CTA Case No. 2954 (Decision)

REPUBLIC Of' THE PHILlPPtNf:~ COURT OF T A.X PPEALS QUEZON CITY GRAPH IC ARTS SERVICE, I NC ., MARIO GUERRERO ang ALFREDO GUERRE RO, Petit i oners, - versus - C.T . A. CASE NO . 2954 COMMISSIONER OF INTERNAL REVENUE , Respondent . X- - - - - - - - - - - - - - X DE C I S I 0 N Peti t ion f or r ev iew of the decision of respondent Commissioner of Inter nal Revenue denying {1) .the pro t est of petitioner Graphic Arts Service , Inc . , on the assess- ment issued aga inst it f or deficiency income tax for the year 1974 in the amount of 1!1 68 7 ,628.22; a nd {2) .t he claim for refund of the amou nts of 1!121 , 029 .50 and 1!116 , 776 . 00 representing 50~ fr au d penalty imposed on petitio ners Alfredo Guerrero and Mario Guerrero, respectively, for the taxable year 1974. The antec eden t facts that gave rise to the present controversy, which are not disputed , are narrated i n � respondent ' s memorandum: (pp . 187-190, CTA records.) Petit i oner Graphic Arts Service , Ihc@ {hereinafter r e ferred to as Graphic, for brevity) i s a f ami l y c o rporation engag ed i n the busi riess of pri n ting and publica tion of va r ious mag a zines . Peti tione rs Mar io and Alfr edo , both sur n ame d Guer r e ro , f ather ~nd son, are amon g t he off icers and d irectors of Graphic of which t hey own 50% of the outstand i ng shares of ~ock. In the year 136

DECISION - CTA CASE NO . 2954 - 2- unde r rev iew, Dona Elena Guerre r o , wife of p etit i oner ~a rio Gue r rer o, was t he vice- president of Graphic. Respo ndent, on the basis of a written denuncia tion, dated 1 3 July 197 5, conducted an investigation o f the tax liabilities o f t he three petitioners . As a r e sult, d efi- ciency assessment s, all dated 22 August 1975, were iss ued by responden t to t he three petitioners a s follows : Deficiency Income Tax ----~p~l_u s i nterest Graph ic �il4 ,94 8 .6 4 Mario Guerr ero 4,276 . 68 Alf redo Guerrero 904 . 32 In the assessment-letters respondent stated that s ince pet i tioners have already paid t he assessed amoun ts, the case is consider ed closed and terminated . The reafter, on the basis of another confiden tial in forma ti on , dated 1 September 1975 , r e sponden t caused a re- investigation �of petit i oners tax liabilities. Petitioners notwithstanding repeated requests, and the issuance of a subpoenq duces t ecum fo r the product ion of their books of acc6unts, objected to the second tax examination c la iming that it is a viola ti on of �section l24 of the Tax Code . Respondent justified the re-investigation on t he g round that since petitioner s ' returns are t ai nted with fraud , Section 324 of the Tax Code, which prote�c ts taxpa y er s fr om mu l- tiple examinations, does not apply . Pur suant to Section 16 of the Tax Code, on t he basis of t he best evidence obtain- able, respondent, on r ecommendation o f h is examiners , issued three separate letters assessing peti tidners ' deficiency i ncome t ax f o r 1974, a s f o llows: I II 137 I

DECISION - CTA CASE NO. 2954 - 3- Graphic P687 , 628 .22 Mario Guerrero 60 , 307 . 00 Alfredo Guerrero 75 , 597 .69 inclusive of 50% surcharge and 14% annual in t erest. In a l etter dated 15 July 1977 , peti- tioners protested the new deficiency tax assessments. Petitioners Mario and Alfredo Guerrero o ffered to se ttle the assessments against them in t he aggregate sum of ~104 ,713.2 6, inclu sive of in ter est up to 15 July 1977, conditioned upon the exclusion of the 50% fr au d penalty . Respondent denied the pr otest and the offer of settlement in a letter dated 31 March 1978 (E xh . 17, p. 146 , BIR rec . ) The instant petit ion for review was filed on 24 May 1978 . On 5 Decembe r 1978 , petitioners Mario and Alfredo Guerrero paid under protest the deficiency income tax assessments against th em in the amounts of P60 ,3 07 . 00 and P75 , 597 . 69, both incl us ive of 50% fra ud penalty . At the outset, as stated earlier, the disputed deficiency assessments for the year 1974 were issued against petitioners as a result of a re- investigation conducted by respondent on the basis of a written denunciation. Due to petitioners' objection and re- fusal to h ave their books and accounti ng records exam- ined f or the second time , r espondent assessed petitioners for deficiency income taxes on the best evidence obtain- able, that is, on the in formation submitted by informant Florentino Cuevas , Jr. in his le tte r dated September 1, 1 975 , together with 17 journal entries and his hand written comments . (Exhs . "R-GR" , pp. 46-51 , BIR records; 138 l

DECISION - CTA CASE NO . 2954 - 4- Exh . "12" , pp. 92-95 , BIR reco rd s . ) It is t hus clear beyond doubt that the deficiency i ncome tax assessments unde r consideration we r e not issu ed in violation of Section 3 37 (now Section 324) _of the Na t i onal Int erna l Revenu e Code which pr o vides that taxpaye rs' boo ks of accounts and o ther accoun ting records shal l be subjec t to examination only once in a taxable year. Section 337 (now Section 32 4 ) .o f t he National I nternal Revenue Code at the time material t o this case r equires that books of accounts and other accoun ting records must be preserved for at lea st five years from the date of t he last entr y, and a re s ubj ect t o exam- ination and i nspection at any time by internal revenue of fi c ers. Howeve r, exami nati on and in spection may be mad e only once in a taxable y ear during the five -yea r p eriod th e y are re quired t o be preserved , e~cept in cases of fra ud , i rregu l ar ity or mista ke , or unless t he taxpayer reques ts otherwise. In ordering the re-investigation of petitioners, i t is to be noted that respondent acted on a letter dated Sep tember 1, 1975 of Floren tino Cuevas, Jr. in- form ing the Commissioner of Internal Revenue of the alleged tax evasion devices, i ndicated by t he journal entries specified theiein and written comments of in- fo r man t , used by petitioners in l essening the ir 1974 i ncome tax liabi li ties . However , in re-inve stiga ting 139

