CTA Case No. 3482 (Decision)

REPUBLXC OF THE PHXLXPPXNES COURT OF TAX APPEALS QUEZON CXTV INVESTORS FINANCE CTA CASE NO. 3482 CORPORATION, Petitioner~ versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. - - - - - >: DEC I s I 0 N Petitioner appeals to this Court from the decision of res pondent Commiss ioner of Internal Revenue dated April 22~ 1982 denying petitioner ' s protest on the asses sments of d ?'f'ic iency income~ pet-centage and fjocumentary and s cience stamp ta >: es for the fiscal year ended December 20~ 1975 in the amounts of P598~327.94~ P264~044.92 and P40~000.00 respe c tively (E x hibit H~ p. 12~ CTA rec.). ' As gathered from the records of this case~ i t appears that petitioner is a corporation duly organized and existing under the laws of the Phi 1ippines and engaged in the financing company business under the Financing Company Act as well as in quasi - banking funct i ons under the regulations of

DECISION CTA CASE NO. 3482 - 2- the Central Bank, with business address at Esquerra Building I I , Amorsolo Street , Legaspi Village, I Makati, Metro Mani 1a (see Paragraph 1, p .1, CTA rec. , admit ted in paragraph 1, ansv1er, p. 30 CTA rec.). On December 24, 1981 respondent Commissioner of Internal Revenue issued an assessment against petitioner for deficiency income tax for the year 1975 and demanded that payment be made in favor of the government in the total amount of P598, 327.94, inclusive of interest pursuant to Section 51 (d) of the Tax Code, as amended by Presidential Decree No. 69 which took effect on January 1, 1973 (Exhibit E, p.8, BIR rec.). Likewise, on the same date December 24, 1981 another letter was issued by respondent assessing petitioner for deficiency percentage and documentary science stamp taxes amounting to P264,044.92 and P40,000.00 respectively (see p.9, CTA rec.). These assessments were protested by petitioner in its letter dated January 29,1982 claiming that the assessments wet- e done in an arbitrary manner considering that the revenue e>:aminer assigned to investigate did ask additional document to support the entries appearing in its books of accounts and 1' ')I- ...., )

DECISION CTA CASE NO. 3482 - 3- promised to return at a future date~ but said e}:aminer never did return~ but instead petitioner received the subject assessment last January 29~ 1982. Like\1-lise, petitioner claims that the right of respondent to collect the subject deficiency taxes has alr-eady prescribed pursuant to Section 318 of the Ta:�: Code (E>:h. G. p. 10, CTA rec.). Respondent in his letter decision dated April 22, 1982 denied petitioner's protest and informed petitioner that the assessments was issued on time since the Vice President of petitioner's corporation a \1-Jai ver of statute of limitation on November 11~ 1980 and June 24,1981. It like\1-lise informed petitioner that respondent's denial is final and if petitioner is not agreeable to his decision, petitioner may appeal to the Court of Ta:�: Appeals within 30- days from receipt of his letter of denial (Exh. H~ p.12, CTA rec.). On the basis of his denial, petitioner on June 18, 1982 interposed its appeal to this Court. Sometime on September 'L?"'�?-.�' ~ 1988, petitioner filed a Manifestation and Formal Offer of Evidence stating that last August 17, 1988 petitioner manifested before this Court that out of the three (3) assessments subject matter of the instant case,

DECISION CTA CASE NO. 3 482 - 4- the deficiency income tax assessment in the amount of P598,327.94 and the alleged sur-char-ge on gr-oss r-eceipts tax in the amount of P264,044.92 have alr-eady been compr-omised under- Executive Or-der- No. 44 (see p. 136, CTA r-ec.) and the only r-emaining issue left to this Cour-t to be r-esolved is the assessment for- documentar-y and science stamp taxes in the amount of P40,000.00 for- the year- in question computed as follows: Documentar-y & Science Stamp Taxes - 1975 Stock Dividend-- -------------- P8~000~000.00 Documentar-y stamp tax due thereon------------------- 20~000.00 Science stamp tax (equal amount)---------------- AMOUNT DUE AND COLLECTIBLE This manifestation was concur-r-ed to by r-espondent in his comment to petitioner-'s offer- of evidence dated . October- 10, 1988 (see p.276~ CTA r-ec � ) � On the hearing of Febr-uar-y 24, 1989, both par-ties v1ai ved the filing of their r-espective memor-andum in suppor-t of their- cases. Respondent fur-ther- mani �fested that he vii 11 no 1anger- pr�esent documentar-y or- testimonial evidence and mer-ely submit this case for- decision on the basis of the r-ecor-ds and the pleadings (seep. 284, CTA r-ec.).

