Professional Documents
Culture Documents
":
REPUBLIC
OF
COURT
THE
OF
QUEZON
MANILA
MANDARIN
HOTELS,
PHILIPPINES
TAX
APPEALS
CITY
INC. ,
Petitioner,
THE
versus
C.T.A.
OF
COMMISSIONER
Promulg
INTERNAL
REVENUE,
Respondent.
X
- -
;. 2 4 1997
R
CASE
NO.
5046
d'
DECISION
This
respondent
1988
1993,
deficiency
percentage tax
assessment
in
Petitioner
business
as
registered
denying
the
is
hotel
the
and
enterprise
sum
for
VAT
on
the
tax
and
engaged
in
value-added
corporation
restaurant
with
protest
P12,211,987.53.
of
domestic
dated
Revenue,
petitioner's
issued
the
of
decision
Internal
of
total
the
from
appeal
Commissioner
25,
October
an
Is
It
operator .
Registration
is
No.
VAT
32-0<
000281 .
On
notice,
July
dated
deficiency
taxab Ie
8,
June
1988,
thus:
petitioner
22, )1992,
value-added
year
hereunder,
1992,
the
and
received
demanding
percentage
deta I Is
of
which
an
the
assessment
payment
taxes
are
for
of
the
enumerated
DECISION
C.T.A. CASE
NO.
5046
-
Deficiency
Basic
Add:
Tax
V a I ue .. Added
Tax
fr.
to
In
Office
52,097.66
4,774,801.35
179,445.19
50,000.00
16,000.00
Due
P11,756,054.03
P455,933.50
letter,
of
the
respondent
the
assessments
Petitioner alleged
respondent's
protest
of
four
percentage
tax
imposed
As
as
a
by
as
waiver
of
respect
to
the
collection
of
which
the
July
30,
issued
by
tax
of
received
1992,
the
of
by
respondent.
stemmed
various
tax
and
claims
to
from
laws
This
assessment.
value-added tax
the
petitioner
1992,
deficiencies
petitioner
one
item
have
been
noted
that
respondent.
information,
28,
Issuance
1991,
It
the
Is
assessment
business taxes
be
has
signed
for
the
running
the
Tax
Code
provided by
of
to
petitioner
of IImitations
period
its
27,
interpretation
statute
prescriptive
on
the
items
November
the
July
collateral
early
the
that
in
cited
wrongly
dated
erroneous
resulted
which
Tax
1-20-89
protested
Percentage
P208,390.65
6-30-92
Amount
1988
5,545,002.13
Compromise
Total
1,386,250.53
p
surcharge
Int.
Business
Tax
25%
and
(see
the
of
with
consequent
page
211,
BIR
records).
Petitioner
on
November 10,
received
1993
in
the
a
final
Ietter,
denial
dated
of
Its
October
protest
25,
1993,
DECI S ION C. T . A.
CA SE NO .
5046
-
which
prompted the
review
by
this
This
Court on
for
review
O riental
Hotels,
Internal
Revenue"
but
Revenue"
the
in
an
Inc.
amended
latter title
S ecurities
and
is
to
file
December 1 0,
"Mandarin
Hotels,
petitioner
petition
Mandarin
was
petition
initially
vs.
The
vs. The
Commissioner
petition
fi I ed
Exchange
on
to
of
(see
"Mani I a
I nternal
of
1994
June 9 ,
registered
Commission
entitled
Commissioner
changed
later
petitioner's
for
199 3 .
was
Inc.
name
page
as
with the
64,
CT A
records).
Respondent filed
January 2 8,
the
its
Answer
(p.
2 8 - 31 ,
wherein
following
3.
Petitioner
deficiency
year 19 8 8
V AT
in
the
was
and
rec.)
she
Defenses,
taxes
amount of
on
proposed
thus:
assessed
Percentage
total
CTA
for
for
the
P1 2 , 211 ,9 8 7 .3 3
I!
a s f o I I ows:
I 1
Valu e Added Tax
(ASS. NO.
