SANKYU LOGISTICS PHILIPPINES, INC., v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION SANKYU LOGISTICS CTA CASE NO. 8080 PHILIPPINES, INC., Members: Petitioner, -versus- BAUTISTA, Chairperson PALANCA-ENRIQUEZ, and COTANGCO -MANALASTAS , J J COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. DEC 2 8 2012 X - - - - - - - - - - - - - - - - - - - - - - - --- _ C.._~ - /t_: _o? ~--~ ~ --- X DECISION COTANGCO-MANALASTAS, J. : This is a Petition for Review filed on April 14, 2010 by Sankyu Logistics Philippines, Inc. (petitioner) pursuant to Section 4(a) of Rule 8 of the Revised Rules of the Court of Tax Appeals (RRCTA), in relation to Rule 4 thereof, to review by appeal the inaction of the Commissioner of Internal Revenue over petitioner's administrative claim for issuance of lax credit certificate for its alleged excess creditable withholding tax (CWT) for taxable years 2007 and 2008 in the aggregate amount of P6,299,797.00. THE FACTS Petitioner Sankyu Logistics Philippines, Inc. is a domestic corporation du ly organized and existing under the laws of the Republic of the Philippines, with office address at 8th Floor, Salamin /--

DECISION CTA CASE NO. 8080 Page 2 of 2 0 Building, Salcedo Street, Legaspi Village, Makati City. 1 Petitioner is registered with the Bureau of Internal Revenue (BIR) and was issued Tax Identification No. 205-657-646-000-VAT.2 Respondent is the duly appointed Commissioner of the Bureau of Internal Revenue vested by law with the power to enforce and implement the provisions of the National Internal Revenue Code (NIRC), related statutes, and their imple menting rules and regulations . She holds office at the BIR National Office Building, Agham Road , Diliman, Quezon City. On March 9, 2009, petitioner's Board of Directors issued a resolution approving the cessation of commercial operations of petitioner effective March 31, 2009 and the liquidation effective June 30, 2009.3 On ,July 31, 2009, petitioner filed an application for closure a nd for cancellation of its BIR registration with the BIR due to cessation of commercial operations as per the above resolution of petitione r's Board of Dircctors.tJ On March 2, 2010, petitioner filed with the BI R its short period Income Tax Return (ITR) for the pe riod covering ,January 1 to ,June 30, 2009, pursuant to its cessation of commercial operations.s On April 13, 2010, petitioner filed with the BIR Reve nue District Office (ROO) No . 47 - East Makati an administrative claim for issuance / 1 Par. 1, Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), docket , p. 46. 2 Par. 3, Admilted Fa c ts, JSFI, docket, p. 47. 3 Par. 7, /\dmitt.ed Facts, ,JSFI, docket, p. 4 7. 4 Par. 8 , Admitted Fact s , ,JSFI, doc ket , p. 47 . s Par. 9, Admitted Facts, JSFI , docket, p . 47 .

DECISION CTA CASE NO. 8080 of lax credit certificate for excess creditable withholding lax for taxable years 2007 and 2008 m the amounts of Pl ,689,921.00 and P4,609,876.00, respectively, or an aggregate amount of ?6,299,797.00.6 On April 14, 2010, petitioner filed this Petition for Review due to respondent's inaction over its administrative claim for issuance of tax credit certificate for ils excess CWT for taxable years 2007 and 2008 in lhe aggregate amount of P6,299,797.00, pursuant lo Section 229 of lhe NIRC of 1997. In respondent's Answcr7 filed on April 30, 2010, sh e interposed lhe following special and affirmative defenses: "SPECIAL AND AFFIRMATIVE DEFENSES 5) Assuming without admitting that Petitioner filed a claim for refund, the same is subject to investigation by the Bureau of Internal Revenue; 6) Petitioner failed to demonstrate that the tax, which is the subject of this case, was erroneously or illegally collected; 7) Taxes paid and collected arc presumed to have been made in accordance with the laws and regulations, hence, not refundab le; 8) It is incumbent upon the Petitioner to show that it has complied with the provisions of Section 204(C) in relation to Section 229 of the Tax Code, as amended upon which its claimed for refund is premised; 9) In an action for tax refund the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge said burden is fatal to the claim (Emmanuel & Zenaida Aguilar u. Commissioner, CA -GR No. Sp. 16432, lr March 30, 1990 cited in Aban, Law of Basic Taxation in the Philippines, 1 st Edition, P. 206); 6 Par. 10, Admitted Facts, JSFI, docket, p . 47. �7 Docket, pp . 16- 18.

