1maple v. CIR
1maple v. CIR
1maple v. CIR
SECOND DIVISION
-versus-
Castaneda, Jr.,
and
Casanova, JJ.
COMMISSIONER OF
INTERNAL REVENUE,
Respondent.
Promulgated:
DEC
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Chairperson
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DECISION
CASTANEDA, JR., J.:
STATEMENT OF FACTS
Petitioner 1Maple Sales, Inc. is a corporation duly organized and
existing under the laws of the Philippines, with business address at )L-
DECISION
CTA CASE NO. 8925
Page 2 of 26
<t-
Par. 2, Joint Stipulation of Facts and Issues (JSFI), Docket, Vol. I, p. 149.
Par. 4, JSFI, Docket, Vol. I, p. 150.
4
Par. 3, JSFI, Docket, Vol. I, p. 150.
5 Par. 5, JSFI, Docket, Vol. I, p. 150.
6 Par. 6, JSFI, Docket, Vol. I, p. 150.
7
Par. 7, JSFI, Docket, Vol. I. p. 150.
8 Par. 8, JSFI, Docket, Vol. I, p. 150.
9 Par. 9, JSFI, Docket, Vol. I, p. 150.
10
Par. 10, JSFI, Docket, Vol. I, p. 150.
3
DECISION
CTA CASE NO. 8925
Page 3 of 26
Assessment
is
well
supported by facts and
laws
5. Assessments are presumed correct and made in
good faith. The taxpayer has the duty of proving otherwise.
In the absence of proof of any irregularities in the
performance of official duties, an assessment will not be
disturbed. Even an assessment based on estimates is prima
facie valid and lawful where it does not appear to have
been arrived at arbitrarily or capriciously.
6. In the present case, petitioner is being taxed for
Improperly Accumulated Earnings Tax, under Section 29 of
the NIRC, as amended. Relevant provisions thereto are
quoted herein as follows:
SEC.
29.
Imposition
of
Accumulated Earnings Tax. -
Improperly
12
DECISION
CTA CASE NO. 8925
Page 4 of 26
(C) Evidence of Purpose to Avoid Income Tax.(1) Prima Facie Evidence. - The fact that any
corporation is a mere holding company or
investment company shall be prima facie evidence
of a purpose to avoid the tax upon its shareholders
or members.
(2) Evidence Determinative of Purpose. -The fact
that the earnings or profits of a corporation are
permitted to accumulate beyond the reasonable
needs of the business shall be determinative of the
purpose to avoid the tax upon its shareholders or
members unless the corporation, by the clear
preponderance of evidence, shall prove to the
contrary.
XXX
DECISION
CTA CASE NO. 8925
Page 5 of 26
DECISION
CTA CASE NO. 8925
Page 6 of 26
p 71,738,452.00
1,943,010.00
73.681,462.00
21,521,536.00
52.159,926.00
21,411,392.00
(3,500,000.00)
p 70,071,318.00
p
7,007,131.80
1,751,782.95
4,492,243.40
50,000.00
P13,301,158.15
fr-
DECISION
CTA CASE NO. 8925
Page 7 of 26
DECISION
Final discussions
21. Assessments are presumed correct and made in
good faith. The taxpayer has the duty of proving otherwise.
In the absence of proof of any irregularities in the
performance of official duties, an assessment will not be
disturbed. Even an assessment based on estimates is prima
facie valid and lawful where it does not appear to have
been arrived at arbitrarily or capriciously.
22. The burden of proof is on the taxpayer contesting
the validity or correctness of an assessment to prove not
only that the Commissioner of Internal Revenue is wrong
but the taxpayer is right. Otherwise the presumption of
correctness of tax assessment stands. The presumption in
favor of the correctness of tax assessment stands where
evidence to the contrary is wanting. Hence, the
assessment issued against petitioner is imbued with factual
and legal bases.
23. All presumptions are in favor of the correctness
of tax assessments. Dereliction on the part of petitioner to
satisfactorily overcome the presumption of regularity and
correctness of the assessment will justify the judicial
upholding of said assessment notice."
The Pre-Trial Conference 13 was set on April16, 2015. Petitioner
filed its Pre-Trial Brief1 4 on April 13, 2015; while respondent filed
through registered mail an Urgent Motion to Defer Pre-Trial
Conference 15 on April 8, 2015 and received by the Court on April 16,
2015. ~
13
14
15
DECISION
CfA CASE NO. 8925
Page 9 of 26
16
17
18
19
2o
21
22
23
24
DECISION
CTA CASE NO. 8925
Page 10 of 26
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26
DECISION
CTA CASE NO. 8925
Page 11 of 26
DISCUSSION/RULING
The Court shall address first the matter of timeliness of the filing
of the present Petition for Review.