DECI SION - CTA CASE NO . 2954 - 5- the 1974 income _t ax liabilities of petitioners , r espon- de n t' s examiners d id not cond uc t an examinat i on and i nspect i on of their books of accounts and othe r accoun ting records as petitioners objected to and r efused a second examination of thei r books and records . As stated above , respondent assessed petitioners f or defic iency income taxes upon the best evidence obtainable pursuant to Section 16 of the Nati ona l I nterna l Revenue Code . It seems clear the r efore that when respondent issued the defic i ency income tax assessments under considerat ion , petitione r s ' books of accoun ts and other accounting records we re not subj ected to examinat ion and i nspection fo r a second time i n t he same yea r . Under Se ction 16 of the Tax Code , the Comm issioner of I nternal Revenu e has the power to make tax a ssess - ments on the be s t evidence obta inable when ~he re is r eason to believe that the re tu rn is false, incomplete or erroneous , or in c ases wherein taxpayers have refused to make return. (See also Sec . 51 (b ) '� NIRC ; Sec . 195 , Rev . Regs . No . 2.) . It has bee n held that the Commi s sioner of Internal Revenue is authorized to make subsequent r eassessment to collect additional sums covered by the original assessment provided it is done within the pres- criptive period . � (See Col lector of In t ernal Revenue vs. Ba tang a s Tr anspo r ta tion Co ., 102 Phi l. 822 .) Since the d ef i cienc y i ncome tax assessments in ques tion were i ssued 140

DECISION - CTA CASE NO . 2954 - 6- not on the basis of a second exami natio n and inspection of p e titioners� books of acco u n ts and ot~er accounting records , the i r i ssuance could not be i n violation o f Section 337 (now Section 324) of the National Internal Revenue Cod e . Part I - Assessment against Petitioner Graphic Ar ts Service , I nc . This brings us to the issue presen t ed by t he parties as to whe t her or net the amount of P687 , 628 .2 2 representing deficiency i ncome t ax assessment against petitioner Gr aphic Arts Service, I nc ., has legal and f actual I bas is . Based on the best evidence obtainable, r espondent found p etit ioner Graphic Acts Service , Inc. , l iable f or defi ciency income tax i n . t he amo unt of P687 , 628 . 22 , in - elusive of� surcharges and penalties , due to unallowable deductions and addit i o nal incomes itemized hereunder: (E x h. "11- C", p . 96 , BI R records. ) UNALLOWABLE DEDUCTIONS & ADDITIONAL I NCOMES 1 . F i ct itious expen s es charged to Produc ti on Cost : a. Scripts and manuscripts ����� P 20 , 305 . 00 . . . . . . . . . b . Illustrations and Letterings � � 7,0 00 . 00 89,873.32 c . Paper in �Rolls 141

DECISION - CTA CASE NO . 295 4 - 7- . d. P ape~ in Reams � � � � � � � ., 26,875 . 00 . e . In ks and Solvent s � � � � � � � 32 , 219. 3 7 f . Stitch ing & Packi ng � � � � 40 , 159.33 . . g . Stitching & Packing Supplies � � 5 , 350 . 00 h . Parts and Suppl ies � � � � � 29 , 5 46.80 . . i . l'1etal P l ates � � � � � � � � � � 17 , 500 . 00 j � Fi lms � � e � � � � � � � � 10�351.0 5 Total per JV # 6 46 , 650, 653 , 656 , 657 , 662 , 665 & 663 ����� P279,179 . 67 A 2. Fictitious expenses charged to Selling Expense: a . Truck ing , hauling & fre ight JV # 660 & 683 ������� �� ~ 54 , 995 . 16 3 . Fictit ious expenses charged to Administrative Expense : a . Tr a vel & transportation ����� P 5 , 782 . 93 b . Emp loyees benefits � � � � � � � 11,4 0 5 . 77 c . Of fice Suppl ies �������� 11 , 656.74 d . Postage � � � � � � � � � � � � _6 39.01 e. Spec i al bonus � � � � � � � � ._1L-~ l4 ll. 0�0 Total pe r J V # 670 & Resolution of Ex. Commi t tee � � � � � � � � P308,895 . 45 4. Personal Expenses o f Corporate Officers Charged to Production Cost: . . a. Stitch i ng & Packing � � � � � ., P 7 4 . 40 �. b . F i lms � � � � ������� 1 22 . 80 c . Print i ng Cost � � � � � � � � � 236.25 Total per JV # 666 & 678 � � � � � . P 433 . 45 5 . Pe rsonal Expenses of Corporate Officer s Charged t o Adm inist r ative Expenses : a . Miscella neous �� ������� P 25 , 934 . 76 b. Repair s & Maintenance � � � � � 15,578 . 13 c . Insurance � � � � � � � � � � � 12,154. 96 d. Travel & Transpor tat ion ���� 11,531 . 70 e . Ren t � � � � � � � � � � � � � 8 , 356 . 07 f . Leaseho ld i mprovements � � � � � 5,812 . 07 g . Postage ����� � � � � � � � 2, 332 . 36 h. Vacation & Sick Leave �� � � � 1,219 .20 i . Legal , medical & audit fees � � 960 . 00 j. Representation � � � � � � � � � 164 . 55 k . Donat ions � � � � � � � � � � � 350 . 00 1 . Employees benefits � � � � � �_____zl~4~2~� ~0~0 Total per JV # 666 , 671, 674, 676 & P 84 , 535 . 80 67 8 142

l ,_' t DECISION - CTA CAS E NO . 2 9 54 - 8- 6 . Undeclared Inven tory as of 12/ 31/ 74 � � ~ 25 0 , 000.0 0 t 7 . Undeclared Printing Income o o e o o 115,000 . 00 Tota l Adj u stments Respondent 's disal lowance of t he expense s char ged t o produc t i on cost, sel l ing and administrative expenses was anchored on informant 9 s allegation that through a d justing j our n a l ent r ies ma d e at the end o f the year under re v iew , p er Journal Vou c hers No s . 6 48 , 65 0 , 653 , 656, 657 , 660 , 662 , 665 , 670 , 683 and 687 , petitioner " Graphic Ar ts Service , I nc ., h ad fraudulently reduced its t rue ne t taxable income by inc reasing its production cost , selling and administrative expenses through variou s charges t hat were actually fi cti tious expenses". (See ex a miner's repo rt , Exhi bit 11 F " , p. 67, BIR records .) . As shown by the j ciurnal entries , petitio ner in c reased its expenses by s ett i ng up i n its books at the end of the year 1974 , accrued expe nse s wh ich were al leg.ed ly ficti t ious. To rebut in for mant ' s allegation , petitioner Graph ic Arts Service , Inc. presented voucher checks evidencing payment in 197 5 of the se accrued expenses, together with supporting documents such as s ales invoices, sl ips , off i c i al receipts , accoun ts payable vouchers and other paper s, to p r ove that these e xpenses paid were actually i ncurred in 1974. All the documents adduced f or t h is purpose are mere 143

DECISION - CTA CASE NO . 2954 - 9- xe rox copies , th~ original s of which were allegedly lost in a fire on December 14 , 1 98 1 which destr oyed the office of pe t itioner's counsel where these were suppcsedly kept at the time . (Exhs . "Y" , " Y- 1" and "Y-2".) As the s e xerox copies could not be c ompared wi th the originals , they should be subjected to closer scrutiny , t he unreliability as convincing evidence of xerox copies standing alone being well-known. The voucher checks presented by petitioner showi ng payments in 1975 of expenses appear t o be i n order . What needs verification are the supporting documents , t o determine whether the expenses paid were those wh i ch petitioner claims to have been accrued i n 1974 . The findi ngs arrived at, after a careful examinati on of the supporting documents , are as follows : (See Annexes "A" , "B" , "C" , " D" and "E". ) 1. Fictitious expense charged to production cost : a . Scripts ~20,305 . 00 Illustrations 7, 000 . 00 Total (Exhs . "U- GR-1 " to " U-GR-338 " P27 , 305 .0 0 The supporting documents for the voucher checks in payment c~ articles and illustrations for petitioner' s publications are printed slips showing the payee , the title of the article, the magazine where it was published, the magaz i ne ser ies number , t he date o f i ssue and other particulars. The dates of issue of the magazines where 144

