CTA Case No. 2809 (Decision)

t 'tt: !ll!!Plli'!UC OF 7m~ PHH.Ti"PlNRS t COURT OF TAX APPEALS I i. QUKZON Cn'V r. ! 1 I 1I I \ \ ABS-CBN BROADCASTING / CORPORAT ION, C. T.A . CASE NO . 2809 Petitioner, - versus - THE COl<11'1 ISSIONER OF INTERNAL REVEN UE, Respondent. X- - - - - - - - - - - - X DE C I S I 0 N Petitio ner ABS - CBN Broad casting Cor po r ation has filed its petition in this Court wherein it seeks for the r eview of a deficiency withholding income t ax assess- ment Of respondent Commissioner of Internal Revenue for the year s 1965, 1966, 1967 a nd 1968 i n t he respective amount o f P75,8 95 . 24 , P99,239.18, Pl28,502.00 and P222,260.00 or a total of P525,897.06. As borne out by the ple a dings and records of the case, petitioner is a corpor ation d uly 6rganized and existing under the laws of the Philippines , with business address at Bohol Avenue , Quezon City. During the years i nvolved i n the i n stan t case, petit ioner was e ngaged in t he business of exhibiting films locally produced as well as foreign films acqu i r ed from -foreign corpo rations not engaged in trade or business within the Philippines 35-A

( DECISION - CTA CASE NO. 2809 \ <...?.. - 2- ~ ,.lI i for which it paid rentals . In an investigation conducted .by respondent, it ~ was disclosed that petitioner remitted to foreign cor- l; porations not engaged in trade or business within the ji Philippines film rentals 4uring the years 1965, 1966, l 1967 and 1968 in the amount of ~2,175,578.53, anq film royalty, as of the end of the calendar year 1968, in the amount of '191,950.76. On the basis of these find- ings, respondent issued a letter of dema'nd dated April 16, 1971 assessing against and demanding from pe titioner deficiency withholding income tax for the years 1965 to 1968 in the amount of P525,897.06 computed allegedly in accordance with Sections 53 and 54 of the National Internal Revenue Code, �details of which are as follows: 1965 Total amount remitted ����� P 511,059.48 t!Vi thholding tax due thereon � � --1~.53,318.00 Less: Amount already assessed � 89,000.00 Balance .���. ��������� P 64,318o00 Add: ~% mo. int. fr . 4-16-66 to 4-16-69 �� � � � 11,577.24 Total amount due & collectible P 75,895.24 -1966 t Total amount remitted ���� � P 373,492.21 I Withholding tax due thereon � � 112,048.00 J ! Less: Amount already assessed 27,9~~ Balance �� . ���������� P Add: ~~ mo. int. fr. 84,101.00 � 4-16-67 �to 4-16-70 �� ~ o 15,138.18 Total amount due & collectible ~P--~9~9~,~2~3-9~�~1~8

DECISION - CTA CASE NO. 2809 - 3- -1967 Total amount remitted � � � � � !__�~1,160.65 Withholding tax due thereon � � 180 ,348 .00 Less: Amount already assessed 71,448.00 Balance ����� � � ��� �� D 108 1 900.00 Add: ~% mo. int. fr. Total 4-16-68 to 4-16-71 � � � 19,602.00 amount due =p---,1~2�8 , 50 2. 0 0 & collectible 1968 Total ambunt r emit ted � � � � � P 881,816.92 Withholding tax due thereon � o \291,283.00 Less: Amount already asse ssed 92 , 886 .00 Ba lance � � � � � � � � � � � � P 1 98,447.0 0 Add: ~% mo. in t . f r . 4-16-69 to 4-29-71 � � � 23 ! 813 .6 4 Total amou n t due & collectible P 222,2~0.64 (Exh. "4", pp. 156-157, BIR records). In a letter date d May 5 , 1 9 71, petitioner, through couns el, requested r econsideration and withdrawal of the assessment. However on April 6, 1976, re s pondent, without categorically deciding the request for recon- s i de ration and withdrawal of petitioner, issued a warrant of distrain~ of personal property and warrant of levy of real property, whi ch were served on petitioner~s counsel on April 14 , 1976, to enforce collection of the withholding tax assessed by him. Hence the present recourseo The issues posed on this appeal are : (1) Whether or not the assessment issued by res- Ir ..J_�

