Asian Bank Corporation v. Court of Tax Appeals, et al.

SPECIAL EIGHTH DIVISION [CA-G.R. SP No. 40766. * July 8, 2004.] ASIAN BANK CORPORATION , petitioner , vs . THE COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE , respondents . D E C I S I O N SANTIAGO-LAGMAN , J p : Assailed in this petition for review are the Court of Tax Appeals' (CTA) Decision 1 dated January 30, 1996 which denied Asian Bank Corporation's claim for refund relative to Documentary Stamp Tax and its Resolution 2 dated May 02, 1996 denying the latter's motion for partial reconsideration. The pertinent facts, as culled from the records, are as follows: On January 10, 1990, petitioner Asian Bank Corporation received two (2) separate assessment notices from respondent Commissioner of Internal Revenue (CIR) demanding payment of Gross Receipts Tax (GRT) and Documentary Stamp Tax (DST) deficiencies for taxable year 1986 in the amounts of P1,566,681.40 and 528,138.68, respectively. Petitioner then filed a letter of protest on February 9, 1990 3 and later paid the assessment under protest on March 5, 1990. 4 Thereafter, on April 25, 1990, petitioner filed a claim for refund for the excess payments made concerning the GRT and DST for the taxable year 1986. 5 Upon the inaction of respondent CIR, petitioner elevated its claim for refund to the respondent CTA, which was docketed as CTA Case No. 4720. On January 30, 1996, respondent CTA issued its assailed decision, the dispositive portion of which reads: "WHEREFORE, in view of the foregoing, petitioner is entitled to the refund of Gross Receipts Tax (GRT) in the sum of P486,961.45 . . . : xxx xxx xxx With respect to petitioner's claim for refund of documentary stamp tax, it has been established that no excess payment was made in the taxable year 1986, hence, such claim for documentary stamp tax is hereby DENIED. SO ORDERED." 6 Unsatisfied, petitioner filed a motion for partial reconsideration 7 but the same was subsequently denied by respondent CTA in its Resolution dated May 2, 1996. Petitioner now comes to this Court through a petition for review raising the following assignment of errors: 1. The CTA decision and resolution totally ignored the clear and uncontroverted documentary evidence submitted by the petitioner; and 2. The CTA decision and resolution erred in failing to apply specific and uncontroverted provisions of the National Internal Revenue Code. The present petition involves three (3) items for which petitioner claims refund thereof, to wit: a. The amount of Php37,600.00 representing loan transactions; b. The amount of Php458,460.85 on new loan releases; and c. The amount of Php220,633.967 covering the transfer of government securities. Petitioner contends that the foregoing amounts were erroneously subjected to DST for the following reasons: first , the amount of Php37,600.00 involved "trade receivables" covered by mere invoices as substantiated by the evidences presented by petitioner; second , the amount of Php458,460.85 concerned, reclassified accounts which were mere reversal of accounting entries arising out of dishonored checks; and lastly , the amount of Php220,633.967 on government securities are not within the purview of Section 174 of the National Internal Revenue Code. We find the contentions posed by the petitioner to be unuleritorious. It must be emphasized that the CTA, by the very nature of its function, is dedicated exclusively to the consideration of tax problems and has necessarily developed an expertise on the subject. Accordingly, the conclusions reached by it will not be set aside lightly, unless there has been an abuse or improvident exercise of authority. 8 It has likewise been held that in reviewing administrative decisions, the reviewing court cannot re-examine the factual basis and sufficiency of the evidence. 9 In this case, there is no showing of abuse or improvident exercise of authority on the part of respondent CTA. Hence, on this score alone, the instant petition must fail. Moreover, with respect to the first item , petitioner avers that respondent CTA failed to take cognizance on the relevance and sufficiency of its testimonial and documentary evidence to prove the existence of original invoices of its trade receivables which would justify exemption from DST. We are not persuaded. A claim for refund is in the nature of a claim for exemption and should, therefore, be construed in strictissimi juris against the taxpayer. 10 It is the taxpayer claiming refund who has the burden of proof to establish the factual basis of its claim. In the instant case, petitioner must simply proffer, as evidence, the alleged invoices covering the trade receivables. The original invoices are the best evidence. Resort to secondary evidence can only be made when the original document was lost, destroyed or cannot be produced in court. Prior to the introduction of such secondary evidence, the proponent must establish the former existence of the document. 11 However, a perusal, of the records would show that petitioner failed to prove the existence of the original invoices and further failed to explain why the original invoices were not submitted. Clearly, the secondary evidences presented by petitioner deserve neither attention nor consideration. As aptly observed by respondent CTA: "In the instant case, petitioner presented as evidence a comparative computation of DST for 1986 prepared and certified correct by its own vice president and comptroller (Exhibit 'B') indicating the above stated account which is at best self-serving and as such does not convince this Court of the veracity of the Figures contained therein. All presumptions are in favor of the correctness of tax assessment. . . As it is, a mere paper indicating figures not backed up by the corresponding photocopies of the invoices is not sufficient to rebut such presumption." 