1.

CIR VS CA FACTS: The CIR caused the service of an assessment notice and demand for payment of the amount of P12,391,070.51 representing deficiency ad valorem percentage and fixed taxes, including increments, for the taxable year 1975 against ACMDC. Likewise, on the basis of the BIR examiner's report in another investigation separately conducted, the Commissioner had another assessment notice, with a demand for payment of the amount of P13,531,466.80 representing the 1976 deficiency ad valorem and business taxes with P5,000.00 compromise penalty, served on ACMDC on September 23, 1980. ACMDC protested but the same was denied, thus, it appealed to the CTA. The CTA held that ACMDC is not liable to deficiency ad valorem percentage tax, but it is liable for the other taxes assessed. Such decision was affirmed by the CA, thus, this petition to the SC by both the petitioner and private respondent. ISSUE: 1. Is ACMDC liable for ad valorem deficiency tax? 2. Is ACMDC liable for 25% surcharge for alleged late filing of notice of removal/late payment of the ad valorem tax on silver, gold and pyrite extracted during the taxable year 1976? 3. Is ACMDC liable for manufacturer's sales tax on grinding steel balls borrowed by its competitor? 4. Is ACMDC liable for contractor's tax on the alleged lease of personal property during the taxable years 1975 and 1976? DECISION: 1. No. Ad valorem tax is to be computed on the basis of the market value of the mineral in its condition at the time of such removal and before it undergoes a chemical change through manufacturing process, as distinguished from a purely physical process which does not necessarily involve the change or transformation of the raw material into a composite distinct product. It is a tax not on the minerals, but upon the privilege of severing or extracting the same from the earth, the government's right to exact the said impost springing from the Regalian theory of State ownership of its natural resources. If the market value chosen for the reckoning is the value of the manufactured or finished product, as in the case at bar, then all expenses of processing or manufacturing should be deducted in order to approximate as closely as is humanly possible the actual market value of the raw mineral at the mine site. The ACMDC is, therefore, not liable to pay ad valorem deficiency tax because the expenses for smelting and refining were properly deducted from the value of the manufactured copper wire bar in paying their ad valorem tax. 2. Yes. ACMDCs contention that they could not pay the ad valorem tax on silver, gold and pyrite extracted at the time of extraction because they could not know the amount of those minerals until the after the copper concentrates had gone through the process of smelting and refining in Japan while the amount of pyrite cannot be determined until after the flotation process separating the copper mineral from the waste material was finished is untenable. They are barred by estoppel in pais. If, as stated by petitioner, it is able to estimate the grade of the copper ore, and it has determined the grade not only of the copper but also those of the gold and silver during the assay (Petitioner's Memorandum, p. 207, Record), ergo, the estimated commercial quantity of the silver and gold subject to ad valorem tax could have also been determined and provisionally paid as for copper. 3. No. ACMDC was not engaged in the sale of grinding steel balls. The sale they made to other mining companies were merely accommodations and not for profit. The profit they made from these sales was merely incidental to their main business and cannot be considered as a separate business. 4. Yes. Considering that there was a series of transactions involved, plus the fact that there was an apparent and protracted intention to profit from such activities, it can be safely concluded that ACMDC was habitually engaged in the leasing out of its plane, motor boat and

dump truck, and is perforce subject to the contractor's tax. 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 Bureau of Internal Revenue 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. 2. REPUBLIC OF THE PHILIPPINES VS CA FACTS: Petitioner filed this petition for review by certiorari the decision of the CA in reversing the decision of the CFI ordering the private respondent NIELSON & COMPANY, 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, and costs of suit, and of the resolution of the respondent Court, dated 31 May 1974, denying petitioner's motion for reconsideration of said decision of 3 April 1974. In a demand letter dated 16 July 1955, the CIR assessed Nielson deficiency taxes as stated above. This demand was reiterated in 3 more letters. On the theory that the assessment had become final and executory, the Commissioner filed a complaint for collection of the said amount with the CFI. ISSUE: Was there a valid notice of assessment? DECISION: While the contention of the BIR 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, wherein a direct denial of its receipt 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 cannot be assumed that private respondent received said letter. However, since petitioner has sent a follow up letter, and the same was received by respondent as shown by their admission, the assessment was in fact received because this follow-up letter is considered a notice of assessment in itself. 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. In a suit for collection of internal revenue taxes, as in this case, where the assessment has already become final and executory, the action to collect is akin to an action to enforce a judgment. No inquiry can be made therein as to the merits of the original case or the justness of the judgment relied upon. 3. CIR VS FLORES VDA DE CODINERA FACTS: On December 22, 1947 at Guiwan, Samar, Restituto Codiera, then living, purchased thirty-sight (38) boxes playing cards (poker) of 144 packs to a box belonging to the Philippine Government, paying 10% compensating tax therefore in the amount of P54.72. The amount of P2,681.28, as deficiency specific tax, plus a penalty of'P50.00, or a total of P2,731.28, were assessed and demanded from Restituto Codiera on August 7, 1948. On November 23, 1948, the Collector of Internal Revenue sent to the City Treasurer of Cebu, a warrant of distraint and levy against the properties of the late Restituto Codiera. The City Treasurer was not able to effect the distraint in view of the levy on attachment in Civil Case No. 4862. On March 7, 1955, or five years after the assessment was made and after the dismissal of the Civil Case No. 4862, a warrant of distraint 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 late Restituto Codiera for the same taxes was again issued. This was opposed by the respondents (heirs of Restituto Codiera) as it was allegedly barred by prescription. ISSUE: Whether the attachment levied upon in Civil Case No. 4862 barred the enforcement of the warrant of distraint and thus suspended the running of prescription. DECISION: The most general rule requires that all subsequent writs, to be levied on personal property, whether issuing from the same or different courts, shall be placed in the hands of the officer making the first attachment, to be by him served by making a return thereon in the order in which they are delivered to him, in which order successively they take effect as liens upon the residue of the personal property (or proceeds thereof), after satisfying the earlier writ or writs by him served. The rule regarding successive attachments on immovable property is founded on an altogether different principle than that regarding attachment on personal property. This is because the officer making an attachment upon real estate takes no possession or right of possession of the land, but simply fixes a lien thereon of record. Successive attachments may thereafter be placed upon it by the same or another officer, subject, however, to the equity of all prior attachments. Again, property levied upon by order of 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 or his agents of the power to divest the Court of its jurisdiction over said property. It does not impair such rights as the Government may have for the collection of taxes. In view of the foregoing, we hold that appellant herein is not entitled to the benefits of the suspension provided for in section 333 of the National Internal Revenue Code. 4. CABRERA VS PROVINCIAL TREASURER OF TAYABAS FACTS: The provincial treasurer of Tayabas issued a notice for the sale at public auction of numerous, real properties forfeited for tax delinquency said sale to be held "on December 15, 1940 at 8 a.m. and every day thereafter at the same place and hour until all the properties shall have been sold to the highest bidder. Copy of the notice was sent by registered mail to Nemesio Cabrera, but the envelope containing the same was returned with the remark "Unclaimed," undoubtedly because Nemesio Cabrera had already died in 1935. The land was actually sold on May 12, 1941, for the sum of P74.34 to the appellant Pedro J. Catigbac. Thereafter the appellee, Basilia Cabrera, filed a complaint in the Court of First Instance of Tayabas against the provincial treasurer and the appellant, attacking the validity of the tax sale on the grounds that she was not notified therefore and that although the land had remained in the assessment book in the name of Nemesio Cabrera, a former owner, she has become its registered owner, since 1934 when a Torrens title (No. 8167) was issued to her by the register of deeds of Tayabas. ISSUE: Was the tax sale valid? DECISION: No. Under the law the provincial treasurer is enjoined to set forth in the notice, among other particulars, the date of the tax sale. We are of the opinion that this mandatory requirement was not satisfied in the present case, because the announcement that the sale would take place on December 15, 1940 and every day thereafter is as general and indefinite as a notice for the sale. The appellee was admittedly not notified of the auction sale, and this also vitiates the proceeding. Neither the alleged receipt by the appellee of a copy of