~I I I. t~ ..~ fi ~ l~ DECISION - !i' CTA CASE NO. 2809 4- pondent on April 16 , 1971 in t he amounts of P75,895.24, P99,239.18 , Pl28,502.00 and P222,260.64 or a total sum of P525,897.06 as deficiency withholding i ncome tax for the years 1965, 1966, 1967 and 1 96 8 is in accordance . with law. (2) Whether or not the right of re spondent to assess t he deficiency '"i thhold i ng income tax for 'the _ year 1965 in the a mou nt of P75,895.24 has already ;, prescribed. r The parties are no t in dispute on the provisions of I~ j i. law, revenue circulars or . rulings, legal principles, I I. 'rI . amounts of film rentals and film royalty remitted to I~ non-resident foreign corporations, and computations of the withholding income tax� paid or payable by petitioner. Petitioner pleads that in withholding and remitting to respondent the income tax due on the film rentals and royalty paid to foreign corporations not engaged in trade or business in the Philippines , reliance was made . strictly on General Circular No. V-334 dated April 12, . 1961 of the Bureau of Internal Revenue, which circular was issued pursuant to Section 24(b) of the National Internal Revenue Code. The pertinent provision of General Circular No. V-334 reads as follows: "4. The local distributor should with- hold 30% of one-half of the film rentals paid to the non-resident for e ign film distributor, and pay the same to this Of fice in accordance �

DECISION - CTA CASE NO. 2809 - 5- with law unless the non-resident foreign film distributor makes a prior settlement of its income tax liabilityo" . The rationale behind General Cir c ular No. V- 334, according to petitioner, is stated in its first paragraph~ In connection with Section 24(b) of Tax Code, the amendment introduced by Republic Act No. 2343, under which an income tax equal to 30% is levied upon the amou nt received by every foreign corporation not engaged in trade or business within t he Philippines from all sources within this cou~try as interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or period- ical gains, profits, and income, it has been determined that the tax is still imposed on income derived from capital , or labor, or both combined, in accordance with the basic pr inciple of income taxation (Sec. 39, Income Tax Regulations) , and that a mere r eturn of capital or investment is not income (Par. 5.06, 1 Mertens Law of Federal Taxation). Since ac vording to the findings of the Sp~cial Team \'lho inquired into the business of the non- resident foreign film distributors, the dis- tribution or exhibition right on a film is invariably acquired for a consideration, either for a lump sum or a percentage of the film rentals, whether from a parent company or an independent outside producer, a part of the receipts of a nonresident foreign film distributor drived from said film represents, therefore, a return of investment. It is clear from the aforecited circular that the withholding i ncome tax should be computed at thirty per cent (30%) of ONE-HALF of the film rentals paid to a non- resident foreign film distributor. Hence, petitioner insists that its . reliance on, and compliance with, the 'i

,l I DECISION - CTA CASE NO. 2809 - 6- circular absolved it from any deficiency withholding income tax liability. Respondent, on the other hand, contends that the above General Circular No. V-334 relied upon by petitioner was subsequently revoked by Revenue Memorandum Circular No. 4-71 dated February 8, 19 71. Revenue Memorandum Circular No. 4-71 provides as follows: "After a restudy and analysis of Sectio~ 24(b) of . the National Internal Revenue Code, as amended by nepublic Act No. 543~, and guided by the interpretation given by tax author ities to a similar provision in the Internal Revenue Code of the United States , on which the aforementioned provision of our Tax Code was patterned, this Office has come to the conclusion that the tax therein pres- cribed should be based on gross income \'li thou t deduction whatever. Consequently, the ruling in General Circular No. V-334, dated April 12 , 1961, allowing the deduction of the pro- portionate cost of production or exhibition of motion picture films from the rental income of I nonresident foreign corporations, is erroneou s i for lack of legal basiso l' lI ' "In view thereof, General Circular No . V-334, dated April 12, 1961, is hereby revoked and henceforth, local film distributors and exhibitors shall deduct and withhold 35% of the entire amount payable by them to non- resident foreign corporations, as film rental or royalty, or whatever such payment may be denominated, without any deduction whatever, pursuant to Section 24(b), and pay the with- held taxes in accordance with Section 54 of the Tax Code, as amended. "All rulings inconsistent with this Circular is likeTtlise revoked." (Exh. "8", p. 171, BIR records.) Relying however on the then Section 338-A (now 35-F

