COMMISSIONER OF INTERNAL REVENUE v. MT. BLANC MOTORS, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY EN BANC COMMISSIONER OF INTERNAL CTA EB No. 1667 REVENUE, (CTA Case No. 8588) Petitioner, -versus- P rese nt: Del Rosario, P.J , Castaneda, Jr., Uy, Fabon-Victorino, Mindaro-Grulla, Ringpis-Liban, and Manahan, JJ MT. BLANC MOTORS, INC., Respondent. Promulgated: x----------------------------------------------------------:~~!-~-~-~--~~~-;;r,:~~"'� R ES OL U TIO N CASTANEDA, JR., J.: This resolves petitioner's Motion for Reconsideration (of the Decision promulgated on January 7, 2019) filed on January 29, 2019. Respondent fi led its "Comment (Re: Motion for Reconsideration Dated 29 January 20 19)" by registered mail on March 18, 20 19 and received by the Court on March 26, 2019. This motion was submitted for resolution on March 27, 2019. The dispositive portion ofthe Decision dated January 7, 2019 states: WHEREFORE, premt ses considered, the present Petition for Rev iew filed by the Commissioner of Internal Revenue is DENIED for lack of merit. Accordingly, the January 4, 2017 Decision and the May 24, 2017 Resolution of the CTA Special Third Division in CTA Case No. 8588 are AFFIRME D with MODIFICATION in the computation of the deficiency interest and delinquency interests in view of the effectivity of Republic Act No. 10963 (TRAIN Law) on )<:...

RESOLUTION CTAEBNo.I667(CTACaseNo.8588) Page 2 of5 January 1, 2018 and the issuance of Revenue Regulations No. 21-2018 dated September 14,2018. The Petition for Review filed by Mt. Blanc Motors, Inc. m CTA Case No. 8588 is PARTIALLY GRANTED. The assessment covering the alleged deficiency income tax for taxable year 2008 in the amount of P165,472.01, inclusive of interest, is CANCELLED AND WITHDRAWN. However, the assessments for deficiency VAT and withholding tax on compensation for taxable year 2008 shall be UPHELD but in the adjusted amount of P1,142,716.02, inclusive of 25% surcharge imposed under Section 248(A)(3) of the NIRC of 1997, as amended, and deficiency and delinquency interest imposed under Section 249(B) and (C) of the NIRC of 1997, as amended, respectively computed until December 31, 2017, computed as follows: 1 VAT WTC Total Basic Deficiency Tax p 113,290.81 p 110,469.23 p 223,760.04 25% Surcharge Deficiency Interest 28,322.70 27,617.31 55,940.01 1/26/20092 to 11/16/20123 [1,391 days] 86,349.32 171,274.44 (!'113,290.81 X 20% x 3.8110 yrs.) 84,925.11 1/14/20094 to 11/16/2012 [1,403 days] p 227,962.84 p 223,011.65 p 450,974.49 (P\10,469.23 X 20% x 3.8438 yrs.) 116,146.36 229,400.02 Total Amount Due- Nov. 16, 2012 113,253.66 Deficiency Interest 233,708.75 462,341.51 11/17/2012 to 12/31/2017 [1,871 days] 228,632.77 (P113,290.81 X 20% x 5.1260 yrs.) p 577,817.95 p 564,898.07 p 1,142,716.02 (Pll 0,469.23 X 20% X 5.1260 yrs.) Delinquency Interest 11/17/2012 to 12/31/2017 [1,871 days] (!'227,962.84 x 20% x 5.1260 yrs.) (!'223,011.65 X 20% x 5.1260 yrs.) Total Amount Due - Dec. 31, 2017 In addition, Mt. Blanc Motors, Inc. is liable to pay delinquency interest at the rate of 12%5 on the total unpaid basic deficiency tax, surcharge and deficiency interest as of November 16, 2012 amounting to P227,962.84 for VAT and P223,011.65 for WTC, or in the aggregate amount of P450,974.49, computed from January 1, 2018 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as Jc- 1 Section 6 of Revenue Regulations No. 21-2018 dated September 14, 2018. 2 Section 4.114-1 (A) of Revenue Regulations No. I6-2005. 3 Date of Receipt ofFDDA, Exhibit "P-6", Docket, Vol. I, p. 39. 4 Section 7 of Revenue Regulations No. 9-200 I, as amended by Revenue Regulations No. 26-2002. 'Section 2 of Revenue Regulations No. 21-2018 dated September 14,2018.

RESOLUTION CTA EB No. 1667 (CTA Case No. 8588) Page 3 of5 amended by Republic Act No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN). SO ORDERED. Petitioner moves for reconsideration of the January 7, 2019 Decision based on the following grounds: I. The Honorable Court erred in cancelling the deficiency income tax on the alleged additional taxable income ofP282,515.26. II. The Honorable Court erred in cancelling the deficiency income tax assessment arising from petitioner's alleged undeclared income from unaccounted source of cash ofP23,123.55. Ill. The Honorable Court erred in cancelling the deficiency income tax assessment arising from the disallowance of the excess tax credits of P292,551.60 IV. The Honorable Court erred in cancelling the deficiency VAT ansmg from the undeclared sales and unaccounted source of cash. In its "Comment (Re: Motion for Reconsideration Dated 29 January 2019)," respondent argues that the petitioner's motion is a mere rehash of his arguments in the petition which were already considered by this Court in the January 7, 2019 Decision; and that the petitioner did not raise any new ground that would warrant reversal of the said Decision. After a careful review of the grounds raised and arguments presented by petitioner, We find no valid or cogent reason to deviate from our findings and conclusions reached in our Decision dated January 7, 2019, thus, the motion is denied. Tax assessments by tax examiners are presumed correct and made in good faith, and all presumptions are in favor of the correctness of a tax assessment unless proven otherwise.6 The prima facie correctness of a tax assessment does not apply upon proof that an assessment is utterly without foundation. 7 ')t-- 6 Commissioner of Internal Revenue vs. Gonzalez, et at., G.R. No. 177279, October 13, 2010. 7 Commissioner ofInternal Revenue v. Hantex Trading Co., Inc., G.R. No. 136975, March 31, 2005.

RESOLUTION CTA EB No. I667 (CTA Case No. 8588) Page4of5 In this case, the CTA En Bane reiterated the findings of the CTA Division that there was no under-declared purchase that may result in additional taxable income in the amount of P282,515 .26; that petitioner had no other basis to support his conclusion that respondent had an unaccounted source of cash or undeclared income in the amount ofP23,123.55, thus, for lack of factual basis the deficiency income tax assessment was cancelled; that petitioner did not explain the basis for the disallowance of the excess tax credit ofP292,551.60, thus, pursuant to Section 228 of the NIRC of 1997, as amended, this item of assessment shall be considered void; and that no basis to the deficiency VAT arising from the alleged undeclared sales and unaccounted source of cash. WHEREFORE, premises considered, petitioner's Motion for Reconsideration (of the Decision promulgated on January 7, 2019) is DENIED for lack of merit. SO ORDERED. ~?!. c .c..;:t;;::-1:4t' ~ .fiJANITO C. CASTANED1;'JR. Associate Justice WE CONCUR: Presiding Justice (On Leavej ERLINDA P. UY Associate Justice ~ N. Mt-:1~- C~ CIELITO N. MIN'GARO-GRULLA Associate Justice

RESOLUTION CTA EB No. 1667 (CTA Case No. 8588) Page 5 ofS (On Leave! MA. BELEN M. RINGPIS-LIBAN Associate Justice ~ 7�~~~�--~&~-- CATHERINE T. MANAHAN Associate Justice