FAS-488-92-002804)
Basic Tax
Add:
p 5,545,002.13
P208,390.65
1,386,250.53
52,097.66
4,774,801.35
179,445.19
50,000.00
16,000.00
P11,756,054.03
P455,933.50
25% surcharge
Percentage Tax
4.
business
its
Petitioner
of
hotel
services.
is
a common
guests merely
Hence,
Its
not
carrier
as
engaged
as
part
It
in
the
transports
of
transp ortation
its
hotel
services
DECISION
C.T.A.
CASE
NO.
5046
-
extended
under
to
the
Section
5.
hotel
102
of
guests
the
Tax
Reimbursement
biIIings
gross
of the
receipts
for
tax
must
of
form
incIude
activity
rendered
fees
due
of
VAT
of
the
Therefore,
computing
the handIing
to
to
to
telephone
part
purposes.
purpose
toI I
subject
cost
VAT
due
is
Code.
petitioner
the tax
gross
the
fees,
the
telephone service
hotel
guests,
Ph II Ipp Ine
plus
Long
the
Distance
Telephone Company.
6.
The
(Furniture
to
sale of
the financing
personal
property
and Fixture)
company
from
is
and
equipment
company/borrower
considered
property subject
to
10%
The
tax
sale
value
of
added
tax.
7.
P455,933.50
justified
Sec.
113
In
of
8.
tax
in
good
prove
this
The taxpayer
has
Inc.
145
Co. ,
Aveline,
year
CIA,
SCRA
dispute
tax
has
validity
Inc. vs.
8
of
BIR
of
to
are
the
the
in
tax
burden
of
98
Phil.
290;
290;
kinds
of
570).
centers
(VAT)
Deficiency
P11,756,054.03,
records)
made
duty
(Interprovincial
on
and
VAT on
two
the
is
computed
taxes
percentage
other
amount
216,
of
and
Resources
presumptions
taxpayer
Its
Autobus
the
Construction
all
The
CIA
Schedule
vs.
correctness
impugn
value-added
of
SCRA 671).
the
The present
The
(CIA
Likewise,
to
and
assessments
faith.
of
vs.
tax
correct
assessments.
namely:
jurisdiction,
are presumed
9.
of
legal
examiners
of Asia,
proof
is
Tax Code.
otherwise
favor
assessment
percentage tax
In
by
deficiency
for
tax.
income for
the
officer, in
the
as
follows:
(p.
5046
-
INC.
TotaI
Department
Income
4,988,665. 83
893,554. 58
Health Center
Business Center
4,662, 142. 87
Garage
3, 149,239. 37
6,219,940. 10
TOTAL
P65,760,496. 13
p 6,576,049. 6 1
7,609,725. 36
69 1,793. 2 1
Disposal of Assets
P73,370,22 1. 49
7,267,842. 82
Output Tax
P45,847,628. 69
Telephone
Guest Laundry
Add:
INCCJ.E
1988
Payment
Percentage tax payments
Garage
Other Income
p
Total
84,954. 06
241!4 10. 8 1
326!364. 87
VAT Payments
p
1st Qtr.
545,135. 44
3rd Qtr.
382,927. 03
4th atr.
481! 137.42
Total
p 2,000,364. 6 1
p 2,326,729. 48
TOTAL
Less:
Disallowed
Total Claimed
Less:
591,164. 72
2nd atr.
AI lowed
Input Tax
P808,095.40
204,206. 6 1
603!888. 79
1,722!840. 69
p 5,545,002. 13
25% Surcharge
1,386,250. 53
Interest
4,774,801. 35
( 1-20-89 to 6-30-92)
Compromise
Total VAT Due and Payable
50,000. 00
P 1 1,756,054. 03
DECIS ION
C.T.A.
CAS E
NO. 5046
-
The
Schedule of
in
1988
year
hereunder
as
Deficiency
the amount
follows:
P455,933.50,
of
215,
(p.
