NDC Provident Fund v. Court of Tax Appeals

SEVENTH DIVISION [CA-G.R. SP No. 56028. June 12, 2003.] NDC PROVIDENT FUND, represented by its Trustee, THE NDC PROVIDENT FUND COMMITTEE OF TRUSTEES , petitioner , vs . THE COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE , respondents . D E C I S I O N ASUNCION , EJ , J p : Before Us is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure assailing the August 9, 1999 Decision of the Court of Tax Appeals (CTA) in CTA Case No. 5525, the dispositive portion of which reads: "WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, Respondent is hereby ORDERED to REFUND the amount of P1,748.30 to the Petitioner immediately. SO ORDERED." Records show that on July 22, 1996, the Bureau of Internal Revenue (BIR), thru Head Revenue Executive Assistant Alicia Tomacruz, rendered BIR Ruling No. DA-265-96 declaring that the National Development Company (NDC) Provident Fund is an employees' trust exempt from income taxes under Section 3(b) of the Tax Code. Consequently, the NDC Provident Fund's income from investments shall not be subject to the 20% final tax of interest and/or yield on deposit substitutes. In view of such exemption under Section 53(b) of the Tax Code, the NDC Provident Fund filed a claim with the respondent Commissioner of Internal Revenue for a tax refund in the amount of P950,275.81, representing the 20% final taxes withheld from NDC Provident Fund's earnings from bank deposits and investments from 1994 up to 1996. The claim for refund was subsequently amended to P917,564.58. There being no action on its claim for tax refund, the NDC Provident Fund filed a petition before the Court of Tax Appeals (CTA) on April 22, 1997, which was docketed as CTA Case No. 5525. Petitioner NDC Provident Fund claims that its deposits and money market placements and investments in treasury bills were subjected to 20% final withholding tax, as follows: 1996 1995 1994 Total Savings Account Land Bank PhP272.13 PhP PhP PhP272.13 DBP 364.81 1,111.36 286.86 1,763.03 636.94 1,111.36 286.86 2,035.16 Investments LBP T-bills 176,496.56 202,647.37 140,088.58 519,232.50 LBP Special Savings Acct (SSA) 1,555.71 1,555.71 176,496.55 202,647.37 141,644.29 520,788.21 BSP Fixed Term Deposit 92,594.52 139,717.47 162,149.22 394,761.21 Grand Total PhP269,728.01 PhP343,476.20 PhP304,380.37 PhP917,584.58 After trial, the respondent CTA rendered its assailed August 9, 1999 Decision upholding NDC Provident Fund's entitlement to an exemption pursuant to Section 53(b) of the Tax Code and BIR Ruling No. DA-265-96. However, the CTA ruled that the application for tax refund can only cover the period from 1995 to 1996. As the claim was failed only in 1997, the portion of the claim covering the period of 1994 has already prescribed for being beyond the peremptory two-year period for the filing of a timely judicial claim for a refund provided in Section 230 of the Tax Code. Further, the CTA ruled that the NDC Provident Fund failed to prove the factual elements of its claim for refund, except for the amount of P1,748.30 which was charged as 20% final withholding tax from 1995 to 1996 on its Savings Account with the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP). Aggrieved by the foregoing Decision of the CTA, petitioner moved for a partial reconsideration of said Decision. The motion for partial reconsideration was denied on November 5, 1999. In this petition, NDC Provident Fund submits that the CTA committed a grave error in denying the larger portion of its claim for a tax refund on the ground that the testimony of petitioner's witnesses, Mr. Jolan Wedingco and Ms. Ana Garing were allegedly biased, self-serving and tainted with partiality. Moreover, it is argued that the CTA erred in ruling that petitioner failed to prove the factual elements of its claim for a refund. After a careful study of the records and the arguments of both parties, We find that the petition lacks merit. It appears that the investments in the LBP, in the form of T-bills and Special Savings Account (SSA), and the Fixed Term Deposit with the Bangko Sentral ng Pilipinas (BSP) were in the name of the NDC. Only the Savings Account with the DBP and the LBP were deposited in the name of the NDC Provident Fund. In the assailed August 9, 1999 Decision, respondent CTA ruled that: "With respect to its investments, Petitioner merely presented the certifications