CTA Case No. 4323 (Decision)

�,nrt' I '~ l REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PHILIPPINE ELECTRICAL C.T.A. CASE NO. 4323 MANUFACTURING COMPANY. Petitioner, - versus - THE COMMISSIONER OF INTERNAL REVENUE. Respondent. X- - - - DECISION This is a claim for refund in the amount of P209, 2 53.00 representing alleged ' erroneous payment of advance sales tax. Petitioner, is a domestic corporation organized and existing under the laws .of the Philippines, with principal office at 1873 P. Domingo St. Makati, Metro Manila, and is engaged in the manufacture and sale of lamps. The records show that petitioner made three (3) separate importations of 500,000 pieces of filam~nts tungstenis 100 x 230 volts from General Electric Brazil under Import Entry Nos. 70494-3-1984, 180445-3-1984, and 230915-3-1984, respectively with a value of US$22,260.00.

DECISION - C.T.A. CASE NO. 4323 - 2- On August 20, October 25 and December 26, 1984 petitioner claimed to have paid the advance sales tax due on the said three (3) importations under then Section 162 o� the Tax Code, amounting to P204, 236. 35 computed as :follows: O~~icial Receipt No. Amount 492578 August 20, 1984 P68,089.35 392955 - October 25, 1984 68,089.00 555694 - December 26, 1984 68,058.00 Petitioner allegedly discovered that the 922,273 pieces o� the imported filaments, . with a value of US$40,448.92 were defective. On June 27, 1986, under Central Bank Export Declaration Without Foreign Exchange Proceeds No. 86/1073, petitioner exported back to Brazil the said defective filaments for replacement. On November 23, 1986, the 922,500 pieces of replacement filaments arrived valued at US$40, 959 under import entry no. 016508. On January 28, 1987 petitioner paid the advance sales tax on the said importation of replacement filaments in the amount of P209,253.00 under Official Receipt No. 2018331. On August 12, 1987 petitioner filed with the Chief of the Appellate Division of the Bureau of Internal

DECISION - C.T.A. CASE NO. 4323 -3- Revenue a claim �or re�und o� P209, 253. 00 representing the erroneously paid advance sales tax. Petitioner without waiting �or respondent to act on its claim �iled the instant petition �or review to toll the running o� the prescriptive period set �orth in Section 243 a� the Tax Code. Petitioner maintained that the payment o� the advance sales tax is erroneous pursuant to then Sec. l62(c) o� NIRC, as amended by Executive Order No. 36 salient portion a� which states: "advance sales tax is imposed and paid only once on articles imported. Petitioner said that "shipment a� articles made to replace defective items are no longer subject to advance sales tax" <par. 9 petition �or review) also petitioner relied on BIR Ruling No. 110-86 dated July, 1986 which reads as follows: "This refers to your letter dated May 13, 1986, requesting for and in behal� a� your client, Borroughs Ltd., exemption from the payment of advance sales tax on the shipment of an article which is allegedly a replacement o� a tax-paid defective article. XXX XXX XXX "In reply, please be in�ormed that advance sales tax imposed under Section 162 ( c > of the Tax Code, as amended, is levied and paid only once on the articles imported. Consequently, your client's second shipment of an article that would replace the defective item imported last December 31, 1985 the advance sales tax on which amounting to P80,577.00 has already been paid, is no longer subject to another advance sales tax. "

DECISION - C.T.A. CASE NO. 4323 - 4- Respondent in her Answer to the petition admits incontestable facts such as petitioner's existence, and the filing of the claim for refund but d~nies the rest of the allegations of petitioner for lack of knowledge and information sufficient to form a belief as to the truth . of the matters alleged therein. And by way of special and affirmative defenses alleged the following: 1. The second shipment of 922, 500 pieces of filaments is subject to advance sales tax; 2. BIR Ruling No. 110-86 dated July 11, 1986 was issued by respondent's predecessor. Respondent, who is the incumbent Commissioner of Internal Revenue, is vested with authority to revoke, repeal or abrogat~ the acts or rulings of his predecessor in of:fice, because the erroneous or non-valid construction o:f a statute by those administering it is not binding on the Government i:f therea:fter the latter becomes satis:fied that a di:f:ferent construction is called for <Hilado vs. Coli. o:f Int. Rev., 100 Phil. 294 [ 1956 J, citing Association of Clerical E�ployees vs. Brotherhood of Railroad & Steamship Clerks, 85 F<2d> 152, 109 A. L. R. 345>; 3. Taxes are presumed to have been collected in accordance with law. Hence, the burden of proof lies on the taxpayer to prove that the taxes paid were illegally or erroneously collected. Failure to sustain said burden is fatal to the action :for re:fund o:f taxes; 4. Claims for refund o:f taxes are construed strictly against the claimants, the same being in the nature of an exemption :from taxation <Manila Electric Co. vs. CIR, 67 SCRA 351>;

