Commissioner of Internal Revenue v. Citibank, N.A.

FIRST DIVISION [CA-G.R. SP CASE NO. 35313. October 8, 1999.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . CITIBANK, N.A. and THE COURT OF TAX APPEALS , respondents . D E C I S I O N ELBINIAS , P . J p : Petition for review of the decision of the Court of Tax Appeals (CTA) dated June 21, 1994, in C.T.A. Case No. 4068, ordering petitioner Commissioner of Internal Revenue to grant private respondent Citibank, N.A. a tax credit in the amount of P19,726,862.00. Private respondent Citibank, N.A. is authorized by the Central Bank to operate as a Foreign Currency Deposit Unit (FCDU). As FCDU, it paid the ten percent final tax and corporate income tax for the first quarter ending March 31, 1984 amounting to P19,726,862.00. For the second and succeeding quarters of the taxable year 1984 until 1985, private respondent incurred losses in its FCDU operations resulting in an overpayment of corporate income tax for the year 1984. On May 29, 1995, private respondent filed a petition with respondent Court of Tax Appeals praying that it be granted a tax credit memo in the amount of P19,726,862.00 presenting its corporate quarterly income tax return. Petitioner Commissioner of Internal Revenue opposed the petition, pointing out that private respondent failed to produce the necessary evidence to substantiate its claim such as the source documents showing the exact nature of the income from foreign exchange dealings on which the corporate income tax of P19,726,862.00 was paid for the first quarter of 1984, the source documents showing the exact nature of the loss from foreign exchange dealing, and the books of accounts on the FCDU showing how the transactions from foreign exchange dealings were recorded and arrived at during the year 1984. Respondent Court of Tax Appeals granted the petition on the ground that the aforequoted documents were no longer necessary in the light of the undisputed documentary and testimonial evidence of private respondent with the information sought for shown in the duly audited Financial Statement and Accompanying Notes found on Pages 94-100 of the BIR records. Hence, this petition. The petition is impressed with merit. Contrary to the CTA's finding that private respondent's documentary and testimonial evidence were undisputed, Atty. Laurentino Sicat, Revenue Enforcement Officer of the Bureau of Internal Revenue's Banks, Financing and Insurance Division, testified that the denial of private respondent's claim for tax credit was due to non-availability of the desired documents as aforequoted (TSN, Apr. 22, 1993, pp. 22-25), which private respondent failed to rebut save for the corporate tax returns, whose evidentiary weight are very self-serving. Hence, in the absence of proof to the contrary, findings and conclusions of government officials, such as that of petitioner Commissioner of Internal Revenue, warrant the presumption of regularity and correctness. ( La Campana Foods Products, Inc . vs . Court of Appeals, GR No . 97838, 221 SCRA 770 [1993] ) Furthermore, tax refunds are in the nature of tax exemptions and when it is claimed, it must be shown indubitably to exist, for every presumption is against it, and a well-founded doubt is fatal to the claim, (Commissioner of Internal Revenue vs . Procter and Gamble Philippine Manufacturing Corporation, GR No . 66838, 204 SCRA 377 [1991]) It is likewise settled that exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. (Province of Tarlac vs . Alcantara, GR No . 65230, 216 SCRA 790 [1992]) dctai WHEREFORE, the petition is GRANTED, and the questioned decision of respondent Court of Tax Appeals is hereby REVERSED and SET ASIDE. SO ORDERED. Magtolis and Cosico , JJ ., concur.