CTA finds bus company, owner guilty of tax evasion

The Court of Tax Appeals (CTA) has slapped a maximum prison sentence of 16 years against a Valenzuela City-based bus operator accused of evading P14.9 million worth of back taxes in 2008 and 2009.

In a 36-page decision promulgated on March 12, the Second Division found Kingsam Express Inc. and its owner Samuel Santos "guilty beyond reasonable doubt" for two counts each of violation of Sections 254 (tax evasion) and 255 (failure to supply correct and accurate information) of the National Internal Revenue Code.

The CTA also ordered Kingsam and Santos to pay a fine of P400,000 each. They will also pay the deficiency in income and value-added taxes upon the assessment of the Bureau of Internal Revenue (BIR).

The BIR charged Kingsam and Santos in 2015 for alleged tax evasion when they declared an income of only around P1.2 million and P1.6 million in 2008 and 2009, respectively, despite the purchase of 25 bus units worth a combined amount of P49.6 million in the same period.

The bus units included seven King Long Model XMQ6119 units in 2008 and 18 Hyundai buses in 2009. The BIR then said the purchase caused a tax deficiency worth P4.1 million and P10.8 million, respectively.

In his defense, Santos argued that he did not declare the buses as Kingsam's assets since the units only received its certificates of public convenience on June 23, 2010 which allowed it to ply its designated routes.

However, the CTA said the evidence against Santos proved his "deliberate non-recognition" of the bus units as assets, while Kingsam made the "unlawful intent to hide the actual transacaction" of the buses in its financial statements (FS).

The CTA added the purchase and delivery of the bus units should have been included in the financial statements of Kingsam if it accepts the defense of Santos.

"The recognition of said assets and liabilities in accused Kingsam's FS should have been reflected in the FS for the ending period of 2010 or 2011 when Kingsam's certificate of public convenience was issued or payments were being made, respectively. But none of that reporting was made," the CTA said.

"The accused had really no intention to disclose the actual transaction in its FS," the decision added.

Associate Justice Catherine Manahan penned the decision, with the concurrence of Associate Justices Juanito Castaneda Jr. and Caesar Casanova who dissented on the ruling.

In his dissenting opinion, Casanova said he believes the constitutional right of Santos to due process was violated when was filed at the tax court due to the "absence of fairness fatally injected in the trial."

Casanova also questioned the credibility of the prosecution's lone witness, a certain Medardo Tipon, for his failure to identify Santos in open court and his contradictory statements.

"It is elementary rule that for a witness to be believed in his story, he must be credible as well as his testimony in court. This is not present in the instant cases," he said. —KG, GMA News