CIR vs.

CA, Atlas Consolidated

242 SCRA 289
GR No. 104151 March 10, 1995
"Assessments are prima facie presumed correct and made in good faith. So that, in
the absence of proof of any irregularities in the performance of official duties, an
assessment will not be disturbed."

FACTS: The Commissioner of Internal Revenue served two notices and demand for
payment of the respective deficiency ad valorem and buiness taxes for taxable
years 1975 and 1976 against the respondent Atlas Consolidated Mining and
Development Corporation (ACMDC). The latter protested both assessments but the
same were denied, hence it filed two separate petitions for review in the Court of
Tax Appeals. The CTA rendered a consolidated decision holding, inter alia, that
ACMDC was not liable for deficiency ad valorem taxes on copper and silver for 1975
and 1976 thereby effectively sustaining the theory of ACMDC that in computing the
ad valorem tax on copper mineral, the refining and smelting charges should be
deducted, in addition to freight and insurance charges.
However, the tax court held ACMDC liable for the amount consisting of 25%
surcharge for late payment of the ad valorem tax and late filing of notice of removal
of silver, gold and pyrite extracted during certain periods, and for alleged deficiency
manufacturer's sales tax and such contractor's tax for leasing out of its personal
properties. ACDMC elevated the matter to the Supreme Court claiming that the
leasing out was a mere isolated transaction, hence should not be subjected to
contractor's tax.

ISSUE: Is the claim of the private respondent, with respect to the contractor's tax,
impressed with merit?

HELD: No. It is being held that ACMDC was not a manufacturer subject to the
percentage tax imposed by Section 186 of the tax code. However such conclusion
cannot be made with respect to the contractor's tax being imposed on ACMDC. It
cannot validly claim that the leasing out of its personal properties was merely an
isolated transaction. Its book of accounts shows that several distinct payments were
made for the use of its personal properties such as its plane, motor boat and dump
truck. The series of transactions engaged in by ACMDC for the lease of its aforesaid
properties could also be deduced from the fact that during the period there were
profits earned and reported therefor. The allegation of ACMDC that it did not realize

any profit from the leasing out of its said personal properties, since its income
therefrom covered only the costs of operation such as salaries and fuel, is not
supported by any documentary or substantial evidence.
Assessments are prima facie presumed correct and made in good faith. Contrary
to the theory of ACMDC, it is the taxpayer and not the BIR who has the duty of
proving otherwise. It is an elementary rule that in the absence of proof of any
irregularities in the performance of official duties, an assessment will not be
disturbed. All presumptions are in favor of tax assessments. Verily, failure to present
proof of error in assessments will justify judicial affirmance of said assessment.

REPUBLIC vs. CA, and NIELSON & CO.,INC.

149 SCRA 351
GR No. L-38540 April 30, 1987
"The follow-up letter reiterating demand for payment could be considered a notice
of assessment in itself if duly received by the taxpayer."

FACTS: The petitioner sought the review on certiorari of the decision of the
respondent Court of Appeals reversing the decision of the then Court of First
Instance of Manila which ordered private respondent Nielson & Co., Inc. to pay the
Government the amount of P11,496.00 as ad valorem tax, occupation fees,
additional residence tax and 25% surcharge for late payment, for the years 1949 to
1952. Petitioner claims that the demand letter of 16 July 1955 showed an imprint
indicating that the original thereof was released and mailed on 4 August 1955 by
the Chief, Records Section of the Bureau of Internal Revenue, and that the original
letter was not returned to said Bureau; thus, said demand letter must be considered
to have been received by the private respondent. According to petitioner, if service
is made by ordinary mail, unless the actual date of receipt is shown, service is
deemed complete and effective upon the expiration of five (5) days after mailing. As
the letter of demand dated 16 July 1955 was actually mailed to private respondent,
there arises the presumption that the letter was received by private respondent in
the absence of evidence to the contrary. More so, where private respondent did not
offer any evidence, except the self-serving testimony of its witness, that it had not
received the original copy of the demand letter dated 16 July 1955.

