Republic v. Nagrampa

[CA No. 32667-R. August 30, 1968.] REPUBLIC OF THE PHILIPPINES , plaintiff and appellee , vs . HILARIO NAGRAMPA , defendant and appellant . SYLLABUS 1. TAXES AND ASSESSMENT; PRESUMPTION THAT ASSESSMENT NOTICE HAS BEEN RECEIVED. In the absence of proof that the taxpayer did not receive the notice of tax assessment, the presumption arises that official duty has been regularly performed (Section 5 (m), Rule 131, Rules of Court); that the ordinary course of business has been followed (Section 5 (o), supra ); and that the notice duly directed and mailed to the taxpayer was received by him in the regular course of the mail (Section 5, (v), supra ). Hence, the burden shifts to the taxpayer to show that he did not received the notice mailed to him. Having failed to overcome the foregoing presumptions, it stands that the assessment notice was received by him. 2. ID.; ASSESSMENT DEEMED MADE UPON RELEASE OR MAILING OF NOTICE. The assessment is deemed made when the notice is released, mailed or sent by the Collector of Internal Revenue to the taxpayer, for the purpose of giving effect to said assessment. It is not necessary that the notice be received within the period of five years to bind him by such assessment. Neither is it necessary to be shown by the Government that the taxpayer received notice of assessment to enable it to prosecute in court its claim against the taxpayer (Collector of Internal Revenue vs . Bautista, G.R. Nos. L-12250 and L-12259, May 27, 1959). 3. ID.; SECTION 331, NATIONAL INTERNAL REVENUE CODE, CONSTRUED. Under Section 331, National Internal Revenue Code, as long as an assessment is made within five years after the filing of the return, the action in court to collect the unpaid tax may be filed even after the expiration of five years from the filing of the return. 4. ID.; JURISDICTION; FAILURE TO CONTEST ASSESSMENT IN COURT OF TAX APPEALS; EFFECT. Failure on the part of the taxpayer to contest the correctness and legality of the assessment made by the Collector of Internal Revenue by appealing therefrom to the Court of Tax Appeals, as provided in Section 11 of Republic Act No. 1125, the suit by the Government becomes an ordinary claim for collection of a sum of money cognizable by the ordinary courts. D E C I S I O N CAPISTRANO, J p : The findings of the trial court are as follows: "This is an action for collection of the amount of P1,434.00 as deficiency income tax for the year 1951; the 5% surcharges thereon for late payment; the 1% monthly interest on said amount from 11 March 1957 to the date of full payment; and for costs. The action was originally filed on 23 June 1958 in the Municipal Court, which found for plaintiff on 28 September 1959. Whereupon defendant appealed to this Court. "In this Court, after the plaintiff presented its evidence, defendant thru counsel, instead of adducing evidence in his behalf, presented a demurrer to plaintiff's evidence, without reserving his right to present any in his behalf, and submitted his case on plaintiff's evidence, and his own consisting of Exhs. 1, 1-A and 2, to which plaintiff interposed no objection. "It appears that defendant Hilario Nagrampa filed, after an extension duly granted, his 1951 income tax return with the Bureau of Internal Revenue on 31 March 1952 (Exh. A; Income Tax Return). Defendant paid on 21 May 1952 the amount of P4.00 per his said Return (Exh. 2; O.R. No. A-35682). After verification and investigation of said return, an examiner of the Bureau of Internal Revenue, per his report of 2 November 1956, found defendant liable for a deficiency income tax in the amount of P1,434.00 (Exh. B; Adjustments to Net Income). In view of his deficiency, Income Tax Assessment Notice No. AR-22738-36/51 was issued on 16 February 1957 to defendant, requiring him to pay the said sum on or before 10 March 1957 (Exh. C.) Letters of demand for payment of the amount of the deficiency income tax for 1951, exclusive of penalties incident to late payment, was also issued (Exhs. D and E). Defendant never received there notices. "Defendant relies on two defenses. First, that the present action had already prescribed, and is therefore, barred by the statute of limitations. Second, that he did not receive the assessment notice and, therefore, is not liable to payment thereunder on the ground of non-compliance with due process requirements. On defendant's first ground, he maintains that since five years had elapsed from the filing of his income tax return on 31 March 1952 up to the time he received plaintiff's letter dated 12 March 1958 or a period of nearly six years he is not under obligation to pay the alleged deficiency income tax." From these findings of facts, the judgment of the lower court reads as follows: "WHEREFORE, judgment is hereby rendered sentencing defendant to pay plaintiff (1) the sum of P1,434.00, as deficiency income tax for the year 1951; (2) the amount equivalent to 5% of said sum, as surcharge thereon for