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SECOND DIVISION
MEDTEX CORPORATION
Petitioner,
Members:
CASTANEDA, JR., Chairperson
CASANOVA, and
COTANGCO-MANALASTAS,JJ.
-versus-
COMMISSIONER OF
INTERNAL REVENUE,
Promulgated:
SEP 012014
Respondent.
r7
~:) o
, .,. .
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DECISION
COTANGCO - MANALASTAS,~ :
DECISION
CTA Case No. 8508
Page 2 of 38
P32,081,141.00
755,779 .23
3,682,008. 7'1
'1,'137,787.97
36,518,928.97
1,825,946.45
1,604,057.05
221,889.40
207,244 .70
429,134.10
Amount
73,333.32
16,500.00
11,635 .00
2 ,340,561.94
Tax Due
7,333.33
825.00
232.70
47,811.24
55,202.27
54,797.27
DECISION
CTA Case No. 8508
Page 3 of 38
Deficiency Withholding Tax
Add: Interest
Total Deficiency Expanded
Withholding Tax
Deficiency Final Withholding
Tax
Dividends paid
Filipino Stockholders 60%
Chinese /Taiwanese
Stockholders 40%
Final tax Due
Add: Surcharge
Interest
Total Deficiency Final
Withholding tax
Subtotal
Compromise Penalties
For failure to Pay n1corne
For failure to remit/pay EWT
For failure to remit/ pay Final Tax
TOTAL AMOUNT PAYABLE
405.00
398 .52
803 .52
145,000,000.00
87,000,000.00
58,000,000.00
803.52
8,700,000.00
11,600,000.00
20,300,000.00
5,075,000.00
P19,975,200.00
25,050,200.00
15,350,200.00
15,350,200.00
45,780,137.62
25,000.00
2,000 .00
p
52,000.00
25,000.00
P45,832, 137.62
6
7
8
P32,081,1111.00
p
755,779.23
3,682,008.74
4,437,787.97
36,518,928.97
1,825,916.45
1,601,057.05
221,889.40
2111,193.09
136,382.18
Tax Base
73,333.32
16,500.00
11,635.00
Tax Due
7 ,333.33
825.00
232.70
DECISION
CTA Case No. 8508
Page 4 of 38
Freight I handling
Total Deficiency Expanded Withholding
Tax
Less: Remittances
Deficiency Withholding Tax
Add : Intere st
Total Deficiency Expanded Withholding
Tax
Deficiency Final Withholding Tax
Dividends paid to Individual
Final tax Due on Dividends
Le ss: Remittance s
Deficiency Final Withholding Tax
Add: Surcharge
Interest
Total Deficiency Pinal Withholding tax
Compromise Penalties
Por failure to Pay - income
For failure to remit/pay - EWT
For failure to remit / pay - Final Tax
TOTAL AMOUNT PAYABLE
2,340,561.94
2,442,030.26
46 ,811.24
55,202 .27
54,797 .27
405.00
405.00
810
276,805.00
27,680.50
0
27,680.50
6,920.13
34,831,30
69 ,431.92
p
2 5 ,000.00
2,000.00
6 ,000.00
p
33,000 .00
539,624.41
10
P32,081,141.00
p
755,779. 2 3
3,682 ,008. 71
Tax Base
73,333.32
16,500.00
11,635.00
2,310,561.9 4
2 ,11 2 ,030.26
4,437,787 .97
36,518,928.97
1,825,946.15
1,604 ,057 .05
221,889.40
221,889 .IJ.O
443 ,778.80
Tax Due
7,333.33
825.00
232.70
16,811.24
55,202.27
54,797 .27
405 .00
125 .2 5
830.2 5
DECISION
CTA Case No. 8508
Page 5 of 38
Deficiency Final Withholding Tax
Dividends paid to Individu al
Final tax Du e on Dividends
Less: Remittances
Deficiency Final Withholding Tax
Add : Su rcharge
Interest (Oct. 11, 200 5 to Apr. 11, 20 12)
Total Deficiency Final Withholding tax
ComiJromise Penalties
For failure to Pay - income
For failure to remit / pay - EWT
For failure to remit/ pay - Final tax
TOTAL AMOUNT PAYABLE
276 ,8 0 5.00
27 ,680 .50
0
27 ,680 .50
6,920.13
35,984.65
70,585 .28
p
25,000.00
2,00 0 .00
6,000.00
p
33,000.00
548,191.3 2
13
DECISION
CTA Case No. 8508
Page 6 of 38
P443,778.80
1'830.25
P70,585.28
P33,000.00
P548, 194.32
J-
21
DECISION
CTA Case No. 8508
Page 7 of 38
13.
