G.R. No. L-12073. May 23, 1961
RICARDO S. SANTOS, PETITIONER AND APPELLANT, VS. HON. MARIANO NABLE, ETC., ET AL., RESPONDENTS AND APPELLEES.
DIZON, J.:
and demand made by the Collector of Internal Revenue upon appellant for the
payment of the sum of P3,292.04 as amusement tax deficiency for the period from
January, 1947 to July, 1948, inclusive.
It appears that, based on the investigation made and report submitted by
Assistant Revenue Agent, P. A. Cosare, the appellee, Collector of Internal
Revenue issued against appellant, Ricardo S. Santos, as owner and operator of
the Ace Theatre located in San Juan, Rizal, a deficiency assessment of
P3,234.26, plus a compromise penalty of P850.00, or a total of P4,084.26.
In a letter dated December 10, 1948 appellant requested a reinvestigation of
the matter, alleging that the report of Agent Cosare “may have overlooked all
the receipts paid by him on the amusement tax basing all from his gross
receipts”. The reinvestigation was made but the result was that appellee issued
an amended assessment dated July 28, 1949 for the slightly bigger total sum of
P4,242.04. Details thereof are as follows:
” 3,465 P1.00 P0.16 P554.40 86,553 .75 .12 10,386.36 36,126 .50 .08 2,390.08 77 .80 .12 9.24 3,070 .60 .10 307.00 278 .40 .06 16.68 1,732 .30 .04 69.28 __________ Total amount due for the period P14,233.04 Less: Total payments made 10,841.00 __________ Deficiency amusement tax 3,392.04 Compromise penalty for failure to pay on time 800.00 Compromise penalty for using unregistered admission tickets 50.00 __________ P4,242.04″
The matter remained unsettled until October 6, 1953 when appellant made
another request for a reinvestigation. In his letter for that purpose he
requested that he “be allowed to examine and verify the books taken from me by
your agent, P. A. Cosare during his original investigation”. On November 2 of
the same year appellant also requested appellee in writing to have his case
submitted to the Conference Staff of the Bureau of Internal Revenue, to give him
an opportunity to “air my (his) objections”, for the reason that the agent had
not “proven his supposed findings as he cannot produce the books for my business
which he took from me”. The request was granted but during the hearing before
the Conference Staff, appellant’s books could not be produced by the Bureau of
Internal Revenue, thus rendering it. impossible for appellant to prove the
errors allegedly committed by Agent Cosare in arriving at the figures stated in
his report of April 22, 1949. The hearing proceeded without the missing books
which, as a matter of fact, have not yet been located to this date. Thereafter
the Conference Staff recommended that the last assessment of P4,242.04 inclusive
of penalties, be affirmed. On the basis of this recommendation appellee
reiterated the disputed assessment and appellant was served with the
corresponding demand for payment on August 9, 1955. On September 8 of the same
year, he filed a petition for review with the Court of Tax Appeals, but after
proper proceedings the latter rendered the decision appealed from affirming the
assessment made by appellee “except as regards the compromise penalty of
P850.00” over which said court declared itself without jurisdiction.
It is an admitted fact that the Bureau of Internal Revenue had taken
possession of the books of appellant since the original investigation of the
case and that the same were lost while in its possession. The record also
discloses that the total tax liability demanded from appellant amounted to
P14,333.04, of which he had paid the considerable sum of P10,841.00.
Upon the other hand—as far as the record discloses—when the first
reinvestigation was made, appellant’s books were not returned to him in order
that he may use them to prove the inaccuracy of some of the findings of agent
Cosare, and the reinvestigation consisted merely in Cosare going over the books
again by himself. When during the hearing before the Conference Staff, the
Bureau of Internal Revenue could not produce appellant’s books when such
production was demanded, the latter was virtually deprived of the opportunity to
prove his case with the best possible evidence—his own books.
Appellee, however, claims that the report of agent Cosare was based on
figures taken from appellant’s own books showing the number of admission tickets
sold, and the price of each; that appellant’s requests for reinvestigation were
in vague and general terms and should be construed merely as attempts to delay
collection of the tax assessed; that he was given time and opportunity to
produce copies of the lost books and records or secondary evidence thereof, but
had failed to do so . All these contentions do not justify or explain the loss
of the books in question nor are they sufficient to deny appellant the
opportunity to prove his claim concerning the incorrectness of some of Cosare’s
findings, with the best evidence—as is generally required.
Appellee also contends that the assessment in question should be affirmed
because, in the absence of clear proof of error, the presumption must be that
official duty had been regularly performed and that the revenue agent concerned
acted in good faith. As far as the good faith of the agent is concerned, there
seems to be no question here. On the other hand, it does not seem fair to affirm
the questioned assessment simply on the basis of the rebuttable presumption of
regular performance of official duty, considering the fact that, by granting
appellant’s requests for reinvestigation, appellee himself had inferentially
admitted that his petitions were not groundless. To this we must add too the
consideration that appellant had already paid the considerable sum of P10,841.00
representing more than two thirds of the total assessment made against him.
Apparently, at least, he was not acting in bad faith or merely attempting to
delay payment when he asked for a reinvestigation of the assessment.
It is true—as appellee says in his brief—that a taxpayer who contests the
correctness of an assessment has the burden of proving his contention. This,
appellant was willing to do but, as already stated, he was deprived of the best
means of doing it with the loss of his books. His only error, perhaps, was in
not producing secondary evidence of their contents during the hearing before the
Conference Staff.
In view of the circumstances disclosed by the record, we believe that, in
equity, appellant should be given a last opportunity to prove—even with
secondary evidence—his contention that, in some respects, the assessment against
him is incorrect.
Wherefore, the decision appealed from is hereby set aside and the case is
remanded to the Bureau of Internal Revenue for further proceedings in accordance
with this decision.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L., Paredes, De Leon, and Natividad, JJ.,
concur.