ISSUE: Was notice of assessment or demand properly served to the respondent?

Should the receipt by the respondent of the succeeding follow-up demand notices
be construed as receipt of the original demand?

HELD: As to the first issue, no. As correctly observed by the respondent court in its
appealed decision, while the contention of petitioner is correct that a mailed letter is
deemed received by the addressee in the ordinary course of mail, still this is merely
a disputable presumption, subject to controversion, and a direct denial of the
receipt thereof shifts the burden upon the party favored by the presumption to
prove that the mailed letter was indeed received by the addressee. Since petitioner
has not adduced proof that private respondent had in fact received the demand
letter of 16 July 1955, it can not be assumed that private respondent received said
letter.
As to the second issue, Yes. Records show that petitioner wrote private
respondent a follow-up letter dated 19 September 1956, reiterating its demand for
the payment of taxes as originally demanded in petitioner's letter dated 16 July
1955. This follow-up letter is considered a notice of assessment in itself which was
duly received by private respondent in accordance with its own admission. And
consequently, under Section 7 of Republic Act No. 1125, the assessment is
appealable to the Court of Tax Appeals within thirty (30) days from receipt of the
letter. The taxpayer's failure to appeal in due time, as in the case at bar, makes the
assessment in question final, executory and demandable. Thus, private respondent
is now barred from disputing the correctness of the assessment or from invoking
any defense that would reopen the question of its liability on the merits.

COLLECTOR OF INTERNAL REVENUE vs. VDA. DE CODIERA

102 PHIL 1165
GR No. L-9675, September 28, 1957
"The property levied by a competent court may, with the consent thereof, be
distrained, subject to the prior lien of the attachment creditor."

FACTS: The Collector of Internal Revenue sent a warrant of distraint and levy against
the properties of Restituto Codiera for collection of certain deficiency specific tax.
However, it could not be effected in view of the attachment of the said properties of
the CFI-Manila of another case. After seven years, the Collector of Internal Revenue
issued a warrant of distraint and levy commanding the City Treasurer of Cebu City to
distrain the goods, chattels, or effects and other personal property of whatever

character, and levy upon the real property and interest in or rights to real property
of the estate of the deceased. The heirs of the deceased filed the action with the
CTA barring the government to collect said deficiency on the ground of prescription
therefore praying to declare null and void, and of no legal force and effect the
warrant of distraint and levy which the respondent issued on March 7, 1955.

ISSUE: Does the attachment made by a court in a civil case over certain properties
of a taxpayer bar the government from enforcing a warrant of distraint and levy
over the aforesaid properties in order to collect the taxes due?

HELD: No. There may be a valid reason for non-distraint of the property which was
due to the attachment of the CFI-Manila in another case. However, such property
levied by a competent court may, with the consent thereof, be subsequently
distrained, subject to the prior lien of the attachment creditor. The attachment
merely deprives the Collector of Internal Revenue the power to divest the Court of
its jurisdiction over said property but it does not impair such rights as the
Government may have for the collection of taxes.

CABRERA vs. THE PROVINCIAL TREASURER OF TAYABAS

GR No. 502, January 29, 1946
"The taxpayer should at least be apprised of the exact date of the proceeding by
which she is to lose her property. Failure of the taxpayer to accordingly correct or
change name in the assessment record cannot supplant such absence of notice."

FACTS: The Provincial Treasurer of Tayabas issued a notice for the sale at public
auction of the real properties of Nemesio Cabrera forfeited for tax delinquency on
December 15, 1940. The letter sent to Nemesio Cabrera was returned marked
Unclaimed for the latter was already dead in 1935. The land was actually sold in a
rescheduled public auction sale on May 1941 to Catigbac and was finalized in May
1942. Basilia Cabrera, the registered owner of the land subject to attachment, filed
a complaint with the CFI-Tayabas against the Provincial Treasurer and Catigbac
attacking the validity of the sale on the grounds that she was not notified, even
though the property had remained in the assessment book in the name of Nemesio
Cabrera, because she became the registered owner thereof since 1934 when a
Torrens Title was issued to her by the Register of Deeds of Tayabas.