DECISION CTA CASE NO. 8080 10) Claims for refund are construed strictly against the clajmant, the same partake the nature of exemption from taxation (Commissioner of Internal Revenue us. Ledesma, 3 7 SCRA 95) and as such, these are looked upon with disfavor (Western Minolco Corp. us. Commissioner of Internal Revenue, 124 SCRA 121) ." On November 15, 2010, petitioner moved for the commissioning of Atty. Ma. Cecilia C. Katigbak as Independent Certified Public Accountant (CPA) to perform the following functions: 1. Conduct the examination and audit of the voluminous documents, and thereafter; and 2 . Issue and file with this Court a Formal Report attesting to the correctness of the contents of the Summary jies and compliance with substantiation requirements under pertinent tax laws, regulations and jurisprudence after making such examination, evaluation and audit.s In a Rcsolution9 dated December 13, 2010, the Court granted petitioner's motion to commission Atty. Ma. Cecilia C. Katigbak as Independent CPA. During trial, petitioner presented as witnesses Ms. Aida V. Magampon, petitioner's former Finance and Administration Manager from March 29, 2004 until August 31, 2009, and Atty. Ma. Cecilia C. Katigbak, the duly appointed Independent CPA. During the scheduled hearing on February 27, 2012, petitioner's counsel failed to appear, despite notice.lO This prompted respondent to move that petitioner be deemed to have waived its right to present further evidence, which the Court denied. In a/- s Docket, pp. 59 -63 . 9 Docket., p. 80 . 10 Docket, p. 121 .

DECISION CTJ\ CASE NO . 8080 Resolution 11 dated March 7, 2012, the Court warned petitione r's counsel that if he failed to appear again on March 26, 2012, petitioner's right to present further evidence shall be deemed waived . During the March 26, 2012 hearing, counsel for petitioner again failed to appear despite notice. The Court, upon motion of respondent and considering the warning given in the Resolutionl 2 dated March 5, 2012, declared that petitioner's right to present further testimonial evidence has been deemed waived.l 3 On May 3, 2012, petitioner filed its Formal Offer of Evidence 1\ and respondent filed no comment/ opposition to such offer. In th e Resolution 15 dated June 1 1, 2012, this Court admitted Exhibits "1", "I - 4", "1-5" and '\J", described as follows: EXHIBIT DESCRIPTION " I" Revised Report on the Result of the Procedures Performed for the Claim for Refund/Tax Credit Certificate for taxable - - years 2007 and 2008 __ - --. "1 -4 " Summary of Creditable Withholding Tax for ----� taxable years 2007 and 2008 "1 - 5" Summary of Certificates of Creditable Tax Withheld not Signed by the Payor for taxab le years 2007 and 2008 " \. ] " ,Judicial Affidavit of Ally. Ma. Cecilia ------ Katigbak dated May 24, 20 1_1 "J" JudiciaJ Affidavit of Ms. Aida V. Magampon dated November 17, 2011 I I Docket., p . 123. 12 Docket, p . 123, should be r~csolut.ion dated March 7, 2012. 13 Docket., p. 126. 14 Docket. , pp. 135- 140 . IS Docket., pp. 148- 149.