DECISION - CTA CASE NO . 2954 - 10 - the articles wer~ published, as reflected in the printed slips are for the year 1974; h?wever , various discrepancies will be noted in these dates of issue , to wi t: 1. The same magazi nes with the same seri e s numbers have different dates of i ssue in 1 974 , especially in the month of December . 2o Although tnese magaz ines appear to be published weekly, the sequence of the dates of issue does not follow the sequence of the magazine numbers. 3. There are slips paid for in the early part of 1975 for ar ticles published in the months of February , March , April and May, purportedly for 1974 , but most often with no year of issue indicated . It seems doubttul that paymen t to contributors would be delayed for several months considering that the amounts are small . It is more pro- bable that t hese publ i cations were for 1975 . 4 . In several slips, the maga zine numbers are blurred or not specified, making it difficult to verify the correctness of t he date of i ssue . In view of the abovestated i nconsistencies , these slips which were i ssued by petitioner cannot be con- 145

DECISION - CTA CASE NO . 2 954 - 11 - sidered of any eyident i ary value. Ou r findi ngs con - f irm i nformant ' s comment t hat "there a r e no ac t ual accoun t s due the refor, as scripts a nd i llustrat i ons are always paid in advance before actual publicat1on". (Exh . "1 2", p . 95 , BIR rec .) Respondent ' s determination that these expenses are not deductible is ther efore sustained . b . Paper in rolls p 89 , 873 . 32 Paper in reams 26,87 5. 00 Total Pll6 ,7 48 . 32 Severa l of the sales i~ voices for the above ex- penses , although dated in December , 1974 , were received i n the months of March and April , 1975 , and paid in May , 1975 . Ordinarily, the date of d e liv e ry o f goods is acknowledged i n the delivery r e ceipt or sales in- voice , whichever is presented at the t i me o f delivery . So t hat the date of receipt in t he sales invbice is presumed to be the date of delivery of the goods , in the absence of a ny othe r evidence i nd ica t i ng otherwise . Thus , these supplies del ivered in 1975 were expenses for 1975 and shou l d not be t aken up a s 1974 expe n ses . Accor dingly , o nly the amount of Pl6,230 . 00 may be al l owed as purcha ses of paper s i n 1974, the balanc e of P100 ,518.32 should be disal l owed . (See An nex "A ".) c . Stitching a nd packing P40 ,159 . 33 St i tch ing and packing supplies 5 , 350 . 00 Pa rts and s upplies 29,546. 80 Total P75 , 056 . 13 146

DECISION - CTA CASE NO . 2954 - 12 - The sales i.nvoices submi tte�d to justify the stitch- ing and packing expenses show the same discrepancies found in t he sales invoices for paper in rolls and reams . After t ak ing these discrepancies i nto account, t he stitching and packing expenses paid , appearing t o have been incurred in 1974 amounts to P53 , 038.45 , hence the d i fference of P22 , 017 . 68 is not allowable as a deductible expense for 19 7 4. (See Annex "B ".) d . Inks and solvents ~32 ,219 . 3 7 Metal plates Films 17,500 . 00 101351.05 Total P60,070 . 42 As can be ascertained from the voucher checks and sales invoices presented by petitioner t o substant'ate these expenses, outstanding accounts in 1974 for these mater i als amoun ting to ~100 ,5 99 .27 were paid in 19 75 . Since t hese expenses a lleged to be fictitious amoun t only to ~60,070.42, the evidence offered by petitioner is sufficient to establish their existence . (See Annex "C ".) 2. Fictitious e�xpenses charged to selling expense: a . Trucking, hauling and freight ii54 , 995.16 The vouche r checks in payment of trucking , hauling and freight expenses have no suppor ting documents , exc ept for a fe w accounts payable vouchers. Accounts payable vouchers are p r epared by petitioner's account- i ng departmen t upon receipt of invoices or statements 147

DECI S ION - CTA CASE NO . 2954 - 13 - to take up t he liabili t ies for merchand ise o r services . At the prope r time , t hes e a r e paid by voucher checks . Withou t the s upporting p apers s uch as the i nvoic es o r statements , the s e v ouchers stan ding alone canno t prove tha t the payn:ents made we r e for the accrued exp en s es i n question . As petit i oner fail e d to substantiate the truck i ng , hau ling and freight expenses , respondent's disallowa nce of the to t al a mo unt of ~54 , 995 . 16 shc u ld be sustained . (See Anne x "D" .) 3 . Fictitious e xpenses charged to ad ministrative expense : a . Travel and transportat ion ~ 5 , 782 . 93 b . Employees bene f its 11,405 .77 c . Office supplies 11 , 656 . 74 d . Postage 639 . 01 e . Special bonus 279,411 . 00 With the e xc e ption of the s pecial bonus , the expenses charged t o adfuin i strative expense under Journal Voucher No . 670 we re likewise evidericed by petitioner with voucher chec ks and sa le s invoices . But as in the previous sales invoices presented for other expenses, the date s of receipts and deliveries of some of these invoice s were for 1975. In several p a yments by vou c he r checks, t he dates when the exp e ns es were incurred were not even specified . In view of these discrep ancies only the amounts of ~4,987 . 49 f o r e mp l oyees be ne fits , ~9,296 . 50 f or d fi ce supp li e s and ~446.60 for postage may be allowed as ded uctions. 148

DECISION - CTA CASE NO . 2954 - 14 - The r emaining balances in the amo un t s of P6,418 . 28 for employees be nef i ts, P2 , 360.24 fo r of f ice s upplies and Pl92.41 for po stage c an not be considered as ex- penses for 1974. The tr avel and transportation ex- penses i n t he amount of P5,782 . 93 , disallowed not because it i s fictitious but on the ground that it represen t s actua l per sona l expenses of the c ompany offic ers and shou l d not be c hargeable to the c ompany ( t .s.n., p p. 191-192 , March 27, 1 981) ~ can not be al l owed as a deduction f or l ack of any j ustification on the part of petitioner . (See Annex "E".) I t is alleged by i nformer that a special bonus amoun t in g t o P279,4ll . OO covered by an exe cut i ve com- mittee resolution dated December 18 , 1974 (Exhibit " T-GR") ~ specifying no particular r ecipi ents and dis- t r i but i on wa s dependent upo n the president ' s . discretion ,~ wa s sti ll undistributed as o f September, 19 75 . (See informant' s letter , p. 49, BIR records .) That " the special bonus was declared purposely t o r educe income tax due . The original reso l ution specifically prov i ded that the bonus was to be paid on May 31 , 1975 i n the amount o f Pl04,4ll.OO t o employees and Pl75 , 000 . 00 to of f icers- owners . The bonus , however , was never dis- tr i buted and paid to the r ecipients as s t ated i n the r esolution" . ( Informant ' s c omments, p . 92 , BIR r ecords; t. s . n ., pp . 192-1 93, March 27, 1981. ) 149

