Corporate Tax Liability is not Personal to its President/Owner

In 2003, Mr. Gregorio Villamar Araño was the President of Discovery Drug-Las Piñas, Inc. (DDLPI) and as such he received income from his services. He was assessed of deficiency income tax and value-added tax not as a president of a corporation but as the sole proprietor of Discovery Drug and not Discovery Drug-Las Piñas, Inc. The assessments were the result of the computerized matching conducted by the BIR on the sales of the suppliers of Discovery Drug where a discrepancy was discovered against the purchases declared by Discovery Drug in its tax returns which amount was treated as undeclared sales and income.

The Court of Tax Appeals denied the petition of the BIR stating that Mr. Araño as president of DDLPI did not act with malice or bad faith to disregard corporate fiction, such as him. DDLPI had a separate judicial personality distinct from the persons composing it. Thus, it is not proper and legal for the BIR to assess Mr. Araño for the alleged tax liabilities of DDLPI. 

(Commissioner of Internal Revenue vs. Gregorio Villamar Araño, CTA Case No. 7491, June 8, 2011)