DECISION CTA CASE NO . 8080 Th e Court denied Exhibits "1 - 1", "1-2 ", "1 -3", a nd th e sub- markings of "1-4" due to petitione r's failure to submit th e duly m a rked exhibits. On cJun e 21, 2012 , re spond e nt m a nife sted that sh e will n o longe r pre s e nt a ny evid e nce a nd moved for a pe riod of thirty (30) d ays to submit memorandum , which this Court granted. 16 On Septe mbe r 11 , 201 2, this ca s e wa s deem ed submitted for decision c onsidering re spondent's Me morandum fil ed on Au g ust 23, 2 01 2 a nd th e Report dated August 2 8 , 2 012 of t h e Court's Judi c ia l Records Division slating th a t petition e r fa il ed to fil e a Me mora ndum . THE ISSUES The following a rc the pa rties' jointly stipula ted issuesl7 submitted for this Court's conside ration: "1 . Wh e th e r or not Petition e r's c la im for lax refund or credit for exce ss CWT for ta xa ble years 2 007 a nd 2 008 in th e aggrega te a mount of P6, 299 ,797 .00 wa s fil e d within th e two (2 )-yea r pre s c riptive pe riod for filin g claims for tax refunds or credits ; 2. Whethe r or not th e incom e pay m e nts from whic h th e a bove exce ss CWT b e ing cla im ed we re withh e ld we re d e cl a red by Pe tition e r in its ITR a s pa rt of its gross m comc; 3. Whether or not the fact of withholding were e stablished by a copy of th e Ce rtificates of Credita bl e Tax Withheld a t Source (BIR Form No. 2 307) duly issued by th e income payor (i. e., custome rs) to t h e pay ee (i .e., c laim a nt Pe tition e r) showing th e a mount/- 16 Doc k e t , p . 15 0 . 17 Doc k e t , p. 48 .

DECISION CT/\ CASE NO. 8080 of mcome paid a nd a mount of lax withheld there from; 4. Whether or nol the a bove excess CWT being claimed are duly substantia ted with docum e nts ;" The foregoing issues can be summarized as follows: "Whether or not petitioner is entitled to a n issuance of lax c redit certificate for its a ll eged excess c redita ble withholding lax for taxa ble years 2007 a nd 2008 in the aggrega te a mount of P6,299,797. 00." THERUUNGOFTHECOURT Petitioner must satisfy the following req uisites lo be e ntitled to a re fund of its purported excess c redita ble withholding lax for taxable years 2007 a nd 2008: 1. Th e c la im for refund was fil ed within the two -year prescriptive period as provided unde r Section 2 04(C) in re la tion lo Section 229 of th e NIRC of 1997, as a mended; 2 . The fact of withholding is established by a copy of a slalemcnl duly issued by the payor (withholding age nt) lo the payee, showing the a mount paid a nd the a mount of lax withheld therefrom; a nd 3. The income upon which the taxes were withheld was included in the retu rn of the recipie nt. IS Be fore discussing wh eth e r petitione r was a ble lo comply with the three requisite s, it is impe rative to disc uss first whether petition er was ab le lo co mply with th e Best Evidence Rul e 19 in relation to t h e f,- 2005 Revised Rul es of lhc Court of Tax Appeals a nd the doctrin e laid 111 Section 2.58, l<cvcn ue l<egu lat.ions No. 2 -98, as amended; Citibank N.A. us. Court of Appeals, et al. , G.R. No. 107434, October 10, 1997; 1\CCRA In vestme nts Corporation us . The Honorable Court of Appeals, et a l., G .R. No . 96322, December 20, 1991. ICJ Section 3, Rule 130 of the Rules of Court.