DECISION - CTA CASE NO . 2954 - 15 - To refute inf9rmant's cha rge, pet iti one ~ presented rece ipts showing parti al payments of the bonus in 1979 as f o llows : (Exhs. "X-GR", "X-1-GR " & "X-2-GR" .) Exhibit Date Name Payment Balance Total X-GR 5-9-79 Alfredo Guerrero jjl 8 , 537 . 40 jjl 61,622 . 70 p 70,1 60 . 10 X-1-GR 5-9-79 Elena Races 1 6,972. 80 X-2-GR 5-9-7 9 Xavie:r Guerre ro 8, 48 9 0 80 122, 50 9.17 1 39 , 481 . 97 61,279 ol 3 69,7 68.93 To t a 1 It is apparent from pe titioner 8 s exhibi ts that the specia l bonus of P279, 4l l . OO was meant to be distributed only to t he abovenamed of fi cer~owners and was not in reality i n te nded for the other employees . Bonuse s vo ted at t he end of the year , when annua l profits a re known , are particularly suspect as i ntended as a distribution of e arnings . (Mertens, Law of Federal Income Taxation , Vol. 4A, Chapte r 25, pp. 340 & 341 .) Mor e so in th i s case , where the r ecipients are the officer-owners . That the partial payments of this bonus were made to t he officer-owner s five years after it was declared furthe r l ends credence to informant 's allegation tha t the bonu s de cla r ation wa~ not made i n good faith and as c ompensation for services actually render ed . It is i ncumbent upon petitioner to prove t hat the bonus payments we re reasonabl e compensa ti on f or ser vic es ac tually rendered and not merely a distribution of pro- fits or a scheme to recjuce t ax pa yments. Aside from pr esent i ng the abovementioned receip t s , petitioner gave 150

DECI SION - CTA CASE NO . 2954 - 16 - no satis f acto ry ~ xp l ana tion for the: bon us di s.tri but ion. Thus, ha ving fail ed to ju s tif y th is expense , petitioner is not entitled to its ded uc t ion . 4�. Personal ex:pen s e:s o f cor por ate office r s It 433 . 45 charged t o prod uct i on cos t Personal expe nse s of c orporate� o f f i cer:s cha r ged to a dm inis t rati ve cost 84 ,535 . 80 . To t a 1 1!18 4 ,9 69.25 On the disallowed e xpe nse s c har ged t o pr oduct ion cost and adm in istrative expe nses per Journal Vouchers Nos . 666, 671, 67 4 , 676 and 678, a mo unting to P8 4 , 969 .25, informant t e stified tha t havi ng pr epared t hese journa l vouchers hi ms e lf, he knows th ~ t hese are not fict itious but a re expen ses for the personal benefit of the par ti- cular co rporate o ffi cers. (t.s. n ., pp, 193-195, March 27, 1981.) In h is han dwritten c ommen t s o n t hese j o urnal e ntries, in f o r ma n t spe ci f i e d th e pe rsonal us es f o r wh ich these expe n s es wer e spe n t . (pp . 9 4- 95 , BIR ~ e cor d s .) As shown in the jour nal e nt ri es (pp . 47- 48 , BI R records ) ~ t hese e xpen ses wh ich wer e pr eviou s l y cha r ged to t he " Due fr om Of fic er s/Employe e s" accou n t were sub- s eq uen tly reclassified and taken up as company expense s at t he end o f the ye ar . The bur den rests on petiti oner to prove that these entr i es we re not made to re duce advances to officers and inc rease cor porate expenses. Pe t itioner Graphic Arts Se rvice, Inc. in i t s memorandu m does not di spute t he correctness of these j ournal vouche rs 151

DECISION - CTA CASE NO . 2954 - 17 - as re cor ded . I~ fa c t, it cites the se journa l vouchers as cover in g these expenses . (Petitioners ' ~emorandum, pp . 1 60 -162, CTA rec o rds .) . But asi de f rom arguing t ha t in an earlier e xamination respo nden t found not hing wr ong with the t r ea t men t of these e xpenses , except for ~6 ,300 . 00 unsu ppor ted e xpenses , petitioner i ntroduced no o t her ev i- dence to con tr over t informant's claim. Section 66 , Re venue Regulations No . 2 , requ ires t ha t any clai m for deduction must be substantiated by r e c ord showing in d e tai l t he a moun t and nature of the expenses i ncurred. Under the circumstances , re spondent did not err in his dete rmination of the amounts of ~84,5 35 . 80 and ~43~.45 as per sonal expenses o f the corporate o fficers not c harge- a b le to comp any expen ses . S e Undeclared prin ting income ~115 ,0 00.00 Informan t ' s commE�n t on t he undeclar ed p-rinting in coiJle of ~115, 00 0e00 (Exh . "12" , p . 9 3, BIR re co rd s ) is as follows: "This r epresents upward adj ust ments of printing charges for p r inti ng Woman's Home Comp an ion published by R.T . Reye s and Associates Publ ishing, Inc . pr ior to acqui s i tio n by Graphi c Arts Service , Inc . of 7 0 ~ of its shares of stock . This price adju stment was debited to R T . Reye s a nd Assoc i~tes Publ i shing , I nc . a nd was r e corded in t heir book s as an ad ju stment to Graphic Arts Ser vice, 152 l

,. DECISION - CTA CASE NO . 2954 - 18 - Inc.'s previous _bills. However , s ince t he previous owners had not ratified the price adjustments , the entries therefor in both books were reversed to reduce the printing i ncome of Graphic Arts Ser vice , Inc . " Petitioner mai ntains that the reversing entry is justifiable as the charges were not yet acceptable to R. T. Reyes and Associates at that time . It was only in June, 1975, that an agreement was reached between peti- tioner Graphic Arts Service, Inc . and R. T. Reyes and Associates regarding the inc rease of printing ch a rges by means of board resolutions . (Exhs . "V-GR" and "W-GR"; t.s.n ., pp . 122-125 , January 22, 1981. ) There is no controversy with regard to Graphic Arts Service, Inc.'s 7 0 % own ership in R.T . Reyes and Associates Publishing, Inc�� Petitioner's witness, the general manager of Graphic Arts Service, Inc., testLf ied that somet ime in 1 974 petitioner acquired 70% of R.T. Reyes and Associates . (t.s.n., p. 91 , December 5 , 1980. ). If petitioner had already the controlling i nterest in R.T . Reyes and Associates in 1974, then there would have been no reason for reversing the entry charging R.T. Reyes and Associates for additional printing charges , as there would have been no question about i ts accep tances, peti- tio er being in c ontrol of R.T. Reyes and Associates by the end o f that year . Pet i tioner ' s board re sol~tion in 153

