CTA Case No. 618 (Decision)

UiPUBLIC OF THE PHILIPPINRZI COURT OF TAX APP LF 0 B .LLCQ:CS, C. T.A. CP:3 o. 618 Petitioner , - versus - COLLECT OF Il\ITERNAL VENUE, Respondent. X~ ~- - ~~ ~ - - - � X DECISION This iS an appeal, filed by petitioner lfredo Bollozos, from the decision of the Collector (now Com- missioner) of Internal evenue, assessing against and demanding from the former the payment of the total amount of � 5,348o34 , as deficiency fixed and percen- tage taxes and surcharge covering the period from the first quarter of 1950 up to and including the third quarter of 1955, for engaging in business as operator of a shop in the City of Cebu for the construction and repair of mechanical devices. (See Demand Noo 56-199, dated August 31, 1956, marked as Exhibit 4, Po 11, BIR rec.) The undisputed and agreed facts in this case, as embodied in the partial �~ tipulation of Facts~, dated pril 15, 1959, are as follows: �11. That during the years 1950 to 1955, inclusive, the petitioner engaged in business as operator of a shop for the construction and repair of mechanical devices at Cebu City; 11 2. That during the said years, the peti- tioner paid the fixed tax of 10.00 a year im- posed by 'e ction 182 of the ~tional Internal evenue Code, except for the year 1952; �

DECISION - I o. 618 C. I . A. CASE .. 2\...t. - fl3. That during the said. years. it was as- certained by both parties that the petitioner failed to pay all the percentage taxes imposed by Section 191 of the Tax Code , thereby incur- ring deficiency percentage tax amounting to ~3 . 111 .. 52, instead of �4 , 254.67 , c omputed as follows: Percen- Defi- Tax taqe Yea.: o;t;: ~oss cj,enc~ Qua;t:te;~;: B.e c ej.Q;ts Rate Tax Paj,d Tax -0-- ls t <:iu arter 1950 ~ 9 ,315 .. 00 ~ �144. 98 f F 41 . 32 2nd tJ " ' 9 , 091 . 50 ~6 181.. 83 3rd II up _to Sept. ~. 1950 6, 930.90 ~ -o .... 138 . 62 34 .. 03 ~ 395.80 -------- 4th Quarter 1950 101 109 . 80 3J6 269. 26 TOTAL ------ ~35 1 447.20 TOfAL 1st "'{,uarter 1951 iP- 3 , 859 . 22 3% -.-- -0--- 115. 78 2nd 11 11 5, 148. 53 3% 154 .. 46 -.-- 2870 72 3rd Jl II 9,590.64 33'vo/0;l Jl 6, 985 , 30 10 4th tl .._ _____ -.0 ....2<:::8056 ... TOTAL - - - --- ~ 25,583 . 69 TOTAL 651 .. 74 1st Quarter 1952 � 6, 117. 96 3% - o-� 183.54 2nd u 5, 402.. 01 3% .. 0 .... 162.. 06 IJ 3rd 11 u 12, 671 . 71 3% -0-- 380. 15 -o -- 154. 30 ------ 4thjJ 11 51009 . 48 3% TOTAL TOTAL 29 , 201 . 16 ... ___ __ __ 725.75 For 1953 1112, 680. 67 3�o --..---- ~380, 42 For 1954 ,12, 680.67 3!6 For 1955 19,246020 3~ -0-- 3800 42 577. 39 Total Percentage tax for 1953 to 1955 ----------- - 1 1338 . 23 --------- Tor L DEFICIENCY PERCENTAGE. 3, 111.52 TAX FOR 1950 TO 1955 11 4 . That the parties hereby reserve their right to present additional evidence not covered by this stipulation of fa cts in support of their respe ctive c ontentions .. �� By way of a c orrection to the ustipulation of Factst' quoted above, the petitioner and the -respondent also agreed in open court that for the year 1955 , only three- fourths (3/4) of ~19,246.20 or ~~4 , 434 o 65 should be con- sidered as gross receipts in computing the percentage tax''

DECISION - C. T. Ao CASE NO. 618 ... 3 - due , inasmuch as the dec ision appealed from covers only the period from the fir st quarter to the third quarter of 1955. (Pp. 2-3, t.s.no� Hearing on April 15, 1959 . ) �~. Inasmuch as the petitioner has already admitted in the "Stipulation of Facts" his liability for the pay- ment of ~ fixed and percentage taxes , the only question which remains to be decided iS y.~hether or not the right of the Commissioner of Internal Revenue to assess and collect said taxes , including the corresponding surcharges, has already prescribed in accordance with law. The pertinent provisions of the National Internal evenue Code applicable to the case at bar provide as follows: "Sec. 331. Period of limitation upon assessment and collectiono- Except as pro~ vided in the succeeding section , internal- revenue taxes shall be as sessed within five years after the return was filed , and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such periodo For the purposes of this section a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day: Provided , That this limitation shall not apply to cases already investigated prior to t he approval of this Code . 11 usee . 332. Exceptions as to period of limitation of assessment and collection of taxes. - (a) In the case of a false or frau- dulent return with intent to evade tax or of a failure to file a return , the tax may be assessed , or a proceeding in court for the collection of such tax may be begun without assessment , at any time within ten ears after the d~scover of t he falsit , fraud, or omissionp Underscoring sup~liedo)

