ALFREDO BOLLOZOS, PETITIONER, VS. COURT OF TAX APPEALS AND COLLECTOR OF INTERNAL REVENUE, RESPONDENTS.

This is a petition for review of the decision of the Court of Tax Appeals, as
well as of the order denying the motion for reconsideration filed therefor, ordering the petitioner to pay the respondent
Commissioner of Internal Revenue the total sum of P3,624.77, “as deficiency fixed and percentage taxes and
surcharge covering the period from the first quarter of 1950 up to and including
the third quarter of 1955” plus costs.

The facts of this case are set forth in the partial “Stipulation of Facts,”
dated April 15, 1959,
hereunder reproduced as follows:

“1. That during the years 1950 to 1955, inclusive, the petitioner engaged in
business as operator of a shop for the construction and repair of mechanical
devices at Cebu City;

“2. That during the said years, the petitioner paid the fixed tax of P10.00 a
year imposed by Section 182 of the National Internal Revenue Code, except for
the year 1952;

“3. That during the said years, it was ascertained by both parties that the
petitioner failed to pay all the percentage taxes imposed by Section 191 of the
Tax Code, thereby incurring deficiency percentage tax amounting to P3,111.52,
instead of P4.254.67 computed as follows:

	Year of Quarter	Gross Receipts	Tax Rate	Percentage Tax Paid	Deficiency Tax
	1st Quarter 1950	P 9,315.00	2%	P144.98	P41.32
	2nd Quarter 1950	9,091.50	2%	—	181.83
	3rd Quarter up to September 21, 1950	6, 930.90	2%	—	138.62
	4th Quarter 1950	10,109.80	3%	269.26	34.03
	Total	P35,447.20		Total	395.80
	1st Quarter 1951	P3,859.22	3%	115.78	—–
	2nd Quarter 1951	5,148.53	3%	—	154.46
	3rd Quarter 1951	9,590.64	3%	—	287.72
	4th Quarter 1951	6,985.30	3%	—	209.56
	Total	P25,583.69		Total	P651.74
	1st Quarter 1952	P6,117.96	3%	—	P183.54
	2nd Quarter 1952	5,402.01	3%	—	162.06
	3rd Quarter 1952	12,671.71	3%	—	380.15
	4th Quarter 1952	5,009.48	3%	154.3	—
	Total	P29,201.16		Total	P725.75
		=========			======
	For 1953	P12,680.67	3%	—	P380.42
	For 1954	12,680.67	3%	—	380.42
	For 1955	19,246.20	3%	—	577.39

 

	Total Percentage Tax
		For 1953 to 1955 —————————–	P1,338.23
	TOTAL DEFIENCY PERCENTAGE
		TAX for 1950 to 1955 ————————-	P3,111.52

“4. That the parties hereby reserve their right to present additional
evidence not covered by this stipulation of facts in support of their respective
contentions.”

As stated in the decision of the Court of Tax Appeals, the petitioner and the
respondent, by way of correcting the above-reproduced stipulation, also agreed
in open court that for the year 1955, only three-fourths (3/4) of P19,246.20 or P14,434.65 should be considered as gross receipts
in computing the percentage tax due, inasmuch as the decision appealed from
covers only the period from the first quarter to the third quarter of 1955.

As may be observed, the petitioner admits his failure to pay the fixed and
percentage taxes for the period in question. The only issue he raises in this
appeal is his contention that the right of the Commissioner of Internal Revenue
to collect the same has already prescribed.

