BIR Ruling

February 22, 1957 MEMORANDUM FOR The Chief Counsel As stated by the Conference Staff, the principal question to be decided in this case is whether Mr. Miguel Kairuz could be held liable for the payment of the forest charges on the difference between the quantity of timber admittedly sold and the estimated timber yield of private woodlands registered under PWR Nos. 114 and 353. cdt The Conference Staff contends that the burden of proof is upon this Office to establish the validity and legality of the taxes assessed against the taxpayer. We respectfully disagree with the Staff on this point. There is a presumption of correctness and validity in the assessments made by the Collector and hence, it is incumbent upon the taxpayer to disprove it. Of course, this should not be taken to mean that this Office should make an assessment even if there is no basis at all. Every assessment made by this Office should have a basis both in fact and in law. However, the taxpayer should be required to present proof showing that the assessment has no basis. The Staff is also of the opinion that this Office has no evidence sufficient to sustain assessment. It should be noted that the taxpayer is being required to pay the forest charges on the difference between the timber admittedly cut and sold by him consisting of 3,432.68 cu.m. and the estimated timber which could have been cut from the registered private woodlands mentioned above consisting of 568,21 cu.m. The records show that the taxpayer has not cut and removed timber from any other registered woodland other than the registered woodland in question. The forestry officials found out that the said two private woodlands would yield only 568,21 cu.m., which finding is presumed to be correct in the absence of evidence to the contrary. Consequently, if the taxpayer cut and removed timber only from the two private woodlands in question, but the findings show that he cut and sold 3,432.68 cu.m. which quantity could not have all come from these woodlands, the taxpayer should prove that he cut and removed the difference from other registered private woodlands. In lieu of this proof, he must disprove the findings of the forestry officials by proving that all of the said 3,432.68 cu.m. of timber were cut, gathered and removed from the two registered private woodlands in question. In the absence of these alternative proofs, it necessarily follows that the difference was cut, gathered and removed from the public forest or from unregistered private lands and, hence, must be subjected to forest charges, pursuant to Sections 264 and 265 of the Tax Code. In other words, in the absence of proof of the taxpayer, the assessment of this office should stand following the rule of presumption of correctness the tax assessments mentioned above. The assessment is legal because it is based on the best evidence obtainable, pursuant to Section 15 of the Tax Code. In this connection, it may be stated that, contrary to the opinion of the Chief, Legal Branch of Baguio City Regional Office, the collection of the amount of P15,310.02 which was assessed by this Office on June 20, 1950, has not as yet prescribed. It should be noted that this assessment was superseded by our letter dated February 6, 1951, by increasing the amount assessed to P15,481.07, Hence, the five-year period of collection should commence on February 6, 1951. On January 12, 1956, or before the lapse of the period of collection, the taxpayer executed a waiver by consenting to the collection of the tax even after the lapse of the period but not later than December 31, 1957. Likewise, this waiver includes another amount of P16,199.15 assessed by this Office on March 10, 1951. However, the waiver has not yet been signed by the Collector. In the light of the foregoing, it is believed that the taxpayer should be given the last opportunity to disprove the assessment made by this Office. For this purpose, a hearing should be conducted by the Conference Staff, inasmuch as this case is pending determination by the said Staff. It may be stated that the case was decided by the Staff without any hearing. However, before such opportunity is granted the taxpayer, the waiver in question should be signed by the Collector. Likewise, it is necessary that the taxpayer be required to execute another waiver before December 31, 1957 extending the period agreed upon for the collection of the tax. LLphil Respectfully submitted, (SGD.) PRISCILLA R. GONZALES Acting Chief, Law Division