DECISION - CTA CASE NO . 29 54 - 19 - 1975 authorizin~ a retroac t i v e i ncrease in printing charges (E x h . "V-GR") .and ReT . Re yes and Associa t e�s ' conform ity thereto {Exh. " W-GR" ) .were therefore mere formalities and paper transacti ons. Having been earned in 1974, the pri n ting in come of ~115,000 . 00 should be taken up as income in 1 974 , as properly determined by respondent. 6 . Undecla red inventory as of December 31, 1 9 74 ~250 , 000 . 0 0 It is all eged by respondent ' s informa nt that he understated petitioner ' s 1974 year-end i nventory by ~250 , 000 . 00, " for which a cert ifi c ation that more than ~200,000.00 i n i nv entories were excluded from t h e actu~1 list submitted to the Bureau of Internal Revenue , was i ss ued to the ext ernal auditors, Guzman, Bocaling & Co ." {Exh . " R-GR" , p. 51, BIR records.) . On the other hand, witness f o r fetitioner Vi rgilio Tor res, a partner of Guzman, Bocaling & Co ., in his testimony befor e the Court, denied requiring such a certification of underdeclaration from informant {t.s. n ., p. 4, August 4 , 1981) ~ This y ear -end in ventory wh i ch appea r s in the financial stat ement ending December 31, 197 4 that Guzman , Bocalhg & Co. prepared for Graphic Arts Service, Inc. ( E~h . 01 M-GR" ) .i s the same as the Physical Co unt In ventory f o t he year ending December 31, 1974 submitted to the Bureau of Internal Revenue on 154

DECISION - CTA CASE NO . 295 4 - 20 - Janua J." 2 9 , 1975 (Exn . " M-1 - GR ") .conducted and sig ned by the Chief Accoun t ant, the Int ernal Audit~r and approved by the General Manager of Gr aphi c Arts Ser - vice , Inc . Infor man t claims t hat he prepa red the listing of these inventories and that he understated it by ~25 0,000.00 . However , the records do not show th at he h<~o a hand in t he physical count or listi n g . Neither cou ld he produce a copy of t he understated invent ory a llegedly g i ven to the external auditors Guzman, Bocaling & Co. (t.s.n. 1 pp. 2 9-32 , July 20, 198l o) . As against the certification of the external auditors and t hose who participated in the physical count, i nform- ant ' s unsupported a llegation cannot prevail . In resume , the unallowable deductions and addit ional income as determ ined by the Court are as foll ows : 1. Fictitious expenses char ged t o production cost : Scripts a nd manu scripts � � � ~ 20,305 . 00 Illustrations and let t er ings . 7,0 00 . 00 Paper in rolls and paper in r eams � � � � � � � � � 100,518 . 32 Sti t ching and packing ; S t ftch- ing and packing supplies ; Parts and s upplies � � � 22,017. 68 ~149 , 84 1. 00 2. Fictitious expenses charged to se l ling expense : Tr ucking, hauling and freight ~ 54 , 995 .16 3 . Fictitious e xpenses charged to admi nistra t i ve expense: 155

DEC I SION - CTA CASE NO . 2954 - 21 - Travel t r ansportation � � ~ 5 782 . 93 Employees benefits � � � 6 , 418.28 Office supplies �� �� 2 , 360 e24 Postage , telephone and telegrams � � �� � � 1 92 e41 Special bonus 279,411.00 ~ 294, 1 64 . 86 4 . Per s onal expenses of corpor a te 433 . 45 officers c harged t o production ~ 84,535 . 80 cost : s. Perfonal expenses o f corporate off i cer s charged to administr a - tive expense 6 . Un d e clar e d pr i nting income Pll5,000 . 00 Tota l a d j ust ments ~g2~!:2~2!:�1 Petitioner Gr aphic Arts Service , Inc . dispu t es respo ndent ' s impos ition of the 50% fr aud pena lty con- tending that the alleged fic t itious expenses, t he pe r s ona l e xpenses of the corpo rate officers and the undec l ared income s have all been amply j ustified . Pet i tione r 0 s c ontent i on is devoid o f me r i to Of the tota l adjus tment s to petitioner ' s 1 974 ne t income amounting to Pl , 0 9 3,039 . 73 as p er r espondent ' s defic ien cy assessment , cons i sting of unallowable d e- decti ons amounting to P728,0 39 . 73 and additiona l incomes i n t he s um of ~ 365 ,00 0.0 0 , peti tio ner was able to just i fy only expenses in the amou nt of P l44 , 069 . 46 . and an u n - d ec lared inc ome o f P250, 0 0 0 . 00 or a tota l of P394 ; 0C 9 . 4 6 , which is 3 6 % of the t .otal adj ustments . The Court found t he bala nce of P698 , 970.27 a s correctly det ermined by responden t. (See foregoing resume .) 156

I' j. DECISION - CTA CASE NO . 2 9 54 - 22 - If petitioner Graph ic Ar t s Service , Inc. could substantiate only the amou nt of ~ 1 44 , 069. 4 6 as expenses out of a total of ~728 , 039 .7 3 disall o wed by res pondent, then it is a clear indication that petitioner had in f act intentionally overstated deductions to reduce its taxable i nc o me . Among t he circumstances generall y re c ognized as justifying the imposition of the fraud penalty are: (1) .i ntentional understatement of income, s ubstantial in amount E.�� ~ or su bstantial in relation to the total r eported income; ( 2) .intenti o na l overstatement of deductions , s u bstan tia l in amo un t Eer ~ or su bstantial in r e lation t o t he to t a l r eported income; and ( 3) .recur renee of the u nder - s tateme nt of i nco me or o v er s ta t ement of dedu ct i on s for more than one ta x year . (Ba lter , F r aud Under Fede ral Tax Law, 2nd ed . Ll95]./, p . 226 , cited in Perez y. Araneta , B.T .A. No . 189 , Feb. 13 , 1956, affd o in L-10507, 103 Phil. 1167 , unp u b .; Coll . v . Reyes, 104 Phil . 10 6 1 , unpub.) In the c ase at ba r , the intentional overstatemen t o f deductions, together with the understated i ncome , is not only substantial in amoun t ~ ~ bu t also substantial in relation to t he t otal reported income. Petitioner declared a net inco me of ~5 98, 967.26 i n its 1974 tax return (Exh . "D- GR" ) �. � The t o ta l adjustment to n et in- come in t he amount of P 6 98 , 970.27 as ve rifi ed by the Cour t is 1 17% of pe tit i oner ' s net income . Co nsidering 157