It must be recalled that during said
discussion, the subject tax deficiencies were
explained to the representatives of the petitioner
and they agreed to pay the same.
14. Contrariwise, respondent considered the
documentary evidence presented by petitioner's
representative, however, petitioner should not and
cannot dictate that respondent honor the same if it
was found insufficient to support petitioner's
protest.
DECISION
CTA Case No. 8508
Page 8 of 38
a.
b.
c.
Ltd.
d.
16.
As reported, upon verification of the
Minutes of the Board of Directors and of the
Secretary's Certificate, it was revealed that not all
dividends were paid to corporations but includes
individual stockholders. Hence, the assessment of
l.Oo/o Final Withholding Tax.
Amount
Subscribed
17,047,000.00
19,900.00
7,500 .00
3,000.00
600.00
1,000 .00
400.00
100.00
100.00
Amount Paid
17,047,000.00
19,900.00
7,500.00
3,000.00
600.00
1,000.00
400.00
100.00
100.00
DECISION
CTA Case No . 8508
Page 9 of 38
rule
DE CISION
CTA Case No . 8 5 0 8
Page 10 of 38
DECISION
CTA Case No . 8508
Page 11 of 38
STATEMENT OF ISSUES
23
DE CISION
CTA Ca se No. 8 508
Page 12 of 3 8
XXX
XXX
DECISION
CTA Ca se No . 8 5 08
Page 13 of 3 8
32
Exhibit "H"
Section 1, Article III , 1987 Ph ilippin es Constitu tion.
CTA EB No s. 63 1 and 632, December 22,2 0 11.
DECISION
CTA Case No. 8508
Page 14 of 38
DECISION
CTA Case No. 8508
Page 15 of 38
Freigh tj Handling
Total
Less: l~emittances
Total Deficiency Expanded Withholding Tax
Add: Interest (January 21 , 2007 to April20 ,
2012)
Total Deficiency Final Withholding Tax
Deficiency Final Withholding Tax
1)ividends paid to Individuals
Final Tax Due on Dividends
Less: Remittances
Deficiency Expanded Withholding Tax
Add: Surcharge
Interest (Oct. 11 , 2005 to Apr. 11, 2012)
Total Deficiency Final Withholding Tax
34
p 32,081,141.00
p
755,779 .23
3,682,008.74
4,437,787.97
36,518,928.97
1,825,946.45
1,604,057.05
22 1,889.40
Tax Base
73 ,333 .32
16 ,500.00
11,635.00
2,340,561.94
2,442,030.26
221,889.40
443,778 .80
Tax Due
7,333.33
825.00
232.70
46 ,811.24
55,202 .27
54,797.27
405.00
4 25 .2 5
830 .2 5
p
p
276,805.00
27,680.50
7 ,680.50
6,92 0.13
35,984.65
70 ,585 .28
DECISION
CTA Case No . 8508
Page 16 of 38
Compromise Penalties
For failu re to p ay - Incom e Tax
For failure to withhold/ remit / pay- l<~WT
For failure to withhold /remit/pay - Final
Tax
Total Compromise Penalties
25,000.00
2,000 .0 0
6,00 0 .00
33,000.00
548,194.32
Schedule
7 .2
Schedule 7.3
Non Taxable
272,487.80
376,269.71
190,317.10
Taxable
Total
Total
p
648,757.51
1,466.80
282,967.00
474,780.90
3,267,538.58
27,292 .73
4,859,930 . 13
8,154,761.44
1'>3,730,373.48
f> 28,759.53
1'>5,519, 166.84
P9,278,299.85
f>
Salaries
f>
642,176 .73
21,159.52
Wages-Overtime
3,205.42
Holiday Pay
33,555.95
7,822,123.00
Direct Labor
Total
P8,522 ,520.62
755,779 .23
35
36
37
38
39
DECISION
CTJ\ Case No. 8508
Page 17 of 38
p 8,522,520. 70
Add:
530 100
520800
530400
530 2 00
601600
530300
1,164,593.89
379,223 .28
137,025.64