DECJSION - C. ToA. CASE NO. 618 - 4- From the record of the case at bar , it appears that t he pe titioner herein failed to file his tax re- turns , except for the first and fourth quarters of � the year 1950. Hence, pursuant to Section 332( a) of the Tax Code which is quoted above , the court action to collect the defic iency fixed and percentage taxes I due from and payable by petitioner Alfredo Bollozos for the periods where no return was filed , may be begun even without assessment within ten (10) years after the discovery on November 29 , 1955 , of the omission to file the tax r eturns . (Exhibit 3 , pp . 4-5 , Bm. rec . ) Con- Sidering that the petitioner filed the instant appeal on January 24 p 1959 , and the respondent submitted his answer to the petition for review on March 13 , 1959 p which is equivalent to a court proceeding to collect the defic iency fixed and percentage taxes under review � (Collector of Internal Revenue vs o Clement , Go Ro No . L-12194 , January 24 t 1959; Collector of Internal Re - venue vs . Solano , Go R. Noo L-11475 , July 31 , 1958) , we believe and so hold that the right of the respondent to collect the disputed deficiency assessment for the periods not covered by any tax return has not yet pres- cr ibedo ( Bisaya Land Transportation Coo, Inc. vs o Col- le ctor of Internal Revenue , Go R. Noo L- 12100, May 29 , 1959 o) ith regard to the first and fourth quarters of the year 1950, we note from the "Stipulation of Facts" submitted by the parties that the petitioner paid the

DECISIO-J - C. I . A. CASE HO. 618 - 5- amoun ts of ~144 . 98 and ~269 . 26 , respe ctively , as per- centage tax and is still liable for the sums of ~41 . 32 and ~34 o 03 as defic iency tax for the same periods . In view of these admitted payments of the percentage tax for the first and fourth quarters of the year 1950, we believe that the corresponding tax returns must have been filed , and for the purpose of computing the period of limitation upon asses sment , the said tax returns shall be c onsidered to have been filed on April 20, 1950 and January 20, 1951 , respectively , the last dates pres- cribed by law to file the same o Inasmuch as the dis- puted assessment issued against the petitioner was served only on April 8 , 1959 (pp . 7- 14; 24- 32, t . s.,n o1 Hear ing .on April 8 , 1959; p. l , Hearing on April 15 , 1959) , or more than five (5) years from the filing of the returns , we are of the opinion and so hold that the right of the respondent to assess and c ollect the defic iency assess - ments in the amounts of P41 .. 32 and ~34 .. 03 for the first and fourth quarters of the year 1950 has already pres- . cribed. Hence , pursuant to Section 14 of Republic Act No. 1125, there iS no deficiency for the said periods . In resum~, the total tax liability of the peti- tioner is ~3 , 624 .. 77 , c omputed as follows: FIXED TAX: 10. 00 FERCENTAGE TAX: 1950 000 � � 0� 0 � � � 0� c�� ~320o45 1951 oo ����ooe o oo o oo� � � o� � o~o� o � o e� � o 651 . 74 1952 725 .. 75

DECISION - C. T. A. CASE NO. 618 - 6- 1953 oooooooooo oo oooo ~380. 42 1954 ooooooooo ooooooo 380. 42 1955 ooooo ooooo ooooo : 433. 04 Total percentage tax � ��� ~2, 891 . 82 25% �or late payment � � � � � �� � � 722. 95 3,624.77 TOTAL FIXED AND PERCENT GE TAXES AND SURa-IARGE STILL DUE N~ PAYABLE ��� � �� �� �� � � � � o� � The respondent alleges and contends for the first time in his memorandum that the 5Q% surc harge for omis - Sion to file the tax returns should be imposed on and collected from the petitioner. In answer to this ~ it � shall suffice to state that the respondent did not pre- sent any evidence whatsoever to show "willful neglect to file the return within the period prescribed" (Sec . 183 , National Internal Re venue Code) and that su c h ~'willful neglect to file the returnu c an never be pre - sumed . (Ivied ina vs . Collector of Internal Revenue , C. ToAo Case No. 129. November 261 1958o) WHEREFORE, in view of the foregoing c onsidera- tions ,. the decision appealed from iS hereby modified , and petitioner Alfredo Bollozos is hereby ordered to pay the respondent Commissioner of Internal Revenue t he total sum of ~ 3 , 624 . 77 , as defic iency fixed and per- centage taxes and surcharge covering the period from the first quarter of 1950 up to and including the third

BECI~IOl - C.T. Ao CASE �o. 618 - 7- quarter of 1955p lith costs against the petitioner. SO ORDERED. anila, September 9, 1959o ~~ l IANO I LE Presiding Judge lE ca OJR: