Jurisprudence – Worthlessness of Debt to be written off

I.

What to do to say that earnest efforts were exerted

a. Collector of Internal Revenue v. Goodrich International Rubber Co., G.R. No. L-22265, 22
December 1967 –

CONCEPCION, C.J.:

Appeal by the Government from a decision of the Court of Tax Appeals, setting aside the
assessments made by the Commissioner of Internal Revenue, in the sums of P14,128.00 and
P8,439.00, as deficiency income taxes allegedly due from respondent Goodrich International Rubber
Company — hereinafter referred to as Goodrich — for the years 1951 and 1952, respectively.

These assessments were based on disallowed deductions, claimed by Goodrich, consisting of

several alleged bad debts, in the aggregate sum of P50,455.41, for the year 1951, and the sum of
P30,138.88, as representation expenses allegedly incurred in the year 1952. Goodrich had appealed
from said assessments to the Court of Tax Appeals, which, after appropriate proceedings, rendered,
on June 8, 1963, a decision allowing the deduction for bad debts, but disallowing the alleged
representation expenses. On motion for reconsideration and new trial, filed by Goodrich, on
November 19, 1963, the Court of Tax Appeals amended its aforementioned decision and allowed
said deductions for representation expenses. Hence, this appeal by the Government.

The alleged representation expenses are:

1. Expenses at Elks Club P10,959.21

2. Manila Polo Club 4,947.35

3. Army and Navy Club 2,812.95

4. Manila Golf Club 4,478.45

5. Wack Wack Golf Club, Casino 6,940.92

Español, etc.

TOTAL P30,138.88

The claim for deduction thereof is based upon receipts issued, not by the entities in which the
alleged expenses had been incurred, but by the officers of Goodrich who allegedly paid them.

The claim must be rejected. If the expenses had really been incurred, receipts or chits would have
been issued by the entities to which the payments had been made, and it would have been easy for
Goodrich or its officers to produce such receipts. These issued by said officers merely attest to
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their claim that they had incurred and paid said expenses. They do not establish payment of said
alleged expenses to the entities in which the same are said to have been incurred. The Court of Tax
Appeals erred, therefore, in allowing the deduction thereof.
The alleged bad debts are:

1. Portillo's Auto Seat Cover P630.31

2. Visayan Rapid Transit 17,810.26

3. Bataan Auto Seat Cover 373.13

4. Tres Amigos Auto Supply 1,370.31

5. P. C. Teodoro lawphil 650.00

6. Ordnance Service, P.A. 386.42

7. Ordnance Service, P.C. 796.26

8. National land Settlement Administration 3,020.76

9. National Coconut Corporation 644.74

10. Interior Caltex Service Station 1,505.87

11. San Juan Auto Supply 4,530.64

12. P A C S A 45.36

13. Philippine Naval Patrol 14.18

14. Surplus Property Commission 277.68

15. Alverez Auto Supply 285.62

16. Lion Shoe Store 1,686.93

17. Ruiz Highway Transit 2,350.00

18. Esquire Auto Seat Cover 3,536.94

TOTAL P50,455.41*

The issue, in connection with these debts is whether or not the same had been properly deducted as
bad debts for the year 1951. In this connection, we find:

Portillo's Auto Seat Cover (P730.00):

This debt was incurred in 1950. In 1951, the debtor paid P70.00, leaving a balance of P630.31. That
same year, the account was written off as bad debt (Exhibit 3-C-4). Counsel for Goodrich had merely
sent two (2) letters of demand in 1951 (Exh. B-14). In 1952, the debtor paid the full balance (Exhibit
A).

Visayan Rapid Transit (P17,810.26):

This debt was, also, incurred in 1950. In 1951, it was charged off as bad debt, after the debtor had
paid P275.21. No other payment had been made. Taxpayer's Accountant testified that, according to
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its branch manager in Cebu, he had been unable to collect the balance. The debtor had merely
promised and kept on promising to pay. Taxpayer's counsel stated that the debtor had gone out of
business and became insolvent, but no proof to this effect. was introduced.

Bataan Auto Seat Cover (P373.13):

This is the balance of a debt of P474.13 contracted in 1949. In 1951, the debtor paid P100.00. That
same year, the balance of P373.13 was charged off as bad debt. The next year, the debtor paid the
additional sum of P50.00.

Tres Amigos Auto Supply (P1,370.31):

This account had been outstanding since 1949. Counsel for the taxpayer had merely sent demand
letters (Exh. B-13) without success.

P. C. Teodoro (P650.00):

In 1949, the account was P751.91. In 1951, the debtor paid P101.91, thus leaving a balance of
P650.00, which the taxpayer charged off as bad debt in the same year. In 1952, the debtor made
another payment of P150.00.

Ordinance Service, P.A. (P386.42):

In 1949, the outstanding account of this government agency was P817.55. Goodrich's counsel sent
demand letters (Exh. B-8). In 1951, it paid Goodrich P431.13. The balance of P386.42 was written
off as bad debt that same year.

Ordinance Service, P.C. (P796.26):

In 1950, the account was P796.26. It was referred to counsel for collection. In 1951, the account
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was written off as a debt. In 1952, the debtor paid it in full.

National Land Settlement Administration (P3,020.76):

The outstanding account in 1949 was P7,041.51. Collection letters were sent (Exh. B-7). In 1951,
the debtor paid P4,020.75, leaving a balance of P3,020.76, which was written off, that same year, as
a bad debt. This office was under liquidation, and its Board of Liquidators promised to pay when
funds shall become available.

National Coconut Corporation (P644.74):

This account had been outstanding since 1949. Collection letters were sent (Exh. B-12) without
success. It was written off as bad debt in 1951, while the corporation was under a Board of
Liquidators, which promised to pay upon availability of funds. In 1961, the debt was fully paid.

Interior Caltex Service Station (P1,505.87):

The original account was P2,705.87, when, in 1950, it was turned over for collection to counsel for
Goodrich (p. 156, CTA Records). Counsel began sending letters of collection in April 1950. Interior
Caltex made partial payments, so that as of December, 1951, the balance outstanding was
P1,505.87. The debtor paid P200, in 1952; P113.20, in 1954; P750.00, in 1961; and P300.00.00 in
lawphil.net

1962. The account had been written off as bad debt in 1951.

The claim for deduction of these ten (10) debts should be rejected. Goodrich has not established
either that the debts are actually worthless or that it had reasonable grounds to believe them to be
so in 1951. Our statute permits the deduction of debts "actually ascertained to be worthless within
the taxable year," obviously to prevent arbitrary action by the taxpayer, to unduly avoid tax liability.

The requirement of ascertainment of worthlessness requires proof of two facts: (1) that the taxpayer
did in fact ascertain the debt to be worthlessness, in the year for which the deduction is sought; and
(2) that, in so doing, he acted in good faith.1

Good faith on the part of the taxpayer is not enough. He must show, also, that he had reasonably
investigated the relevant facts and had drawn a reasonable inference from the information thus
obtained by him.2 Respondent herein has not adequately made such showing.

The payments made, some in full, after some of the foregoing accounts had been characterized as
bad debts, merely stresses the undue haste with which the same had been written off. At any rate,
respondent has not proven that said debts were worthless. There is no evidence that the debtors
can not pay them. It should be noted also that, in violation of Revenue Regulations No. 2, Section
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102, respondent had not attached to its income tax returns a statement showing the propriety of the
deductions therein made for alleged bad debts.

Upon the other hand, we find that the following accounts were properly written off:

San Juan Auto Supply (P4,530.64):

This account was contracted in 1950. Referred, for collection, to respondent's counsel, the latter
secured no payment. In November, 1950, the corresponding suit for collection was filed (Exh. C).
The debtor's counsel was allowed to withdraw, as such, the debtor having failed to meet him. In fact,
the debtor did not appear at the hearing of the case. Judgment was rendered in 1951 for the
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creditor (Exh. C-2). The corresponding writ of execution (Exh. C-3) was returned unsatisfied, for no
properties could be attached or levied upon.

PACSA (P45.36),

Philippine Naval Patrol (P14.18),

Surplus Property Commission (P277.68),

Alvarez Auto Supply (P285.62):

These four (4) accounts were 2 or 3 years old in 1951. After the collectors of the creditor had failed
to collect the same, its counsel wrote letters of demand (Exhs. B-10, B-11, B-6 and B-2) to no avail.
Considering the small amounts involved in these accounts, the taxpayer was justified in feeling that
the unsuccessful efforts therefore exerted to collect the same sufficed to warrant their being written
off.3

Lion Shoe Store (P11,686.93),

 Ruiz Highway Transit (P2,350.00), and

Esquire Auto Seat Cover (P3,536.94):

