CTA Case No. 4071

DECISION

- 4 ·- o"f i nterest on each disguised loans even qualify as dividends being distributed to the affiliates/officers (supposedly lending loans to the corporation instead of being regular investors/stockholders). Some of the e:·:penses were totally disallowed, i.e. , inventory loss of P5,323.00 and the amortization-goodwill of P2,000.00 for failure of petitioner to substantiate the same. Other e:·: penses deducted in the Income Statement were allowed only to the extent of 50% of the amount claimed such as the following: ~JI...lflt. deducted One-half in tt-e Incrne ( 1/2) Statement Disallowed Professional 1!~ Tt?dTlical fees F\'epairs 8~ 1'"1aintenace Of"f ice suppl i.es Corrm .. rr·licat.ion e:·q:::ense Mi.scel J.anet.."1l.t~; e:·q::x:nse F'52, 799. (X) 49 ,t.Bl.OO :20,933.00 1.9,728.00 9 ' 6.~8 • 00 P26, 399. ~..iO 24, 84(l. ~-o 10,466. ~ ... o 9,864.(X) 4 ,81c1. oo The rest of the remaining disallowed e:·:penses were computed on the basis of the difference of the amounts claimed as deductible expenses for the year 1976 as compar-ed to the previous year 1975, tel wit:

Salaries, wages 8~ al 101.-k<.nces P120, 492. (X) Rent e:·:pe:nse 69,846.00 Depr"'E'C i.a t.i.on 54, 331 • (X) P105,607 .(X) 6.3, 004. (X) :!o,471.(X) Disallo,.ed ..CQiit~CE!.l.£!?1.

P14,885.00 5, 962.(X) 17,860.00

DECISION --

1'1edica l e :q:Jense Tr··ansportatia1 J c.mi tol"·ial e:-.-· pense - 5 -·- 12,128.00 4,157 .00 2,410.00 Th e pr-esumption is 1 ,o5.2:.oo 2,971.00 1,123.00 the 11 ~ 075, (X) 1,186.00 1,287 . <X> e:.:penses incurred in 1975 remained the same for the s ucceeding year, considering that the accounting record for·· the year 1976 was not pr-·esen ted for e:·:am.ina t.ion, them any increase in the amount claimed cannot be accounted for.

Apparently the examiner's report made as close as a n appr-o:·: ima t.ion as it can, bearing heav i 1 y if it chooses upon petitioner ~ho se inexactitude is of .i. ts m-.Jn making.

As s u c h~ the report des erves the c r-e d e nce that s hould nor-mally be accorded in the <'.:\bsemce? of con tr·ar·y evidence. And, not. that the e:·:arnin er- · s < · red <~ n t.ia 1 s a r e irnpec:cab 1 e but to hi s ·f avo r··.

must be c:on c:eded the pr-esumption of n~gul a 1·· i ty i n the perfor-·rna n ce of off ic ia 1 duties (Sec .

m- 5, Revised Rules of Court ;

u.s.

v.

Esca l a nte, 3 6 F' h i 1.

743)' which has not been dispr-oved by any affirmative evidence of irregu l arity or u nlawful conduct. (Prima Business Machines, Inc. v. Commissioner of Internal Revenue , CTA Case No.

2990, August 31, 1981 . )

Thus, s .i.m.i.la,~ ly held, ta:·:

assessments by ta:~, e:·:ami n ers

DECISION -··

-··· 6 -··· a t-e presumed correct and made in good faith. The ta:-:payet"- has the duty to prove otherwise ( Commissioner of Internal Revenve v. Construction Resources of Asia, Inc., 145 SCRA 67.1);

and an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed.

(Gutierrez v.

Villegas~ 8 SCRA 527.)

Accor-dingly, we fc-,?el compe 11 eci to a f finn the import and force of ' ... he r··epor-t o"f findings which may not be suffered to petrify in futility.

In the case at bar, petitioner failed to dischat"··qe ad minis tr··a ti ve 1 y and judicially, having waived i~s right to present evi dence .in s upport of its claimed deductible e :-~ pen se~:; • Thi s Court c.:\rH1ot be e :-: pee: ted to ~::;anc: tion e:-~ ped ien t un sus t..3 inab 1 e either by operation of law or applicable settled principles. ThE~ pr-ose r·· .i. pt : ... 1ns of sect..w ing the in tegr-· i ty of the c:ol J.ec::ticm of lawful dues are no mer-e ingenuous sophistr-·ies conjured rJut o·f some quir-ky insights but are tinged with strong issues of public policy to fr-aud upon the r£~venue lest the c:o r-net"-stone of effective collection be placed in . I

-·· 7 - thE~ qu.i.ck s,:~nd of self-·.i.nter·est. ( Samhwa Co. Ltd.

v. Commissioner of Customs~ CTA Case No . 3099, July 31' 1981.)

It may be necessary to repeat what the Supr·eme Court said in the P.P.!J.! ... f~~j,_~ -·-- ··§.Y .... J=:.9.. .. -.... ~. 9..2.E:?. (G.R.

L- 81446, August 18~ 1988) which so plainly apply to the case at bar, that - Where the ta:·: payer is appealing to the tax court on the ground that the Collector's assessment is et-roneous, it is in c umbent upon him to prove there what is the corTec t and just 1 iabi 1 i ty by a full and fair di sc losure of all pertinent d a ta i n his possession. Otherwise, if, the tax pa yer confines himse lf to proving that the assessment is wrong~ the tax court. rwoc:eed ings would settle nothing, a nd the way would be left open for s ubsequent assessments and appeals in interminable succession. By ;:;~. 11 of the 'for··egoing ~ We hesitate t.o furthe r fa s hion and issue i nto a sat i s f a torily settled l ega l situation.

WHEREFORE~ petition is hereby dismissed at petitioner's c osts.

SO ORDEF~EO.

Quezon City, Metro Manila, October 28 , 1988. Associate Judge

DECI£3ION ·····

.... B - ·

~JE CONCUR~

C E R T I F I C A T I 0 N I that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Constitution. AMANT FILLER Presiding Judge Court of Tax Appeals