ACOJE MINING COMPANY, INC., PETITIONER, VS. THE COMMISSIONER OF INTER­NAL REVENUE AND THE COURT OF TAX APPEALS, RESPONDENTS.

Section 51 of the National Internal Revenue Code, as originally enacted,^[1]
provided:

“SEC. 51.  Assessment
and payment of income tax. – (a) Assessment
of tax. – All assessments shall be made by the Collector of
Internal Reve­nue and all persons and corporations subject to tax shall be
notified of the amount for which they are respectively liable on or before the
first day of May of each successive year.

“(b) Time
of payment. – The total amount of tax imposed by this Title shall
be paid on or before the fifteenth day of May following the close of the
calendar year, by the person subject to tax, and in the case of a corporation,
by the president, vice-president, or other responsible officer thereof.  If the return is made on the basis of a
fiscal year, the to­tal amount of the tax shall be paid on or before the
fifteenth day of the fifth month following the close of the fiscal year.

“(c) Installment payments. – When the tax as­sessed
against the taxpayer is in excess of ten pe­sos, the taxpayer may elect to pay
the tax in two equal installments in which case the first install­ment shall be
paid on or before the date prescribed in the preceding subsection, and the
second installment, on or before the fifteenth day of August fol­lowing the
close of the calendar year, or on or be­fore the fifteenth day of the eighth
month following the close of the fiscal year, as the case may be.  If any installment is not paid on or before
the date fixed for its payment, the whole amount of the tax unpaid shall be
paid upon notice and demand from the Collector of Internal Revenue.

“(d) Refusal or neglect to
make returns; frau­dulent returns, etc. – 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 the
discovery thereof, at any time within three years after said return is due, or
has been made, make a return upon 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 persons or corporation immediately upon notification of the amount of
such assessment.

“(e) Surcharge and interest in
case of delin­quency. – To any sum or sums due and
unpaid after the dates prescribed in subsection (b), and (c) and (d) for the
payment of the same, there shall be added the sum of five per centum en the
amount of the tax unpaid and interest at the rate of one per centum a month
upon said tax from the time the same became due, except from the estates of
insane, deceased or insolvent persons.”

This case arose under this original provision of sec­tion
51.  The last day for filing the income
tax returns of corporations was March 1, 1958,^[2]
but the petitioner Acoje Mining Company was allowed
by the Bureau of Internal Revenue (BIR) up to April 30 of that year within
which to file its return “on condition that 50% of the tax due on each
return is paid to the * * * Treasurer of Manila on or before May 15, 1958, with
or without assessment notice(s) from this Office; otherwise, there shall accrue
on the whole tax due on each return the 5% surcharge and the 1% monthly
interest from May 16, 1958, pursuant to section 51(e) of the National Internal
Revenue Code.”^[3]

The petitioner filed its return on April 24, 1958, but it failed to pay its tax, which
amounted to P1,148,585, or any amount thereof, on May 15, 1958 as demanded in the let­ter of the BIR.  On May 24 the petitioner received an as­sessment
notice from the BIR, giving it the option of paying its tax in two equal
installments, the first on or before June
15, 1958 and the second on or before August 15, 1958. 
Still the petitioner was not able to pay its obligation.  On March
16, 1959 it paid P1,303,693.98, representing the amount of the tax,
surcharge, interest and compromise penalty.^[4]  In­terest was paid on the whole amount of the
tax from August 16, 1958
and on only one-half of the tax from May
16,1958.  But the respondent
Commissioner of Internal Revenue demanded the pay­ment of the additional sum of
P17,2Z8.77 on the ground that in­terest should be paid on the entire amount of
tax due from May 16, 1958
to March 16, 1959.^[5]  The petitioner’s request for reconsideration
having been denied, the case was elevated to the Court of Tax Appeals on the
issue of whether upon the failure of the petitioner to pay the first
installment of its 1957 in­come tax on May 15, 1958 the whole amount thereof
became liable to the payment of interest. 
The petitioner contended that with­out notice or demand by the
respondent Commissioner the second installment did not become due until August 15, 1958.  On the other hand, the respondent
Commissioner argued that no such no­tice or demand was necessary as the entire
amount of the tax automatically became due upon the failure of the petitioner
to pay the first installment thereof on May
15, 1958.