late payment; and (3) 1% monthly interest on said sum from 11 March 1937 to the date of full payment; with costs against defendant. "SO ORDERED." From this judgment, defendant Hilario Nagrampa interposed this appeal. Appellant contends that he never received Income Tax Assessment Notice No. AR-22738-56/51, dated February 19, 1957 (Exhibit C) and, therefore, cannot be made answerable for an alleged tax deficiency of which he had no knowledge. He points out that "there is nothing in the record nor proof of any kind" that it was ever released, mailed or sent by the Collector of Internal Revenue. Appellant's claim is belied by the evidence on record. On the face of the assessment notice, Exhibit C, it appears that the same was released to him by mail on February 19, 1957. This Court likewise believes that in the absence of proof adduced that he did not receive it, the presumption arises in favor of the appellee that official duty has been regularly performed (section 5 (m), Rule 131); that the ordinary course of business has been followed (section 5(o), supra ); and that the notice duly directed and mailed was received by him in the regular course of the mail (section 5 (v), supra ). Hence, the burden of proof was shifted to appellant to show that he did not receive the notice mailed to him. Appellant having failed to overcome by competent evidence the foregoing presumptions, it now stands that the assessment notice, Exhibit C, released by mail to the appellant, was received by him in the regular course of the mail. Granting arguendo , that he failed to receive the notice of the assessment (Exhibit C), appellant cannot derive any advantage from such failure to receive it. It is now settled that the assessment is deemed made when the notice is released, mailed or sent by the Collector of Internal Revenue to the taxpayer, for the purpose of giving effect to said assessment. It is not necessary that the notice be received within the period of five years to bind him by such assessment. Neither is it necessary to be shown by the Government that the taxpayer received notice of the assessment, to enable it to prosecute in court its claim against the taxpayer. (See Collector of Internal Revenue vs . Bautista, G. R. Nos. L-12250 and L-12259, May 27, 1959) Invoking the decision of the Court of Tax Appeals in the case of Querol vs . Collector of Internal Revenue, appellant insists that since the action for collection was instituted in the Municipal Court on June 23, 1958, after more than five years from the date of the filing of the income tax return on March 31, 1952, the appellee's cause of action has already prescribed. To begin with, appellant cannot draw any legal binding force from the decision he invokes. Decisions of the Court of Tax Appeals have no binding effect upon this Court. Moreover, section 331 of the National Internal Revenue Code provides: "Except as provided in the succeeding section, internal-revenue taxes shall be assessed within five years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. Therefore, as long as an assessment is made within five years after the filing of the return, the action in court to collect the unpaid tax may be filed even after the expiration of five years from the filing of the return. Since, as already shown, the assessment for the deficiency income tax was made on February 18, 1957 and released by mail to the appellant the next day which was within five years from the filing of the return on March 31, 1952, the filing of the complaint in the Municipal Court on June 23, 1958, even after the lapse of five years from the filing of the return, did not bar the appellee's cause of action. On appeal, for the first time, appellant challenges the competence of the Municipal Court and Court of First Instance to hear and determine the instant case, claiming that since the appellee's action involves a disputed assessment of an internal revenue tax, the same should have been filed in the Court of Tax Appeals. It will be recalled that appellant had failed to contest the correctness and legality of the assessment made by the Collector of Internal Revenue by appealing therefrom to the Court of Tax Appeals, as provided in section 11 of Republic Act No. 1125. The Government's suit, therefore, become an ordinary claim for collection of sum of money cognizable by the ordinary courts. Appellant's failure to appeal to the Court of Tax Appeals from the assessment rendered it final, executory and demandable, and his refusal to pay the deficiency income tax due from him did not render the assessment a disputable one cognizable by the Court of Tax Appeals (Republic vs . Del Rosario, G. R. No. L-10640, March 11, 1959). Therefore, both the Municipal Court and Court of First Instance correctly assumed jurisdiction of the instant case. In view of the foregoing, the judgment appealed from is hereby affirmed in all respects, with costs against appellant. AFFIRMED. Caizares and Nolasco, JJ ., concur.