Tax case digest:

1. comm vs josefina leal

2. Comm Internal revenue vs. PASCOR
FACTS:
- The BIR commissioner authorized revenue officers to examine the books of
accounts and other accounting records of Pascor Realty and Development
Corporation and resulted in a recommendation for the issuance of an
assessment in the amounts of P7,498,434.65 and P3,015,236.35 for the years
1986 and 1987, respectively.
- Commissioner of Internal Revenue filed a criminal complaint before the
Department of Justice against the PRDC, its President Rogelio A. Dio, and its
Treasurer Virginia S. Dio, alleging evasion of taxes in the total amount of
P10,513,671 .00.
- Private respondents PRDC, et.al. filed an Urgent Request for
Reconsideration/Reinvestigation disputing the tax assessment and tax
liability.
- the CIR denied the urgent request for reconsideration/reinvestigation of the
private respondents on the ground that no formal assessment of the has as
yet been issued by the Commissioner.
-

Private respondents then elevated the Decision of the CIR to the Court of Tax
Appeals on a petition for review. Then CIR filed a Motion to Dismiss the
petition on the ground that the CTA has no jurisdiction over the subject
matter of the petition, as there was no formal assessment issued against the
petitioners
- The CTA denied the said motion to dismiss in a Resolution dated January 25,
1996 and ordered the CIR to file an answer within thirty (30) days from
receipt of said resolution. The CIR received the resolution but did not file an
answer nor did move to reconsider the resolution.
ISSUES:
1. Whether or not the criminal complaint for tax evasion can be construed as an
assessment.
2. Whether or not an assessment is necessary before criminal charges for tax
evasion may be instituted.
3. Whether or not the CTA can take cognizance of the case in the absence of an
assessment.
HELD:
1. Neither the NIRC nor the regulations governing the protest of
assessments provide a specific definition or form of an assessment. An
assessment informs the taxpayer that he or she has tax liabilities. But not all
documents coming from the BIR containing a computation of the tax liability
can be deemed assessments. Even these definitions fail to advance private
respondents' case. That the BIR examiners' Joint Affidavit attached to the
Criminal Complaint contained some details of the tax liabilities of private
respondents does not ipso facto make it an assessment. The purpose of the
Joint Affidavit was merely to support and substantiate the Criminal Complaint

for tax evasion. Clearly, it was not meant to be a notice of the tax due and a
demand to the private respondents for payment thereof. An assessment
contains not only a computation of tax liabilities, but also a demand for
payment within a prescribed period. It also signals the time when penalties
and protests begin to accrue against the taxpayer. To enable the taxpayer to
determine his remedies thereon, due process requires that it must be served
on and received by the taxpayer. Accordingly, an affidavit, which was
executed by revenue officers stating the tax liabilities of a taxpayer and
attached to a criminal complaint for tax evasion, cannot be deemed an
assessment that can be questioned before the Court of Tax Appeals. The fact
that the Complaint itself was specifically directed and sent to the Department
of Justice and not to private respondents shows that the intent of the
commissioner was to file a criminal complaint for tax evasion, not to issue an
assessment. What private respondents received was a notice from the DOJ
that a criminal case for tax evasion had been filed against them, not a notice
that the Bureau of Internal Revenue had made an assessment.
2. Section 222 of NIRC states that an assessment is not necessary before a
criminal charge can be filed. This is the general rule. The filing of a criminal
complaint must be preceded by an assessment is incorrect argument. Section
222 of the NIRC specifically states that in cases where a false or fraudulent
return is submitted or in cases of failure to file a return such as this case,
proceedings in court may be commenced without an assessment.
Furthermore, Section 205 of the same Code clearly mandates that the civil
and criminal aspects of the case may be pursued simultaneously. Such
protests could not stop or suspend the criminal action which was independent
of the resolution of the protest in the CTA. This was because the
commissioner of internal revenue had, in such tax evasion cases, discretion
on whether to issue an assessment or to file a criminal case against the
taxpayer or to do both. The criminal charge need only be supported by
a prima facie showing of failure to file a required return. This fact need not be
proven by an assessment
3. Estate vda gabriel vs CIR
FACTS:
- During the lifetime of the decedent, Juliana Vda. De Gabriel, her business
affairs were managed by the Philippine Trust Company (Philtrust). The
decedent died on April 3, 1979. Two days after her death, Philtrust, filed her
Income Tax Return for 1978. The return did not indicate that the decedent
had died.
- The court a quo appointed one of the heirs as Special Administrator.
- The Bureau of Internal Revenue conducted an administrative investigation on
the decedents tax liability and found a deficiency income tax for the year
1977 in the amount of P318,233.93. Thus, on November 18, 1982, the BIR
sent by registered mail a demand letter and Assessment Notice No. NARD-78-

82-00501 addressed to the decedent "c/o Philippine Trust Company, Sta.

Cruz, Manila" which was the address stated in her 1978 Income Tax Return.
No response was made by Philtrust. The BIR was not informed that the
decedent had actually passed away.
The court a quo appointed Antonio Ambrosio as the Commissioner and
Auditor Tax Consultant of the Estate of the decedent.