Percentage
BIR
Roo Revenue
Reservations
Total
!Receipts)
Taxable
Banquet
is
computed
I NC.
1988
Deficiency
Tax Due
Receipts
Pl55,083,830.66
Food Revenue
the
Gross Receipt
for
records)
Tax
Tax Paid
Tax
76,215,586.95 1,436,725.39
71,652,312.28
2,866,092.49
2,808,623.49
57,469.01
19,094,305.19
_.;.19-L..
__
19
'- _... 4,-'-305
_ .
I 09
1,527,544, 42
1,376,622, 78
1501921.64
Beverage
Revenue
TOTAL
____
25\ Surcharge
52,097.66.
179,445.19
16,000.00
Coproise
Total Deficiency Percentage Tax
The
I terns.
assessment
This
of clarity
VALUE-ADDED
Court
of
an additional
assessment
gross receipts
PLOT
each
contends
VAT
of
VAT
is
into
subdivided
appropriate in the
item
four
Interest
Individually.
T AX
the
of
for
finds it
to discuss
Petitioner
amount
P455,933.50
stems
sum
of
subject
to
P35,900,388.53
that
from
substantial portion
the respondent's
P35,900,388.53
the
10%
represents
VAT.
the
as
inclusion
part of
The
its
additional
tol Iing
guests of
of
charges
petitioner
DECISION
C.T.A.
CASE
NO.
5046
-
paid to
of
PLOT
and
which
the petitioner's
Petitioner
that
only
the
accrued in
base for
the
amount
with
fees
the
usage
to
(the
should include
petitioner's
its
the
and
which
the
actually
proper
service
and
represent
it
and
because
to
such
not petitioner's.
theorizes
that
revenue,
thus,
gross
the
plus
tax
petitioner pays
I ines
other hand,
or
opines
petitioner,
the
handling fees,
telephone
respondent
should be
PLOT
part
VAT.
telephone
gross sales
the
form
revenues of
the
should
amount
amount that
of
on
based on
the
receipts of
the
claims
for
of petitioner)
gross
pertains
is
base
Respondent,
VAT
taxable
handling
respondent
disagrees
favor
actual
PLOT
gross
the
tolI
the
It
profit
fees
from
due
to
PLOT.
The
petitioner
paid
to
receipts subject to
Section
whether
Is
issue
102
PLOT
the
should
10%
not
the
amount
that
form
part
of the
gross
. (
or
VAT.
of
the
Tax
Code
which
served
VAT
as
the
( ,)
basis
of the
10%
provides
as
'
fo I I ows:
Sec.
102.
Va I ue-added
(a)
services.
There
value-added
receipts
sale
Rate
shall be levied,
of
services'
tax
derived
equivalent
the
on
sa I e
base
of
tax.
assessed
by any
services.
means
and
tax
and
to
collected a
of
10%
gross
person engaged in
The
phrase
performance
qf
of
'sale
alI
the
of
kinds of
.,
DECISION
C.T.A.
CASE
NO.
5046
-
services
for
others
consideration,
rendered
for
customs
immigration
property;
cinematographic
goods
for
thereof
or
or
contract
exercise
the
performed
person,
of
basis
Regulation
No.
manner
as
the
to
excluding
provision
the
10%
5-87
defines
and
of
the
fee,
materials
deposits
or
constructively
quarter
speaks
for
the
performed
for
of
Section
Section
amount
service
be
gross
the
X .
for
value-added
VAT.
of
that
or
or
taxable
or
total
charged
services
during
of
representing
actually
services
abovecited
the
compensation
the
use
means
services
performance
or
amount
received
The
the
in
repacking
xxx.
equivalent
payments
another
not
faculties:
receipts'
its
engaged
or
similar
for
mental
with
advance
of
of
or
the
supplied
lessors
persons
and
service
commercial,
or distributors
whether
price,
including
and
manufacturing
'Gross
or
brokers;
fi I ms;
money
or
performed
estate
lessors
others;
of
ca I Is
physical
X
real
processing,
regardless
remuneration
those
construction
stock,
and
fee,
including
by
milling,
same
contractors;
personal
the
tax.
