Tax court voids P65.93-million assessment of MyPhone’s liabilities

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LOCAL MOBILE phone brand MyPhone won in its bid to cancel the Bureau of Internal Revenue (BIR)’s assessment of tax liabilities worth almost P66 million.

In a decision dated Aug. 4, 2017, the First Division of the Court of Tax Appeals (CTA) granted My Solid Technologies and Devices Corp. or MyPhone’s Petition for Review on the BIR’s assessment of the company’s P65,928,415.74 alleged tax liability for the first half of tax year 2012, as the court gave merit to MyPhone’s earlier merger with Mytel Mobility Solutions.

MyPhone, on July 31, 2014, sought the tax court to assail the Formal Assessment Notice (FAN) issued by the BIR dated Dec. 2, 2013, detailing the company’s alleged discrepancies of the said amount.

In weighing in on the merits of the case, the tax court disagreed with the BIR’s assessments which were issued due largely on the alleged revenue liability of MyPhone to “file an application for merger, or any notices of such, with the BIR.”

The tax court noted that the Securities and Exchange Commission, on May 29, 2012, approved the Plan and Agreement and the Articles of Merger by MyPhone, the surviving corporation, and Mytel Mobility Solutions, as the absorbed corporation.

In dismissing the BIR’s arguments, the tax court held that “the merger shall be effective upon the issuance of a certificate of merger by the [SEC],” as provided by Section 79 of Batas Pambansa Blg. 68 or the Corporation Code of the Philippines.

The CTA also cited Section 80 of the Corporation Code which held that “a merger shall have the effect of ipso jure transferring all the rights and properties of the absorbed corporation to the surviving corporation.”

The tax court held the same in cancelling the disallowance input tax worth P11,448,182.73, unsupported input tax worth P40,017,741.93, and excess input tax amounting to P10,159,773.44.

“Wherefore, premises considered, the instant Petition for Review is granted. Accordingly, the deficiency value-added tax assessment covering the period of January 1, 2012 to June 30, 2012 in the aggregate amount of P65,928,415.74 is cancelled and set aside,” the tax court held. — Kristine Joy V. Patag