12 Anent the second item , petitioner contends that the amount of P458,460.85 should not be subjected to DST since the same merely involved "reversed entries" as a consequence of the dishonor of check payments and should not be considered as new loan releases. We disagree. Documentary stamp taxes are levied on the exercise by persons of certain privileges conferred by law for the creation, revision or termination of specific legal relationships through the execution of specific instruments. The documentary stamp taxes must be paid upon the issuance of said instruments, without regard to whether the contracts which gave rise to them are rescissible, void, voidable or unenforceable. 13 In this case, the petitioner stated that upon issuance of a check in its favor as payment for an obligation, it applies the same as settlement for such obligation. 14 Considering that the obligation is settled, the same is legally extinguished. Thus, if an entry is reversed, a new loan obligation arises which is thus subject to DST. Lastly, on the third item , petitioner argues that government securities, involving Treasury Bills and Central Bank Bills, are deposit substitutes and not certificate of indebtedness subject to DST. A close scrutiny of Section 174 of the National Internal Revenue Code (NIRC), as amended reads: "On all bonds, debentures, and certificates of indebtedness issued by any association, company, or corporation, there shall be collected a documentary stamp tax of One peso on each Two hundred pesos, or fractional part thereof, of the face value of such documents." Should government securities be considered as certificate of indebtedness within the purview of the aforesaid proviso? Republic Act (R.A) No. 245, as amended by Presidential Decree No. 142, also known as an "Act Authorizing the Secretary of Finance to Borrow to Meet Public Expenditures Authorized by Law and for other purposes" defined the nature of Treasury Bills. "SECTION 1. In order to meet public expenditures authorized by law, or to provide for the purchase, redemption, or refunding of any obligation, either direct or guaranteed, of the Philippine government, the Secretary of Finance, with the approval of the President of the Philippines, after consultation with the Monetary Board, is authorized to borrow from time to time on credit of the Republic of the Philippines, such sum or sums necessary, and to issue therefore evidences of indebtedness of the Philippine Government. Such evidence of indebtedness may be of the following types: a. Treasury bills issued on a discount basis or at par and payable at maturity without interest. Treasury bills may be offered for sale either on a competitive basis or at a fixed rate of discount or at par and may be made payable at any date not later than one year from the date of issue. xxx xxx xxx." Similarly, pursuant to Section 98 of R.A. No. 265, CB bills are evidence of indebtedness issued by the Central Bank (now Bangko Sentral ng Pilipinas) against its international reserves or against other government securities it has acquired or may be issued without relation to specific types of assets of the bank. Furthermore, Central Bank and Treasury Bills may be classified as `certificates of indebtedness' under Section 174 of the NIRC. 15 It is noteworthy that respondent CTA itself, which has acquired expertise on the matter, has already ruled that government securities are subject to DST under Section 174 of the NIRC. 16 Such a ruling has been affirmed by this Court in CA-GR SP No. 29853 on September 19, 1994. Clearly, We find no reason to reverse such a conclusion. In sum, petitioner, who has the onus of showing that respondent CIR erroneously assessed and collected DST, has failed to overcome this burden. Bereft of any competent proof to the contrary, all presumptions are in favor of the correctness of tax assessments. The good faith, of tax assessors and the validity of their actions are presumed. 17 From the foregoing, We find no reversible error in the assailed decision and resolution of respondent CTA. WHEREFORE, premises considered, the instant petition is DISMISSED and the assailed Decision dated January 30, 1996 and Resolution dated May 02, 1996, both of the Court of Tax Appeals, are AFFIRMED. SO ORDERED. De Guia-Salvador and Enriquez, Jr., ** JJ ., concur. Footnotes * Re-raffled to the present Ponente on February 23, 2004. ** Vice J. Alio-Hormachuelos, who is on leave. 1. Rollo , pp. 1942. 2. Rollo , pp. 4445. 3. Rollo , p. 19. 4. Rollo , p. 20. 5. Rollo , p. 20. 6. Rollo , p. 41. 7. Rollo , p. 46. 8. Sea-Land Service, Inc. v. Court of Appeals, 357 SCRA 441 (2001). 9. Protector's Services, Inc. v. Court of Appeals, 330 SCRA 404 (2000). 10. Commissioner of Internal Revenue v. Tokyo Shipping Co., Ltd., 244 SCRA 332 (1995). 11. Ong Ching Po v. Court of Appeals, 239 SCRA 341, (1994). 12. Rollo, p. 32. 13. Philippine Rome Assurance Corporation v. Court of Appeals, 301 SCRA 443 (1999). 14. Rollo , p. 11. 15. Hector S. De Leon, The National Internal Revenue Code Annotated, Eight Edition, p. 293. 16. BPI Family Bank v. Commissioner of Internal Revenue, CTA Case No. 4256, August 7, 1992. 17. Commissioner of Internal Revenue v. Construction Recovery Asia, Inc., 145 SCRA 671 (1986).