CTA Case No. O-90 (Amended Decision)

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY Third Division PEOPLE OF THE PHILIPPINES, CTA CRIM. CASE NO. 0-090 Plaintiff, (I.S. No. 07K-19049) For: Violation of Sec. 255, in relation to Sections 253(d) and 256 of the 1997 National Internal Revenue Code -versus- Members: BAUTISTA, Chairperson PALANCA-ENRIQUEZ, and COTANGCO-MANALASTAS, II WONG YAN TAK, Promulgated: GERALYN BOBIER, JAN 8 2013 and PIC N' PAC MART, INC., Accused. X-----------------------------------------------------------------------------------------------------------X AMENDED DECISION BAUTISTA, Z,: For resolution is the "Omnibus Motion (In the nature of Motion To Admit Accused Under Probation and Partial Motion for Reconsideration)," filed by accused Wong Yan Tak on October 30,2012. In the Decision1 dated October 17, 2012, the Court held that: "WHEREFORE, premises considered, the Court finds and so holds that: 1) Accused WONG YAN TAK is GUILTY BEYOND REASONABLE DOUBT of Violation of Section 255 of the National Internal Revenue Code of 1997, as amended, and is hereby sentenced to suffer an indeterminate penalty of imprisonment of one (1) year, as minimum, to two (2) years, as maximum, and is ORDERED to pay a fine in the amount of P10,000.00, with subsidiary imprisonment in case accused has no property with 1 Records (CTA C rim Case No. 0-090), pp. 669-690.

AMENDED DECISION CTA Crim. Case No. 0 -090 which to meet the said fine, pursuant to Section 280 of the same Code; 2) As regards the civil liability, Court hereby ORDERS the accused WONG YAN TAK to pay the Bureau of Internal Revenue the amount of Php3,552,716.81, representing the 2002 deficiency value-added tax assessment, plus 20 % delinquency interest per annum from September 9, 2005, until fully paid pursuant to Section 249 of the National Internal Revenue Code of 1997, as amended, taking into consideration the amount of Php232,134.00, already paid on March 17, 2009; 3) In addition, Court hereby ORDERS Pic N' Pac Mart, Inc. to pay Fifty thousand pesos (P50,000.00), pursuant to Section 256 of the same Code. SO ORDERED ." Accused is asking the Court to reconsider his civil liability, wherein the Court ordered him to pay the amount totaling to Php3,552,716.81, which represents the 2002 deficiency value-added tax assessment, plus 20 % delinquency interest per atmum from September 9, 2005, until fully paid. Accused is also asking the Court to place him under Presidential Decree No. 968, otherwise known as the Probation Law of 1976, as amended. On November 29, 2012, the prosecution filed a "Comment/Opposition (To Accused's Otnnibus Motion dated October 30, 2012)," in response to the Resolution2 promulgated by the Court on November 13, 2012. In the "Comment/Opposition (To Accused' s Omnibus Motion dated October 30, 2012)," prosecution is asking the Court to deny the "Omnibus Motion (In the nature of Motion To Admit Accused Under Probation and Partial Motion for Reconsideration)," as the points raised by the accused have no merit. 2 /d., pp. 704-705.

AMENDED DECISION CTA Crim. Case No. 0-090 After a careful study of the issues raised by the parties, the Court finds the "Omnibus Motion (In the nature of Motion To Admit Accused Under Probation and Partial Motion for Reconsideration)," partially meritorious. On the issue of the civil liability, the Court finds that accused is correct in pointing out that Pic N' Pac Mart, Inc., a corporation, is a separate and distinct entity. Thus, while accused Wong Yan Tak is the president of the said corporation, he himself is not the corporation, but merely a responsible officer. Only when the circumstances warrant the application of the doch�ine of "piercing the corporate veil" can the Court hold stockholders and/ or officers of the Corporation directly liable for corporate tax liabilities.3 However, in this case, no allegation was ever made that the corporation was being used merely as an adjunct, business conduit or alter ego of another corporation or by its stockholders, nor was their an allegation that the corporation was being used to perpetuate fraud in relation to our tax laws. Only in these circumstances can the fiction of separate and distinct corporate identities shall be set aside, making the individuals liable for the tax liabilities of the said corporation. Thus, the civil liability arising from the assessment should be collected from Pic N' Pac Mart, Inc. and not the accused Wong Yan Tak. Thus, Pic N' Pac Mart, Inc. has a tax liability in the amount of Php3,552,716.81, representing the 2002 deficiency value-added tax assessment, plus 20 % delinquency interest per annum ~~- ! 1 C/R vs. Toda, G.R. No. 147188, September 14, 2004, 438 SCRA 290; CIR vs. Menguito, G.R. No. 167560, September 17, 2008,

AMENDED DECISION CTA Crim. Case No. 0-090 from September 9, 2005, until fully paid pursuant to Section 249 of the National Internal Revenue Code of 1997, as amended, taking into consideration the amount of Php232,134.00. On the subject of probation, the Court deems it proper to discuss this at a later date. WHEREFORE, the "Omnibus Motion (In the nature of Motion to Admit Accused under Probation and Partial Motion for Reconsideration)" filed by accused Wong Yan Tak, insofar as the Partial Motion for Reconsideration, is hereby GRANTED. Accordingly, the order of the Court in its Decision dated October 17, 2012, insofar as the civil liability amounting to Php3,552,716.81, plus 20 % delinquency interest per annum is hereby CANCELLED. The resolution on the Motion to Admit Accused under Probation, is hereby HELD IN ABEYANCE. SO ORDERED. ISTA WE CONCUR: ~/-~.-"//- (Retired) AMELIA R. COTANGCO-MANALASTAS OLGA PALANCA-ENRIQUEZ Associate Justice Associate Justice

AMENDED DECISION CTA Crim. Case No. 0-090 ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of e opinion of the Court's Division LO CERTIFICATION Pursuant to Section 13 of Article VIII of the Constitution, 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's Division. ~~~ c-c..:r-~ J~R. f(JANITO C. CASTANEDi Acting Presiding Justice