DECISION - CTA CASE NO. 28 09 - 7- Section 327) National Internal Revenue Code, petitioner a s sa i ls the retr o active ap~lication of Revenue Memo- randum Circular No. 4-71. Section 338-A reads as follows: SEC. 338-A. Non-retroac ivity of rulings.- Any revoca t ion, modification, or reversal of any of the r ules and regulations promulgated in accordance with the preceding section or any of the rulings or c i rculars promulgated by the Com- missioner of Internal Revenue shall not be given retroactive application if the revocation, modi- fication, or reve rsal will be prejudicial to the taxpayers except in the following cases: {a) where the taxpayer deliberately misstates or omits material �facts �from his return or in any document required of him by the Bureau of Internal Revenue ; (b) where the facts subsequently gathered by the � Bureau of Internal Revenue are materially different from the facts on which the ruling is based, or (c) where the taxpaye r acted in bad faith. In dealing with the authority of the Commissioner of Internal Revenue to issue and promulgate circulars, � it must be stressed that he is not and could not be authorized under the provisions of the National Inte r nal Revenue Code, under which the deficiency withholding income tax here is assessed, to alter, amend or modify, much less lower, the amount, measure or rate of the tax . That p.ower is vested in the legislature or the law-making body. The legislature may not delegate the power to select the subject person or property to be faxed , the amount or measure of the tax and the defi- nition of the purpose for which the tax shall be levied. (61 C.J. 86.) The only auth o rity~ven to the Comm is- sioner of Interrial Revenue by the Tax Code, in respect

DECISION - CTA CASE NO. 2809 - 8- of circulars, is to issue and promulgate all necessary ci~culars for c arry ing out the p rov isions of the Code o Therefore, it logically follows that any circular of ~he Commissioner of Internal Revenue which would alter, amend or modify the amo~nt, measure or rate of the tax specifically provided by the National Internal Revenue Code would be void. (Greenf ie ld vs. Meer, 77 Phil. 394i Wise & Co. vs8 Meer, 78 Phil. 655o) It seems �too cl�ear for serious argu{llent that an administrative officer can not change a law enacted by Congress. A regulation or circular that is merely an interpretation of the statute when once determined to have been erroneous becomes nullity. An erroneous construction of the law by the Commissioner of Internal Revenue does not, therefore, preclude or ~stop the Govern- rnent from collecting a tax which is legally due. (Hilado vs. Collector of Internal Revenue, 100 Phil. 288, citing Ben Stocker, et. al ., 12 B.T.A. 1351.) No vested or acquired right can arise from acts or omissions which are against the law or 'V'lhich infr: inge upon the rights of o thers. (Article 2254, New Civil Code.) It follows that the Commissioner of Internal Revenue is vested with authority to revoke, repeal or abrogate the acts or previous rulings of his predecessor in office because the construction of a statute by those administering it is not binding on .their successors if thereafter the 35�H

DECISION CTA CASE NO. 2809 - 9- latter become satisfied that a different construction should be given. (See Hilado vs. Collector of Internal Revenue, s upra, citing Association of Clerical Employees vs . Brotherhood of Railway & Steamship Clerks, 85 FoLZ�7 � 152 , 109 A.L.R. 345a) Accordingly, if General Circular No. V-334 of the Commissioner of Internal Revem~e under v1hich petitioner computed and deducted the withholding income tax due on the film rentals and royalty it remitte~ to non-resident foreign corporations and foreign film distributors not engaged in trade or business within the Philippines is not in conflict with the law , then the withholding and payment to the Bureau of Internal Revenue of only thirty per cent (30 %) of ONE-HALF of such film rentals and royalty did not result in any deficiency withholding tax liability of petitioner. On the other hand, it is axiomatic that if, under the law, petitioner as local film exhibitor should deduct and withhold thirty per cent {30%) of the entire amount of film rentals or royalty it remitted to foreign corporations not engaged in trade or business within the Ph il ippines, it is ~elf-evident that petitioner is still liable for the deficiency witl.holding income tax assessed against it by respondente Any erroneous interpretation of the law by the Commissioner of Internal Revenue would not estop

