CTA Case No. 4072

DECISION -

Fetitioner as a corporation oarganized and existing under the laws of the Republic of the Fhilippines, with principal office at the Fhilamlife Building, United Nations Avenue, Ermita, Manila. On June 21, 1984, petitioner received from respondent ai pre-assessmenk motice for unpaid documentary ard aC Lence stamp Laxes on life insurance policies issued during the year 1978 in the amount of F4,615,794.28, On dune 26, 1984 petitioner pratested the pre- assessment on graunds af prescriptian and lack of factual and legal Hasis s and recques tec the Withdrawal and cancellation af the assessment by respondent. However, an duly 18, 1984 petitioner received ai combination tax clearance~assessment letter from respondent informing petitioner that while mo defarienmy fuasipveets hax pias found to be due fram petitioner, cdocumentary anc science stamp taxes in the amount of F4,612,794.28 were found to be still due and collectible fram it. Again, petitioner on Ais 16, 1984 protested the aforesaid ASS semen t on cpreouand & oni payment, prescription and lack of factual and legal basis.

On May 26, 1986, however, petitioner received a 337

DECISION ~—

letter from respondent denying its protest or request for reconsideration and reiterating that said assessment be settled.

Hence, this appeal, Aes special anc affirmative defenses, respondent in his answer to the petition for review alleges that:

Fer anvestiqatian canductecd by agents af the respondent and per records furnished by the petitioner, petitioner is liable in the amount af F4,613,794,289 as deficiency documentary and science stamps taxes on life insurance policies issued during the year i978;

During the investigation of this case by respondent’ s @xaminers, petitianer failed to show official re eAphes of cdecumentary and science stamp taxes pursuant to F.OD. 1049 anpraved an November 4S, 1976 as implemented by Revenue Regulations No. 9-75 (28-76) dated November 25, 1974;

As no tax return is filed far documentary stamp tax purposes, the case falls within the coverage of exceptions to the then S-year period of limitation of assessment under & ection 219 of the 1977 Tax Cede (new Section 269). Hence, respondent 338

DECISION —-

has 10 yea > from discovery of the omission to affix the documentary and science stamp taxes on petitioner’s insurance policies, In this case, the omission was discovered on March 12, 1984 per ayaminer’s report, cansequently, respondent has up to Maren 12, 1994 within which to issue the assesament. As the assessment was issued on July 10, 1984 petitioner was assessed within the period. (Commissifoner vs. Ayala Securitres Corp. & The Honorable Court of Tax Appeals, G.f. No. €r2P4ag, November 22, PPO, 10% SCRA Sat-B2Ae?

The assessment ino question was assued ain accardance with law and revenue rvequilatiornss All presump tians are an Favar cf the correctness of the as aa mesrik .

On the question of prescription, the rule now established Ls that if there if ona law oar ragqulatiaon requiring the filing of a return, the right of the Government ta asgsegs oar collect national internal revenue tax does mat prescribe. Limitatians upon the right of the gavernment ta aspeas and collect tanesn will nab be presumed ain the absence of clear legislation ta the contrary and where the government has mot by express 333 DECISION CTA CASE NO.

1072 - 5 ~- statutory provi s ion provid e d a limitation upon its right.

to asse ~~s unpaid t," :-: es , s uch right is imp r·esc r·· i p t i b 1 f? • ( Commissioner of Internal Revenue vs. Ayala Securities Corporation, L-29485, Nove mber 2 1 .• 1980, 101 SCRA 2.31. ) Si nce there is no law or regulation requiring the filing of a return for docu mentary s t a mp tax, a nd none has been pointed to by pet i t .. i em e r .. , anc::l naticmal internal revenue ta xes, the right o f the Government to .:~ sses~5 at"· c nl J.r.:•c:t thP docurnf?ntdry an d scienc e s tamp invt:>lved i.n thi s case not therefore pre sc: rib ~ .

Petitioner main tai n s howeve r that it has f ully paid a ll documentary an d scien ce stamp taxes due on the in s urance policies it issued in the year 1978. And the evi denc e presented by petitioner ~ which wa s n ot di s pute d or ..

contr· ovf.:?rt.E·~d by res pondent, s hows that petit ioner ~ad e the f o llowi ng p a yme nts of 1.

.1. 7526t:J.).)

2.

.1752661.1 3.

J.C'f] 7C'f7 1_2 4.

J C:.'fi79701.

P.~~j:;§' 01--{14-78 0 .1.-·{lf.l.-78 0 .1.-.. Jb·-·E37 0 .1.--.16--Hl 340 ~.!'Q.,\D.t.

P40~000.00 '-10 ~000.00 '-l(l ' 000 • (:(l 40,000 . 00

14, 15.