gross
receipts
2(m)
of
receipts
102(a)
of
in
Revenue
exactly
the
Tax
thus:
"Gross
(m)
amount
of
money
receipts"
or
its
the
contract
price,
fee,
including
the
supplied
advance
with
charged
services
actua I I y
received
during
services
performed
another person,
compensation
amount
the
payments
means
equivalent
the
taxable
or
to
and
or
the
or
service
materials
deposits
or
constructive I y
quarter
be
total
representing
for
for
the
performed
for
as
the
Code,
DECISION C.T.A.
CASE
NO.
5046
-
amount
the
of
money
petitioner
calls
actua I Iy
The
taxpayer.
to
as
its
by
made
facts
PLOT
constructively received
but
were
why
the
instead
petitioner's gross
In
Commissioner) of
and
Inc.,
Internal
13887
and
Supreme
ruled,
In
to
money
Revenue vs.
Appeals,
SCRA
402)'
the
gross
say,
so
there
include
these
nor
service
is
reason
no
as
fees
part
CoIIector
The
Mani Ia
(formerly
Jockey
1960
of
Jockey
(now
Club,
Collector)
Inc.,
Club,
(108
gross
amusement
which
or
recent
of Tax
of
overseas
actually
as
the
Phil.
of
Nos.
Lthe
821),
receipts
place
although
has
of
the
should
not
delivered
been
regulation
for
to
especiaIIy
some
person
proprietor . "
Court
concept
30,
pIace
law
the
more
Internal
by
than
Mani Ia
the
amusement
other
by
thus:
of
any
earmarked
PLOT
Revenue vs.
June
"Needless
the
of
the
not
petitioner
entitled
vs.
proprietor
include
the
paid
by
receipts.
L-13890,
Court
were
for
the
to
received
amount
guests
Commissioner
Revenue
the
charges
Internal
The
that
tal Iing
by
refers
receipts
constructive Iy
show
should
cases
the
or
charges
respondent
gross
of
definition
The
case
Tours
G.R.
Supreme
receipts
No.
Specialists,
66416,
Court
in
Commissioner
entitled,
March
again
broader
of
Inc.,
and
The
21'
1990
(183
into
the
delved
sense
than
what
DECISION
C.T.A.
CASE
NO.
5046
- 10
was
enunciated
earlier,
in
the
"As
demonstrated
Code
do
entrusted
to
them
be
to
and
benefit;
must
include
the
taxpayer
not
it
law
<Underscoring
Therefore,
receipts
The
to
in
imposition
of
VAT
Petitioner
the
percentage tax
of
VAT.
the
that
there
would
exempt
meaning
Tax
of
Code."
by
the
the
under
and
the
gross
therefore
gross
that
are
the
receipts
on the
the
to
must
be
Section 103(j)
rendered
Title
are
of
of
by
It
subject
of
the
Tax
persons
from
of
the
received
to
the
subject
exempt
petitioner
guests
revenues
already
longer
respondent's
transportation
the
services
of
petitioner's
is
petitioner
service
in
Issue
received
argues
should
inclusion
of
part
in
carriers
clearly provided
taxpayer's
necessary
which
belong
not
the
the
receipts
the petitioner.
amount
type of
that
of
on
hate I .
these
do
VAT erroneous
Item
extended
common
to
under
or
respondent's
as
10%
favor
services
mentions
not
find
to
from
hence,
quoted
supp I ied)
stemming
this
which
under
PLOT
second
monies
We
subject
cancelled
on
case
above-mentioned
to tax
redound
Is
receipts
paid
the
regulation
or
amount
In
not
do
and
a
gross
tax
Jockey C I ub
receipts subject
gross
Tax
from
Mani I a
thus:
case,
be
to
the
Tax Code
VAT
Code
as
which
subject
the
3%
to
payment
DECISION
C.T.A. CASE
NO.