DECISION CTJ\ CASE NO. 8080 down by the Supreme Court in the case of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue20 {Atlas case). The Best Evidence Rule as provided in Section 3 of Rule 130 of the Rules of Court slates that "when the subject of inquiry is the contents of a document, no evidence shall be admissible other than th e original document itself." While the above-quoted provision does admit exce ptions, absent the clear showing that it falls under any of those exceptions, the originals of the documents should be submitted. However, this Court has its own rules lo compliment the Best Evidence Rule, which specifically cater to the voluminous documents or long accounts that taxpayer-claimants submit as ev id e nce to substantiate their claim for a lax refund. As provided, the Revised Rules of the Court of Tax Appeals allows and ad mits the reproduction or copy of the original. Section 5 of Rule 12 of the RRCTA stales: "SEC. 5. Presentation of voluminous documents or long accounts. - In the interest of speedy administration of justice, the following rules shall govern the presentation of voluminous documents or long accounts, such as receipts, invoices and vouchers, as evidence to establish ccrtajn facts: (a) Summary and CPA certification. - The party who desires to introduce in evidence such voluminous documents or long accounts must, upon motion and a pproval by the Court, refer the voluminous documents to an independent Certified Public Accountant (CPA) for the purpose of presenting: (1) a summary contllining, among other matters, a chronological listing of the numbers, dates and amounts covered by the invoices or receipts and 1r- the amount(s) of taxes paid; and 20 G.R. Nos. 141104 a nd 148763, June 8, 2007 .

DECISION CTA CASE NO. 8080 (2) a certification of an independent CPA allesting to the correctness of the contents of the summary after making an examination , evaluation and audit of voluminous receipts invoices or long accounts. The name of the Certified Public Accountant or partner of a professional partnership of certified public accountants in charge must be slated in the motion . The Court shall issue a commission authorizing him to conduct an audit and , thereafter, testify relative to such summary and certification. (b) Pre-marking and availability of originals. - The receipts, invoices, vouchers or other documents covering the said accounts or payment lo be introduced in evidence must be pre-marked by the party concerned and submillcd to the Court in order to be made accessible lo the adverse party who desires to check and verify the correctness of the summary and CPA certification. The original copies of the voluminous receipts, invoices or accounts must be ready for verification and comparison in case of dou bl on its authenticity is raised during the hearing or resolution of the formal offer of evidence ." In rclalion to the above-quoted provision, Section 2 of Rule 13 of the RRCTA, as amended, enumerates the duties of an Independent CPA, to wit: "SEC . 2. Duties of independent CPA. - The independent CPA shall perform audit functions in accordance with the generally accepted accounting principles, rules and regulations, which shall include: (a) Examination and verification of receipts, mv01ces, vouchers and other long accounts; (b) Reproduction of, and comparison of such reproduction with, and certification that the same are faithful copies of original documents, and pre -marking of documentary exhibits consisting of voluminous documents ; (c) Preparation of schedules or summaries contajning a chronologicaJ listing of the numbers, dates and amounts /r covered by receipts or invoices or other relevant documents and the amount(s) of taxes paid;

DJ.<:CISION CT/\ C/\SE NO. 8080 (d) Making findings as to compliance with substantiation requirements under pertinent tax laws, regulations and jurisprudence; (e) Submission of a formal report with certification of authenticity and veracity of findings and conclusions in the performance of the audit; (f) Testifying on such formal report ; and (g) Performing such other functions as the Court may direct ." (Emphasis supplied) One of lhc important duties of the Court-commissioned Independent CPA is lo certify that the documents submitted as evidence before the Court are faithful reproductions or copies of the original. ll is a lso lhc duty of th e Independent CPA to dete rmin e whether the taxpayer-claimant complied with substantiation requirements under pertinent lax laws, regulations and jurisprudence. While this Court gives weight to the Independent CPA 's findings and conclusions derived from lhc examination and verification of the documents submilled as evidence, it is not bound by such an assessment or report. The Supreme Court emphasized in the Atlas case21 lhal the In dependent CPA's certification, findings, a nd conclusions arc not enough lo substantiate petitioner's claim for tax refund and il is incumbent upon the taxpayer to submit the supporting documents. The Highest Tribunal explained that the supporting documents arc necessary lo determine the authenticity and veracity of the Indcpcndcnl CPA's conclusions. The pertin e nt~ 21 G.R. Nos . 141104 and 148763 June 8 , 2007.

