CTA Case No. 699 (Decision)

/ REPUBLIC OF THE PHILIPPINES / OOURI' OF TAX-APPEALS I MANILA LIMPAN INVESTMENT c.r.A. OORPORATION t CASE NO. 699 Petitioner, -versus - THE OOMMlSSIONER OF INTERNAL REVENUE, Respon~ent. X� ~ ~ - ~ � - - ~X DECISION This is an appeal from the decision of the res- pondent holding the petitioner liable for the payment of the sums of �7,338.00 aHd 130,502.~, representing alleged d~ficiency income tax and . surcharge for the years 1956 an(! 1957, respec.tively. On October 21� 1959, befor~ filing his answer to the petition for re- view, respondent filed a motion to dismiss the appeal on the ground that the same was filed beyond the thirty- day period prescribed in Section 11 of Republic . Act ~o. 1125. However, as the facts in relation to the alle- gation that the appeal was filed out of t~e were not clear, this Court required respondent to file his ans. wer so that the jurisdictional issue and the issues raised on the merits -may be considered at the same time. In his answer, respondent failed to raise the jurisdictional issue, apparently conceding that his position was untenable. After hearing, in which both parties presented both oral and documentary evidence, counsel for both � II

DECISION .. O.T.A. CASE NO. 699 parties were givtn time within which to tile th~ir memoranda, H()We~er, d'spite two exten~ion$, _counsel for petitione_r fail.�d to file a memorandum; neither did they file a reply to respond~nt's memorandwn� The deficiency income tax _assessment ~as bro-.aght about by the allege~ underdeclaratiol'l of petitioner's rental income and excessive depreci~tion deduction claimed .for its b~ildtngs, as followss 1. Unreported rental income~ 1i:�i!OO a. For the year 1956 ~- � 20~199.00 29 b. For the y_eTaort~1l957 �.;..-;. 1!__ .,__ 2. Exeessive _depreciation ~~ductions . a. For the year 1956 �� � 4.?.6o.oo b. For the year 1957 ... ,1,6 ;338;00' Total -- f20.598.00 In connectioQ with the unreport~d re_ntal income for 1956, paragraph 11 of the Petition for Review statest �11. That with respect to the supposed undeclared rentals for the year l956 as � above-concluded by the respondent, ~ount- � ing _to ll2D,l99,00 1 the petitioner nevex- ~ol lected nor received the said sum nor any part of it inasmuch as the pn,vious owners of the lease4 buildings has to collect part of the total rentals .in 1956 to apply to their payment of rental on the lana in the amount of ~~.630�00~-�- ._ __ - ~ petitioner~s own admi!;sion� the _ s~ of __ ~,199.00 was actually collected (rom ~ts tenants and that the said amount was appli~ in pa~ial paym~nt of its obligation to the former owners of the buildings as �rental on the land,� Undoubtedly, the said amount was incane to it in 1956, and there is absolutely no

DECISION � C.TeA� CASE NO. 699 � 3- justification for its failure to .declare the same as part of its income for said year~ As regards the unreported rental income for the year 1957, paragraph 13 of the Petition for Review state as . 13. That with respect to the alleged undeclared rentals in the amount of 181,. 690.00 for the year 1957, the petitioner respectively submits the following explana. tion as to the supposed non-declaration of rentals in the amount of ~1,380.00 . and vehemently maintains that it never received nor collected the amount of 181,690.00, nor any part of it in 1957s Name of Itngnj; ExPlanation Amoynt Kian Tek �is a sub-tenant as his given rate is not applic.ble . � 4.ax:>.oo Qaua Ping -of the �11.ooo.oo alleged �undeclared rental� the amount of 7,200.00 �1,200.00 had been turned in to the pe- titioner by Mr. I.P~ Um in January� ~~59 Santos Yu � the � amount of tt3,- � 600.00 had be4;tn turn- � ed in to the petition- er by Mr. I.P. Lim in Jan., 1959 . 3,6oo.oo Go Tong - ~,7oo.oo was not re- ceived nor collected by Mr. I.P. Lim but was part of the ~.- 650.00 received by the petitioner in June, 1957 . 2,700.00 Go Tong �the sum of �1o,ecn.oo was not actually nor � constructively receiv- � ed by the petitioner . in 1957 because the same was in �custodia legis�. As to the ~,650.00 which represents the rentals collected from the Court as deposit made by Go Tong from II