5046
Respondent
petitioner
not
It
and
engaged
transports
hotel
respondent
falls
Tax
falls
carrier
instead
of
VAT
the
to
by
to
to
in
guests
can
the
common
be
to
of
the
as
of
its
to
to
insists
the
but
Section 115
Section
service
of
102
the
VAT.
It
that
commtin
3%
part
according
of
ambit
resolved
accordance
Corollary
3%
be
service
petitioner
sale
because
activity
petitioner
subject
received
in
the
is
is
carrier's
tax
VAT.
issue
transport
10%
such
score,
common
revenues
particular
merely
petitioner
carrier
common
this
The
of
of
contention
argument that
guests
outside
subjecting
On
the
hotel
the
with
business
This
squarely
Code
the
its
service.
disagrees
proposes
in
11
its
hotel
guests
carrier's
Section 102
Is
transport
classified
whether
petitioner
issue
this
Is
the
with
extending
here
as
tax
of
in
the
services
Section 115
to
Tax
Code.
or
not
to
carrier
the
providing
subject
whether
common
under
are
not
or
Its
the
hotel
subject
of
the
the
to
Tax
Code.
We
carrier
Tax
find
petitioner's
subject
Code,
bereft of
Article 1732
carrier
to
as
the
3%
tax
under
that
It
Is
Section 115
common
of
the
merit.
of
follows:
contention
the
New
Civil
Code
defines
common
DECISION
C.T.A.
CASE
NO.
5046
-
ART.
the
air,
to
for
the
or
the
occasion
I ike
only
or
of
carrying
goods
or
both,
are
or
by
persons,
engaged
in
transporting
land,
offering
water,
their
or
services
public.
in
is engaged
business
of
when
petitioner
the
providing
for
carriers
associations
compensation,
Petitioner
in
firms
business
passengers
Common
1732.
corporations,
12
transporting
I imousine
business
and
not
On
the
passengers.
extends
service
guests
its hotel
the hotel
It
ike,
and the
not to
and
services
transport
the
does so
public
in
genera I.
In
the
case
No.
Quitoriano,
Supreme
entitled
Court
8686,
defined
"A
July
choose
or
carrier
<Underscoring
defines a
common
"Any
approved
carrier
the
or
fare
private
himself
out
property
from
and
who
generally.
Mich.,
130
person
Is
to
persons
him.
contract
the
by
the
or
carry
who
may
common
for
who
hire."
(Tilson
Supp.
1990,
Is
to
place
servIces
v.
676,
in
carrier.
public
Ford
678)"
to
refusal
paid
p.
thus:
law
without
transportation
place
ed.,
this manner,
charge
offers
F.
and
fo I I ows:
persons
6th
required
to
of
in
freight
or
or
business
189),
Phil.
corporation
or
Dictionary,
carrier
passengers
or
goods
Qulnajon
supp Iied)
Law
Black's
for
person
carry
as
business
and remunerate
to
vs.
(31
is
regular
property
Is
undertakes
1915
30,
carrier
common
to employ
States
common carrier
corporation whose
passengers
United
convey
if
the
contrast
One
who
to
holds
as
engaged
in
of
persons
or
for
compensation,
to
Motor
the
Co.,
pub Iic
D.C.
275,
DECISION
C.T.A.
CASE NO.
5046
-
The
petitioner
aforequoted
to
tr ansport
the T ax
T ax
Its
to
VAT
It w as
percent age
in
is
within
erroneous
receipts
Respondent
the
f at I
on
resulting
t ax
under
correct
accord ance
any
In
of
the
Its
p art
from
the
Section
115
subjecting
102
of
these
with
Section
of
the
ass ai led
by the
petitioner
which
respondent
Code.