DECISION CTA CASE NO . 8080 portions of Lhe Atlas case decision arc quoted hereunder for ready reference: "Also worth noting in the same decision is the weight given by this Court to the certification by the independent certified public accountant (CPA), thus - XXX XXX XXX There is nothing, however, in CTA Circular No. 1- 95, as amended by CTA Circular No. 10-97, which either expressly or impliedly suggests that summaries and schedules of input VAT payments, even if certified by an independent CPA, suffice as evidence of input VAT payments. XXX XXX XXX The circular, in the interest of speedy administration of justice, was promulgated lo avoid the lime-consuming procedure of presenting, identifying and marking of documents before the Court. It does not relieve respondent of its imperative task of pre- marking photocopies of sales receipts and invoices and submitting the same to the court after the independent CPA shall have examined and compared them with the originals. Without presenting these pre-marked documents as evidence - from which the summary and schedules were based, the court cannot verify the authenticity and veracity of the independent auditor's conclusions . There is, moreover, a need lo su bjecl these invoices or receipts lo examination by the CTA in order to confirm whether they are VAT invoices. Under Section 21 of Revenue Regu lation No. 5 -87, all purchases covered by invoices other than a VAT invoice shall not be entitled lo a refund of input VAT. XXX XXX XXX While the CTA is not governed strictly by technical rules of evidence, as rules of procedure are nol ends in themselves but are primarily intended as tools in the administration of justice, the presentation of the purchase receipts and/or invoices is not mere procedural technicality which may be disregarded considering that it J.- is the only means by which the CTA may ascertain and verify the lru lh of the respondent's claims.

DECISION CTA CASE NO. 8080 The records further show that respondent miserably fai led to substantiate its clajms for input VAT refund for the first semester of 1991. Except for the summary and schedules of input VAT payments prepared by respondent itself, no other evidence was adduced in support of its clrum. As for respondent's claim for input VAT refund for the second semester of 1991 , it employed the services of ,Joaquin Cunanan & Co. on account of which it (,Joaquin Cunana.n &, Co .) executed a certification that: We have examined the information shown below concerning the input tax payments made by the Makati Office of Manila Mining Corporation for the period from ,July 1 to December 31, 1991 . Our examination included inspection of the pertinent suppliers' invoices and official receipts and such other auditing procedures as we considered necessary in the circumstances. xxx As the certification merely stated that it used 'auditing procedures considered necessary' and not auditing procedures which arc in accordance with generally accepted auditing principles and standards, and that the examination was made on 'input tax payments by the Manila Mining Corporation,' without specifying that the said input tax payments are attributable to the sales of gold to the Central Bank, this Court cannot rely thereon and regard it as sufficient proof of the respondent's input VAT payments for the second semester. As for the Petition in G.R. No . 141104 , involving the input VAT of petitioner corporation on its zero - rated sales in the first quarter of 1992, this Court already found that the petitioner corporation failed to comply with Section 106(b) of the Tax Code of 1977, as amended, imposing the two-year prescriptive period for the filing of the application for refund/credit thereof. This bars the grant of the application for refund/credit, whether administratively or judicially, by express mandate of Section 106(c) of the same Code. Granting arguendo that the application of petitioner corporation for the refund/credit of the input VAT on its zero- rated sales in the first quarter of 1992 was actually and timely filed, petitioner corporation still failed to present together with its application the required supporting /r- documents, whether before the SIR or the CTA. As the Court of Appeals ruled-