ISSUE: Is there a need for new notices if the land was not sold on the date specified
in the previous notice?

HELD: Yes. Under the law, even if the notice state that the sale would take place on
a specified date and every day thereafter, it is a general and indefinite notice. In
order to protect the taxpayers rights, the taxpayer should at least be apprised of
the exact date of the proceeding by which she is to lose her property. Besides, the
appellee admittedly being not notified also vitiates the proceeding. She is the
registered owner of the land and had become liable for taxes thereon. For all
purposes, she is the delinquent taxpayer "against whom the taxes were assessed."
It cannot be Nemesio for the latter's obligation to pay ended where Basilia's liability
began.
Basilia may be criticized for failure to have changed the name in the assessment
record. However, such circumstance, nevertheless, cannot supplant the absence of
notice.

MAMBULAO LUMBER CO. vs. REPUBLIC

132 SCRA 1
GR No. L-37061, September 5, 1984
"Forest charges are internal revenue taxes and the BIR has the sole power and duty
to collect them. Thus, an assessment made by the Bureau of Forestry cannot be
considered an assessment made by the BIR."

FACTS: The Bureau of Forestry sent a demand letter dated January 15, 1949 to
Mambulao Lumber Co. demanding for the payment of forest charges and
surcharges. Mambulao protested the assessment. On August 29,1958, the BIR
likewise wrote a letter to the company demanding payment, which subsequently
requested reinvestigation. The BIR gave the company twenty (20) days from receipt
within which to submit the results of its verification of payments. For failure to
comply and failure to pay its tax liability despite demands, CIR filed a complaint for
collection with CFI-Manila on August 25, 1961. The CFI-Manila and Court of Appeals
decided against Mambulao ordering it to pay the tax liability. Petitioner argued that
the collection is barred by the statute of limitations under Sections 332 of the NIRC.
As stated, the collection should be made within the five (5) year period. From 1949

(date when the Bureau of Forestry assessed and demand payment as forestry
charges and surcharges) up to 1961 (date of filing of complaint), it is already more
than five years.

ISSUE: Has the period of filing of collection complaint prescribed?

HELD: No. The action for collection is not barred by prescription. The basis of the
complaint filed on August 1961 was the demand letter made by the CIR on August
29, 1958 and not the demand letter of the Bureau of Forestry on January 1949. So
that the reckoning date of the 5-year period should be from the date of the BIR
letter and not that of the Bureau of Forestry. This must be so because forest charges
are internal revenue taxes and the BIR has the sole power and duty to collect them.

FERNANDOS HERMANOS, INC. vs. COMMISSIONER

29 SCRA 552
GR No. No. L-21551, September 30, 1969
"The filing of an answer to taxpayer's petition for review is considered as institution
of judicial action."

FACTS: The Commissioner of Internal Revenue assessed the petitioner investment

corporation of deficiency income taxes for the years 1950 to 1954 and for 1957.
There were two conflicting dates of assessment, which are vital to the compliance
with the statute of limitations, based on each claim of the petitioner and the
respondent; the Commisioner's record of date of assesment is February 27, 1956
while the petitioner believes the demand was made on December 27, 1955 so that,
as the petitioner corporation claims, the Commissioner's action to recover its tax
liability should be deemed to have prescribed for failure on the part of the
Commissioner to file a complaint for collection against it in an appropriate civil
action.

ISSUE: Has the action for collection prescribed?