rECISION � C.T.A. CASE NO. 699 - 4- May, �1954 to Sept~ � 19~, inclusivt:t, none of this amount cor- responds to rental ". income for 1957 hav- ing bee~ accounted � as income by the pe- titioner in June, 1957, altnough P.&rt of this amount ' (May, 1954 - .June, 1955) ' belongs to Mr� . ISC1� be lo P. Lim� The petitioner corporation was organized and start- ed operations only in the latter half of 1955 llOa�QO,OO 131,380.()() P~om the foregoing allegations c~ntain,d in the Petition fo~ Review, petitioner seeks to just~fy _ its failure to report in its income tax return _for 1957 the _s~ of tt31,380,00 on,J.y, impliedly admit~ing :th� correctness of respondent's dete~ination in connec� tioll with thELS\.Uil of ll5013lO.oo. Of the_sum of f3l,38:>.c:;x;>, wbicb is <:onte$ted� it is all~ged that the sum _of f4,20Q,OQ was collected .from . a sub-tenant, '13,500,00 was collected by Mr. I.P, Lim, pres~dent of petitioner corporation, ar)d th(l balance of ltlO,~.oo was depos~ted by certain tenant$ in court. � _That the amount of 141 200,00- was Paid by a sub~ tenant and not by a tenant is immaterial~ l~y amount � paid by way of rental by a tenant or sub-tenant and . � collected by the landlord is income to the landlord, .With tespect to the amount allegedly collected . by Mr. I. P, Lim, president of petitioner corporat~on, it is contended that Mr. Lim turned over the amount

.. DECISION � C.T.A. ~E NO. 699 - 5- to petitioner not in 1957 but in 1959� And sine~ peti- tioner is keeping its books of a~counts on .the a~tual __ receipts and disbursements basis, the amount so collected J;>y its president is income to it only ~n the year the same is turned ovef to it. _ This is not correct. A. corporat~on can ~ct only throug~ its office~s. So, any amount paid to the president of a eo1'poration, _ who is acting for and en behalf of the corporation, _ ~s payment to the corporation itse~f. Therefore. ~spond ent ~Qmmitted no error in hol~ing . that the amount p~i~ to Mr. Lim was income to petitioner in the year ef re~ ceipt by Mr. L~. In connection with th' sUJp of lllO.a:x>.oo, which was alleged~y deposited in courtby certaill tenants. it appears that the said amount was subjeet to witll� drawal by pe~itioner after the deposit. The said amo~nt was, therefore, deemed ta have been constructively re- ce~ved by petitioner in the year it was deposited, that is, in 1957. Again, respondent committed no errQr in holding that it was income to petitioner in 1957� As regards the alleged excessive depreciation claimed by petitioner in the sum of P20.598.00 for the two years under review, which was disallowed by respondent. the evidence of record does not show that � respondent committed an abuse of discretion in dis- allowing _the deduction. It appears that the rates of depreciation applied by respondent ~o the buildings owned by petit.ioner are even more th~n the rates allow- able for similar properties listed in Bulletin P of

DECISION .. C.T.A. ~E NO. 699 the u. s. Burea\l of lnternal Revenue. (See Zamora v. Coll. of Int. Rev�� c.r.A. No. 234, Dec. 29, 1958.). We find no justification to disturb the findings of respondent on this point. Finding no reversible error in the decision ap. pealed from, the same is hereby affi:z:med J.n .12121 with costs against petitioner. SO ORDERED. Manila, May 31, 1963. RCMAN M. UMAU Associate Judge I a:>NOJRs