certificate of sale dated May 12, 1941, nor her failure to redeem thereafter, had the effect of validating the prior tax proceeding. The sale in favor of the appellant cannot bind the appellee, since the land purportedly conveyed was owned by Nemesio Cabrera, not by the appellee; and, at the time of the sale, Nemesio Cabrera had no interest whatsoever in the land in question that could have passed to the appellant. The appellee may be criticized for her failure to have the land transferred to her name in the assessment record. But her Torrens title charges the Government which had issued it, with notice thereof. 5. MAMBULAO LUMBER COMPANY VS REPUBLIC FACTS: On January 15, 1949, the Bureau of Forestry demanded from Mambulao Lumber Company the payment of assessed forest charges and surcharges in the amount of P15,443.65 when it manifested under the name of the subject taxpayer 2,052.48 cubic meters of timber. The company protested the assessment. On August 29, 1958, the Acting CIR likewise wrote a letter to the company demanding payment, which subsequently requested reinvestigation. The BIR gave the company 20 days within which to submit its verification of payment. For failure of the company to comply, the BIR, on August 25, 1961, filed a complaint for collection with the then CFI. The company raised the defense of prescription, arguing that from January 15, 1949, when the Bureau of Forestry made an assessment and demand for payment up to the filing of the complaint for collection on August 25, 1961, more than 5 years had elapsed. ISSUE: 1. is the filing of the complaint for collection already barred by prescription. 2. Can the petitioner still question the validity of the assessment? DECISION: 1. No. The letter of demand of the Acting Commissioner of Internal Revenue dated August 29, 1958 was the basis of respondent's complaint filed in this case and not the demand letter of the Bureau of Forestry dated January 15, 1949. This must be so because forest charges are internal revenue taxes 6 and the sole power and duty to collect the same is lodged with the Bureau of Internal Revenue 7 and not with the Bureau of Forestry. The computation and/or assessment of forest charges made by the Bureau of Forestry may or may not be adopted by the Commissioner of Internal Revenue and such computation made by the Bureau of Forestry is not appealable to the Court of Tax Appeals. 8 Therefore, for the purpose of computing the five-year period within which to file a complaint for collection, the demand or even the assessment made by the Bureau of Forestry is immaterial. 2. No. In a suit for collection of internal revenue taxes, as in this case, where the assessment has already become final and executory, the action to collect is akin to an action to enforce a judgment. No inquiry can be made therein as to the merits of the original case or the justness of the judgment relied upon. Petitioner is thus already precluded from raising the defense of prescription. Where the taxpayer did not contest the deficiency income tax assessed against him, the same became final and properly collectible by means of an ordinary court action. The taxpayer cannot dispute an assessment which is being enforced by judicial action, He should have disputed it before it was brought to court. 6. FERNANDEZ HERMANOS, INC. VS CIR FACTS: 7. REPUBLIC VS ARANETA FACTS:

8. MARCOS II VS COURT OF APPEALS FACTS: petitioner Ferdinand R. Marcos II questions the assessment and collection through the summary remedy of Levy on Real Properties, estate and income tax delinquencies upon the estate and properties of his father, despite the pendency of the proceedings on probate of the will of the late president. They contended that following the rules on claims, the judge should first give his approval before the BIR can assess and collect taxes upon the estate. ISSUE: Can the BIR collect taxes due on the property even if there was a pending settlement of the estate in the probate proceeding? DECISION: Yes. 