DECISION CTA CASE NO . 8080 Page 13of 20 In actions involvin g claims for refund of taxe s a ssessed a nd collected , the burden of proof rests on the taxpayer. As clearly discusse d in th e CTA 's d ecision , petitione r failed lo substantia te its claim for lax re funds . Thus: 'We note, however, lha l in th e cas es a l bar, petitioner has reli ed totally on Revenue Re gul a tions No. 2-88 in determining compliance with the documenta ry require m ents for a successful re fund or issuance of lax credit. Unmentioned is th e a pplicable and spe cific a m e ndment later introdu ced by Reve nu e Regul a tions No . 3- 88 d a ted Apri l 7 , 1988 (issu ed ba re ly a fter two months from th e promulga tion of Revenu e Re gul a tions No . 2-88 on Fe bruary 15, 1988) , whi ch amended Section 16 of Re ve nu e Re gu lations No . 5 -87 on re funds or tax c redits of input lax. x x x. XXX XXX XXX 'A thorough exa min a tion of th e evidence submitted by the petitione r before this court revea ls outright th e fa ilure to satisfy do c um e nta ry re quire ments la id down under the above-cited regul a tions . Specifica lly, petitione r wa s not able to present the following documents, to wit: 'a) sales invoices or rece ipts ; 'b) purc h a s e invoice s or re ceipts ; 'c) evide nce of a c tual receipt of goods; 'd) 801 state m e nt showin g th e amount a nd d e scription of sale of goods, etc. 'c) ori ginal or attested copies of invoice or receipt on ca pital e quipment loca lly purc h a s ed; and 'D photocopy of import e ntry do c um e nt and confirm a tion receipt on imported capital equipm ent. 'Th e re is th e n eed to examin e th e s a les in voi ces or receipts in order lo a s certai n th e actual amount or qu antity of goods sold and their selling price. Without th e m , this Court cannot ve rify th e correctn e ss of petitione r's claim inasmu ch as the regula tions require th a t th e input taxes being sou ght for re fund should be limited to th e portion th a t is directly a nd e ntire ly a ttributa bl e lo th e pa rti c ul ar ze ro - ra ted tra nsac tion. In this instance , the be st ev id e n ce of su c h tra nsac tion are th e s ai d sales invoices or receipts. Also , eve n if sal e s in voi ces are produced, th e re is th e furth e r n eed lo submit evide n ce th a t such goods we re acluall received b the bu e r, in this case, by CBP, Philplhlos and PASAR.

DECISION CT/\ C/\SE NO. 8080 Page 14of20 XXX XXX XXX Laslly, this Court cannot determine whether there were actual locaJ and imported purchase of capitaJ goods as well as domestic purchase of non-capitaJ goods without the required purchase invoice or receipt, as the case may be, and confirmation receipts. There is, thus, the imperative need to submit before this Court the originaJ or attested photocopies of petitioner's invoices or receipts, confirmation receipts and import entry documents in order that a full ascertainment of the claimed amount may be achieved. Petitioner should have taken the foresight to introduce in evidence aJl of the missing documents abovementioned. Cases filed before this Court are litigated de novo. This means that party litigants should endeavor to prove at the first instance every minute aspect of their cases striclly in accordance with the Rules of Court, most especiaJly on documentary evidence. xxx" (Emphasis supplied) In this case, what remams of petitioner's evidence are the following: 1. Revised Report on the Result of the Procedures Performed for the Claim for Refund/Tax Credit Certificate for taxable years 2007 and 200822 ; 2. Summary of Creditable Withholding Tax for taxable years 2007 and 200823 ; 3. Summary of Certificates of Creditable Tax Withheld not Signed by the Payor for taxable years 2007 and 2 0 0 8 21; 4. Judicial Affidavit of Atty. Ma. Cecilia Katigbak dated May 24, 20 11 25 ; and 5. ,Judicial Affidavit of Ms. Aida V. Magampon dated November 17, 201 ]26. In light of the foregoing, the duly admilled pieces of evidence of petitioner after being measured and weighed are found wanting./- 22 Exhibit "I". 23 Exhibit "1-4". 24 Exhibit "1 -5". 2s Exhibit '\J". 26 Exhibit '\J" .

