evidence is based on jurisprudence which found that documents in the BIR Records are admissible as evidence, even when these are not individually offered as such. However, this is an exception to the rule, justified when such consideration is done for "the ascertainment oftruth", as in BPI-Family Savings Bankv. Court ofAppeals, 1 or "substantial justice", as in Hua v. Commissioner ofInternal Revenue.2 However, as discussed in the assailed Decision, the Indemnity Agreement does not actually prove that respondent earned income. Petitioner does not argue against this in his Motion. He does not show that the amount respondent received surpassed the loss or damage it incurred. Even assuming arguendo that this Court En Bane considered the Indemnity Agreement, then, it would still be unconvincing as prima facie proof of a substantial underdeclaration on respondent's part. Having failed to show how or why ignoring the Indemnity Agreement would prevent the ascertainment of truth or substantial justice, petitioner failed to show that the Indemnity Agreement should not be considered forgotten evidence, as an exception to the rule, and that the Court in Division erred in refusing to countenance said document. Considering that ( 1) the Indemnity Agreement is not admissible; and (2) even if it were admissible, it fails to prove petitioner's contentions, petitioner's argument in support of the applicability of the 10-year prescriptive period remains unconvincing. Without the Indemnity Agreement, petitioner's evidence is insufficient to prove respondent's alleged substantial underdeclaration. With the Indemnity Agreement, petitioner's evidence is still insufficient, as the document does not, by itself, show that respondent actually earned taxable income. Either way, petitioner failed to prove substantial underdeclaration on respondent's part and consequently has no prima facie evidence of the falsity or fraudulence of respondent's return. Without any evidence of such falsity or fraud, not even prima facie evidence, petitioner is unjustified in using the 10-year prescriptive period. The three-year prescriptive period thus applies, and the assessment prescribed by the time petitioner issued it. In sum, the ruling in the assailed Decision still stands.( G.R. No. 111480. April 12.2000. CTA Case No. 9912. December 7. 2021.

RESOUTIO'i CT A EB No. 1766 (CTA Case 1\o. 8862) Page 3 of3 ACCORDINGLY, petitioner's Motion for Reconsideration [re: Decision dated 13 June 2025}, filed on July 2, 2025, is hereby DENIED for lack of merit. The assailed Decision, dated June 13, 2025, is AFFIRMED. SO ORDERED. WE CONCUR: INHIBITED MA. BELEN M. RINGPIS-LIBAN Associate Justice ~~. :J.Au-.u..-u�<cAI..-- cHHERINE T. MANAHAN Associate Justice ' JEANMARI ~ ft..-- f. f-~M&u-lfM~ MARIAN IV'{) F. REitS-FA~ARDO Associate Justice LA~~~ID Associate Justice ~~~~ CORAt6N G. FERRER- L RES Associate Justice HENRY /JRNGELES Associate Justice