Court of Tax Appeals
0CTA Case No. 1330
REPURLIC OF THE PHILIPPINES
CCORT OF FAX APPEALS
QUEZON CITY
Petitioner, \\] ~- Versus ~ Qc. Ted. CASE NO. 1330
TM COMMISSIONER OF
INTERBAL REVENUE, Respondent.
Rew nnannw woe ea jf
/RRGEeTon
This is em appeal from a decision of the respon- dent dated December 26, 1962 holding the petitioner liable for the deficiency incone assesszents for the years 1956, 1955 and 1959, in the total amount of P641.50.
Petitioner is the fresident of the Lincoln College, & non-stock educational institution loeated in Tloile City, which is operated and run by the Marian Corpore- tion. The articles of incorporation ef this institu- tien, as originally drafted and executed, was entitled “Articles of Incorporation of the Lineoln Sehool”, When registered, however, with the Securities and Exchange Commission, this title was changed by crossing out the words “the Lincoln School", and substituting therefor the name "Marian Cerperation".
The persons who constitute the board of Trustees of the Lincoln Schoel, now Lincoln College, are the original ineerporators of the Marian Corporation. (Exe hibits "A", "Aol" and "A-2", pp. 42-85, CTA Rec.)
The purpose for which the Marian Corporation is formed is to establish, operate and own educa- » 419
DECISIONs- CTA
CASE WO. 1330.
-2- tional institutions which shali be maintained by means of tuition and other fees, matriculations, endowrents, donations and charitable centributions, (ixhibit "A", pars. 1 and 7) In order to acet its operational expenses, special- ly the interests on its loan from the Development Bank of the Philippines, the Lincoln College leased four of the rooms in the first fleor of its three-story build- ing te Del Roseric Marketing Corporation for which it wae paid a rentel of #2,600.00 in 1955, and £5,200.,00 in 1959, (pars. 1 and 2, Petition; par. 1, Answer; See also Exhibdt “H"), In 1956, the College realized from its educational activities er income of ¥4,124.21, but it income tex return due to its belief Petitioner filed his indivViduel income tax returns for the tax years 1956, 1958 and 1959. (Exhibits "22" to "14" inclusive, pp. 19-23, BIN Ree.) But these returns did not include the income of the institution. In view of the expected income from the lease of a portion of its building, petitioner wrete on June 26, 1958 to the respondent Commissioner inquiring "if there is any tax to pay the Government in which case we (peti- tioner) would be very glad to comply". ‘This letter was not answered. Instead, respondent ordered the examination of the books of accounts of the petitioner, ineluding those of the Lincoin College of which he is the President. (Exhibit "1", pp. 109-115, “Ik See.)
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DECIS 10Ns~ CTA
CASE HO. 1330 = en Qe May 24, 1962, respondent issued against peti- tiener Deficiency Income ‘ax Assessment Notices Nos. 22-EAR-755%23-62/56, for 7313.58 (Exhibit "15", p. 18%, BIR Rec.); 22~EAR-862212-62-58 for F95.07, (Exhibit "16", po 18%, BIR Ree.) and 23-EAR~2613%3-62-59 for ¥242.85 (Exhibit "17", p. 18%, BIR Rec.).
These assessuents were disputed by the petitioner in his letter, dated June 22, 1962, (Exhibit "15", pp. 185-187, BIR Rec.) wherein he requested that they be reconsidered. This request was denied by the respon- dent in his letter, dated December 25, 1962 (Exhibit "19", pe 196, BIN Ree.).
appears in evidence thet the properties of the Linceln College, consisting mainly of several school buildings, were declared for real estate tax purposes in the name of the institution. (Exhibits "C" to “C-5", pp. 67-72, CTA Ree.) | Petitioner centends that the Lincoln College is not a single proprietorship exclusively owned by the petitioner and his wife, as contended by the respon- dent, but a non-stoek corporation dedicated exdilusive- ly to religious, cultural and educational purposes, no income of which inures to the benefit of any ine dividual, and therefore is tax-exempt. And that, granting for the sake of argument that the incosze of the Lineein College is taxable, the respondent's right te assess and cellect the tax in question has 121 ~ - ne el ee Sle
DEC ISIONs= CTA
CASE RO. 13306 already prescribed.
It is abandently clear that the Lincoln School, now Lincoln College, was registered as Marian Corpora- tion. This is indicated net only by the articles of ineorporation (Exhibit "A"), where the typewritten. name, “The Lincoln Sehool", was crossed out and was substituted with the name, "Nerian Corporation", but also by the fact that the inecorporators of the ‘arien Corporation and the members of the board of Trustees of the Lincoln College are identically the same persons. It is equally clear that the Lincoln College (registered as Marian Corporation) is a non-stock corporation.
.
Zt is ne ev 3 that the Linecla College is owned exclusively by the petit. :
therefore, he cannet be assessed for any incone real- \ —_—_————— Cee nr ER EsantnsnnttnttittintitnntTianssueteteemeenennemiimmmenemnen ized by the Lincoln College.
NT cc In view of this conclusion, we find it unnecessary te determine whether or not the income in question is taxable, WHRAPPORE, the decision of respondent, dated becen- ber 26, 1962, is hereby set aside, without any pronounce- ment as to costs.
SO ORD’ PED.
Quezon City, July 17, 1965.
ef 2 REYES, SR.
siding Judge ROMAN M, UMALI
Associate Judge © 122
WE CONCUR: '
ANDRO BF.