~ '*'** I' DECISION - CTA CASE NO. 2954 - 23 - this substantial adjustment in relation to net income , ~he conclusion is inevitable that petitioner Graphic Arts Service, Inc. filed fraudu lent income tax r eturns in 1974. It follows that the impaition of t he 5 0% s ur- charge i s i n a c cordance with Section 72 of the Tax Code. In line with the foregoing, the deficiency i ncome tax of petitioner Graphic Arts Service , Inc. for 1974 is c omputed a s follows: Net inco me per original investigation . ~ 612 , 477 .7 6 Add : Total adjustment � � � � � � � __ 698,970.27 Net i ncome per re-in ve stigation � � � ~1,311 , 448.03 Tax due t hereon ������� � �� ~ 499 ,0 07 . 00 I ncome tax a lready paid �� ����� ___104, 367 .00 Deficiency income tax �������� ~ 244,&40.00 Add: 50% surcharge �������� 122,320 . 00 14% i n t . from 4/16/75 to 5/31/77 72,7 8 0~39 Tot al amount due and collectible � � � != =~J ~ ~z~ ~ ~J ~ Part I I - Assessment against Petitioner s Al f redo Guerrero and Mario Guerrero Coming t o the question as t o whether or not the inc ome tax r eturns of petitioners A:Ire�do Guerrero and Mario Guerrero are ta inted with fraud , the defic iency income ta x assessment against petitioner A.lfredo Guerrero for 197 4 in the amou nt cf P75 ,57 9 . 69 , inclusive of pen a lties , w~s brought about by his failure to de cl are as income f or 1974. commissions i n the a mount of P79 ,578.43, whi l e the deficiency in come tax assessment of ~60 , 3 0 7 . 00 against petiti o ner Mario Guerrero was due to t h e non- incl us i on o f his wi fe's (Mrs. Elena R. Gu e rrero) .salary of ~54 ,0 00 . 00 in their 1974 i ncome tax return . Both 158

DECISION - CTA CASE NO . 2954 - 24 - I I l petitioners admlt to their f ai l ur e to declare said I par t of thei r income i n their respec t iye t ax r e t urn , I I but i nsist t hat the omissions were inadve r tent and I that there was no in t ent to evade the payment of t axes . I Af t e r h a vi ng paid t he d e f iciency assessmen t s , pe ti t i oner s Alfredo Gue r rero and Mario Guerrero seek the ref und o f the 50% su r charge which th e y h ad paid as fraud pena l t y in the amoun ts of P21,029 . 50 and Pl6 , 776 . 00 , r espec t i ve l y . Pet it ioners question the i mposition of t he 50% f r aud penal ty averring that such failure t o include part of their income in the i r r espect i ve income t ax r e t urn was not intentional o n their par t, but was attr i- b ut a b l e to informa nt Florentino Cuevas , Graphic Arts Serv i ce , Inc . comproller at t hat time , to whom they e ntru s t e d t he prepar ation o f t heir income tax r eturns . On the othe r hand , r e s pondent argues t hat " wher e a false return is i n fact s i gned by t he t axpaye r , the fact of per sonal knowl edge of the false contents of the retur n and wi llfu l ness of i ts f iling c a n be i mputed o r inferred" . (Juan D. Nassr v . Commission er o ~ Inte r nal Revenue , CTA Case No . 1 668 , J uly 2 4 , 19 7 0 , certiorari denied in ~ - 32659 , Oct . 19 , 1970 . ) (Respondent ' s Memorandum, p . 201, CTA records .) The fact that the retur n is signe d by the taxpaye r i s no t b y itEf�: f Eu ff icien t to ju sti f y t he i mposi t ion of t he 50% f r aud penalty. Other factor s have to be considered , I \ 159 ~~

1 DECISION - I CTA CASE NO. 2954 I - 25 - the most i mportant of which is that the fil i ng of the fa l se return be intentional. As cited by r espondent in his memorandum : (p . 199, CTA recor ds ) " To just ify the i mposition of fra ud penalty , it must be shown (1) .that the ret ur n was signed by the t axpayer, althoug h prepar ed by a bookkeeper; (2) that t he re t urn i s false and taxpayer knew , or c ould have known t he return to be fal se; (3) that t he r eturn was fi led willful ly wit~ i nte nt to e vade the payment o f t ax es . (Lur d i ng v . Uni ted States, 179 F 2d 418~ 422 ; Erlinda Br i nker vs. Cell . of In t . Rev. , CTA 366 , July 1 7 , 195~) The intent to evade t axes r ef l ects t he taxp~ yer' s ev i l state of mi nd {Balter, on cit. p. 394 ). In other word s , the fil i ng of false or �fraudulent retu r n must be without just i fi able excu s e , o r withou t ground fo r believing that it is l awful . {United States v. Mu r duck , 290 US 389 ; Bal t e r , i b id., p . 38)~ The spoilage commissions due Alfredo Guerr ero fo r 197 4 were not paid t o him directly bu t wer e simply er e - dited to his account . {See Jo urnal Voucher No. 6 72 , p. 46 , BIR re cords.) In t he c ase of Mario G u errero~ he and his ~ wi fe h ad several sources of income as shown in Schedule I , Exh . " A-MG" (p . 3 5, BIR r ecords )~ There ex is t s theh the possibility that t he non- inclusion of these incomes in their r eturns could have been due to oversight. By hi s own admission , i nformant Flo renti no Cuevas supervised the preparation of the income t ax re turns of pet i t i oners, wh ile it was being prepared by a member of his accounti ng staff. He testi fied that he noticed t hat t he salary of Mrs . Guerrero in the amo unt of ~54 , 000 .00 and t he commissions of Alfredo Guerrero amou n ting to 160

DECISION - CTA CASE NO . 2954 - 26 - ~79 , 578 . 4 3 we re .no t reported i n their r especti ve income ta x r e turn . ( t . s . n . , p p . 1 97 1 98 , M ar ~ h 27, 198 1. ) _It i s s t range t ha t i nbrmant did not make the necessary correct i ons , consider i ng that he was entrusted wi th the pr eparation of said retur ns , and yet he does not claim th a t he h a d rece ived i nstr ucti ons from pe t itioner s Ma r io and Alfredo Guer rero to exclude portions of th e i r income f rom t he i r i nc ome tax returns. The fra ud con templated by J.;;v.: is actual and not constr uctive . It must be i n tentional f r aud, consisting of deception willfully and deliberately done or resorted to in o r de r to induce a nother t o give up some legal right . Ne gl i ge nce , whether slig ht or gross, is not equivalent to f r au d . I t must be i nte nt i onal wrongdoing with the sole object of avoiding the tax . (Aznar vs . Court of Tax Appe a ls , L-20569 , Aug. 23 , 197 4, 58 SCRA 519 .) Moreove r �, i t is a well settled rule that fraud is not to be pre- sumed , i t is incumbent upon responden t to prove i ts existence . Respondent ha ~ ro t shown that the f iling of the f alse returns wa s without ju st ifiable excuse . To war r an t the imposition of th e 50% fraud pen alty , the i n tent to evade payment of taxes must be c lear ly e s tab- l is h ed . Ha ving failed to do so , responde nt should refund the 5 0% frau d pena l ty co l l e cted fr om petitioners Alfre do Gu e rr e ro and Ma rio Guer rero in t he amount of ~2 1, 029 . 50 and ~16,776 . 00 , respec t ive ly , for the taxable year 1 974 . 161