- ~�~�� ~~ -~���- -~--�~--------- ����--�� --------W-"'f'"''Mi''"O" --~UJII';'....,..��~ l ,. ' r. .DECISION - CTA CASE NOo 2809 - 10 - the Government from asserting the tax, even though petitioner may have relied, or been misled, by such i nterpretation. Petitioner's liability was determined by the law, and not what some administrative official i thought was the law. We should therefore determine I the measure or basis of the income tax levied and collected upon the amount of film rentals and royalty I \ received by foreign corporations not engaged in trade or business within the Philippines from ~ources within the Philippines. The law involved is Section 24(b) (1} of the National i Internal Revenue Code, and at the time this case arose, li l! ! reads as follows: SEC. 24. Rate of tax on corporations.- (b) Tax on foreign corporations.-(!) Non- resident corporations.- There shall be levied, collected, and paid fo�r� each taxable year, in lieu of the tax imposed by the preceding para- graph, upon the amount received by every foreign corporation not engaged in trade or : _ business within the Philippines, from all sources within the Philippines, as i nterest, dividends, rents, salaries, wages, premi ums, annuities, compensations, renumnerations, emoluments, or other fixed or determinable annual or periodical or casual gains, profits and income and capital gains, a tax equal to thirty per centum of such amount: Provided, however, That premiums shall not include reinsurance premiums. And Section 54 of the same Code at the time material to this proceeding states: SECo 54. Payme nt of c or poration i ncome tax at source o- In the c ase of foreign corporations subject to taxation under this Title not engaged in trade or business within the Philippines and

�----------------~-~~�-u..A� DECISION CTA CASE NO. 280 9 - 11 - not having any office or place of business there- in , there shall be deducted and withheld at the source in the same manner and upon the same items as is provided in section fifty-three a tax equal to thirty per centum thereof, and such tax shall be returned and paid in the same manner and subject � t o the same conditions as provided in that section: � Provided, however, That no such deduction or with- holding shall be required in the case of reinsurance premiums ceded to f oreign insurance corporations not engaged in trade or business in the Philippines and having no office or pl ace of business therein. Referring to the terms of the la\'1, it is quite appar en t that the income tax imposed, and to be deducte~ l ~nd withheld at source, upon the amount of film rentals and royalty received by every foreign corporation not engaged in trade or business within the Philippines, from all sources within the Philippines, is equal to thirty~ centum (30%) of �UCh amount, \'lithout any deduction v;hatever. The statute employs the words "upon the amount received by every foreign corporation not engaged in trade or business within the Philippines, from all sources within the Philippines, x x x rents x x x or other fixed or determinable annual or periodical or casua:l gains, profits, and income, x x J' a tax equal to thirty per ce~ of such amount"-not less. Nothing there said speaks, expressly or impliedly, of thirty Eer centum of one-half of such amount. Hhere the la\-.r commands that a tax equal to a specified rate.or per- centage of the entire amount received by every non- reside... nt corporation from all sources within the

... ~ . -����-�- - �~~-����"~�-��-�----- ..........�.-�"1...........................~. .............. , . � - - DECISION CTA CASE NO. 2809 - 12 - Philippines should be levied and collected on such a amount, no deduction from, or reduction of, the amount f ixed and established by the statute as basis of the tax should be allowed . Deductions are wholly and exclusively within the power of Congress or the law- making body to grant , condition or de ny; and where the statute imposes a tax equal t o a specifi ed rate ok percentage of the gross or entire amount received by the t axpayer, ~he authority of some administrative ' off ic ial t o modify or change,much less reduceu the basis or measure of the t ax should not be read into the law. The provi sions of a revenue law which are intended for the security of the citizen or to i ns ur e the equality of taxation, or for certaint;:y as to the nature and amount of eac h ee rson's tax are mandatory. Acts done in vio~ lation of such provision are invalid. (51 Am. Jur. 359; Viuda e Hijos de Pedro P. Roxas vs. Rafferty , 37 Phil. 958.) Citing the first paragraph of General Circular . . No. V- 334, !uera, petitioner however avers that a part of the receipts of a non-resident foreign film distri- butor derived from film r en tals represents a return of investment; and a mere return of investment is not income. A return of investment is a question of fac t, and is not measured by a theoretical percentage of the amount of rental received by a non-resident f oreign ~5 - L

