CTA Case No. 321 (Decision)

.- L t.OUH1 JOSE NO SUY, ,o..~~ c.r. � CAS � 321 Pet itioner, � ve:rsua � CuOvLLECuTaO, OF IUTERNAL~\\ Reap ondent , X� � - � - � � � � � X DECISIO This is an appeal from the decision of the Col lector of Internal venue assessing and d..an. ding from t he pet itioner the payment of the sum of �386. 00 as defi ciency income tax for the year 19~. Jose Ng uy , petitioner, filed his income tax return for the year 1950, refl ecting the sua of 5,~. 29 as net income and the total amount of 7, 800. 00 as personal exemptions for th� taxa� ble year. Hence , said return did not indicate any incom subject to income tax. However , after an examination and audit was conduct d by an examiner of the reau of nterna1 venue . re~ pondent disall ed certain deductions claimed by the petitioner , and on February 27 � 1956, iasued an assesament againat petitioner d..anding the amount ' of t386. 00 as deficiency incom tax. On Mar ch 21 , 1956 , petitioner filed with respondent its protest againat the d ficiency assess ent raising the d fense of prescription 309

- CIS c. r. � ��� o. 321 - 2- citing S ction 51 (d) of the ational Int mal venue ode as author i t y t refor . Inasmuch as the respondent insist d on the collection of the assessed deficiency inco~e tax , p tition r on October 4 , 1956 filed his petition for revie 'I with t his Court. ctober 25 , 1956 , the respondent f il d hie answer thereto praying , a ong other things , t e paym nt by petitioner of the all g d deficiency incom tex. Petitioner raises no issue of f ct and does not question the corr ctn ss of t he said. asses ment. But he contends how ver, t hat und r the roviaions of . ection 51 (d) of t he Nation 1 Internal ev nue Cod , the right of r espondent to collect th all ged deficiency ln. co e tax for th y ar 19 h s pre cribed. H argues and concludes thus� �so far , there is no r cord show- ing t e xact dat n the p titioner filed his inco e tax return for th yea 19 and in the abs nee of that . t e counting of t e p riod should b - gin on r h 1 , 1951. From l arch 1 , l95l ~ to February 27 , 1956 the lat- ter period eing th d t of t e d - and fo the alleg d defici ncr - there i alr ady a period of a ost five (5) years had elapsed. This be1n the c ae , the right to c llect aid deficiency income tax h s alr ady pr scrib d. � (P�titioner� e or ndu � PP � l - 2 ) cannot ree i t h nor .ub crlbe to t e erg nt and conclusion of the petitioner. It 1 true that the Coll ctor of Int m l Rev nu cannot collect y su ary a ini tr tive m thod ':_) 1 0~ <.)...._

DEClSIC!l. c . T. � Case No. 321 an assesam nt for income tax after the lapse of three y ars from the dat e the return is due , or has been made. ( hilippine Sugar state D velop- ent v � osadas , 68 hi!. 216' Collector Of Internal venu vs. velino, 53 OQ 645; llec- tor of Internal venu va. eyes , � No. L- 8685, Jan. 31 , 1957; Coll ctor of lnt mal R venue vs. Zul et , G. � eb. a, 1957 ~ Sambrano va. Court of rax eals , No. L-8652 , reb 30 , 19!>7) Hew ever , in the case at bar, r spondent is not collecting, nor ia h atte ting to collect t e defi ciency income tax assessment in question by any known su ry administrative ethod. Therefore , we ar o the opinion and so hold t t th defense of pr scrip� tion as against collection by su ry procedure as provided for in Section 51 (d) of the r x Co e does net li� in the in tant case. However, t defic� cy inco tax as es � ent in question h s dmittedly been ass ssed within five (5) years after the zeturn as fil d and therefore validly ffect d it in t e periOd prescribed by Section 331 of tho T ~ Cod � !though respondent may De barred ftc collecting the tax by summa~ methods after t he three year period pro- vided by ��etion 1 (d), nonetheless . respondent co ld enforce coll ction of the tax by judicial action (Saabrano vs. Court o,; Tax peals , �YPtfU

c.rI�S�I - e No. 321 Ca Collector vs. vel!no , to section 332 (c) o th~ venue Code here the assess ent is validly ade within p riod pr &� cr!bed in Section 331 , th pro ding in Court for the collection of the t x may b b gun ith� in five (5) ye rs after the se sm nt of th t x. Th a s sm nt in this case having betn effocted , petition r ~it out p ylng th tax had t alt rnativ of ppealing th same to this Co rt pursuant to section 11 , epublic ct o. 1125, a serting s d fen pr cription (see s c. 1 � � ct o. 1125) or it ntil t e Coll ctor of Int rn l venu instit te t e ju- d cia! civil action d t er s rt his def ns o pr scr.iption. Or the taxpay r may el ct to pay th t x and pursu the r y provid d by s ction 306 of th T x Cod John ton L r co. v � Court al , G. � o. L- 9292, il 23 , 1957) In the inst nt cas , petitioner lect d th proc dur first giv abo � G fore- stat d , p titian ti- tion for r vi" of th d cision of t of Int mal v nue on ctob r 4 , 19 , latt r submitt d his nsw r h reto n cto r 25 , 1956 , praying , ong other things, forth r dition of jud t orderin th p titioner to pay the def ciency incom tax aa&essed against ,. 919 v-

D CISlO C. T. A. C se No. 321 - 5- hia. The appeal of the petitio r to this Court is, v b lleve, equivalent to a judicial action for the coll ction of deficiency income tax w1thin1he pur- view o! said ection 332 (c) . It set the mach1- , ner1 of this Court into operation for the purpose or determining the question relative to t assess- ment and/or collection of the tax. Thus, where a taxp yer paid 1ncome taxes after the col otion by SWDIIla 1 method has been barr d and thereafter ins- tituted action tor its retund, it was held th t "the collection becam judicial and the right or the Collector of Internal Revenue to effect the col- lection through that eans has not pr scr bed (Philippine gar Estate Dev. Co. v. Pos , 68 I Phil. 216) . In Vie of the nature and subject matter or the instant petition for review, ther� is every reason to treat the present appeal as an action 1n court hich 1nvolvei th collection ot a deficiencf tax ass ss ent. Consequentl.7, it appearing that this actio s in ti tuted on Octo- ber 4, 1956, or seven (7) months and seven (7) daya from and after the assess ent of Febru ry 27, 1956, the right to entorce the collection of th de!ioienc1 income tax in question by judio1 l a �- tion has not prescribed under section 332 (o) of the Xax Code. IO s, 1 VIEW OF THE 0 GOI G CONSID the decision of the Collector of Intern 1 R venue appe led !rom, is hereby affirmed. The petitio- ner is ordered to pay to the respondent the sum ot 86.00 s de! e1 ncy 1 come tax for th 3 i 0 I I') ~I

Cl I � C. t . � Case No. 321 year 1950, plus the 5% surcharge and l monthly int r at t her on fro date of delinquency to the date of p ym nt th�reOf. ORD� ila, ilip ines , July 1 , 1957. E CU t "" s� 31 �1 0