In a documented account of the dates and incidents relevant to the issue
raised, the appellee recites the following:

“This case arose from the information received by the Provincial Revenue
Officer of Cebu City that appellant was operating a
general repair shop since 1947 in Cebu City and was
irregular in the payment of his taxes (Exhs. 1 & 2, pp. 1 & 2, BIR rec.). With this information,
the said revenue officer assigned an agent to investigate the business
activities of the appellant at C. Padilla
St., Cebu
City. On November 29, 1956, the said
revenue agent submitted his report, together with his working sheet, on the
gross receipts of the appellant covering the period from the first quarter of
1950 to the third quarter of 1955 (Exh. 3, pp. 3-5,
BIR rec). On December 6, 1955, an assessment notice was sent to the
appellant (p. 6, BIR rec.) by the Regional Office in
Cebu
City, signed by Group Supervisor
Nector Espenilla, requesting
the appellant to appear at the Regional Office in
Cebu
City and to explain his side of the
case within ten (10) days from, receipt of said letter. This request, however,
was not complied with by the appellant (p. 7, BIR
rec.). Another notice was sent to the appellant on April 19, 1956 (p. 8, BIR rec.) but he likewise failed to
appear before the Regional Office Director or his representative.

“On June 13, 1956, the
appellant authorized in writing Ernesto Ante, to represent him in his pending
internal revenue case, and that said written authority was personally presented
by Ernesto Ante to the Office of the Bureau of Internal Revenue in
Cebu
City on June 15, 1956 (Exh. B, p. 9, BIR rec; pp. 6-9, t.s.n., hearing on Apr. 8, 1959). In view of this representation, a formal letter of demand
(No. 56-199), dated August 31, 1956, was issued to the appellant (Exh. 4; pp. 10-100, BIR rec.), addressed and mailed on
September 1, 1956 to Ernesto Ante, the appellant’s authorized representative at
C. Padilla St., Cebu City (Exh. 5; P- 37, BIR rec.). (A copy of this letter of demand
was, likewise, handed personally to the appellant upon suggestion of the Court
of Tax Appeals during the hearing of this case on April 8, 1959; PP. 31-33,
t.s.n.). A follow up letter was sent to said authorized representative of the appellant by the City
Treasurer of Cebu City on September 10, 1956. (pp. 14 and 48, BIR
rec.). The Chief Legal Assistant and Deputy, Office of the City Treasurer
of Cebu City, made several direct requests to the
appellant to pay the deficiency taxes assessed and demanded by the Bureau of
Internal Revenue but the latter likewise ignored the demands for the payment of
said assessment (p. 16, BIR rec., 1st indorsement
dated April 25, 1958).

“On June 23, 1958, a
‘Warrant of Distraint and Levy’ was issued by the
Regional Office against the prOFerties of the
appellant (p. 19, BIR rec.; Exh. D), thru the City
Treasurer of Cebu
City (Exh.
D-l; p, 20, BIR rec.) but the
same was not executed in view of the appellant’s request for reinvestigation.
(See letters of counsel for petitioner dated August 5, 1958 and the 3rd indorsement of Deputy Treasurer of Cebu City dated August 8, 1958, and 2nd indorsement of Legal Assist, ft Deputy Office of the City
Treasurer of Cebu City dated August 6, 1958, pp. 24,
22 & 21 respectively, BIR rec.).

“A waiver of the statute of limitations, signed by the appellant (pp. 17-18,
BIR rec.), was executed and submitted to the Regional Office in Cebu City hut the latter refused to accept the same for the
reason that it was defective (p. 25, BIR rec).

“On December 16, 1958, Regional Office answered the letter of the appellant’s
counsel dated October 18, 1958 with the information that the assessment in
question as already final, the 30-day period within which to protest the same
having elapsed (p. 29, BIR rec). Accordingly, on the
same date, the Regional office returned the ‘Warrant of Distraint & Levy,’ issued on June 23, 1958, to the City Treasurer of Cebu for immediate execution (p. 30, BIR rec).

“On January 24, 1959,
appellant filed a petition for review with the Court of Tax
Appeals.”

In contending that prescription has set in his favor, appellant argues that
it should be assumed that the required returns were filed on the dates they were
due since the filing of the same are required by Sees. 208 and 209 of the
revenue code and the presumption in law is that he has complied with its
requirements, per Section 99 (ee), Rule 123, Rules of Court. (now Sec. 5 (ff,
Rule 131.)