DECISION - CTA CASE NO . 2809 - 13 - __ ,..J corporation which, by express mandate of the law, is subject to income tax equal to a fixed rate of the entire amount received by it from all sources within the Philippines without any deduction whatever, not being authorized to engage in trade or business within the Philippines. But assuming ~~uendo that a part of the receipts of a non-resident foreign film di~tri- butor �derived from film rental represents a return of investment, th~t portion thereof has already been con- \ sidered, one way or the other , in determin i ng the amount of rent or royalty for the use of or for the privilege of using in the Philippines of its films. At all events, income tax means a tax based on income, gross or net (27 Am. Jur. 308); and it is now generally regarded as an excise tax and not a tax on property . The theory � that a tax on income is legally or economically a tax on its source is no longer tenable. (Graves vs. Ne\v York , 306 u.s. 466; Madrigal vs . Rafferty, 38 Phil. 414.) The net result is that pursuant to the .provisions . . of the then Sections 24 (b) (1) and 54 of the National Internal Revenue Code, in relation to Section 53 thereof, the income tax imposed , and to be deducted and withheld at source by local film exhibitors, like petitioner herein, upon the amount of film rentals and royalty remittedcy them to their foreign suppliers and distri- butors, which are foreign corporations not engaged in 35-M

DECISION - CTA CASE NO. 2809 - 14 - trade or business within the Philippines, during the years involved in this case, should be equal to t hirty ~ 9enturn (30%) of such entire amount without any deduction whatever. It follows that no error was corn- mitted by respondent in revoking, under Revenue Memo- randum Circular No. 4-71 dated February 8, 1971, General Circular No. V-334 a llowing the deduction of the "pro- portionate cost of productton or exhibition of motion picture films �from the rental i ncome of p en -res ident foreign corporations, for lack of legal basis; and requir ing local film distributors and exhibitors to deduct and withhold 35 % (30% during the ta xable years involved in this case ) of the entire amount payable by them to non-r esident foreign corporations, as film r e ntal or royalty, or whatever such payrn~nt may be denominated, without any deduction whatever, pursuant to Section 24(b), and pay the withheld taxes in accord- ance with Section 54 of the Tax Code. Nonetheless, petitioner would attemp t to draw support from Section 338-A (now Section 327) of t he National Internal Revenue Code, s~pra, by contending that any revocation of circulars promulgated by the Commissione r of Internal Revenue should not be given retroactive application if it would be prejudicial to taxpayers. Since the law during all the taxable years involved in the instant c ase from 1965 thru 1968 was ?li -N

DECISION - CTA CASE NO . 2809 - 15 - Gerieral Circular No. V-334, petitioner argues that the same was correctly applied by it in withholding 301 of one-half of the film rentals remitted to its foreign film distributors . (p . 5, Memorandum for Pet~tioner, pp, 44-51 , CTA records.) Petitioner misses the point . General Circular No. V-334 was not the l~w that governed its withhold i ng income tax liabil ities during the taxable years covered by this case , but as its designation im~lies , a circular issued by the Commissioner of Internal Revenue for the guidance of internal revenue officers in the enforcement t of the law . Howeve r, since General Ci rc ular No . V-334 1! f is in conflict with the law it was supposed t o implement, I' I as already discussed . above, it was null and void. As such it had no effect whatsoe ve r ; absolutely ~n d enti~ely null; of no legal force and for that reason cannot be enforced. (Go Chioco vs. Martinez , 45 Phil . 285 . ) Ge- neral Circular No. V- 334 could not therefore give rise to a vested or acquired r ight that could be invoked by petitioner for it is against the law. (Article 2254, New Civil Code.) I t is thus clear beyond doubt that legally there was no circular to revoke which revocation should be prospective in operation under the then Section 338-A of the National Internal Revenue Code. As clearly and explicitly stated by respondent in his demand letter dated April 16, 1971 (Exh. "4 11 , supra) 35-0

