Case Digest (G.R. No. L-13203) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Yutivo Sons Hardware Company v. Court of Tax Appeals and Collector of Internal Revenue, decided January 28, 1961 under the 1935 Constitution, Yutivo Sons Hardware Co. (“Yutivo”), a domestic corporation founded in 1916 and engaged in importing and selling hardware and, after World War II, cars and trucks, purchased vehicles from General Motors Overseas Corp. (GM), which paid the sales tax prescribed by Sections 184–186 of the Tax Code on the basis of its selling price to Yutivo. Yutivo resold these vehicles to Southern Motors, Inc. (“SM”), incorporated June 13, 1946 by members of the Yu family—founders and stockholders of Yutivo—and two others. When GM withdrew in mid-1947, Yutivo became importer for Visayas and Mindanao, continued selling wholesale exclusively to SM, which in turn retailed to the public without paying further tax. On November 7, 1950, the Collector of Internal Revenue assessed Yutivo for P1,804,769.05 deficiency sales tax for the third quarter of 1947 to the Case Digest (G.R. No. L-13203) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Petitioner: Yutivo Sons Hardware Company (Yutivo), domestic corporation engaged in importation and sale of hardware and, post-war, GM cars and trucks.
- Respondents: Court of Tax Appeals (CTA) and Collector of Internal Revenue.
- Transactions and Assessments
- Pre-war and Immediate Post-war:
- General Motors Overseas Corp. (GM) imported vehicles, paid sales tax on sales to Yutivo.
- Yutivo resold to the public without further tax, as sales tax “collected once on original sales.”
- Formation and Operations of Southern Motors, Inc. (SM):
- Organized June 13, 1946 by stockholders related to Yutivo’s founders.
- Yutivo sold GM vehicles to SM; as importer (from mid-1947) Yutivo paid sales tax on sales to SM; SM retailed without further tax.
- Assessments and Litigation:
- Nov. 7, 1950: Collector assessed P1,804,769.05 (3Q 1947–4Q 1949) plus 75% surcharge.
- Nov. 15, 1952: Withdrawal of assessment for insufficient evidence, subject to review.
- Dec. 18, 1954: Reassessment of P2,215,809.27 (including 1950 deficiency and 75% surcharge).
- Apr. 27, 1957: CTA affirmed assessment, deeming SM Yutivo’s alter ego; one judge would have allowed deduction of tax already paid.
- Jan. 28, 1961: Supreme Court decision now under review.
Issues:
- Alter-ego and liability
- Whether SM was a mere instrumentality or subsidiary of Yutivo, justifying disregard of its separate corporate existence and imposition of liability for SM’s retail sales.
- Surcharges and computation
- Whether the 50% fraud surcharge under Section 133 of the Tax Code was properly imposed.
- Whether deficiency tax computation must deduct sales tax separately invoiced before applying rates.
- Prescription and procedure
- Whether assessments were barred by the five-year prescriptive period and validly withdrawn.
- Validity of CTA decision given alleged lack of concurrence of two judges.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)