Respondent CIR issued warrants of distraint and levy to enforce collection of

the decedents deficiency income tax liability, which were served upon her
heir, Francisco Gabriel. Then filed a "Motion for Allowance of Claim and for an
Order of Payment of Taxes" with the court a quo. Mr. Ambrosio filed a letter of
protest with the Litigation Division of the BIR, which was not acted upon
because the assessment notice had allegedly become final, executory and
incontestable.

Mr. Ambrosio filed a formal opposition to the BIRs Motion for Allowance of
Claim based on the ground that there was no proper service of the
assessment and that the filing of the aforesaid claim had already prescribed.
The BIR filed its Reply, contending that service to Philippine Trust Company
was sufficient service, and that the filing of the claim against the Estate on
November 22, 1984 was within the five-year prescriptive period for
assessment and collection of taxes under Section 318 of the 1977 National
Internal Revenue Code (NIRC).

the court a quo issued an Order denying respondents claim against the
Estate,2 after finding that there was no notice of its tax assessment on the
proper party.3

Respondent filed an appeal with the Court of Appeals, assailing the Order of
the probate court. It was claimed that Philtrust, in filing the decedents 1978
income tax return, two days after the taxpayers death, had "constituted
itself as the administrator of the estate of the deceased at least insofar as
said return is concerned
- The Court of Appeals rendered a decision in favor of the respondent.
ISSUES:
1. Whether or not service on Philtrust of the demand letter and Assessment
Notice was valid service on petitioner
2. whether Philtrusts inaction thereon could bind petitioner
HELD:
The resolution of this case hinges on the legal relationship between Philtrust and
the decedent, and, by extension, between Philtrust and petitioner Estate. The
relationship between the decedent and Philtrust was one of agency, which is a
personal relationship between agent and principal. Under Article 1919 (3) of the
Civil Code, death of the agent or principal automatically terminates the agency. In
this instance, the death of the decedent on April 3, 1979 automatically severed the
legal relationship between her and Philtrust, and such could not be revived by the
mere fact that Philtrust continued to act as her agent when, on April 5, 1979, it filed

her Income Tax Return for the year 1978. Since the relationship between Philtrust
and the decedent was automatically severed at the moment of the Taxpayers
death, none of Philtrusts acts or omissions could bind the estate of the Taxpayer.
Service on Philtrust of the demand letter and Assessment Notice was improperly
done. It must be noted that Philtrust was never appointed as the administrator of
the Estate of the decedent, and, indeed, that the court a quo twice rejected
Philtrusts motion to be thus appointed. Since there was never any valid notice of
this assessment, it could not have become final, executory and incontestable, and,
for failure to make the assessment within the five-year period provided in Section
318 of the National Internal Revenue Code of 1977, respondents claim against the
petitioner Estate is barred. When an estate is under administration, notice must be
sent to the administrator of the estate, since it is the said administrator, as
representative of the estate, who has the legal obligation to pay and discharge all
debts of the estate and to perform all orders of the court. In this case, the
assessment was served not even on an heir of the Estate, but on a completely
disinterested third party. This improper service was clearly not binding on the
petitioner.
4. RCBC vs. Commissioner of Internal Revenue
FACTS:
- Petitioner Rizal Commercial Banking Corporation received a Formal Letter of
Demand dated May 25, 2001 from the respondent Commissioner of Internal
Revenue for its tax liabilities particularly for Gross Onshore Tax in the amount
of P53,998,428.29 and Documentary Stamp Tax for its Special Savings
Placements in the amount of P46,717,952.76, for the taxable year 1997. 4
-

Petitioner filed a protest letter/request for reconsideration/reinvestigation

pursuant to Section 228 of the National Internal Revenue Code of 1997
(NIRC).
As the protest was not acted upon by the respondent, petitioner filed a
petition for review with the CTA for the cancellation of the assessments

Respondent filed a motion to resolve first the issue of CTAs

jurisdiction,7 which was granted by the CTA in a Resolution dated September
10, 2003. The petition for review was dismissed because it was filed beyond
the 30-day period following the lapse of 180 days from petitioners
submission of documents in support of its protest, as provided under Section
228 of the NIRC and Section 11 of R.A. No. 1125, otherwise known as the Law
Creating the Court of Tax Appeals.