DECISION - CTA CASE NO . 2954 - 27 - Concl us ion WHEREFORE, the decision of re sponde nt Comm issioner of I nte rnal Revenue under r eview is modifi ed a s i ndicated in the above opinion of th e Co u rt . Accordingly: (1 ) Petitione r Graphic Arts Ser vice , Inc . , is hereby order ed to pay to r e spondent Commissi?ner of In- t e rnal Revenue the sum of ~ 4 39,740 . 39 as deficiency i ncome tax f o r 1 974 , plus 5% surcharge and 14% annual i n tere st from June 1 , 1977 to the date o f f ull payment but not to exce ed the amoun t corresponding to three years pursuant to Section 5l(e) of the 1977 Nat i onal Internal Reve nue Code . {2) . Responde n t Co mmissioner of Internal Revenue is hereby ordered to refund to petitioners Alfredo Guer rero and Hario Guerrero the amounts of ~21 , 029 . 50. and ~16 , 776 .0 0 , respective ly , which petitioners had pa id as 50% fr aud p enal ty for the t a xab le year 1974 , l ess St su rcharge and 1 4% additional interest o n their r espec t ive deficiency i ncome tax for 1974 fr om June 1 , 1977 to the da te o f p ayment on December 5, 19 78 , as in crements i nc i dent to delinquency provided for under Section 5l(e) o f the 1977 Nationa l Internal Revenue Code . 162

DECISION - CTA CASE NO . 2954 - 28 - SO ORDERED . Qu ezon Ci ty , Metro Manila, July 1 8 , 1984. ~,r;:) / AMANTE)?;~ Pr esid i ng Judge WE CONC UR: ............. � ROAQU I N J udge ~REYES Associate Judg � 163

�----- - -- ........... �-- -- - - A!DIU .,. l SUpportin& documents for~ ;r.v. No. 12--670 - .kbibi ts ~6-C&-1 to U-6-G&-131 131 ~bite ' lxhibit I I I I I II - . I ' Findin&a 1 � No, of I I I �I 4 �s 1 All.oved 1 Diaalloved1 &State- 1 I 1 ~e 1 Date of 1 Date Paid 1 Date of I Jllount P�' 1 Jmount ~ !Travel & JJ'oSt8ie1 I I I I 1 Statement 1 Voucher 1 Official 1 State~r.ent 1 per Vouco1er 1Trall8por-1Telepbone 1 VoucheNment ora J/P I I JliimployeeuOf'f-ice 1 Reason for 1 or Ill'VoiCel ~eok 1 Heceiot I ar Ilrt91ce_ t Check : tation . 1& Tele21'B!Il1Bene1'Lt ISupplie~:~_!_________ J Disallovance <lleok a!Dyoiceavo ucher& O.R. J '4 � 3 2 R.dio Communications of the P.I. ' 1-3~75 I 2-20-75 p 143.':1o p 143.98 179. 11 7 -6 5 Radio Communications of the P.I. 10-31-74 h-28-75 ~ 179.11 179.11 10 -8 a.dio Communications of t he P.I. 11 9- 3-25-75 4-11-75 123. !i1 123.51 � 191.06 Jan. 175 j,/C - See State~~U~< t of ~count Fhil. Lona Distance Tel. Co, Jan. account 1-31-75 191.06 191. �. 6 12 15 -14 �13�� Mercur:r Drue Corp. 11-19-74 .1-30-75 2-5-75 - .., 1,100 ,. � 1,100 16 I 256 11 - � SaM illvoice as Exhibit 15 11-23-74 ��� ��� . 256 , _ 2, 146. '10 17 ��� Mercur:r Dru& Corp. 11-1~-74 �~ 19 18 30S.7~ 305.70 �� �� �II 10-14-74 21 20 485 485 - 22 23-34 � 22 Merced Dru& Housea a a Dec accoun1B 1-28-75 4�-5�-75� 7/4.13 . 71~13 621.191- 1,395.37 II 36-46 35 !loy: aooowrta � � � 621.19 - - Merced Dru& House Jan. 175 accounts 4-28-75 47 48-59 908.57 908.57 908.57 Blurred dates of in- -------- voices; Date of request 60 6'1 ---------- Mercury DrUi Corp. of tJ...6..<lli-49 ia 1-11-75 12-5,;,74 .. . 7-31-75 320 320 320 174.61 174.6'1 62 63 Rhea Fharmaceutical Corp. co date 3-25-75 174.61 No date of invoice 64� 65 � Mercury Dru&�� �Corp. 12-4-74 � � 6-20-75 ,O4S728.2.150- - 2,829. 20 478.15 12-5-74 . � 66 � � 1,052.25 ..12-21-74 � 68 67 12-3-74 ,298.8 . 1,298.80 4-:8--75 68 Rhea Fharma.ceutical Corp, � Dec, account ,489.12 1,489.12 � 1,489.12 � � 6-30..75 �� tf:} 70 � JBM Sison Hospital 3~- 450 300 71 � 15 �� 150 4-:8--75 72 74-82 73 � � Merced DrUi House Feb. 175 accounts 5-31-75 373.42 373.42 373.42 l'eb, 175 J/C See Exh. 73 83 84-95 March 175 accounts - � 487.84 487.81. 487.84 March 175 _J/Cs See date reo 'd of Ems, 87 & 88 .----. --------- .5�- I 96 97 Mercury "Dl-�Ui- Co�rp. 10-7-74 . 30�- 75�� 279, 70-r March 175 A/CS 98 �---- 12-6-74 � ' m.?c., ��� � 1b-6-,74 .56.25 I-See date received at 99 �� �� �� 56.25l-- 1,131.90 100 12-6-74 .� Merom 12-1-74 ��� 244.75' 244. ~:~me. 97 & 100 . 101� DrUi . Hou��se 12-3-74 551.2o.!. 551, 102 � 12-4-74 6��-30��-75�� 11.3~ 11.30 103 � Dec, account to.~ � 104 I 38.0S 10,20 - 16.55 16.55 - 105 106 JBM .Sison Hospital - 7-30..75 . 195 195 195 - 1,:no 107 Cecillo Jimenez 1-,6-75 1,330 :8o date when up! nse -- - Cecilio Jimenez l vuinourred 1a! 4-14-75 1.330 .--,. 1,330 No date v.t:.n expense -- ... Cecillo Jimenez .. vas incurred 109 7-14-75 1,480 1,480 No date vhen expense 1,528 -- - Ceoillo Jimenez - I -I. -.incurred 110 - Primo Bautista, Jr, - 1-13-75 8-18-75 1 140 1,528 1975 cash ~VaDCe 1-18-75 111 - - 112P.0.113 115 Modern Busines s Methods, Inc. 2-6-75 I 140 140 See illvoice 1975 expense 114 12-11-74 I 1,320 1,320 Ho invoice; O.R. issued DCI date - 301,55 I agnths before p!.pt:Ilt 116 ,- I'. 0.1'i8 117 IBM Fbilippinea 4-1-75 301,55 No illvoic e - DCI date -- - no date wheD expenae vas inou:Nl 119 121 -120 Mission Marketin& Corp, 1974 4-29-75 6-25-75 570,60 570,60 D~d&ian Press 12-11-74 5-7-75 4,850 122 123 5-15-75 ,850 1,043.50 (\ 4,850 ' -kpooot 1,043.50 llo invo:lc e- no date - ,341. 40 vhea delivered j 124 - 1'.0.126 125 Modern Business Methods, Inc, 5-30..75 3,341.40 � 3,341.40 1975 purchases - 11M 12-74 ';_djJ:/ I Remineton Paper & Stationeries j I . dellnr;r I I P29-812.44 p M6. 60 ~ ��98'M:r3.626.l'~Ml!~ ~ . t ., ! 168 I I r- -r _l_k..........,. r .' ~- k