D E CISION CTA CASE NO. 8080 As laid down m the Atlas case27 , a bse nt th e supportin g docume nts, th e re 1s no oth e r way this Court can d e te rmine t h e a uth e nticity a nd veracity of th e Ind e pend e nt CPA 's conclusion. Pe tition e r's evidence consists only of a re port, summa ri e s , a nd judic ia l a ffid a vits of its witn e sse s . Th e re is no io ta of evid e nce that would support petition e r's conte ntion th a t it wa s a ble to comply wi t h substa nti a tion require m e nts . Th e Court is un a bl e to d e te rmin e wh e th e r petitioner compli ed with th e three requisite s la id down in th e ca s e of Citibank N.A. us. Court of Appe als, e t al. 2B du e to th e a bse n ce of supporting documents. Aside from failing to submit supporting documents to prove that petitione r wa s a ble to comply with the three esse ntia l requisites to be e ntill cd to a tax re fund , pe t ition e r a lso fa il ed to submi t evid e n ce to support its a ll egation that it h a s a lrea d y cea s ed comme rc ia l opera tions. A corpora te taxpaye r that ceased comme rcia l ope ra tions, a s a rule , IS allowed to cla im refund of its excess CWT eve n though it ca rri ed ove r to th e succeedin g year s a id exce ss tax c redit or ove rpa id tax. The s a id circumsta nce s e rve s a s a n exce ption to th e "irrevoca bility rul e". /-- 27 S upra. 28 G .R. No. 107434, Oc tober 10 , 1997.

DECISION CTA CASE NO. 8080 Page 16 of 2 0 In the case of Raytheon-Ebasco Overseas Ltd. - Philippine Branch vs. Commissioner of Internal Revenue29 (Raytheon-Ebasco case) , this Court has reiterated the prevai ling jurisprudential principle that the "irrevocability ru le" docs not apply to a company that has already dissolved its corporate existence, to wit: "(A) company that has already dissolved its corporate existence can be refunded its unutilized lax credits or overpaid income lax within the two-year prescription period reckoned from the dale of payment of the lax. The SIR cannot deny the claim on the basis of Section 76 of the Tax Code, which prescribes that a taxpayer 's option to carry ove r th e excess tax credits or overpaid tax is irrevocable and bars him from applying for cash refund or issuance of a lax credit certificate in the future. It would be unjust if a company that has aJready dissolved its corporate existence cannot be refunded such unutilized taxes. XXX XXX XXX As earlier mentioned, only those companies that have already dissolved its corporate existence can be re fund ed their unutilized lax credits or overpaid income lax. xxx" Nevertheless, mere allegations that a corporation has dissolved its corporate existence arc not sufficie nt for this Court to recognize that the corporation indeed dissolved. This Court also pointed out in the Raytheon-Ebasco case that for a dissolving corporation to b e dee med legally dissolved, it must comply with the following provisions of the NIRC of 1997: "SEC. 52. Corporation Returns. - XXX XXX XXX (C) Re turn of Corporation Contemplating Dissolution or Reorganization. - Every corporation shaJl , within thirty (30) days after the adoption by the corporation of a resolution or/-- 29 CTA I~B No. 592, August. 18, 2011, citing Financial Marketing Services Corporation us. Commissioner of Internal Revenue, CTA Case No. 6443, September 7, 2005 .

