COMMISSIONER OF INTERNAL REVENUE v. SPOUSES EDUARDO X. GENATO and LYDIA M.GENATO AND CONDOMINIUM PUSHERS, INC. AND LANDMART PHILIPPINES, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF CTA EB No.1695 INTERNAL REVENUE, (CTA Case Nos. 8919 & 8920) Petitioner, Present: -versus- Del Rosario, P.J. , Castaneda, Jr., Bautista, Uy, Casanova, Fabon-Victorino, Mindaro-Grulla, Ringpis-Liban, and Manahan,JJ. SPOUSES EDUARDO X. GENATO Promulgated: and LYDIA M. GENATO, CONDOMINIUM PUSHERS, INC. MAY24 2018 of:~ and LANDMART PHILIPPINES, INC. . P>f " Respondents. X---------------------------------------------------------------------------------------------X RESOLUTION CASTANEDA, JR., J.: Submitted for resolution of the Court En Bane is the Motion for Reconsideration (of the Decision dated 12 January 2018jl filed via registered mail by the Commissioner of Internal Revenue (CIR) on February 13, 2018 with Comment/Opposition (Re: Motion for ReconsiderationY filed by respondents, Spouses Eduardo X. Genato and Lydia M. Genato,r 1 Court En Bane' s Docket, pp. 90-94. 2 !d., pp. 99-103 .

RESOLUTION CTA EB No. 1695 (CTA Case Nos. 8919 & 8920) Page 2 of4 Condominium Pushers, Inc., and Landmart Philippines, Inc. on April 12, 2018. In its Motion, petitioner seeks reconsideration of the Decision of the Court En Bane promulgated on January 12, 2018, ("Assailed Decision")3 denying his Petition for Review for lack of merit and accordingly, affirming the judgment of the First Division ("Court in Division") of this Court in CTA Case Nos. 8919 & 8920. In seeking the reversal of the Assailed Decision, petitioner raises the following grounds, to wit:4 a. The subject rescission was made in bad faith; b. Rescission has the effect of withdrawing the capital gains tax returns; c. In rescission, there must be proof that the object and consideration of the contract were returned to its rightful owner. To substantiate its claim of bad faith in the execution of the subject rescission, petitioner asserts that when respondents learned about the imposition of the donor's tax on the excess of the book value of the shares of stock over the value of the real properties transferred, they resorted to the execution of the Affidavit of Rescission and the series of event will lead one to conclude that rescission was resorted to in order to escape or avoid payment of donor's tax.5 Petitioner also avers that such rescission was executed without stating the meritorious reason or ground therefor.6 Citing Section 6 of the National Internal Revenue Code of 1997, as amended as its legal basis, petitioner posits that the execution of the Affidavit of Rescission has the effect of withdrawing the capital gains tax returns filed by respondents. 7 Finally, petitioner postulates that in rescission, there must be proof that the object and consideration of the contract were returned to its rightful owner.8 ~ 3 !d., pp. 70-85. 4 !d., pp. 91-92. 5 !d., p. 91. 6 !d. 7 !d., pp. 91-92. 8 !d., p. 92.

RESOLUTION CTA EB No. I695 (CTA Case Nos. 89I9 & 8920) Page 3 of4 Respondents, in their Comment/Opposition, counter-argue that bad faith is never presumed and that petitioner failed to present any clear and convincing evidence to support his belated allegation of bad faith.9 Respondents likewise contradict petitioner's assertion to the effect that rescission has the effect of withdrawal of tax returns. They maintain that the grant of refund does not necessarily imply that the tax return would be withdrawn.Io According to respondents, a refund is made because taxes have been paid when they should not have been paid. II Respondents also contend that the law does not require that the person applying for refund first prove that the consideration was returned before a refund may be granted.I 2 The Court En Bane resolves to deny the Motion. A careful evaluation of the arguments raised by petitioner in its Motion reveals that it failed to raise any new or substantial matter or any compelling reason that will justify modification much less reversal of the Court En Bane's findings. These arguments are mere rehash of the matters which have already been thoroughly discussed and passed upon by the Court En Bane in the Assailed Decision. By way of reiteration, the Court En Bane holds that petitioner's allegation that respondents' execution of the Affidavits of Rescission was attended with bad faith cannot be given credence because petitioner failed to present any evidence, much less a clear and convincing one, to substantiate such allegation. As this Court had plainly stated in the Assailed Decision, decision cannot be had on the basis of mere speculations and conjectures. The Court En Bane also cannot subscribe to petitioner's view that the subject rescission has the effect of withdrawal of the returns filed. The filing of the present claim for refund does not amount to a request for the withdrawal of the said returns considering that a claim for refund of taxes paid and a request for the withdrawal of tax returns are two different and distinct matters. Neither can this Court accept petitioner's argument that in rescission, there must be proof that the object and consideration of the contract were r returned to its rightful owner. There is no established legal basis for such assertion. 9 !d., pp. 100-101. 10 /d.,p.lOl. II Jd. 12 Id.

RESOLUTION CTA EB No. 1695 (CTA Case Nos. 8919 & 8920) Page 4 of4 WHEREFORE, petitioner's Motion for Reconsideration is DENIED for lack of merit. SO ORDERED. ~----�~ c. a.;t-~ Q_ JlfANITO c. CASTANEDA(.iR.. Associate Justice WE CONCUR: Presiding Justice LOVEiR. BAUTISTA Associate Justice . CAESA~SANOVA ER�P.UY Associate Justice Associate Justice ~0 r.~O+-N. ~~ (;~ N. MNDARO-GRULLA Associate Justice ~- 4i.4- J - MA. BELEN M. RINGPIS-LIBAN Associate Justice ~']:~ CATHERINE T. MANAHAN Associate Justice