Consequently, he concludes that he “did not fail to fife his tax returns, or
at least, the respondent collector did not prove his failure to file his
returns.” (p. 7, Petitioner’s Brief.). And, proceeding
from this premise that he did not fail to file his tax returns on time, the
appellant insists that the provision applicable to this case is 331 of the Tax
Code which provides:

“Sec. 331. Period of limitation upon assessment and
collection.– Except as provided in the succeeding
section, internal revenue taxes shall be assessed within five years after the
return filed, and no proceeding in court without assessment for the collection
on such taxes shall be begun after the expiration of such period. For the
purpose of this section a return filed before the last day prescribed by law for
the filing thereof shall be considered was filed on such last day: Provided,
That this limitation shall not apply to cases already
investigated prior to the approval of this Code.”

On the other hand, the appellees maintain that
while it is true that the law is presumed to have been complied with, per the
rule cited above, an assertion to the effect that the requirement of the law has
not been complied with sets aside the presumption and imposes upon the one
asserting compliance therewith the burden of proving his assertion. It is
claimed that in the instant case, the collector “has repelled appellant’s
defense of prescription with the assertion that the appellant did not comply
with the requirements of Sec. 138 (a) of the Tax Code.” Such being the case, and considering that the defense of Prescription in an
affirmative defense, the burden of proof rests upon the appellant to present
evidence upon the defense he has elected to set up.

In view of their contention, therefore, the appellees maintain that, contrary to the appellant’s
position, the applicable provision of the Tax Code is Sec. 332 and not Sec. 331.
Sec. 332 provides:

“Sec. 332. Exceptions as to period of limitation of
assessment and collection of taxes.–(a) In the case of a false or fraudulent
return with intent to evade tax or of a failure to file a return, the tax
may be assessed, or a proceeding in court for the collection of such tax may
be begun without assessments, at any time within ten years after the
discovery of the falsity, fraud, or omission.” (Underlining supplied by appellee.)

The issue in this case is fundamentally one of fact and not of law, to wit:
Did the appellant file the return mentioned in Section 332 (a) of the tax code?
If he has, then his contention that his tax liabilities has prescribed is
meritorious. On the other hand, if he has not so filed the said return, then
this case must unquestionably be governed by the provision of the
above-mentioned Section 332 (a) to the end that appellant’s claim of
prescription must be denied.

The appellant has offered no proof whatsoever that he did file the said
return. In the premises, he merely relies upon the rebuttable presumption established by the Rules of Court
that he so filed the same. He argues that inasmuch as the respondents-appellees “did not prove his failure to file his return,” he
must be deemed or presumed to have complied with that requirement.

Against the above contention, however, is the factual finding of the Court of
Tax Appeals that “from the record of the case at bar, it appears that the
petitioner herein failed to file his tax returns, except for the first and
fourth quarters of the year 1950.” Furthermore, while it is true that the
appellant is entitled to the presumption he invokes, it is likewise true that
the same presumption no longer obtains in his case since it has been squarely
and explicitly questioned or challenged. And, not only does the appellant no
longer enjoy the above presumption; he is now charged with the burden of proving
his assertion that he has complied with the law. It must be stressed that the
defense of prescription is an affirmative allegation and the burden of proof is
upon the party laying claim to it.

In brief, then, as appellant’s failure to file the required returns was
discovered only on November 29,
1955, the appellee has up to November 29, 1965 within which to
collect the assessment in dispute. And, as the lower court held, “considering
that the petitioner filed the instant appeal on January 24, 1959, and the
respondent submitted his answer to the petition for review on March 13, 1959,
which is equivalent to a court proceeding to collect the deficiency fixed and
percentage taxes under review (Collector of Internal Revenue vs. Clement, G.R.
No. Lr-18194, January 24, 1959; Collector of Internal Revenue vs. Soriano, G. R. No. Lr-11475, July 31, 1938). We believe and so hold that the
right of the respondent to collect the disputed deficiency assessment for the
periods not covered by any tax return has not yet prescribed. (Bisaya Land Transportation Co., Inc. vs.
Collector of Internal Revenue, G. R. No. L-12100, May 29, 1959).”

IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby affirmed
in full, with costs against the appellant.

Bengzon, C. J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Makalintal, Bengzon J.P. and
Zaldivar, JJ.,
concur.