The
third
rel ates
to
item
its
subjected to
T ax
to
not
and
gross
service
Code.
revenues
does
definitions
subject
13
of
VAT
dispos al
the
10%
VAT
of
assets
pursu ant
to
Section
100
of
the
Code.
dispos al
The
1988,
consists
BIR rec.;
R-23,
p.
of
R-4 ,
195,
of
p.
CTA
petitioner's
the
fo llowing:
177,
CTA
rec.;
assets
(see
R-1 6 ,
Historical cost
Increase
Exhs.
p.
the
U,
1 8 8,
year
p.
2 12,
CTA
rec.;
rec. )
Transportation
Appraisal
for
Operating
Bu ltd I ngs
Equipment
Equipment
P3,893,086
P106,621
P1,159,811
P5,159,518
P6,343,293
P106,621
P1,159,811
P7,609,725
P1,137,886
P106,621
P1,244,507
P1061621
P118151388-
2,450,207
Total
5,450,207
Accumulated
depreci ation:
On cost
On appraisal
570,881
P1,7081767
570,881
P1,159,811
P5,794,337
DECISION
C.T.A. CASE
NO.
5046
-
The
subject
the
disposal
to
amount
appraisaI
of
the
o Id
The
was
is
therefore,
and
was
Iinen
that
the
considered sale
of
of
This
Court
its
property
of
the
hotel
been
fu I Iy
has
was
alleged
the
that
business
4%
the
which
caterer's
Code,
to
account
the
which
Tax
the
VAT.
catering
to
on
of
that
and
demolition
the
consisting
hateI
inventory
or
no
of
as
10%
tax
amended,
VAT
under
of
operations
count
longer
this
was
silverware,
amounting
found
useful.
equipment
to
to
have
In
view
can
not
be
transaction.
the
other
of
personal
believes
and
the
subjected
its
sale
performed
It
the
equipment
deemed sale
on
costs
be
Code.
retirement
Respondent,
theory
be
destroyed
the
considered
of
in
to
to
position
renovation
the
subjected
the Tax
after
to
1988.
In
the
The
equIpment
In
not
used
works
subject
114(1)
of
way
used
operating
lost,
thereof,
as
sold
should
P1,159,811.61
been
give
already
103(j)
The
to
transportation
Section
Section
civi I
made thereon.
considered
transportation
china
from
assessed
petitioner's
P6,343,293.00 represents
works
business
Is
were
of
depreciated
under
It
VAT.
assets
10%
renovations
be
these
the
increment
c ivI I
cannot
of
14
hand,
property
subscribes
and
the
equipment
petitioner's
after
the
Is
equipment
property subject to
that
to
10%
VAT.
disposal
taking
into
DECISION
C.T.A. CASE
NO.
5046
-
consideration
to
10%
the
bui Iding
thereof
The
the
se cannot
is
true
sale
the
sale
to
point
of
that
business
be
disposal
the
the
the
due
of
to
loss
or
transportation
asset
other
the
same
the
should
not
Supreme
011 Co.
1955
"In
vs.
(96
something
which
is
the
Is
it
or
to
be
engaging
a
Its
cases
vs. Commissioner
not
of
part
main
of
VAT.
reason
for
but
with
not
respect
noteworthy
fully
depreciated
business
the
of
catering
caterer's
tax
under
Tax
Code,
of
the
VAT.
case
entitled
et
al.,
Standard
No.
l-6931,
ru I ed:
909),
we
the
etc. ,
hold
already
may
to
the
Antigua,
conclusion,
merely
necessary
in
Ph II.
the
the
operating
is
that
In Title
sub j ect
Court
company
business,
be
been
it
catering
to
sub j ect
the
the
Now
further,
percentage taxes
The
AprII 30,
the
with
already
has
sold
to
obsolescence
equipment
in
renovation
sub j ect
because
sub j ect
not
works
for
retirement
etc. >
is
civi
way
considered
Considering
is
the
In
was
the
petitioner.
or
paving
with
connected
is
Vacuum
its
to
and
for
( s I Iverwares,
retirement
demolition of
petitioner
per
equipment
their
manner
The
VAT.
of
same
the
15
that
taxed
further
In
of,
an
when
on
taxed
activity
Incidental
person
Its
main
for
doing
or
work
to
and
is
business. "
Insular
Internal
Life
Assurance
Revenue,
CTA Case
Co. ,
No.
ltd. '
2336,
DECISION
C.T.A. CASE
5046
NO.
and
Fi Iipinas
Internal
12,
Life
Revenue,
1973,
this
"We
view.