These three (3) accounts were among those referred to counsel for Goodrich for collection. Up to
1951, when they were written off, counsel had sent 17 Letters of demand to Lion Shoe Store (Exh.
B); 16 demand letters to Ruiz Highway Transit (Exh. B-1); and 6 letters of demand to Esquire Auto
Seat Cover (Exit. B-5) In 1951, Lion Shoe Store, Ruiz Highway Transit, and Esquire Auto Seat
Cover had made partial payments in the sums of P1,050.00, P400.00, and P300.00 respectively.
Subsequent to the write-off, additional small payments were made and accounted for as income of
Goodrich. Counsel interviewed the debtors, investigated their ability to pay and threatened law suits.
He found that the debtors were in strained financial condition and had no attachable or leviable
property. Moreover, Lion Shoe Store was burned twice, in 1948 and 1949. Thereafter, it continued to
do business on limited scale. Later; it went out of business. Ruiz Highway Transit, had more debts
than assets. Counsel, therefore, advised respondent to write off these accounts as bad debts without
going to court, for it would be "foolish to spend good money after bad."

The deduction of these eight (8) accounts, aggregating P22,627.35, as bad debts should be allowed.

WHEREFORE, the decision appealed from should be, as it is hereby, modified, in the sense that
respondent's alleged representation expenses are totally disallowed, and its claim for bad debts
allowed up to the sum of P22,627.35 only. Without special pronouncement as to costs. It is so
ordered.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, JJ., Zaldivar, Sanchez, Castro, Angeles and Fernando,
JJ., concur.

Footnotes

1 T. H. Low, 19 BTA 980; Sec. 30.27, Mertens, Vol. 5, P. 392.

2 Kahn v. Comm., 108 F (2d) 748 (CCA 2nd, 1940) aff'g 38 BTA 1417.

3Richard Downing, et al., 43 BTC 1147, E. H. McConnel, 6 BTA 116; Fairmont Home
Furniture Co., 23 BTA 909; The Great Northern Pacific Grocery Co., BTA Memo, Op., Cit
87140, October 10, 1938; cited in Mertens, Vol. 5, pp. 418-419.

b. Philippine Refining Company (now known as “Unilever Philippines [PRC]) v. Court of Appeals,
Court of Tax Appeals and the Commissioner of Internal Revenue, G.R. No. 118794, 08 May 1996
–

REGALADO, J.:p
This is an appeal by certiorari from the decision of respondent Court of Appeals1 affirming the
decision of the Court of Tax Appeals which disallowed petitioner's claim for deduction as bad debts
of several accounts in the total sum of P395,324.27, and imposing a 25% surcharge and 20%
annual delinquency interest on the alleged deficiency income tax liability of petitioner.

Petitioner Philippine Refining Company (PRC) was assessed by respondent Commissioner of

Internal Revenue (Commissioner) to pay a deficiency tax for the year 1985 in the amount of
P1,892,584.00, computed as follows:

Deficiency Income Tax

Net Income per investigation P197,502,568.00

Add: Disallowances
Bad Debts P 713,070.93
Interest Expense P 2,666,545.49
—————— ——————
P3,379,616.00

Net Taxable Income 200,882,184.00

Tax Due Thereon 70,298,764.00

Less: Tax Paid 69,115,899.00
Deficiency Income Tax 1,182,865.00
Add: 20% Interest (60% max.) 709,719.00
——————

Total Amount Due and Collectible P1,892,584.002

The assessment was timely protested by petitioner on April 26, 1989, on the ground that it was
based on the erroneous disallowances of "bad debts" and "interest expense" although the same are
both allowable and legal deductions. Respondent Commissioner, however, issued a warrant of
garnishment against the deposits of petitioner at a branch of City Trust Bank, in Makati, Metro
Manila, which action the latter considered as a denial of its protest.

Petitioner accordingly filed a petition for review with the Court of Tax Appeals (CTA) on the same
assignment of error, that is, that the "bad debts" and "interest expense" are legal and allowable
deductions. In its decision3 of February 3, 1993 in C.T.A. Case No. 4408, the CTA modified the
findings of the Commissioner by reducing the deficiency income tax assessment to P237,381.26,
with surcharge and interest incident to delinquency. In said decision, the Tax Court reversed and set
aside the Commissioner's disallowance of the interest expense of P2,666,545.19 but maintained the
disallowance of the supposed bad debts of thirteen (13) debtors in the total sum of P395,324.27.

