The Court of Tax Appeals (CTA) has denied the petition of Pacific Plaza Condominium Corporation which sought a tax refund of P3.18 million from the Bureau of Internal Revenue (BIR)

In a petition, Pacific Plaza wanted to convince the CTA as a full court to reverse and set aside the decision of the tax court's second division which denied its P3,185,128.80 tax refund claim.

The BIR had issued Revenue Memorandum Circular (CMC) No. 65-2012 and clarified that association dues, membership fees, and other assessments and charges collected by a condominium corporation are subject to value added tax (VAT) because they constitute income payment or compensation for the beneficial services it provides its members and tenants.

Pacific Plaza complied with the RMC for the 3rd and 4th quarters of 2017. But when the Supreme Court (SC) ruled in the Association of Non-Profit Clubs Inc. (ANPC) v. BIR that condominium dues are not subject to VAT, Pacific Plaza filed with the BIR an administrative claim for refund/tax credit on Oct. 23, 2019. That same day, it filed a judicial claim with the CTA.

The CTA special second division ruled that the condominium dues collected by Pacific Plaza from its members are not subject to VAT. However, it said that its claim for refund was not substantiated by VAT invoices or official receipts.

Pacific Plaza argued that a claim for refund of excess input VAT attributable to zero-rated sales does not require compliance with invoicing requirements. It insisted that it is entitled to the refund as there is nothing in the law which requires the taxpayer to prove every item in the return.

However, the CTA En Banc said that its denial of Pacific Plaza's petition is "simply an inescapable consequence of its finding that under pertinent law and jurisprudence, the taxpayer-claimant fell short of proving its claim."

"After all, the long-standing doctrine still stands that the burden of proof rests on the taxpayer to establish its right to deductions, refunds, or exemptions. In actions for tax refund, not only is the law construed strictly against the taxpayer, the pieces of evidence entitling it thereto are also strictly scrutinized and must be duly proven," the decision stated.

The 17-page decision was written by Associate Justice Catherine T. Manahan with the concurrence of Presiding Justice Roman G. Del Rosario and Associate Justices Ma. Belen M. Ringpis-Liban, Jean Marie A. Bacorro-Villena, Maria Rowena Modesto-San Pedro, Marian Ivy F. Reyes-Fajardo, Lanee S. Cui-David, Corazon G. Ferrer-Flores, and Henry S. Angeles.