~ -~- - ~ - -- ~~-..;...;........,... r -----I-.., ----- -�---. .______ . ..._h,�---� ... ...__ � � ~ -- - _ �-~ ~ �---��- - � . -- , ~ L. ... .��-~~J . -. ~- �~�"'� ' .,. -= .AliN EX 11 B" � ,j �--:---��----=--:-�--._:-_ ----- Supportint:r aocumen ts .. or 1 'I J � '/, l:;o . 12-656 - ~ibits U-2-GP...1 to U-2-GP...50 J,V, l;Q, 1.,_E:62- EXhibits U-4-GP...1 to U-4-G.?.-;>O 50 Ex:hib1 ta J .w, llo~ 12-0t:sJ- ~nioJ.ts U- 7-GR-1 to U-7-GR-50 f. . :�- ...... .r, .� .( .. Elchibit I . .. ' -I I �' - li~. of Payee � '� uate Pull ~ , Amount paid �.inu.l.Ilj!:i You..aerai ~ -Ia .l/P a- Date or 1 Vou...ner I" l.la~ of � ~ � J\mount per $ �per 'Toucher � All.owed 1 Disal1owea Reason .or Oleck IVOiCll IVouciler: O.R.; t invoice � & � ~e;;.K J uoR� I ' Invoice $ Oleck I vi sa.J...iow all" t1 1 2 J -. Jaeb Fnterpnses 1.2-12-74. 1-3C..75 . r 1;137.60 r 1,1J?.6o !' 1, 1J7.60 4�� "7 6 ---------5 � � � Gra phios Ha.rketing Co1-p. .12-2.8-74 2-2.8-7 5 )-1-75 1,470 -:--r- 1,966.90 1,470 . .. . " " Purc.'"!ass Orders dtd_ i-:3-75 �� ��� 12-2.8-74 n 11 n 3,481.90 I 3,481.90 il 8 II n .Hl3-75 nnn II II II '' 2,205 I 2,205 Invoice date blurred 9 A . . 1-GJ-75 I' 810 Invoice - no date 10 �� � I! '' n � II II 81o--.J � Invoice received 4-2�--5 11-2E>-74 400 3,100 P.O. dated 4-5-75 n 1-3C..75 n n 11 . 400 3,270 / ' ll II f1 3,100 Invoi ce received ". l.oarc=. 1 7; 11� 1J 12 � � Pamas Tralll.ng Co. " n� ~�-T-- . 800 1,500 . Invoice re ceived liar=.. ' 7; II . 1.,_2.8-74 6,200 16 14 15 I 12-31-74 3-25-75 400--�.L 1,955 Invoice rectrived Ha.r~ ' 75 18 : 11-19-74 1-29-75 17 Printers Supplies Mar',cet Co, ; blurred 1-2-75 1,500 1,500 ..,. ~r 3-25-75 6,200 19 21 ~ Garcia's St.ore 110 date 5-3C..75 6,200 6,200. I 6-30-75 22 24 2----J Double Line Gen. Ndse, 12-01-74 6-30-75 1,955 1,955 3,100 . 3,100 25 26 . .V. c. has no payee / . i2-16-74 Z7 Z1 2B Double Line Cen . Hdse, J,270 3,270 J1 30 31 Dica Fiber I ndu stfies 6,200 6,200 Jaeb i:ll t.erprises 3,100 3,100 ~.. �. 32 :n. -----------,---.. - Graphic Harketing Corp. 11-27-74 . 1-18-75 10,292. �;<' .,�. 10, ;200 10,200 34 ' -n 6-30-75 J4 F. Pecha Trading ' 12-25-74 1~25---,- 7,700. 1,925 1,925 II - � n n ' 1f-4-74 n n� 3,850 . ! 3,850 n M 1,186.25 � - Alba Trading Co,, Ltd. 1~21-74 n 11 3,203.20 3,750 n -- The Ault 4: "..liborg Co � . II 1,925--:..J 1,500 35 ..: I J7 36 Received 4-28-75 6-3()...75 3,750 3,750 300 38 1~-s-14 1-30-75 1, 769.50 �. -....J..... II J9 1, 186.25-,.- 4,389.45 3,575 41 nnn 3,203 . 2()...1 . 40�� 42 - -� Print.ers Supplies .Harket eo.� n 1,350 44�� n0 � II 12-20..74 4J -n 12-31-74 250 li 45 -- � n n n 1-3-75 1,500 - --r-�- 3,569.50 4,475 il A 12-31-?4 4b � Pr:1n ters Supplies !1.arket" Co, .� n n. n 300 I 500 60 47 -- � n II 12-11-74 �� n n 1,769. 5a-.L 48 49 12-9-74 2-2.8-75 3,.575 - r� 10f210 -- � � (\ "II n �. . . 12-12-74 II n II J 1, 350 . 250 " II n I )I .~� . . : 12-13-74 n� n n .".!,". 4,475 nn q - � �~ - � '� �. 12-2C..74 - .11 :'�: . 12-2}.74 II !1 IJ ':"' 500 it 50 - - " II n . � :� ~- .� :. . 12-21-74 n�n A 60 .� ��.._,:;. ' . CJ~pJ� t !':?.42~�45 - ~~2~.!~ ~!~~,. f l -1 l. ' I- ! \ �' i - I~. ' I .. < t ! :� . ~- l II i I ~ t �, j ..../..' . . 165 .f.. . -~ ~, 0. ... . -....._ �' . ..... ,. I ., I l .- . t:. , , ~I 'f,fltl.._~, t,t,.,u, "'l-'"-~ .� ,. ' \I ...~ ~ ...... . ~R��-- - - - ' 0'� -a- ..---~-.... .. -�.- ' ;""'~>, 0 I t , , ' "' bf ij {4 .4 < . P "'~"'-:"' ~��~ ~ j I . - - �-�--~....:..... -~_ ....... .... ............. lllf ji#I@L\&411&.�1.& i.i i & M S U I - _ ,_i.UI!d-!Mtt........'t'~>U. !>O.~.4P 9 ��. ;z ii!idWJ ;_ Jt... ~.+ 'h'1!t ~ ....... ~ --..~ ...............~ .