HELD: No. It has been held that "a judicial action for the collection of a tax is begun
by the filing of a complaint with the proper court of first instance, or where the
assessment is appealed to the Court of Tax Appeals, by filing an answer to the
taxpayer's petition for review wherein payment of the tax is prayed for." This is but
logical for where the taxpayer avails of the right to appeal the tax assessment to
the Court of Tax Appeals, the said Court is vested with the authority to pronounce
judgment as to the taxpayer's liability to the exclusion of any other court. In the
present case, regardless of whether the assessments were made on February 24
and 27, 1956, as claimed by the Commissioner, or on December 27, 1955 as
claimed by the taxpayer, the government's right to collect the taxes due has clearly
not prescribed, as the taxpayer's appeal or petition for review was filed with the Tax
Court on May 4, 1960, with the Commissioner filing on May 20, 1960 his Answer
with a prayer for payment of the taxes due, long before the expiration of the fiveyear period to effect collection by judicial action counted from the date of
assessment.

REPUBLIC vs. ARANETA

2 SCRA 144
GR No. L-14142, May 30, 1961
"Where the tax obligation is secured by a bond, the prescriptive period for the
action for the forfeiture of the bond is governed by the Civil Code."

FACTS: The Solicitor General, in behalf of the Republic of the Philippines, filed before
CFI of Manila an action against the defendant Araneta, as principals, and Manila
Surety, as surety, to recover the internal revenue taxes including surcharges, the
payment of which was guaranteed by a bond executed when the first extrajudicial
demand for payment was made. The appellant-taxpayers contend that the
appellee's cause of action has prescribed, because the action for recovery of
internal revenue taxes and surcharge due brought on 22 February 1957, was not
commenced within the period of five years after the assessment dated 15 May 1948
had been made, as provided for in Section 331 of the Tax Code.

ISSUE: Has the action to recover the taxes due from the taxpayer and the surety
already prescribed?

HELD: No. The appellant-taxpayers cannot invoke prescription under the provisions
of Section 331 of the NIRC because the government is suing on the bond executed
and filed by them to guarantee payment in 6 monthly installments of the tax
liability due from 1946 to 1948, which is a separate and distinct obligation of the
parties thereto. The action to enforce the obligation on the bond executed on March
18, 1949, having been filed in court on February 22, 1957, was within the 10-year
prescriptive period to enforce a written contractual obligation, as set by the Civil
Code.

MARCOS II vs. CA
273 SCRA 47
GR No. 120880, June 5, 1997
"The approval of the court sitting in probate is not a mandatory requirement in the
collection of estate taxes."
"In case of failure to file a return, the tax may be assessed at anytime within 10
years after the omission."

FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of
Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos to
cover the payment of his tax delinquencies during the period of his exile in the US.
The Marcos family was assessed by the BIR after it failed to file estate tax returns.
However the assessment were not protested administratively by Mrs. Marcos and
the heirs of the late president so that they became final and unappealable after the
period for filing of opposition has prescribed. Marcos contends that the properties
could not be levied to cover the tax dues because they are still pending probate
with the court, and settlement of tax deficiencies could not be had, unless there is
an order by the probate court or until the probate proceedings are terminated.
Petitioner also pointed out that applying Memorandum Circular No. 38-68, the
BIR's Notices of Levy on the Marcos properties were issued beyond the allowed
period, and are therefore null and void.

ISSUE: Are the contentions of Bongbong Marcos correct?

HELD: No. The deficiency income tax assessments and estate tax assessment are
already final and unappealable -and-the subsequent levy of real properties is a tax
remedy resorted to by the government, sanctioned by Section 213 and 218 of the
National Internal Revenue Code. This summary tax remedy is distinct and separate
from the other tax remedies (such as Judicial Civil actions and Criminal actions), and
is not affected or precluded by the pendency of any other tax remedies instituted by
the government.
The approval of the court, sitting in probate, or as a settlement tribunal over the
deceased's estate is not a mandatory requirement in the collection of estate taxes.
On the contrary, under Section 87 of the NIRC, it is the probate or settlement court
which is bidden not to authorize the executor or judicial administrator of the
decedent's estate to deliver any distributive share to any party interested in the
estate, unless it is shown a Certification by the Commissioner of Internal Revenue
that the estate taxes have been paid. This provision disproves the petitioner's
contention that it is the probate court which approves the assessment and
collection of the estate tax.
On the issue of prescription, the omission to file an estate tax return, and the
subsequent failure to contest or appeal the assessment made by the BIR is fatal to
the petitioner's cause, as under Sec.223 of the NIRC, in case of failure to file a
return, the tax may be assessed at anytime within 10 years after the omission, and
any tax so assessed may be collected by levy upon real property within 3 years
(now 5 years) following the assessment of the tax. Since the estate tax assessment
had become final and unappealable by the petitioner's default as regards protesting
the validity of the said assessment, there is no reason why the BIR cannot continue
with the collection of the said tax.