Petitioner then elevated the case to respondent Court of Appeals which, as earlier stated, denied
due course to the petition for review and dismissed the same on August 24, 1994 in CA-G.R. SP No.
31190,4 on the following ratiocination:

We agree with respondent Court of Tax Appeals:

Out of the sixteen (16) accounts alleged as bad debts, We find that
only three (3) accounts have met the requirements of the
 worthlessness of the accounts, hence were properly written off as:
bad debts, namely:

1. Petronila Catap P 29,098.30

(Pet Mini Grocery)

2. Esther Guinto 254,375.54

(Esther Sari-sari Store)

3. Manuel Orea 34,272.82

(Elman Gen. Mdsg.)

—————

TOTAL P 317,746.66

xxx xxx xxx

With regard to the other accounts, namely:

1. Remoblas Store P 11,961.00

2. Tomas Store 16,842.79

3. AFPCES 13,833.62
4. CM Variety Store 10,895.82
5. U' Ren Mart Enterprise 10,487.08
6. Aboitiz Shipping Corp. 89,483.40
7. J. Ruiz Trucking 69,640.34
8. Renato Alejandro 13,550.00
9. Craig, Mostyn Pty. Ltd. 23,738.00
10. C. Itoh 19,272.22
11. Crocklaan B.V. 77,690.00
12. Enriched Food Corp. 24,158.00
13. Lucito Sta. Maria 13,772.00

—————

TOTAL P 395,324.27

We find that said accounts have not satisfied the requirements of the "worthlessness
of a debt". Mere testimony of the Financial Accountant of the Petitioner explaining the
worthlessness of said debts is seen by this Court as nothing more than a self-serving
exercise which lacks probative value. There was no iota of documentary evidence
(e.g., collection letters sent, report from investigating fieldmen, letter of referral to
their legal department, police report/affidavit that the owners were bankrupt due to
fire that engulfed their stores or that the owner has been murdered. etc.), to give
support to the testimony of an employee of the Petitioner. Mere allegations cannot
prove the worthlessness of such debts in 1985. Hence, the claim for deduction of
these thirteen (13) debts should be rejected.5
1. This pronouncement of respondent Court of Appeals relied on the ruling of this Court
in Collector vs. Goodrich International Rubber Co.,6 which established the rule in determining the
"worthlessness of a debt." In said case, we held that for debts to be considered as "worthless," and
thereby qualify as "bad debts" making them deductible, the taxpayer should show that (1) there is a
valid and subsisting debt. (2) the debt must be actually ascertained to be worthless and uncollectible
during the taxable year; (3) the debt must be charged off during the taxable year; and (4) the debt
must arise from the business or trade of the taxpayer. Additionally, before a debt can be considered
worthless, the taxpayer must also show that it is indeed uncollectible even in the future.

Furthermore, there are steps outlined to be undertaken by the taxpayer to prove that he exerted
diligent efforts to collect the debts, viz.: (1) sending of statement of accounts; (2) sending of
collection letters; (3) giving the account to a lawyer for collection; and (4) filing a collection case in
court.

On the foregoing considerations, respondent Court of Appeals held that petitioner did not satisfy the
requirements of "worthlessness of a debt" as to the thirteen (13) accounts disallowed as deductions.

It appears that the only evidentiary support given by PRC for its aforesaid claimed deductions was
the explanation or justification posited by its financial adviser or accountant, Guia D. Masagana. Her
allegations were not supported by any documentary evidence, hence both the Court of Appeals and
the CTA ruled that said contentions per secannot prove that the debts were indeed uncollectible and
can be considered as bad debts as to make them deductible. That both lower courts are correct is
shown by petitioner's own submission and the discussion thereof which we have taken time and
patience to cull from the antecedent proceedings in this case, albeit bordering on factual settings.

The accounts of Remoblas Store in the amount of P11,961.00 and CM Variety Store in the amount
of P10,895.82 are uncollectible, according to petitioner, since the stores were burned in November,
1984 and in early 1985, respectively, and there are no assets belonging to the debtors that can be
garnished by PRC.7 However, PRC failed to show any documentary evidence for said allegations.
Not a single document was offered to show that the stores were burned, even just a police report or
an affidavit attesting to such loss by fire. In fact, petitioner did not send even a single demand letter
to the owners of said stores.

The account of Tomas Store in the amount of P16,842.79 is uncollectible, claims petitioner PRC,
since the owner thereof was murdered and left no visible assets which could satisfy the debt. Withal,
just like the accounts of the two other stores just mentioned, petitioner again failed to present proof
of the efforts exerted to collect the debt, other than the aforestated asseverations of its financial
adviser.

