CTA Case No. 4588 (Decision)

v \\b REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY C ITl CORP VICKERS PH ILl PP I NES, INC. , Petitioner, - versus - C.T.A. CASE NO. 4588 THE COMMISSIONER OF 9f/;; Promulgated: INTERNAL REVENUE, NOV 271996 Respondent. X- - - ------------------X DECISION Before Us for consideration is the herein prayer of petitioner, through a Petition for Review, for the judicial refund of alleged erroneously paid value-added taxes <VAT> in the aggregate amount of P347,300.94 covering the period December 19, 1988 up to September 12, 1990. Petitioner is a domestic corporation organized and existing under Phi I ippine laws with office located at the 5th Floor, Citibank Centre, 8741 Paseo de Roxas, Makati, Metro Mani Ia. It is allegedly engaged in business activity in the Philippines as a dealer in securities. The antecedent facts are simple.

a --- 1U1 - ... DECISION - C.T.A. CASE NO. 4588 - 2- During the period above-stated, petitioner avers that it rendered brokerage services to non-resident clients for which it was paid in acceptable foreign currency inwardly remitted to the Phi I ippines with a Phi I ippine peso equivalent of P3,473,008.70, and ,.. correspondingly paid the 10% VAT due thereon to the Bureau of Internal Revenue (BIR) in the amount of P347,300.94. Sometime later, petitioner realized that as a dealer in securities, it was exempt from VAT pursuant to Section 103(j) of the Tax Code, as amended, and instead, was supposed to be subject to the percentage tax under Section 116 of the same Code. Consequently, petitioner filed a claim for refund with the respondent on March 20, 1991. Its claim was premised on erroneous payment of internal revenue tax, more particularly, the VAT it had paid. On even date, petitioner filed the instant petition in order to interrupt the running of the two-year prescriptive period for claiming a refund pursuant to Section 230 of the Tax Code. Hence, this appeal. In her answer, respondent contends, among others, that "[g]ranting but not admitting that petitioner is entitled to a tax refund, the right to claim said refund

- DECISION - C.T.A. CASE NO. 4588 - 3- for the period prior to March 20, 1989 has prescribed as the petition for review was only filed on March 20, 1991 or after the lapse of the reglementary period of 2 years provided under Section 230 of the Tax Code." Moreover, respondent asseverates that petitioner has no cause of action because it failed to show that the collection of the aforesaid tax I iabi I ity in the amount of P347,300.94 was illegal or erroneous. Records1 reveal, inter alia, that petitioner offered in evidence the following exhibits, namely: (1} its VAT returns for the period December, 1988 to September, 1990 <Exhibits "C", "D", "E", "F", "P", "Q", "R", and "S"); (2) CB Confirmation Receipts for its VAT payments (Exhibit "C-1", "D-1", "E-1", "F-1", "P-1", "Q-1" "R-1", and "S-1"; (3) schedule of transactions duly registered with the Central Bank covering sale of Phi I ippine securities to non-residents <Exhibit "V"); (4 ) applications for registration of Sale of Phi I ippine securities to non-residents, and authority to transfer outward corresponding stock certificates duly registered with the Central Bank <Exhibits "W-1" to "W-113"); (5) photocopy of its certificate of amended Articles of Incorporation issued by the Securities and Exchange Commissioner <Exhibit "A"); and (6) Amended Articles of Incorporation <Exhibit "B"). ,-,.( ~ 1 1-.� L) (l