DECISION CTA CASE NO . 8080 plan for its disso lution, or for the liquidation of the whole or any parl of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the Securities and Exchange Commission, or for its reorganization, render a correct return to the Commissioner, verified under oath, setting forth Lhc terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of Lhe commissioner, shall, by rules and regulations, prescribe. The dissolving or reorgantztng corporation shall, prior to the issuance by the Securities and Exchange Commission of the Certificate of Dissolution or Reorganization, as may be define d by rules and regulations prescribed by the Secretary of Finance , upon recommendation of the Commissioner, secure a certificate of tax clearance from the Bureau of Internal Revenue which certificate shall be submitted to the Securities and Exchange Commission." (Emphasis supplied) "SEC. 235. Preservation of Books of Accounts and Other Accounting Records. - XXX XXX XXX (e) In the exercise of Lhe Commissioner's power under Section 5(8) lo obtain information from other persons in which case, another or separate examination and inspection may be made. Examination and inspection of books of accounts and other accounting records shaJl be done in Lhc taxpayer's office or place of business or in the office of Lhc Bureau of Internal Revenue. All corporations, partnerships or persons that retire from business shall, within len (10) days from the dale of retirement or within such period of Lime as may be allowed by the Commissioner in special cases, submit their books of accounts, including Lhe subsidiary books and other accounting records lo the Commissioner or any of his deputies for examination, after which they shall be returned. Corporations and partnerships contemplating dissolution musl notify the Commissioner and shall nol be dissolved until cleared of any Lax liability." In addition, Section 136 of the Corporation Code provides: "SEC. 136. Withdrawal offoreign corporations. - Subject to existing laws and regulations, a foreign corporation licensed lo lransacl business in the Philippines may be allowed lo withdraw from Lhe Philippines by filing a petition for withdrawal of license. No ccrlificale of withdrawal shall be issued by Lhc Securities and Exchange Commission unless all Lhe following requirements are mel: ~

DECISION CTA CASE NO. 8080 l . All claims which have accrued in the Philippines have been paid, compromised or settled; 2. All taxes, imposts, assessments, and penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions have been paid; and 3. The petition for withdrawal of license has been published once a week for three (3) consecutive weeks in a newspaper of gencraJ circulation in the Philippines." Based on the above-mentioned provisions of Jaw, a company or corporation that wishes to cease commercial operations and be deemed legally disso lved, must satisfy these requirements: 1. Secure a Certificate of Tax Clearance from the 81 R; and 2. Submit the same to the Securities and Exchange Commission (SEC) for the issuance of the Certificate of Dissolution. Here, petitioner never submitted any evidence to prove that it has ceased its commercial operations. ll merely relied on its bare assertion that petitioner's Board of Directors issued a resolution approvmg the cessation of commercial operations effective March 31, 2009 and the liquidation effective ,June 30, 2009. There was neither a Certificate of Dissolution from the SEC nor a Certificate of Clearance from the SIR. This Court cannot determine whether or not petitioner has dissolved its corporate existence, which m turn would excuse petitioner from the app lication of the irrevocability rule. Bare allegations, unsubstantiated by evidence, are not equivalent to proof under our Rules of Court.30 [ 30 Manzano vs. }Jerez, et al., G.R. No. 112485, August 9, 2001; Coronel vs. Constantino, et al., G.R. No. 121069 , February 7, 2003.

DECISION CTA CASE NO . 8080 Page 19 of 2 0 Tax refunds, like tax exemptions, are construed strictly against the taxpayer. 31 Petitioner, as a taxpayer-claimant, has the burden of proving whether or not it is en titled to a tax refund through the submission of necessary supporting documents to establish the factual bases of the claim for refund. Petitioner's failure to overcome the burden of proving its entitlement to a tax refund or issuance of tax credit certificate leaves this Court with no other choice but to deny the claim. WHEREFORE, the instant Petition for Review is hereby DENIED for insufficiency of evidence. SO ORDERED. ~/-/~/#- AMELIA R. COTANGCO- MANALASTAS Associate Justice WE CONCUR: (Retired) L OLGA PALANCA-ENRIQUEZ Associate Justice 3 1 Citibank N.J\. vs. Court ofAppeals, e t al., G.R. No . 107434, October 10 , 1997.

DECISION CTA CASE NO. 8080 ATTESTATION I attest that the conclusions in the above Decision were reached m consultation before the case was assigned to the writer of the opinion of the Court's Division. CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. (L~c..~,~ gUANITO C. CASTANEDA, JR. Acting Presiding Justice