DECISION CTA CASE NO. 3482 - 5- Hence~ the on 1y remaining issue in this case for this Court to resolve i s whether or not petitioner is liable for the assessment of documentary and science stamp ta>:es by the respondent in the total amount of P40,000.00 for the year 1975. F'eti tioner does not dispute the mathematical computation in the questioned assessment, but claims that the said amounts of documentary & science stamp ta >:es were attached to the various respective certificates of s tock issued by the petitioner to its stoc kholders � In thi s juris diction, s ettled i s the rule that the determination of the Commissioner of Internal Revenue i s presumed correct. It behooves the ta >: payer to r�ebutt such pre s umption (Tan Guan vs. Court of Ta x Appeals and The Commissioner of Internal Re venue, G.R. No. L- 18164, January 1957. 19 SCRA 903; citing Perez vs. Court of Ta >: Appeal s et. al.~L - 10507, May 3 0, 1958; Collector of Internal Revenue vs. Bohol Land Transportation Co., L- 13099, L- 13462, April 29, 1960). Likewise, the Supreme Court said that as a logical outgrowth of the presumption in favor of the validity of assessments, when s uch assess ments are assailed,

DECISION CTA CASE NO. 3482 - 6- the burden of proof is upon the complaining party. It is incumbent upon the property owner to show clearly that the assessment was erroneous, in order to relieve himself from it (Interprovincial Autobus Co., Inc. vs. Collector of Internal Revenue, C.R. No. L-6741, January 31, 1956, 98 Phil. 290). In the case at bar, this presumption of correctness of the assessment in favor of the respondent for deficiency documentary and science stamp ta:�: in the amount of P40,000.00 has been convincingly rebutted by petitioner when it presented to this Court sufficient documentary evidence showing that such taxes have already been paid to the Consolidated Bank and Trust Company on August 5, 1975 by the petitioner in the amount of P40,259.00 as evidenced by Official Receipt No. 2 602 (E >: h. "0" p. 142. CTA rec.), and that the requisite stamps were affixed to various stocks certificates issued to its stockholders as shown on the s ubmit ted documentary e:{ hi bits, thus: P-1 to P- 113, P-115 to 122, found on pages 149-263; 264- 271 of the CTA record and Exhibits P-1-a to P- 10-a; P- 11- b; P- 12-a to P-113-a found on pages 150 to 263 of the CTA rec.; Exhibits P- 15-a to P-122-a found 12u

DECISION CTA CASE NO. 3482 - 7- likewise on page s 265 to 272~ CTA record; Exhibits P - 122- e to 122-c found on pages 273 to 174 CTA rec . ; and lastly Exhibit P- 122-d found on page 275 of the CTA record. The documentary stamp ta:{es affixed to various stockholders certificate issued amounted to P20~014.60 while the science stamp taxes likewise affixed amounted to P20,008.10 or a total of P40,022.70. As we have said, respondent did not present testimonial or documentat-y evidence in support of hi s cas e, but rather submitted the same for decision merely on the bas is of the pleadings and record s . Respondent having failed to overcome the convincing and sufficient evidence presented by petitione r ~ we therefore sustain petitioner herein. WHEREFORE~ the deci s i o n appealed from is hereby reversed. Without cos ts. SO ORDERED. Quez on City, Metro Manila, June 29, 1990 WE CONCUR: AMANTE Presidi / l 'J i- 1

DECISION CTA CASE NO. 3482 - 8- CERT I F I CAT I 0 N I hereby certify that this decision reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. F'residi Judg e Court of Tax Appeals .. ) (..U J