Is
Court
have
the
the
every
in
or
course
in
who
value-added
100
to
selling
102
be
of
of
trade
of
VAT.
The
sel Iing
to
renovation.
rea I
subject
In
the
of
or
same
it
not
to
merely
of
the
said
Tax
Code.
if
renders
of
be
imposed
(As
the
added
sale
business of
property
Code,
as
of
equipment
those
assets
Petitioner
1988
is
and
In
any
to
Sections
EO
273)"
goods
is "in
other
the
assets
not subject
merely
hotel
yet
the
The
taxpayer".
are
not
sells,
subject
and
are
in
are
person
services,
by
the
improvement
in
Any
business,
shal I
(VAT)
only
or
to
incidental
business.
included
among
VAT.
conclusion,
subjecting
is
transactions
goods
tax
property
to
intent
conduct
99
goods,
unserviceable
real
Besides,
the
business,
I iable.
trade
simI I ar
this
imposed
including
Its
of
imports
the
course
Section
Persons
99.
engages
shall
to
or exchanges
person
rule:
which
the
November
hereunder:
the
barters
of
supra.)"
pursuant
"SEC.
who,
to
dated
express
taxes
activity
7,
quoted
to
legislative
business.
amended,
to
Commissioner
both
occasion
law
necessary
(p.
vs.
2337,
occasion
be
tax
the
incidental or
Moreover,
those
had
to
separately
VAT
had
Company
No.
Case
Where
presumed
Assurance
CTA
xxx.
16
We
disposal
find
of
that
respondent
transportation
erred
equipment
in
and
DECISION
C.T.A.
CASE
NO.
5046
-
the
renovation of
taxes
the
last
The
which
building
item
equipment
to
value-added tax.
the
10%
to
VAT
claims
to
Involves
have
disallowance
was
arbitrary
findings.
The
Revenue
and
was
based
the disallowance
by
out
input
tax
in
the
P204,207.21
was
properly
claimed
the
P808,095.40,
only
thus,
of
the
the
total
An
analysis
BIR
records
working
reflected
instead
records).
to
the
submitted
by
prepared
P603,888.79,
In
was
summary,
the
deficiency
of
the
by
this
amount
(see
overall
revenue
taxes
pages
reveal
of
39
findings
assessment
that
P93.964.54
of
to
47,
with
for
BIR
respect
1988
Business Center
that
examiner
Guest Laundry
the
including
case
Health Center
such
documented,
hereunder:
Departent
by
factual
stating
respondent
the
Input
VAT
input
disallowed.
records
d isa I I owed
petitioner 's
deta I I ed
of
paper
the
of
P603,888.79
on
conducted
who
investigation explained
of
the
that
insists
not
Examiner
and
been disallowed
Petitioner
Examiner .
the
operating
relating
petitioner
Revenue
the
the
of
retirement
17
Total Incoe
p 4,988,665.83
893,554.58
4,66Z, 14Z.87
are
DECISION
C.T.A.
CASE
NO.
5046
-
18
Tota I Income
Department
Garage
3,149,239.37
6,219,940.10
P19,913,542. 75
p 1,991,354.27
Garage
241,410.81
Other Income
Total
326,364.87
591,164.72
bl VAT payments
Output Tax Iiabi I ities
1st Otr.
2nd Otr.
545,135.44
3rd Otr.