DECISION - C.T.A. CASE NO. 4588 - 4- The sole issue to be resolved in the case at bar is: whether or not petitioner is entitled to the refund of the alleged erroneous payment of VAT in the said amount of P347,300.94. Delving into the merits of the case, We resolve to ,. peremptorily rule in favor of respondent. Notwithstanding the fact that petitioner has sufficiently established that it is a dealer in securities and therefore exempt from VAT, with alI the a I Ieged business transactions to non-residents involving services on the sale of securities duly proven, it somehow fa i I ed to conv i nee this Court that erroneous . VAT payments on such services rendered were indeed included in the various VAT returns it filed with the 81R. If, as alleged, it is subject to percentage tax, it failed to prove that it paid the said tax due. The above finding is anchored on the curiosity of this Court on why petitioner is merely seeking the refund of P347,300.94 covering the period December, 1988 up to September 12, 1990, when, as the records bear out, the actual total amount of VAT payments made for the same period is computed, as follows: 1 � Confirmation Receipt No. 819179676 .p 148,366.39 dated 03-20-90 <Exhibit "C-1") 2. Confirmation Receipt No. 821284465 213,454.79 dated 12-20-90 <Exhibit "D-1") 1 .' ��; ( ( .� ,__) cl

DECISION - C.T.A. CASE NO. 4588 -5- . 3. Confirmation Receipt No. 820618517 344,628.01 dated 09-20-90 <Exhibit "E-1") 4. Confirmation Receipt No. 820111920 238,625.48 dated 06-20-90 <Exhibit "F-1") 5. Confirmation Receipt No. 818029212 409,069.60 dated 09-20-89 <Exhibit "P-1") 116,983.29 ,. 6. Confirmation Receipt No. 817578310 dated 06-20-89 <Exhibit "Q-1 ") 7. Confirmation Receipt No. 816483383 79,063.26 dated 03-20-89 <Exhibit "R-1") 8. Confirmation Receipt No. 818513486 917,211.31 dated 12-20-89 <Exhibit "S-1") Total .P2,467,402.13 The discrepancy in the above figures could only be interpreted to mean that petitioner is engaged in other rightfully "vatable" sale of services other than dealing in securities, otherwise, it could have surely sought the refund of the entire amount of actual payments made. In this regard, there is a� compe I I i ng need for the petitioner to point out to the Court that the amount being claimed in this petition forms part and parcel of the actual payments made. This could only be done by a painstaking verification of alI the invoices/receipts evidencing the sale of services transacted during each quarter of the period covered and correspondingly relating them to the totality of the quarterly payments. In this way, the particular transactions on the dealing of securities can be properly identified and segregated ' ,. ,. _.,� ._�~ \ J 1 1-�. ~ �.�

DECISION - C.T.A. CASE NO. 4588 - 6- and the fact of payment of VAT thereon truly established with certainty. Sad to say, petitioner was unable to present the required evidence on said specific transactions. There is no way thus far for this Court to ascertain whether the particular transactions from which the herein claim arose were some of those included in the I ist of transactions covering the VAT payments for the quarter concerned. In fine, the VAT payments made as evidenced by the various Confirmation Receipts are presumed to be valid VAT payments in the absence of clear evidence to the contrary. �It should be borne in mind by the petitioner that in cases I ike this which deals on a refund, it has the burden of proof to show that it is entitled to the refund of the amount claimed as refundable because taxes are presumed to have been collected in accordance with laws and regulations on the matter. For having failed to sustain the burden placed upon it by presenting proof that it is entitled to the refund of the amount involved herein, this Court could not look with approval to the grant of the refund. (Caltex [Phi I ippinesl Inc. vs. Commissioner of Internal Revenue; CTA Case No. 2871) It has been the constant and uniform holding of the Supreme Court that claims for refund are construed strictly against claimant since a claim for refund is in 1 .' .... . I :. '-f .J

u - DECISION - C.T.A. CASE NO. 4588 - 7- the nature of an exemption from taxation. (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) WHEREFORE, in view of insufficiency of evidence, the instant petition for review is hereby DISMISSED for lack of merit. SO ORDERED. CONCUR: I I I (7~~~ I ERNESTO D. ACOSTA Presiding Judge CERTIFICATION hereby certify that this decision was reached after due consultation with the members of the Court of Tax Appeals in accordance with Section 13, Article VI I I of the Constitution. <C'~~e. 0~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 1 ' { ~4�. 1�.� {..