The accounts of Aboitiz Shipping Corporation and J. Ruiz Trucking in the amounts of P89,483.40
and P69,640.34, respectively, both of which allegedly arose from the hijacking of their cargo and for
which they were given 30% rebates by PRC, are claimed to be uncollectible. Again, petitioner failed
to present an iota of proof, not even a copy of the supposed policy regulation of PRC that it gives
rebates to clients in case of loss arising from fortuitous events or force majeure, which rebates it now
passes off as uncollectible debts.

As to the account of P13,550.00 representing the balance collectible from Renato Alejandro, a
former employee who failed to pay the judgment against him, it is petitioner's theory that the same
can no longer be collected since his whereabouts are unknown and he has no known property which
can be garnished or levied upon. Once again, petitioner failed to prove the existence of the said
case against that debtor or to submit any documentation to show that Alejandro was indeed bound
to pay any judgment obligation.
The amount of P13,772.00 corresponding to the debt of Lucito Sta. Maria is allegedly due to the loss
of his stocks through robbery and the account is uncollectible due to his insolvency. Petitioner
likewise failed to submit documentary evidence, not even the written reports of the alleged
investigation conducted by its agents as testified to by its aforenamed financial adviser.

Regarding the accounts of C. Itoh in the amount of P19,272.22, Crocklaan B.V. in the sum of
P77,690.00, and Craig, Mostyn Pty. Ltd. with a balance of P23,738.00, petitioner contends that
these debtors being foreign corporations, it can sue them only in their country of incorporation; and
since this will entail expenses more than the amounts of the debts to be collected, petitioner did not
file any collection suit but opted to write them off as bad debts. Petitioner was unable to show proof
of its efforts to collect the debts, even by a single demand letter therefor. While it is not required to
file suit, it is at least expected by the law to produce reasonable proof that the debts are uncollectible
although diligent efforts were exerted to collect the same.

The account of Enriched Food Corporation in the amount of P24,158.00 remains unpaid, although
petitioner claims that it sent several letters. This is not sufficient to sustain its position. even if true,
but even smacks of insouciance on its part. On top of that, it was unable to show a single copy of the
alleged demand letters sent to the said corporation or any of its corporate officers.

With regard to the account of AFPCES for unpaid supplies in the amount of P13,833.62, petitioner
asserts that since the debtor is an agency of the government, PRC did not file a collection suit
therefor. Yet, the mere fact that AFPCES is a government agency does not preclude PRC from filing
suit since said agency, while discharging proprietary functions, does not enjoy immunity from suit.
Such pretension of petitioner cannot pass judicial muster.

No explanation is offered by petitioner as to why the unpaid account of U' Ren Mart Enterprise in the
amount of P10,487.08 was written off as a bad debt. However, the decision of the CTA includes this
debtor in its findings on the lack of documentary evidence to justify the deductions claimed, since the
worthlessness of the debts involved are sought to be established by the mere self-serving testimony
of its financial consultant.

The contentions of PRC that nobody is in a better position to determine when an obligation becomes
a bad debt than the creditor itself, and that its judgment should not be substituted by that of
respondent court as it is PRC which has the facilities in ascertaining the collectibility or
uncollectibility of these debts, are presumptuous and uncalled for. The Court of Tax Appeals is a
highly specialized body specifically created for the purpose of reviewing tax cases. Through its
expertise, it is undeniably competent to determine the
issue of whether or not the debt is deductible through the evidence presented before it.8

Because of this recognized expertise, the findings of the CTA will not ordinarily be reviewed absent a
showing of gross error or abuse on its part.9 The findings of fact of the CTA are binding on this Court
and in the absence of strong reasons for this Court to delve into facts, only questions of law are
open for determination. 10 Were it not, therefore, due to the desire of this Court to satisfy petitioner's
calls for clarification and to use this case as a vehicle for exemplification, this appeal could very well
have been summarily dismissed.

The Court vehemently rejects the absurd thesis of petitioner that despite the supervening delay in
the tax payment, nothing is lost on the part of the Government because in the event that these debts
are collected, the same will be returned as taxes to it in the year of the recovery. This is an
irresponsible statement which deliberately ignores the fact that while the Government may
eventually recover revenues under that hypothesis, the delay caused by the non-payment of taxes
under such a contingency will obviously have a disastrous effect on the revenue collections
necessary for governmental operations during the period concerned.

