Republic v. Carasig

[CA No. 29370-R. January 3, 1966.] REPUBLIC OF THE PHILIPPINES , plaintiff and appellee , vs . REV. FATHER PABLO CARASIG , defendant and appellant . Deogracias T . Reyes and Associates for defendant and appellant. No appearance for plaintiff and appellee. SYLLABUS LIMITATION OF ACTIONS; COLLECTION OF INCOME TAX FOR FAILURE TO FILE RETURNS; LAW GOVERNING. An action in Court for the collection of income taxes for failure to file the returns prescribes after ten years counted from the discovery of the omission, the law applicable being Section 332 of the Tax Code, and not Section 51(d) of the same Code which refers to the summary settlement and collection of a tax, or Section 354 of the same Code which refers to prescription of criminal actions arising from violations of the Tax Code. D E C I S I O N ALVENDIA , J p : The Republic of the Philippines filed this action versus Defendant-Appellant for the collection of the income taxes assessed against him for the year 1946 through 1950 in the sum of P45.56, P249.75, P359.52, P212.15 and P130 respectively, plus surcharge, interest and costs. In the City Court where it was originally filed, the complaint was dismissed. Upon appeal by the plaintiff, the Court of First Instance of Manila rendered judgment, sentencing defendant to pay plaintiff P996.98 plus 5% surcharge and 1% monthly interest from the time of the filing of this action on April 28, 1958. The defendant appealed. Appellant is a priest belonging to the Society of Jesus and during the period covered in the complaint was assigned to teach at the Ateneo de Manila, a school owned by the Society of Jesus. Upon examination of the books of Ateneo de Manila by the Collector of Internal Revenue, it was found that said institution disbursed on account of the clothing, food and incidental expenses of appellant as teacher, the following amounts: 1946 P1,681.82 1947 5,042.19 1948 6,018.00 1949 4,562.02 1950 3,559.19 Corresponding income tax returns were filed for appellant by the Collector of Internal Revenue and notices of assessment sent to him for the corresponding years, as follows: 1946 P45.56 1947 242.75 1948 359.52 1949 212.15 1950 130.00 Total P996.98 Defendant twice asked for a reconsideration of the assessments made, on the ground that he did not receive any salary or compensation and that the amounts credited to him in the books of the institution represented expenses of the Society for his clothing, food and incidental expenses (Exh. G.). Both requests for reconsideration were denied; the last denial was received by defendant on February 22, 1958 (Exh. H-1). As the defendant did not pay the assessment nor appeal therefrom to the Court of Tax Appeals, the plaintiff filed the complaint which originated these proceedings. aisadc The main issue in this appeal is whether or not appellant can assail the validity of the assessments in these proceedings. Under the provisions of Republic Act No. 1125, appellant should have appealed to the Court of Tax Appeals within thirty days after his receipt of a ruling or assessment by the Collector of Internal Revenue, if he did not agree to the same. Said Court has exclusive appellate jurisdiction to review such disputed assessment (Secs. 7 and 11). The admitted failure of defendant to interpose such appeal rendered the assessment final, executory and demandable. Appellant claims that "To say that the Court of Tax Appeals has exclusive jurisdiction over illegal assessment would be to violate the Constitution of the Philippines which categorically provides that the Supreme Court cannot be deprived by Congress of its exclusive power to decide 'all cases involving the legality of any tax import, assessment or toll or any penalty imposed in relation thereto'" (p. 25, appellant's brief). The argument is fallacious. The jurisdiction conferred upon the Court of Tax Appeals by Republic Act 1125 was merely transferred from Court of First Instance which exercised said jurisdiction before the enactment of Republic Act 1125. Decisions of the Court of First Instance then and those of the Court of Tax Appeals now, are appealable to the Supreme Court (Sec. 18, Republic Act 1125) and, therefore, the violation of the Constitution feared by appellant does not exist. The points raised by the appellant in his brief wherein he alleged that the Trial Court erred in not allowing him to present evidence showing the illegality of the assessment and that he did not actually receive any income are proper points which could have been raised, had he appealed the decision of the Collector of Internal Revenue to the Court of Tax Appeals. However, in an action such as this, to enforce collection of an assessment which has become final and executory, said defenses may no longer be interposed. Appellant claims that the action to collect the assessment has prescribed, citing in support thereof the provision of Section 51(d) of the Tax Code which reads: "In cases of refusal or neglect to make a return and in cases of erroneous false or fraudulent returns, the Collector of Internal Revenue shall, upon discovery thereof, at anytime within three years after said return is due, or has been made, make a return upon the information obtained as provided for in this Code or by existing law, or require the necessary corrections to be made, and the assessment made by the Collector of Internal Revenue thereon shall be paid by such person or corporation immediately upon notification of the amount of the assessment." This above quoted provision of law refers to the summary assessment and collection of a tax but not its collection by an action in Court such as the present case (Collector of Internal Revenue vs. Villegas, 56 Phil. 554; Phil. Sugar Estate Development Co., Inc. vs . Posadas, 68 Phil. 216; Collector of Internal Revenue vs . Avelino, G.R. No. L-9202, November 19, 1956). We agree with the Trial Court that the applicable provision is Section 332 of the Tax Code which reads: "In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return, the tax may be assessed, or a proceeding in Court for the collection of such tax may be begun without assessment, at any time within ten years after discovery of the falsity, fraud or omission." In the present case, the discovery of appellant's omission to file his income taxes for 1946 through 1950 was made on July 2, 1953 and the action was filed on April 28, 1958. The provisions of Section 354 of the Tax Code is not applicable to the present case because said section refers to prescription of criminal actions arising from violations of the Tax Code. Neither is Article 1144 of the Civil Code which is also invoked by appellant, applicable, since the present case is governed by a special law. The question of venue raised by appellant is without merit. He was served with summons in the City of Manila. Moreover, by filing his answer and going into trial after his motion to dismiss was denied by the City Court, he waived any right he may have had to raise the question of venue. This is particularly true because he did not reiterate before the Court of First Instance his motion to dismiss which was denied by the City Court. LLphil WHEREFORE, the decision appealed from is hereby affirmed. SO ORDERED. Angeles and Gatmaitan, JJ . , concur.