16, oat , a

BOO OOS

BULL

SOE BPI

REO COORD

ELIT 4A

& O1-24-97 2-01-78 OR0B~78 02-13-78 O2-L3-78 ORO1-78 O4O8783 O4-—-O-78 4-18-78 O4--18--78 O4—-25-78 CU Le FEB Oe LO 7 341 40,000.00 40 000,00) 40) 5 Oo. Oo) 40,000.00

AL OK OO

A) CKD OD

FO OO OD)

90, 0. OD) 40,00) ,.00 40,000, 00 409, OOD. OD) 40,000,000 40,000.00) 40,000.00) 49, 000.00 40, O00) .O0) 40) 000.00 40,000.00 AQ OOO. OD 40, O00), O10 AED OED, OD

40) COO)

409,000 .O0 40,000.00 40 ,000,00 40,000.00

DECISION —-

“Ty Po tn O74 O78 Of 16--78 6-16-78

O6- 20-78

06-22-78 7-10-78 O7-11-78 O7-1L4-78

OF 18-78

40,6 40), 000.00 BO, O00. OO 80,000.00 20, O00. 00) 80,000, 00 40,000.00 40,000.00 40,000.00 40,000.00 40,,000,.00 40,000.00 40,000.00 AQ .O00) OO 0), 000). OO me)

DOCUMENTARY STAMP TAX FAID IN 1978

SO4O1962

TEMP 4L

OLE PA OOS

Se APES

O17 4 7B

O8-O8-78 OB-22-78 9-05-78 OF—O8-7B OFAB-7B 10-04-78 342

FP) OO) OC

FO CHOC, OD) 80,000.00 9, O00 600 90,000,000) 90 OO, OX 9,000.00 90) " OOO Oe) 90, OOOO) FO OOD. 00 90, OOO) OD

DECISION —-

12. 2GE2O891 10-06-78 PO OK OW LS, CAH 10-10-78 Pt) OO, OD 14.0 S71é65204 Ith 24-78 A, OOO. OO

15. 27456440 LO-30-78 PO), OOM, OO

16. 374271628 Li-i7~-78 PO OOO, OO

17. 2BL40RRS Li-LO-7e FO O00), 00)

18. 38177602 Li-21~78 0, O00, 00

19. 38177694 11-24-78 99,000.00 20, 38454415 12-05-78 90,000.00 21, 7464296 12-07-78 90, 000.00 22, SRSOTSS4 12-12-78 90,000.00 3, SAEaSSS4 12-19~78 GH), OOO) OX Weg LEG) 9 OM) 9 (MD On the hasis of the evidence presented, it seems plain that petitioner has paid documentary and science stamp taxes due on insurance policies issued by it during the year L978 in the total amount af F4,600,000,002 that is, F2,440,000,00 Plus F2,1690,000.00, Respondent's assessment for deficiency documentary and science stamp taxes in the year un er cansideration, however, is in the sum of F4,613,494,28, or a discrepancy of P1i2,494.28. We have carefully examined the records af this case, but we fail to find any proof which would show the payment of this shortage of P13,494,28, And petitioner has nat accounted for 343 -

- 9 - or· e :-: pla.ined thi s di s c re pa n c y 01'" shortage of the amount established by the evidence presented by it. All pres umptions are in favor of the correctnes s of res pond e nt' s a sse ssment and it is incumb( ~ n t:. u po n pf.:! t :i. t .i o n r:~r t o pr·o ve th~::

c:r.m tr·ary.

(Commissioner of Ir;t-ernal Revenue vs. Antonio Tuason, In c., G. R. No. 85749, May 15, 1989, c itin g ffindana o Bus Company vs.

Commissioner of Internal Revenue , 1 SCRA S.38.)

Unfortunately, petitioner ·failed to oven.: ome the pres umption of c:orrectn r::~ ~:;~;

o ·f I'" E~~:; pondent ' s <~ '5S e ~:;s rn f.'-:> nt clr· e :-:plain the di s crepancy of P13,494.28. Accordingly~ petitioner Philippine American Life Insurance Company is h e n :? by or·dered to pay to respondent Commissioner of Internal Revenue the amount of P13,494.28 as deficiency documentary and science stamp taxes on insurance policies issued during the year 1978. The compromise penalty of P300.00 suggested by r·espondent in his assessment cannot be imposed as it does not appear that petitioner agree d to its imposition. The rule has been estabL.1 ;hed that compromise penalty cannot be imposed or collected without the agreement and conformity of the taxpayer.

(Uonder Mechanical 344 i -- -- DECISION CTA CASE NO . 4072 ·-· lO ····· Engineer i n g r.:o rp o ra tion v s.

Court o f Ta x Appeals , L- 22805 & 27658 , Jun e 30, 1975, 64 SCRA 555.)

WHEREFORE, the decision appealed from is modified as ind i c a t e d i n t he a bove o pin i on of the Court.

No costs .

WE CONCUR:

( on l eave) CONSTANTE C. ROAQUIN (~s s nc .i..:~ te ,Juclqe ~t@/ CR H .TIFICATION I hereby certify that thi s deci s ion r eac hed afte r due c on s ul tation among t he members of t he Cou rt of Tax Appeal s in accordance wi t h Section 1 3~ Ar t i c l e VIII of t he Consti tution. -

AMANTE F ILLER

f='r·esid .ng ,Judge Court of Tax Appeals 34.3