of Mr. Jolan V. Wedingco, Manager of the Treasury Department of NDC (Exhibits F-1, G-1 and H-1) and the testimony of Ms. Ana L. Garing in the hearing of October 9, 1997 in proving that out of the total investments made by NDC in LBP and Bangko Sentral ng Pilipinas , certain portions thereof belong to the Petitioner. No other proof was adduced in evidence to establish by real evidence the joint participation of the money or asset of the Petitioner together with that of NDC. As such, this Court gives scant probative value to said certifications and testimony for the reason that they are all self-serving and imbued with partiality of interest." Having found that Mr. Jolan Wedingco and Ms. Ana Garing were both members of the NDC Provident Fund's Committee of Trustees, the respondent CTA ruled that they possess a personal interest in the matter and, in the absence of corroborative evidence, their certification and testimony are considered self-serving. Indeed, aside from such testimony and certification, no other documentary evidence was presented a quo which would prove the amount of petitioner's money invested jointly with that of NDC's funds. Petitioner argues that the certifications and testimony of Mr. Jolan Wedingco were presented in his official capacity as Manager of the Treasury Department of the NDC, and as such officer, he enjoys the presumption of regularity in the performance of official duty. Nonetheless, such arguments are insufficient to overthrow the well-settled doctrine that taxation is the rule and exemption is the exception. Any claim for tax exemption is strictly construed against the claimant. ( Mactan Cebu International Airport Authority v. Marcos, 261 SCRA 667) It is axiomatic in the law of taxation that taxes are the lifeblood of the nation. Hence, "exemptions therefrom are highly disfavored in law and he who claims tax exemption must be able to justify his claim or right. ( Commissioner of Internal Revenue v. Court of Appeals, 271 SCRA 605) Likewise, We cannot uphold the petitioner's contention that the respondent Commissioner of Internal Revenue never controverted the fact that portions of the NDC investments with the LBP T-bills and BSP Fixed Term Deposits were for the account of the petitioner. This Court rules that it is not for the Commissioner of Internal Revenue to controvert the basis of petitioner's claim for a tax refund. In general, there is no disagreement that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund. Tax refund, like tax exemptions, are construed strictly against the taxpayer. ( Citibank vs. Court of Appeals, 280 SCRA 459 ) Finally, We affirm the CTA's findings that petitioner failed to prove the factual elements of its claim for refund. A review of the factual basis of petitioner's claims for tax refund shows only the existence of investments in the name of the NDC, in the form of LBP T-bills and BSP Fixed Term Deposits, and the corresponding taxes withheld therefrom. Aside from Wedingco's and Garing's certifications and testimony, nothing else on record concretely shows the proportionate shares, if any, of the petitioner in subject investments which are solely in the name of NDC. On the other hand, We note that petitioner's savings account with the LBP and DBP are all duly supported by documentary evidence. Surely, there would have been records and other documents of disbursements or transactions with respect to the petitioner's funds if such were placed or invested in the money market or, in this case, LBP T-bills and BSP Fixed Term Deposits. There being none, We affirm the conclusion of the respondent court which are duly supported by the evidence on record. It has been the long standing policy and practice of the Supreme Court as well as this Court, to respect conclusions arrived at by quasi-judicial agencies, especially the Court of Tax Appeals which, by the nature of its functions, is dedicated exclusively to the study and consideration of tax problems, and which has thus developed an expertise on the subject, unless an abuse or improvident exercise of its authority is shown. ( Commissioner of Internal Revenue vs. Court of Appeals, 303 SCRA 508) WHEREFORE, based on the foregoing premises, this petition is hereby DISMISSED. Accordingly, the assailed August 9, 1999 Decision of the Court of Tax Appeals in CTA Case No. 5525 is UPHELD. SO ORDERED. Reyes and Bersamin, JJ . , concur.