DECISION - C.T.A. CASE NO. 4323 -5- 5. It is incumbent upon the petitioner to show that it has c omplied with the provisions of Sections 243 and 246 of the Tax Code o:f 1986. It is important to state at this juncture that the issue involve in this cas e is purely factual. During the trial of this case, this Court denied the admission o:f Exhibits "A", "A - 1", "A-2", "B", "B-1", "B- 2", "C", "C-1", "C-2", "G", "H", "K", "L", "M" :for :failure o:f petitioner to show proof of the due execution and authenticity of said exhibits pursuant to Section 21 of Rule 132 of the Rules o:f Court <now Section 20 of the Rules of Court> as stated in the Resolution of this Court dated May 9, 1990. Since, the above cited exhibits constitute the very core of petitioners claim, its failure to produce the original copy of said exhibits is fatal to its claim. As held by this Court in the recent case of Citibank N. A. Phi.lippine Branch vs. The Commissioner o� Interna.l Revenue, CTA Case No. 4258, April 11, 1994, "The basic proof of facts required for the Court to be able to decide the case on _the merits has not been met. It may not be amiss to point out at this stage that in an action for refund/credit, the taxpayer has the burden of showing that taxes paid were erroneously collected and that failure to meet such burden is fatal to its cause as such

DECISION - C.T.A. CASE NO. 4323 -6- claims for ref und are strictly c onstrued against the claimant. " We agree with the argument raised by respondent that due to the non admission of certain d ocumentary evidence of petitioner, particularly exhibits "A" , "A-1", "A-2", "B", "8 - 1", "C", "C-1", "C-2", "G", "H", "I", "J" and M the following allegations of petitioner were not proven: 1. that Petit ioner made three separate importations of 500,000 pieces of filaments from General Elec tr ic Brazil <p ar. 3>. 2 . that Petitioner d iscovered that 9 22, 273 piec es of the imported filaments were defective (par . 5> 3. that Petitioner exported back to Brazil the defective filaments for replacement <par. 6). For failure of pet i t ioner to produce the original of the said documents as provided for in Section �'� of Rule 130 of the Rules of Court, it is clear that the claim of petitioner for the refund of P209,253.00 allegedly representing erroneously paid advance sales tax cannot merit our consideration. It is evident that the non - admission of petitioners documentary exhibits as evidence for petitioner has tremendously weaken his cause. It was as if no pro of of evidence was submitted by petitioner. Although there is evidence that petitioner imported 922 ,500 pieces of replacement filaments <Exh. "K", "L">

DECISION - C.T.A. CASE NO. 4323 -7- that the advanc e sales tax due on the said importation was p a id ( Ex h. " 1'1" > th e s ame , ho we ve r, is not sufficient to prove that said imported filaments are intended :for replac e me nt s of the all e ged prev i ously impo r ted filaments found to be defective. To reite rate, it may not be amiss i to stress that in an action for tax re:fund/credit the taxpayer h a s the burden of s howing that taxes paid are errone ously collected and that failure to meet such burden is f ata l to its case as such c laim :for r efund are stric t l y construe d against th e claimant ( Citibank H.. A.. Philippine Branch vs. Commissioner o:f Internal Revenue, supra>. In the case of A. F . Holding and ltanage�ent Corporation vs. Commissioner o� Internal Revenue, CTA Case No. 4 259, March 16, 1993, this Court ruled i n this wise: "we can not just make our own wild conjectures as to the amount arrived at wanting the necessary supporting documents, o:f course, the petitioner does not expect this Court to go be yond evaluating evidence which are only at hand. In short, the c laim :for re:fund taxes under the category of mere sel:f serving stipulations advance by the petitioner . In a claim for refund, as pointe d out by the respondent, it is incumbent upon petitioner to ' (.. show that i t is en~i tled thereto, otherwise, failure on its part to prove the same is :fatal to its claim :for re:fund.

DECISION - C.T.A. CASE NO. 4323 - a- I t c ann o t b e ~1 a i n sc.~ i d that pet.i tioner is aware o:f the requirement of the law, s pecifically Section 3 Rule 130 of the Rules of Court which states: SEC. 3. Original document must be produced; ex..ceptions. When the subj ect of inquiry is the contents of a document, no evidence shall be admissible other than the original document i tsel:f, except., in the following cases: <a) When the original has been lost, destroyed, or cannot be produced in court, without bad faith on the part of the offeror; <b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter :fails to produce it after reasonable notice; (c) When the original consist o:f numerous accounts or other documents which cannot be examined in court without great loss o:f time and the fact sought to be established :from the~ is only the general resul t of the whole; and <d> When the original is a public record in the custody of a public o:f:ficer or is recorded in a public of:fice. Failure to comply with the requirements, the above provision will only prove the absence o:f those documents. For the reason above stated, it will be an exercise in futility to discuss the other matters raised in the pleadings. . �~ WHEREFORE, in view o~ the :foregoing the case is hereby DISKISSED. With costs against petitioner.

DECISION - -9- / C.T.A. CASE MO. 4323 ;1uAs.saU!~~~~ G:UBA SO ORDERED. Judge WE CONCUR; Jut :i~g D~~~ RAftON 0. Ass ociate J ~~A CERTIFICATION I hereby certify that this decision vas reached after du.e consultation among the members of the Ceurt of Tax Appeals in accordance with Section 13 Article Vlll of the Constitution. \:...... l="g.~ ERHESTO D. ACOSTA Presiding Judge Court of Tax Appea~s