In its decision the respondent Court of Tax Appeals held:

“Apparently, both parties assume that the tax in question was
payable by installment. . . . There is nothing of record [however] to show that
petitioner gave notice to respondent, directly or indirectly, of its desire to
pay, the tax by installment.  In fact,
the whole amount of the tax was paid on March
13, 1959.  Therefore, the
whole amount of the tax was due and payable on or before May 15, 1958, pursuant to Subsection (b) of
Section 51, and interest at the rate of 1% per month is due on the entire
amount from said date, when it became due, to the date of payment.  Subsection (c) of Section 51, prescribing the
dates of payment of income tax by installment, is not applicable as petitioner
did not choose to pay by installment.”

The petitioner asked for a reconsideration of this deci­sion and,
failing to secure one, came to this Court on a peti­tion for review.

1. The petitioner maintains that the only issue in this case is
whether its failure to pay one-half of its tax on or before May 15, 1958 –
without more – ipso facto made its entire obligation due and
demandable, and that in deciding the case instead on the question whether there
was an effective election to pay taxes in installments the respondent CTA de­nied
the petitioner due process.

The ground, however, on which the respondent court de­cided this
case is so intimately related to, and is in fact assumed by the issue posed by,
it that it can be said to be properly before the court.  As we once observed,^[6]
the tendency is to accord appellate courts a broad discretionary power to waive
the lack of proper assignment of error and consider errors “closely
related to an error properly assigned, or upon which the determination of the
question raised by the error properly assigned is dependent.”  The recent case of Philippine Banking
Corp. v. Lui She,^[7]
illustrates this rule.  There, the issue
on which the parties litigated and on which the trial court decided the case
was whether certain contracts purporting to lease a parcel of land to an alien
for 99 years and giving him an option to buy the land in the event he acquired
Philippine citizenship, were freely entered into by the lessor,
an old woman.  This Court, after
reviewing the evidence, found nothing that would vitiate consent but
nonetheless invalidated the contracts on its finding that they were prohibited
by the Constitution:

“This is not to say, however, that the contracts (Plffs. 3-7) are valid. 
For the testimony just quoted, while dispelling doubt as to the
intention of Justine Santos, at the same time gives the clue to what we view as
a scheme to circumvent the Constitutional prohibition against the transfer of
lands to aliens. . . .”

Moreover, the petitioner was not really deprived of its
opportunity to present evidence on the issue on which the case was
decided.  In its motion for
reconsideration, it cited the testimony of its assistant corporate secretary
and attached a letter which it claimed indicated that it had elected to pay in
installments.  Whatever irregularity,
then, might have been committed in the beginning was cured by the subsequent
pre­sentation of evidence on the supposed new issue.

2. Did the petitioner elect to pay its tax in install­ments?  To be sure, the law does not specify in what
way the option to pay in installments should be exercised by the tax­payer.  Obviously, it could be made impliedly as was
in fact done in this case.  Thus,
implicit in the letter of February 25, 1958 of the respondent Commissioner is
the understanding that payment of the petitioner’s tax was to be made in two
installments, hence, the reference therein that “50% of the tax due on
each return is [to be] paid . . . on or before May 15, 1958 . . .; otherwise,
there shall accrue on the whole tax due on each return the 5% surcharge and the
1% interest from May 16, 1958.” 
Again, when the petitioner failed to pay 50% of its tax (or, what
amounts to the same thing, the first installment) on May 15, 1958, the respond­ent
Commissioner gave it the option of paying the first installment on June 15,
1958 and the second on August 15, 1958. 
All this shows the parties’ understanding that the petitioner’s
obligation was to be paid in two installments. 
That the petitioner paid the whole amount of its tax when it finally
paid on March 16,1959 in no
way warrants the conclusion that it thereby gave evidence of its intention to
pay in lump sum.  After August 15, 1958, when the second
install­ment fell due, the petitioner’s obligation was to pay the amount of its
tax in full.

3. We now come to the principal issue in this case: whe­ther the
petitioner’s obligation to pay the whole amount of its tax arose upon its
failure to pay the first installment thereof on May 15, 1958, without need of notice or demand from the
respondent Commissioner.

Section 51(c) provided: “If any installment is not paid on
or before the date fixed for its payment, the whole amount of the tax unpaid
shall be paid upon notice and demand from the Collector (now Commissioner) of
Internal Revenue.”  Obvious­ly, to
follow the petitioner’s argument would be to place in the hands of the
respondent Commissioner the power to condone interests, for by simply
neglecting to make a demand, he could effectively prevent the whole obligation
from becoming due.  This would result in
uncertainty, let alone in the uneven application of the law, since defaulting
taxpayers would or would not have to pay interest on the entire amount of their
obliga­tion depending on whether or not they have been given notices or demands
have been made upon them by the Commissioner of In­ternal Revenue.  Even among those required to pay interest on
the whole amount of tax it is evident that there would be dis­crimination since
notices may be sent or demands made at dif­ferent times.