92 ,2 13.77
71,872.12
33,888.16
Deduct:
513,084.30
33 ,555.95
401,040.60
81 ,600 .00
76,9 00 .30
16 ,856 .56
p 9,278,299.85
DECISION
CTA Case No. 8508
Page 18 of 38
700,397.62
7 ,822,123 .08
p 8,522,520 . 70
DECISION
CTA Case No. 8508
Page 19 of 38
other than the Admin. and Selling Expense and Direct Labor
Accou nts, which are properly reported in the Alphalist as the
same form part of the compensation of petitioner's employees ,
such as the following:
Factory Ove rhe ad
Salaries and Wages
Pl , 164,593.89
137,025.64
92,213.77
Overtime Pay
Iloliday
Admin . and S e lling Expense s
13th month pay
Total
33,888 . 16
P1,427 ,721.46
71,872.12
P 1 ,499 ,593 .58
Wages-Overtime
I Ioliday Pay
13th month pay
Direct Labor
Salaries and Wages
642,176 .73
21,4 59.52
3,205.42
7 1,872 .1 2
518,858. 08
Holiday
210,871.86
Pl,l64,593.89
137,025.64
Iloliday
Total pe rFS
738,713.79
?5,942,274.95
Overtime Pay
Overtime Pay
456,716.27
7,128,721.16
92,213.77
33 ,888.16
1,427 '721.46
P9 ,295, 156 .4 1
!-
DECISION
CTA Case No. 8508
Page 20 of 38
Per FS
Discrepancy
9,295,156.41
(16,856.56)
2 . Deductions
not
allowed
under
RA
No .
7916
P3,682,008. 74
f> 1,745,974.25
21,550.00
121,319.22
42,240.00
1,419,972.79
47,120.25
283,832.23
p 3 ,682 ,008. 74
43
DECISION
CTA Case No. 8508
Page 2 1 of 38
DE CISION
CTA Case No. 8 5 0 8
Page 22 of 38
!J-
DE CISION
CTA Ca se No . 8 508
Page 23 of 38
DE CISION
CTA Case No . 8 508
Page 24 of 38
these
are
office
supplies
DE CISION
CTA Case No . 8 5 0 8
Page 25 of 38
(Emphasis supplied)
This
Court,
Commissioner
In
44
DE CISION
CTA Case No . 8 5 08
Page 26 of 38
XXX
XXX
DECISION
CTA Case No . 8 5 08
Page 27 of 38
47
48
DECISION
CTA Case No. 8508
Page 28 of 38
PARTICULARS
Import Processing Fees
IEIRD No. 26788715 - Nylon Yarn, Poly Yarn
IEIRD No. 26788925 -Velcro, Ilook, Spandex Yarn
IEIRD No. 26788681 - Velcro, Hook
IEIRD No . 26788532 - Metal Strap
- Spandex Yarn, Rubber
IEIRD No. 26803584 Threads
IF:II~D No. 26803 225
- Polybag
IEIRD No . 26831497 - Machine s pare parts
ll<~IRD No. 26831472
-Rubber Thread
mm.D No. 26831551 - Velcro, I look
IEIRD No. 26831576 - Inner 13ox
IEil~D No. 26831734
- Yarn
IEIRD No. 26831743 - Machine spare parts
IEil~D No. 26831874
- Velcro, llook
IEIRD No. 26851235 - Polyester Yarn
IEil~J) No. 26851287
-Liner Hox, PVC Polybag
IEIRD No. 26851366 - Polyurethane Spandex Yarn
49
5o
51
of
P14,955.00
PCV I
APV
1355
1357
1363
1358
1367
1369
1373
1373
1375
1376
1379
1380
1381
1384
1388
1393
Amount
'P
250.00
250 .00
250 .00
250.00
250.00
250.00
250.00
250. 00
250 .00
250.00
250.00
250.00
250 .00
250.00
250 .00
250.00
DECISION
CTA Case No. 8508
Page 29 of 38
IEIRD No. 26851095
IEIRD No. 2685 1296
sub-total
Salary of Contractual Workers and Hauling Service
March 16-31, 2006
-OR No. 1163
April 16-30 , 2 006
-OR No . 116 5
May 16-31, 2006
-OR No. 1168
-OR No. 1171
June 16-3 0 , 2 006
-OR No. 1175
August 16-31, 2 006
Novemb er 1-15,
- 01~ No. 1180
2 006
sub-total
Cannot be ascertained the nature of the payments
PEZJ\ OR No.