REPUBLIC vs. HIZON

320 SCRA 574
GR No. 130430, December 13, 1999
"A request for reconsideration of the tax assessment does not effectively suspend
the running of the precriptive period if the same is filed after the assessment had
become final and unappealable."

FACTS: On July 18, 1986, the BIR issued to respondent Salud V. Hizon a deficiency
income tax assessment covering the fiscal year 1981-1982. Respondent not having
contested the assessment, petitioner BIR, on January 12, 1989, served warrants of

distraint and levy to collect the tax deficiency. However, for reasons not known, it
did not proceed to dispose of the attached properties.
More than three years later, the respondent wrote the BIR requesting a
reconsideration of her tax deficiency assessment. The BIR, in a letter dated August
11, 1994, denied the request. On January 1, 1997, it filed a case with the RTC to
collect the tax deficiency. Hizon moved to dismiss the case on two grounds: (1) that
the complaint was not filed upon authority of the BIR Commissioner as required by
Sec. 221 of the NIRC, and (2) that the action had already prescribed. Over
petitioner's objection, the trial court granted the motion and dismissed the
complaint.
BIR on the other hand contends that respondent's request for reinvestigation of
her tax deficiency assessment on November 1992 effectively suspended the
running of the period of prescription.

ISSUE: Has the action for collection of the tax prescribed?

HELD: Yes. Sec. 229 of the NIRC mandates that a request for reconsideration must
be made within 30 days from the taxpayer's receipt of the tax deficiency
assessment, otherwise the assessment becomes final, unappealable and, therefore,
demandable. The notice of assessment for respondent's tax deficiency was issued
by petitioner on July 18, 1986. On the other hand, respondent made her request for
reconsideration thereof only on November 3, 1992, without stating when she
received the notice of tax assessment. Hence, her request for reconsideration did
not suspend the running of the prescriptive period provided under Sec. 223(c).
Although the Commissioner acted on her request by eventually denying it on August
11, 1994, this is of no moment and does not detract from the fact that the
assessment had long become demandable.

CIR vs. VILLA

22 SCRA 3
GR No. L-23988, January 2, 1968
"What may be the subject of a judicial review is the decision of the Commissioner on
the protest against assessment, not the assessment itself."

FACTS: The spouses Villa filed joint income tax returns for the years 1951 to 1956.
The BIR issued assessments for deficiency of income tax for the said years. Without
contesting the said assessments with the CIR, they filed a petition for review with
the CTA. The CTA took cognizance of the of the appeal and rendered favorable
judgment to the spouses. The CIR appealed to the SC questioning the jurisdiction of
the CTA.

ISSUE: Is an appeal to the CTA proper in this case? Is the CTA vested with
jurisdiction?

HELD: No. The rule is that where a taxpayer questions an assessment and asks the
Collector to reconsider or cancel the same because he (the taxpayer) believes he is
not liable therefor, the assessment becomes a "disputed assessment" that the
Collector must decide, and the taxpayer can appeal to the Court of Tax Appeals only
upon receipt of the decision of the Collector on the disputed assessment. Since in
the instant case the taxpayer appealed the assessment of the Commissioner of
Internal Revenue without previously contesting the same, the appeal was premature
and the Court of Tax Appeals had no jurisdiction to entertain said appeal. For, as
stated, the jurisdiction of the Tax Court is to review by appeal decisions of Internal
Revenue on disputed assessments. The Tax Court is a court of special jurisdiction.
As such, it can take cognizance only of such matters as are clearly within its
jurisdiction.