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. The petitioner now contests the validity and the correctness of the assessments. This objections to the assessments should have been raised, considering the ample remedies afforded the taxpayer by the Tax Code, with the Bureau of Internal Revenue and the Court of Tax Appeals, as described earlier, and cannot be raised now via Petition for Certiorari, under the pretext of grave abuse of discretion. Certiorari may not be used as a substitute for a lost appeal or remedy. Taxes are the lifeblood of the government and should be collected without unnecessary hindrance. 9. REPUBLIC VS HIZON FACTS: On July 18, 1986, the BIR issued to respondent Salud V. Hizon a deficiency income tax assessment of P1,113,359.68 covering the fiscal year 1981-1982. Respondent not having contested the assessment, petitioner, 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, or on November 3, 1992, 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 Regional Trial Court, Branch 44, San Fernando, Pampanga to collect the tax deficiency. The trial court dismissed the case for being barred by the statute of limitations. Petitioner filed this instant petition. ISSUE: 1. Was the complaint not authorized by the CIR although it was signed by the Regional Director? 2. Has the right of the government to file a case for collection of tax already prescribed? DECISION: 1. The complaint is deemed authorized by the CIR. Administrative Order No. 5-83 of the BIR provides: xxx Complaints for collection on cases falling within the jurisdiction of the Region xxx In all the above mentioned cases, the Regional Director is authorized to sign all pleadings filed in connection therewith which, otherwise, requires the signature of the Commissioner. As the complaint filed in this case was signed by the BIR's Chief of Legal Division for Region 4 and verified by the Regional Director, there was, therefore, compliance with the law. The trial courts refusal to recognize the said administrative order is erroneous. The rule is that as long as administrative issuances relate solely to carrying into effect the provisions of the law, they are valid and have the force of law. 2. Yes. Sec. 229 10 of the Code 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. Hence, her request for reconsideration

did not suspend the running of the prescriptive period. Our holding, however, is without prejudice to the disposition of the properties covered by the warrants of distraint and levy which petitioner served on respondent, as such would be a mere continuation of the summary remedy it had timely begun. Although considerable time has passed since then, as held in Advertising Associates Inc. v. Court of Appeals 17 and Palanca v. Commissioner of Internal Revenue, 18 the enforcement of tax collection through summary proceedings may be carried out beyond the statutory period considering that such remedy was seasonably availed of. 10. COMMISSIONER OF INTERNAL REVENUE VS VILLA FACTS: Leonardo S. Villa, a doctor of medicine, and his wife filed joint income tax returns for the years 1951, 1952, 1953, 1954, 1955 and 1956 on April 2, 1952, March 30, 1953, February 26, 1954, March 31, 1955, April 2, 1956 and March 23, 1957, respectively. Subsequently, the Bureau of Internal Revenue determined the income of the Villa spouses by the use of networth method and accordingly issued on February 23, 1961 assessments for deficiency income tax for the years 1951, 1952, 1953, 1954 and 1956 and residence tax for 1951 to 1957. Dr. Villa received the assessments on April 7, 1961. Without contesting the said assessments in the Bureau of Internal Revenue, he filed on May 4, 1961 a petition for review in the Court of Tax Appeals. The Court of Tax Appeals took cognizance of the appeal, tried the case on the merits and rendered the following judgment: The petitioner is ordered to pay to the Commissioner of Internal Revenue or his representative the sum of P244.00, as additional residence tax and surcharge. ISSUE: Does the CTA have jurisdiction to take cognizance of the appeal considering that there was yet no protest made by the taxpayer. DECISION: No. In this case, the parties submitted voluntarily to the jurisdiction of the Court of Tax Appeals, adduced their evidence thereat. Thereafter, they submitted their cause for decision. At no stage of the proceedings have they raised the issue of jurisdiction. However, as aforesaid, the consent of the parties does not confer jurisdiction over the subject matter. The word "decisions" in paragraph 1, Section 7 of Republic Act 1125, quoted above, has been interpreted to mean the decisions of the Commissioner of Internal Revenue on the protest of the taxpayer against the assessments. Definitely, said word does not signify the assessment itself. 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. 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. WHEREFORE, the petition for review filed in the Court of Tax Appeals is hereby ordered dismissed.