Section 228 of the National Internal Revenue Code (NIRC) of
1997, as amended, provides:
"SEC. 228. Protesting of Assessment - When the
Commissioner or his duly authorized representative finds
that proper taxes should be assessed, he shall first notify
the taxpayer of his findings: Provided, however, That a
preassessment notice shall not be required in the following
cases:
XXX
XXX
XXX
Such
assessment
may
be
protested
administratively
by
filing
a
request
for
reconsideration or reinvestigation within thirty
(30) days from receipt of the assessment in such
form and manner as may be prescribed by implementing
rules and regulations. Within sixty (60) days from filing of
the protest, all relevant supporting documents shall have
been submitted; otherwise, the assessment shall become
final.
If the protest is denied in whole or in part, or
is not acted upon within one hundred eighty (180) ;z_
DECISION
CTA CASE NO. 8925
Page 12 of 26
P71,738,452.00
1,943,010.00
73,681,462.00
21,521,536.00
52,159,926.00
21,411,392.00
(3,500,000.00)
P70,071,318.00
DECISION
CTA CASE NO. 8925
Page 13 of 26
financial
(C) Evidence of Purpose to Avoid Income Tax (1) Prima Facie Evidence. - The fact that any
corporation is a mere holding company or investment
company shall be prima facie evidence of a purpose to
avoid the tax upon its shareholders or members.
pz-
DECISION
CTA CASE NO. 8925
Page 14 of 26
J.-
DECISION
CTA CASE NO. 8925
Page 15 of 26
XXX
XXX
DECISION
CTA CASE NO. 8925
Page 16 of 26
XXX
XXX
DECISION
CTA CASE NO. 8925
Page 17 of 26
XXX
XXX
Q37
XXX
XXX
30
DECISION
CTA CASE NO. 8925
Page 18 of 26
XXX
XXX
31
DECISION
erA CASE NO. 8925
Page 19 of 26
32
33
DECISION
XXX
XXX
34
35
36
DECISION
P715,600,000.
Petitioner claims that the increase in inventory, decrease in trade
and other payables, and payment of bank loan came from its
appropriated retained earnings.
However, the Court is not convinced considering that petitioner
failed to provide sufficient evidence to prove its claim. In fact, it may
be observed from its Audited Financial Statements (AFS) that for
taxable years 2007, 2008, 38 2009 and 2010, 39 instead of being
decreased by the alleged implementation of the planned business
expansion, the appropriated retained earnings have increased from
P15 million to P165 million in the span of four ( 4) years, as shown
below:
Taxable
Year
2007
2008
2009
2010
37
Appropriated
Accumulated Profit
p 15,000,000.00
p 20,000,000.00
P110,000,000.00
P165,000,000.00
Ibid., Q&A 40, Docket, Vol. I, p. 182 and Judicial Affidavit of Connie Tan Bautista, Q&A 45,
Docket, Vol. I, pp. 354-355.
38
Exhibit "P-21", Note 7, Docket, Vol. II, p. 579.
39 Exhibit "P-16", Note 10, Docket, Vol. II, p. 551.
DECISION
CTA CASE NO. 8925
Page 22 of 26
Judicial Affidavit of Connie Tan Bautista, Q&A 46 and 47, Docket, Vol. I, p. 355.
Exhibit "P-10", Docket, Vol. II, pp. 517-518.
42 Exhibit "P-14", Docket, Vol. II, p. 528.
43 G.R. No. 108067, January 20, 2000.
41
DECISION
CTA CASE NO. 8925
Page 23 of 26
Note 8, Audited Comparative Financial Statements for Years 2008 and 2009, BIR Records, p.
245.
DECISION
CTA CASE NO. 8925
Page 24 of 26
DECISION
p 71,738,452.00
1,943,010.00
73,681,462.00
21,521,536.00
52,159,926.00
21,411,392.00
_{_31500,000.00)
70,071,318.00
7,007,131.80
1,751,782.95
P8,758,914.75
SO ORDERED.
~he_.~ .Q.
llJANiTO c. CASTANEDK, jR.
Associate Justice
!CONCUR:
CAESA~SANOVA
Associate Justice
45
46
DECISION
ATTESTATION
I attest that the conclusions in the above Decision were reached
in consultation before the case was assigned to the writer of the
opinion of the Court's Division.
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CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, and
Division Chairperson's Attestation, it is hereby certified that the
conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court.
ROMAN G. DEL
Presiding Justice