4665420
PEZJ\ OR No.
4665299
PJ-<:ZA 01~ No.
4667723
PF:ZA 01~ No.
4668632
PEZJ\ OR No .
4669089
PEZA OR No.
4669904
PEZA OR No.
4670436
PEZJ\ OR No.
4671486
PJ-<..:ZA OR No.
4671870
PEZA OR No.
4672799
PEZJ\ OR No .
4674195
sub-total
TOTAL
1396
1398
250.00
250.00
4,500.00
11447
1161 2
11788
11984
12359
1,200.00
900.00
1,300.00
2,395 .00
1,800.00
12851
400.00
7,995.00
1361
180.00
1358
180.00
1367
180.00
1369
180.00
1373
360 .00
1375
3 00.00
1376
360.00
1379
180.00
1381
240.00
1388
180.00
1396
120.00
2,460.00
p 14,955.00
DECISION
CTA Case No. 8508
Page 3 0 of 38
Exhibit
Amount
:P 1,238,700.00
"V"
"V-1 "
"V -2"
25,760.04
5,312.75
4,085.00
94,725.00
p 1 ,368,582. 79
52
DECISION
CTA Case No. 8508
Page 31 of 38
Pl,419,972.79
5,312.75
4,085.00
P 1,410,575.04
DECISION
CTA Case No. 8508
Page 32 of 38
P32,081,141.00
P1,745,974.25
21,550 .00
37,740. 00
1,410,575.04
2,507 .50
3,218,346. 79
'P35,299,487.79
p 1,764,974.39
1,604,057.05
p
160,91 7.34
Tax Base
73,333.32
Tax Due
p 7,333.33
Rentals
16,500.00
825.00
Repairs
11,635.00
232 .70
2,340 ,561.94
46,811.24
Freight/IIandling
55
56
DECISION
CTA Ca se No. 8 5 0 8
Page 33 of 38
2,442,030 .26
Total
Less: Remittances
Total Deficiency Ex panded Withholding Tax
Add: Inter est (January 2 1, 2 007 to April 2 0 ,
2012)
Total Deficiency Final Withholdi ng Tax
P55 ,202 .2 7
54 ,797. 2 7
405.00
425 .25
8 3 0 .25
57
58
59
60
61
DECISION
CTA Case No. 8508
Page 34 of 38
Stockholders
Medtecs International Corp .,
Ltd.
Individual
Total
No . of Shares
Percentage
17,047, 000.00
32,600.00
17,079,600.00
99.8091%
0 . 1909%
100.0000%
P145,000,000.00
0.1909%
276,805.00
10%
27,680.50
-
p
27,680.50
J-
DECISION
CTA Case No. 8508
Page 35 of 38
Stockholder
Medtecs Int'l Corporation
Ltd
Chu Wen-Fu
Marinette B. Avera
Wang Wan-Fa
Richard Fook I ling Sze
Wilfrido C. Rodriguez
Huang Hung
Clement Yang
Paul Winston Poe
Total
4.
The
nominees
17,047,000.00
19,900.00
7,500.00
3,000 .00
600.00
1,000.00
400 .00
100.00
100.00
17,079 ,600.00
P 17,079,600.00
above-named
of Medtecs
Amount Paid
stockholders
International
arc
all
Corporation
Limited.
Without
such
proof
of
release ,
respondent's
{r
DECISION
CTA Case No. 8508
Page 36 of 38
BASIC
DEFICIENCY
TAX
Income Tax
25%
SURCHARGE
TOTAL
P160,917.34
P40,229.34
P20 1,146.68
2 7,680 .50
6,920 .13
34,600.63
P188,597.84
P47, 149.47
P235,747.31
Final Withholding
Tax
Total
In addition ,
following:
petitioner 1s
ORDERED
TO
PAY
the
DECISION
CTA Case No. 8508
Page 37 of 38
p?~~
AMELIA R . COTANGCO-MANALASTAS
Associate Justice
WE CONCUR:
Q_~~c.~ ~
CAESAR~ASANOVA
Associate Justice
DECISION
CTA Case No . 8508
Page 38 of 38
ATTESTATION
~~c-~.Q
JtJANITO C. CASTANEi>A, JR.
Associate ~Justice
Chairperson
CERTIFICATION
Presiding Justice