382,927.03
481,137.42
4th Otr.
p 2,000,364.61
808,095.40
714,130.86
Less: unallowable
93,964.54
p 1,286,233.75
1,612,598.62
TOTAL
Deficiency Value Added Tax
378,755.65
94,688.91
326,093.05
PERCENTAGE
It
the
the
TAX
Is
percentage
tax
on
hotel
petitioner's
tax
deposits
made
faci Iities.
if
subject to
percentage
the
nature
classified as
analysis
that
arose
to
assessment
deposits,
of
799,537.61
not
of
by
income.
tax
against
because
security
the
cIients
Petitioner
applied
Its
due
the
Imposition
for
contends
hotel
these
deposit
deficiency
the
that
biIIs
deposits
which
use
of
of
these
is
not
partake
cannot
be
DECISION
C.T.A.
CASE
NO.
5046
This
Court
assessment
because
should
of
the
not
the
genera I I y
earned
in
advance
which
period
are
future
not
to
in
contract.
faci I ities
in
the
It
or
41-42).
by
the
the
other
is
the
cancel
the
clearly
convertible
nature
party
only
to
wi I I
upon
default
reservation
of
on
the
of
revenues.
period
future
in
deposit
perform
end
his
the
reserving
that
Since
the
the
the
Accounting
Fernando,
of
Is,
complete.
is
a security
use
in
These
services
Ms.
be
received
that
Financial
the
time
must
the
revenue,
witness
taken
earned.
render
of
complete
has
the
of
process
earning
pp.
of
are
unearned
or
is
amounts
revenue
they
Statements
explained
that
as
revenue
as
which
the
1-22,
is
but
fo I I owing
revenue
the
Thus,
as
process
that
is
revenue
an exchange
requires
transfer goods
of
No.
co I Iection
(b)
treated
carried
(Campilation
As
and
received
unt I I
Standards
earning
recorded.
periods
I iabi Iities
ensure
is
are
or
amounts
It
income.
the
of
both
the
principle
are
they
(a)
gross
clients
hotel
principle,
when
complete,
before
Its
the
primarily
tax,
petitioner 's
of
in
respondent
percentage
by
part
the
realization
met:
This
place.
as
recognized
virtually
with
made
treated
conditions are
deficiency
the
Under
or
disagrees
deposits
be
19
of
its
to
the
reserved
guest
to
deposit
is
deposits
are
DECISION
C.T.A.
CASE
NO.
5046
-
payment
of
for
its
future
services
income
gross
20
it
unti
cannot
the
be
treated
earning
as
part
process
Is
complete.
From
deficiency
should
above
the
percentage
be therefore be
WHEREFORE,
its
value-added
plus
20%
pursuant
It
to
there
parties.
Revenue,
1988
Section
was
no
(Ben
L.
Case
assessment
of
the
the
sum
foregoing,
of
from
22,
1992
June
249(c)
of
noted
the
mutual
that
the
agreement
et
for
Tax
respondent
vs.
al.
promulgated
assessment
the
In
of
RAMON
is
16,
QQ'
ERNESTO
D.
Presiding
ACOSTA
Judge
1988,
paid
amended.
compromise
deleted
penalty
inasmuch
between
of
the
Internal
1958).
percentage
merit.
-J!
-r.
Associate
CONCUR:
year
fully
as
reached
July
ORDERED.
until
Code,
is
representing
taxable
Collector
deficiency
lack
petitioner
P799,573.61
the
Chuy,
and
erroneous
is
for
by
the
that
find
cancelled.
We
deficiency
be
imposed
CTA
The
PAY
tax
should
tax
view
interest
originally
as
in
ORDERED to
hereby
discussion,
Ju
tax
for
DECISION
C.T.A.
CASE
NO.
5046
-
21
CERTIFICATION
hereby
after
Tax
of
due
Appeals
the
certify
that
consultation
with
in
accordance
this
the
with
decision
members
Section
of
13,
was
the
reached
Court
Article
Constitution.
Ul
ERNESTO
D.
Presiding
Court
of
Tax
ACOSTA
Judge
Appeals
of
VI I I