2. We need not tarry at length on the second issue raised by petitioner. It argues that the imposition
of the 25% surcharge and the 20% delinquency interest due to delay in its payment of the tax
assessed is improper and unwarranted, considering that the assessment of the Commissioner was
modified by the CTA and the decision of said court has not yet become final and executory.

Regarding the 25% surcharge penalty, Section 248 of the Tax Code provides:

Sec. 248. Civil Penalties. — (a) There shall be imposed, in addition to the tax
required to be paid, a penalty equivalent to twenty-five percent (25%) of the amount
due, in the following cases:

xxx xxx xxx

(3) Failure to pay the tax within the time prescribed for its payment.

With respect to the penalty of 20% interest, the relevant provision is found in Section 249 of the
same Code, as follows:

Sec. 249. Interest. — (a) In general. — There shall be assessed and collected on
any unpaid amount of tax, interest at the rate of twenty percent (20%) per annum, or
such higher rate as may be prescribed by regulations, from the date prescribed for
payment until the amount is fully paid.

xxx xxx xxx

(c) Delinquency interest. — In case of failure pay:

(1) The amount of the tax due on any return required to be

filed, or

(2) The amount of the tax due for which no return is required, or

(3) A deficiency tax, or any surcharge or interest thereon, on the due date appearing
in the notice and demand of the Commissioner,

there shall be assessed and collected, on the unpaid amount, interest at the rate
prescribed in paragraph (a) hereof until the amount is fully paid, which interest shall
form part of the tax. (emphasis supplied)

xxx xxx xxx

As correctly pointed out by the Solicitor General, the deficiency tax assessment in this case, which
was the subject of the demand letter of respondent Commissioner dated April 11,1989, should have
been paid within thirty (30) days from receipt thereof. By reason of petitioner's default thereon, the
delinquency penalties of 25% surcharge and interest of 20% accrued from April 11, 1989. The fact
that petitioner appealed the assessment to the CTA and that the same was modified does not relieve
petitioner of the penalties incident to delinquency. The reduced amount of P237,381.25 is but a part
of the original assessment of P1,892,584.00.
Our attention has also been called to two of our previous rulings and these we set out here for the
benefit of petitioner and whosoever may be minded to take the same stance it has adopted in this
case. Tax laws imposing penalties for delinquencies, so we have long held, are intended to hasten
tax payments by punishing evasions or neglect of duty in respect thereof. If penalties could be
condoned for flimsy reasons, the law imposing penalties for delinquencies would be rendered
nugatory, and the maintenance of the Government and its multifarious activities will be adversely
affected. 11

We have likewise explained that it is mandatory to collect penalty and interest at the stated rate in
case of delinquency. The intention of the law is to discourage delay in the payment of taxes due the
Government and, in this sense, the penalty and interest are not penal but compensatory for the
concomitant use of the funds by the taxpayer beyond the date when he is supposed to have paid
them to the Government. 12 Unquestionably, petitioner chose to turn a deaf ear to these injunctions.

ACCORDINGLY, the petition at bar is DENIED and the judgment of respondent Court of Appeals is
hereby AFFIRMED, with treble costs against petitioner.

SO ORDERED.

Romero, Puno, Mendoza and Torres, Jr., JJ., concur.

Footnotes

1 Justice Eduardo G. Montenegro, ponente, and Justices Minerva Gonzaga-Reyes and

Conrado M. Vasquez, Jr., concurring.

2 Rollo, 48.

3 Ibid., 63; penned by Associate Judge Ramon O. de Veyra with the concurrence of
Presiding Judge Ernesto D. Acosta and Associate Judge Manuel K. Gruba.

4 Ibid., 41-42.

5 Rollo, 42-43.

6 L-22265, December 26, 1967, 21 SCRA 1336.

7 Rollo, 58.

8 Commissioner of Internal Revenue vs. Wander Philippines, Inc., et al., G.R. No. 68375,
April 15, 1988, 160 SCRA 573.

9 The Coca-Cola Export Corporation vs. Commissioner of Internal Revenue, et al., L-23604,
March 15, 1974, 56 SCRA 5; Nasiad, et al. vs. Court of Tax Appeals, L-29318, November
29, 1974, 61 SCRA 238.

10 Commissioner of Internal Revenue vs. Tours Specialists, Inc., et al., G.R. No. 66416,
March 21, 1990, 183 SCRA 402.

11 Jamora, et al. vs. Meer, etc., et al., 74 Phil, 22 (1942).

 12 Republic vs. Philippine Bank of Commerce, L-20951, July 31, 1970, 34 SCRA 361.

c.
d.