DECISION - CTA CASE NOo 2809 !i ; - 16 - II to petitioner, "Under Section 54 of the Tax Code, in l' t f' t relation to Section 53 thereof , you should have with- held the correspond i ng withholding income tax, filed the necessary withholding income tax return and paid the same to this Office." Nothing there said speaks of the revocation of General Circular No. V-334, under which petitioner settled its withholding income fax liabilities for the years 1965 to 1968, by Revenue Me- morandum Circular No. 4-71 , which was a~lege dly applied retrospectively to petitioner. Under paragraph 11 of its petition for review, petitioner however alleges that the right of respondent to assess the deficiency withholding income tax for lI ! taxable year 1965 has prescribed considering that more than five (5) years have already elapsed, the deficiency assessment hav ing been issued only on 16 April 1971. Respondent specifically denied this allegation under paragraph 3(f) of his answer for being erroneous con- elusion of fact and/or law, the truth of the matter being, as averred as special and affirmative defense under paragraph 6 of the answer, t he right of respondent to assess the tax i n the instant case has not prescribed. No proof was offered by petitioner as to the truth of its own allegation of pre s cri ption; an d since it prayed, and submitted its case, for judgment on the pleadings, petitioner must be understood to have admitted the truth 35-'j)

DECISION - �eTA CASE NO . 2809 - 17 - of all the material and relevant allegations of respondent, and to have rested its motion for judgment on t hese allegations taken together and with the evidence presented by respondent that h i s right to a s sess the tax i n this proceeding has not prescribedo (See Bauermann vs. Casas, 10 Phil . 386; Evangelista V So De la Rosa , eto al. 76 Phil . 115.) It appears from the records of the Bureau of Internal Revenue pertaining to this cas~ that an inves- tigation of the withholding income tax liabilities of petitioner for the years 1965 to 1968 was conducted by respondent's e>~aminers pursuant to Letter o f Authority No. 130006 NA dated April 7 , 1970. (Exh. "1", pp. 86-87g BIR records.) As a result of t his in ve s t iga t ion, there have been found due from petitioner deficiency with- holding income tax liabilities for said years in the aggregate amount of P485,947 . 33, exclusive of interest and surcharges. In a letter dated J anuary 18 , 1971, petitioner was invited by respondent t o an informal conference for the latter to go over the findings of the examiners and offer its objection thereto , as well as to present its side of the case. (Exh. "2", p. 89 , BIR records.) Petitioner in its letters dated January 27 , 1971, January 29, 19 71 and February 15 , 1971 explained its side of the proposed assessment, submitting

. .''.� 'I . DECISION .... CTA CASE NO. 2809 - 18 - the necessary papers to support its explanation ~ (pp. 90, 91 and 99, BIR records.) On the basis of the explanation and documents submitted by petitioner, a reinvestiga tion of the case was conducted, and in a letter dated April 16, 1 971, respondent affirmed his finding s, and assessed and dema nded from petitioner de fic iency withholding income tax for the years 1965, 1966, 1967 and 1968 in the amount of P525 ,897.06. (Exh o "4", pp. ,156-157, BIR records.) In its letter of May 5 , 1971, pe ti tioner disputed the assessment and asked that the same be with- drawn. (pp. 160-161, BIR records .) On April 6, 1976, . however, r e spondent issued a warrant of distraint of personal proper ty and a warrant of levy on real pro- '~> perty, wh ich were duly served on petitioner's counsei on April 14, 1976 o (Exhs. "5", "5-A", 6 11 11 "6-A", pp. 1 165-166 , BIR records.) In allegi~g that the rig ht of respondent to assess the deficiency withholding income tax for taxable year 1965 has prescribed under the provisions of Section 331 (now Section 318) of the National Internal Revenue Code, petitioner claims that the April 16, 1971 deficiency withholding tax assessment of respondent was issued after five (5) years from the date of the filing of the return for taxable year 1965. However, no evidence

DECISION - CTA CASE NO. 2809 ~ 19 - what soever was ~ ted by petitioner to substantiate i ts d efense of prescription, although the bu~den of proo f is upon it to prove that t he right of respondent to assess its 1965 income tax de f iciency has already prescribed . It must be stressed that the defense of presc rip t ion is an affirmative allegation and the burden o f proof is upon the party laying claim to it. (Bollozos vs. Court of Tax Appeals, L-16441, March 31, 1965, 13 SCHA 469. ) Pre scription being a matter 9f d efense, t l.e burden is on the taxpayer (petitioner) to prove that j t he full period of limitation has expired, so that he '1 should positively establish the date when the period started to run and when it e nded. (Querol vs . Collector of Internal Revenue, L-16705, October 20, 1962 , 6 SCRA 304.} And, as stated earlier, since petitioner prayed, and submitted its case, for judgment on the pleadings, it must be unders tood to have admitted the truth of all the material and re levant allegations of responde n t :1 including his averment that his right to assess the tax in question has not prescribed. .l At any rate , for purposes of the prescriptive periods 1 established by Sections 331 an�1 332 (now Sections 318 l and 319 ) of the Nat ional Internal Revenue Code, an assessment is deemed made when fue notice is released , mailed or sent by the Commissioner of Internal Revenue to the taxpayer. Failure of the taxpayer to receive I 'l ' �l ! j1 3~-.3