Public policy appears to require that no room be left for the
exercise of purely personal discretion in the matter of pay­ment of taxes if we
are, to borrow Learned Hand’s felicitous phrase, to prevent “the defeat of
the venture at hand”^[8]
or “the failure of the undertaking.”^[9]
For indeed a taxpayer would al­ways find it to his advantage to elect
installment payment on the chance that the revenue official’s neglect to send him
a notice or to make a demand would save him interest on one-half of the tax.

In truth, an examination of section 51 in its entirety re­veals a
legislative design to establish a definite date when taxes should be
demandable.^[10]  Thus, May 15 (now April 15) of every year was
fixed as the date for the payment of the tax or the first installment thereof
and August 15 (now July 15) for the second installment.  What about the obligation for taxes when the
tax­payer fails to pay the first installment? 
To say that, in ad­dition to the taxpayer’s default, there must as well
be a de­mand from the Government before the obligation could become de­mandable
would be to disregard the line of growth of the statute as thus partly revealed
in section 51.

What is more, the general rule expressed in paragraph (b) was
that taxes should be paid on May 15.  If
the privilege to pay in installments was granted it was only on the condition
that one-half of the tax was paid on May 15, the date the whole amount should
ordinarily be paid.  Hence if that
condition was not fulfilled the privilege of paying in installments could not
be claimed.

What then of the requirement of notice and demand in sec­tion
51(c)?  To be sure, that section does not
say that the en­tire amount becomes demandable only upon notice from the Gov­ernment.  This is important because, as Mr. Justice
Felix Frank­furter reminds us, “One more caution is relevant when one is
ad­monished to listen attentively to what a statute says.  One must also listen attentively to what it
does not say.”^[11]  For what section 51(c) does say is that the
tax “[should] be paid upon notice and demand from the Collector of
Internal Revenue,” from which it could just as rightly be concluded that
the assumption is that the obligation has earlier become due and demandable.^[12]  The notice and demand, then, in the original
text could mean no­thing more than a reminder to pay.  After all the statute already provided for a
notice of assessment to be given to the taxpayer on the first of May.

What we have just essayed above should dispose of the pe­titioner’s
other argument that at the earliest its obligation to pay interest on the whole
amount of the tax should begin only from June 16, 1958 because the assessment
notice of the BIR was in effect a grant of an extension of time to pay.

ACCORDINGLY, the decision appealed fro is a affirmed, at
petitioner’s cost.

Reyes, Acting C.J., Dizon, Makalintal, Bengzon, Zaldivar, Sanchez, Angelez, and Fernando, JJ., concur.

Concepcion, C.J., on leave.

^[1] Section
51 owes its present form and substance to the 1959 amendment introduced by
Republic Act 2343.

^[2]
See National Internal Revenue Code, sec. 46(d).

^[3]
BIR letter, dated Feb. 25, 1958.

Total
———————————————–      P 1,303,693.98

_________________________________________________________________________________________

Balance due and
demandable ————-    P1,303,693.98

P     17,218.77

____________________________________________________________________________________

^[6]
Hernandez v. Andal, 78 Phil. 196, 209-10
(1947); accord, Saura Import & Export v.
Philippine Int. Co., 62 O.G.3951 (1963).

^[7] G.R.
No. L-17587, Sept. 12, 1967.

^[8]
L. Hand, The Bill of Rights 14 (1958).

^[9] Id.
at 29.

^[10] Cf.:
“An example [of an exception to the rule in article 1169 of the Civil Code
that demand is necessary to put an obligor in delay] is the tax statute which
provides for a definite period within which to make payment, and regardless of
demand or assessment by the Collector of Internal Revenue or other collecting
agents, the taxpayer incurs delay after the lapse of the period and is liable
for interest, surcharge and penalties.” 
4 A. Pa­dilla, Civil Law-Civil Code Annotated 39-40 (1967).

^[11] Some
Reflections on the Reading
of Statutes, 47 Colum. L. Rev.
527, 536 (1947).

^[12]
Compare the present wording of section 51(a) (2): “If any installment is
not paid on or before the date fixed for its payment, the whole amount of the
tax unpaid becomes due and payable together with the delinquency
penalties.”