Equitable PCI Bank v. Commissioner of Internal Revenue

EIGHTH DIVISION [CA-G.R. SP No. 61109. June 21, 2001.] EQUITABLE PCI BANK (formerly known as EQUITABLE BANKING CORPORATION) , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N LABITORIA , J p : This Petition for Review under Rule 43 of the 1997 Rules of Civil Procedure seeks to set aside the Decision dated July 3, 2000 of the Court of Tax Appeals, in CTA Case No. 5686 and the Resolution dated September 8, 2000, denying petitioner's motion for reconsideration thereof. FACTS OF THE CASE On October 21, 1996, petitioner Equitable Banking Corporation filed with the Bureau of Internal Revenue its Quarterly Percentage Tax Return for the quarter ended September 30, 1996 and paid the corresponding gross receipts tax for the said quarter in the amount of P46,064,040.46, the tax base of which includes the passive income which was subjected to twenty percent (20%) final tax. On April 24, 1997, petitioner filed a claim for refund or issuance of a tax credit certificate of an alleged overpaid GRT of its Head Office for the quarter ended September 30, 1996 in the amount of P1,770,274.00, based on the decision of the Court of Tax Appeals dated January 30, 1996, entitled "Asian Bank Corporation vs. Commissioner of Internal Revenue," in CTA Case No. 4720 which rules that the 20% final withholding tax on interest income should not form part of the taxable gross receipt for purposes of computing the gross receipts tax. On October 21, 1998, petitioner filed with the Court of Tax Appeals a petition for review in order to toll the running of the two-year prescriptive period to judicially claim for refund of overpaid internal revenue tax pursuant to Section 230 (now 229) of the Tax Code. After filing and consideration of the pleadings, public respondent Court of Tax Appeals rendered a judgment denying the petition for insufficiency of evidence. 1 A motion for reconsideration was filed but was denied in a Resolution dated September 8, 2000. 2 Not satisfied, petitioner interposed the present petition, assigning a lone error, thus: "THE CTA ERRED IN HOLDING THAT EPCIB'S EVIDENCE TO PROVE ITS CLAIM FOR REFUND OF EXCESS GROSS RECEIPTS TAX IS INSUFFICIENT" 3 The petition is bereft of merit. In general, there is no disagreement that a claimant has the burden of proof to establish the factual basis of its claim for refund. Tax refunds, like tax exemptions, are construed against the taxpayer. 4 In the case at bench, tax refund claimed by petitioner cannot be granted since their entitlement thereto remains unproven and unsubstantiated. Petitioner failed to discharge this burden of proof as correctly observed by public respondent Court of Tax Appeals, which ruled in this wise, thus: ". . . This Court finds that Petitioner failed to comply with the third and fourth requirements thus, the Court is constrained to deny the refund of the amount of P1,770,274.60, allegedly representing the difference between its gross receipts tax paid pertaining to EBC Head Office and the Adjusted Gross Receipts Tax, since there is no way by which the Court would be able to verify the accuracy and the fact of actual withholding of the 20% final tax on its passive income in the amount of P1,770,274.60. Petitioner should have presented in evidence the certificates of final taxes withheld issued by its withholding agents or issuers of the investment securities showing the amount of interest income payment and the corresponding 20% final withholding taxes. In the same token, Petitioner failed to substantiate its allegation that the 20% final withholding taxes formed part of its gross receipts subjected to the gross receipts tax. Moreover, the Court could not ascertain whether the passive income reflected thereon were recorded at gross or net of the 20% final withholding taxes. In this regard, the source documents such as the detailed transaction records, confirmation of purchase, confirmation of sale, trading sheets, credit/debit advises, accounting tickets, and certificates of final taxes withheld could serve as the best evidence that would clearly establish its entitlement to the claimed fraud. Absence of these documents therefore, is fatal to the taxpayers cause." 5 Verily, We found no basis for overruling the conclusion arrived at by public respondent Court of Tax Appeals. It must be noted that the Court of Tax Appeals is a highly specialized body created for the purpose of reviewing tax cases. As a matter of principle, this Court will not set aside the conclusion reached by an agency such as the Court of Tax Appeals which is, by the very nature of its functions, dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject unless there has been an abuse or improvident exercise of authority. 6 In the case at bench, We find no reason to depart from this ruling, since the findings and conclusions of the Court of Tax Appeals appear untainted by any abuse of authority, much less, grave abuse of discretion. Indeed, We find the decision of public respondent free from any palpable error. HcTEaA WHEREFORE, the decision of the Court of Tax Appeals is hereby AFFIRMED. SO ORDERED. Bello, Jr . and Tirona, JJ ., concur. Footnotes 1. p. 31, Rollo . 2. pp. 41-43, Rollo . 3. p. 11, Rollo . 4. Citibank N.A. vs. Court of Appeals , 280 SCRA 459. 5. pp. 29-30, Rollo . 6. Commissioner of Internal Revenue vs. Court of Tax Appeals , 303 SCRA 614.