f DECISION - CTA CASE NO. 2809 t~ �- 20 - r the assessment within the prescriptive period will not !� affect the validity of the assessment if it was mailed and released within said period . (Basilan Estates vs. I Commissioner of Internal Revenue, L-22492, September 6, 1967, 21 SCRA 17; Nava vs. Collector of Internal t Revenue , L-19470, January 30, 1965, 13 SCRA 104; Republic vs. Alane, L-18865, September 28, 1964, 12 SCRA 24.) j_ The evidence of respondent, both oral and docu- f mentary , show �that while his letter of demand was dated ! \ I April 16, 1971 (Exh. "4", PP o 156-157, BIR records ), the Ll' ''f;" same ""as actually issued on April 12, 1971, sent by personal delivery on April 12, 1971, and actually . received on April 12, 1971 (Exh. "4-C", p . 157 , BIR records; t.s.n., pp. 7-11, hearing on April 27, 1979). j On the right side of p~ge 2 of the duplicate of the letter of demand dated April~' 1971 at the lower �j portion thereof is stamped "Apri 12, 1971" (Exh. "4-A") - denoting the date of receipt of the Records I Division of the Bureau of Internal Revenue; and on the upper right hand corner of page 1 of the said :l demand letter is also \�Jritten "4/12/71" (Exh. "4-B") - signifying the date of releas~ as indicated by the file J code number appearing on the upper right hand corner thereof , according to standard operating procedur e of -I the said Bureau. Then on page 1 of the said duplicate of the letter of demand of April 16, 1971, at the lower ., --� 'I Ji J r~ J1 \' 1 �j ,:! 1 l l ~ l' �, �1 ll I ; .35-T

DECISION - CTA CASE .NO. 2809 �I - 21 - :1 .I i right side thereof~ is also stamped " Received Apri 12, ! . 1971" and a notation "Received Original Copy" wi th an J illegible signature written thereon (Exh . "4-C") indicating the date of receipt of said letter. The uncontr adic t ed evidence of respondent , both oral and documentary , suf f iciently show that while the letter of respondent assessing agai nst and deman~ing f rom petitioner deficiency withholding income tax for the years 1965 to 1~68 was dated April ~6 , 1971, the petitioner on April 12, 1971. As suming arguendo that petitioner's income tax return for 1965 was filed with the Bureau of Internal Revenue on the due date, i.e., April 15, 1966, the assessment for 1965 was issued . within the five-year period provided fa~ by law � �~ 'I Ac c ordingly, the right of respondent t o assess the deficiency withholding income tax for taxable year 1965 in the amount o f P75,895.24 has not prescribed. For the reasons given , the Court finds the assess- ment issued by respondent on April 16, 1971 against petitioner in the amounts of P75 ,89 5.24, ~9 9,239.18, Pl28,502.00 and P222,260 . 64 or a total of P525 , 897o06 as deficiency withholding income tax for the years 1965, 1966, 1967 and 1968, respectively, in accordance with law. As prayed for, the petition for review filed ,), l in this case is dismissed , and peti t ioner ABS-CBN ~ �) w 35'- '

I' DECISION - CTA CASE NO. 2809 - 22 - Broadcasting Corporation is hereby ordered to pay the sum of �525,897 .06 to respondent Commissioner of Internal Revenue as deficiency withhold ing income tax for the taxable years 1965 thru 1968 , plus the surcharge and interest which have accrued thereon inciden t to delinquency, pursuant to Section Sl(e) of the National Internal Revenue Code, as amended. jI WHEREFORE , the decision appealed from is hereby ji affirmed at p~titioner's costs. SO ORDERED. Quezon City, Metro Manila, November 29, 1979. I CONCUR: CO.~~1'::A:~? N'~c . E c<J,�~ /:r�?�AQUIN ,. � ASSOClate Judge (