Petitioner did not file a motion for reconsideration or an appeal to the CTA En
Banc from the dismissal of its petition for review. Consequently, the
September 10, 2003 Resolution became final and executory on October 1,
2003 and Entry of Judgment was made on December 1, 2003.9 Thereafter,
respondent sent a Demand Letter to petitioner for the payment of the
deficiency tax assessments.
Petitioner filed a Petition for Relief from Judgment on the ground of excusable
negligence of its counsels secretary who allegedly misfiled and lost the

September 10, 2003 Resolution. Then the CTA Second Division set the case
for hearing during which petitioners counsel was present.
The CTA Second Division rendered a Resolution denying petitioners Petition
for Relief from Judgment. Petitioners motion for reconsideration was denied
hence it filed a petition for review with the CTA En Banc which affirmed the
assailed Resolutions of the CTA Second Division

ISSUE:
1. Whether or not the petitioner has denied due process by denying the
opportunity to adduce evidence to establish the factual allegation
constituting its alleged excusable negligence
HELD:
Relief from judgment under Rule 38 of the Rules of Court is a legal remedy that is
allowed only in exceptional cases whereby a party seeks to set aside a judgment
rendered against him by a court whenever he was unjustly deprived of a hearing or
was prevented from taking an appeal, in either case, because of fraud, accident,
mistake or excusable neglect. To be heard" does not only mean verbal arguments in
court; one may be heard also through pleadings. Where opportunity to be heard,
either through oral arguments or pleadings, is accorded, there is no denial of
procedural due process. Relief cannot be granted on the flimsy excuse that the
failure to appeal was due to the neglect of petitioners counsel. Otherwise, all that a
losing party would do to salvage his case would be to invoke neglect or mistake of
his counsel as a ground for reversing or setting aside the adverse judgment,
thereby putting no end to litigation. Negligence to be "excusable" must be one
which ordinary diligence and prudence could not have guarded against and by
reason of which the rights of an aggrieved party have probably been
impaired. Petitioners former counsels omission could hardly be characterized as
excusable, much less unavoidable. The fact that counsel allegedly had not renewed
the employment of his secretary, thereby making the latter no longer attentive or
focused on her work, did not relieve him of his responsibilities to his client. It is a
problem personal to him which should not in any manner interfere with his
professional commitments.
Assuming ex gratia argumenti that the negligence of petitioners counsel is
excusable, still the petition must fail. As aptly observed by the OSG, even if the
petition for relief from judgment would be granted, petitioner will not fare any better
if the case were to be returned to the CTA Second Division since its action for the
cancellation of its assessments had already prescribed. Such assessment may be
protested administratively by filing a request for reconsideration or reinvestigation
within thirty (30) days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations. Within sixty (60) days
from filing of the protest, all relevant supporting documents shall have been
submitted; otherwise, the assessment shall become final. If the protest is denied in
whole or in part, or is not acted upon within one hundred eighty (180) days from
submission of documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within (30) days from receipt of the

said decision, or from the lapse of the one hundred eighty (180)-day period;
otherwise the decision shall become final, executory and demandable. While the
right to appeal a decision of the Commissioner to the Court of Tax Appeals is merely
a statutory remedy, nevertheless the requirement that it must be brought within 30
days is jurisdictional. If a statutory remedy provides as a condition precedent that
the action to enforce it must be commenced within a prescribed time, such
requirement is jurisdictional and failure to comply therewith may be raised in a
motion to dismiss.
5. CIR vs Wyeth suaco lab
FACTS:
- Private respondent Wyeth Suaco Laboratories, Inc. (Wyeth Suaco for brevity)
is a domestic corporation engaged in the manufacture and sale of assorted
pharmaceutical and nutritional products
- CIR conducted an investigation and examination of the books of accounts of
Wyeth Suaco. The report disclosed that Wyeth Suaco was paying royalties to
its foreign licensors as well as remuneration for technical services to Wyeth
International Laboratories of London. Wyeth Suaco was also found to have
declared cash dividends and these were paid. However, it allegedly failed to
remit withholding tax at source for the fourth (4th) quarter of 1973 on
accrued royalties, remuneration for technical services and cash dividends,
resulting in a deficiency withholding tax at source in the aggregate amount of
P3,178,994.15. Moreover, Wyeth Suaco deducted the cost of non-deductible
raw materials, resulting in its alleged failure to pay the correct amount of
advance sales tax. There was reportedly also a short payment of advance
sales tax in its importation of "Mega Polymycin D". All these resulted in a
deficiency sales tax in the amount of P60,855.21 and compromise penalty in
the amount of P300.00 or a total amount of P61,155.21.
- The Bureau of Internal Revenue assessed Wyeth Suaco on the aforesaid tax
liabilities in two (2) notices. These assessment notices were both received by
Wyeth Suaco. Thereafter, Wyeth Suaco through its tax consultant SGV &Co.,
sent the BIR two (2) letters, protesting the assessments and requesting their
cancellation or withdrawal on the ground that said assessments lacked
factual or legal basis. Wyeth Suaco's contention was that a withholding tax at
source on royalties and dividends becomes due and payable only upon their
actual payment or remittance. Wyeth Suaco however, admitted liability with
respect to the short payment of advance sales tax in the amount of
P1,000.00 on its importation of "Mega Polymycin D."
- Petitioner CIR, rendered a decision reducing the assessment of the
withholding tax at source for 1973 to P1,973,112.86. However, the amount of
P61,155.21 as deficiency sales tax remained the same.
- Thereafter, Wyeth Suaco filed a petition for review in Court of Tax Appeals
praying that petitioner be enjoined from enforcing the assessments by reason
of prescription and that the assessments be declared null and void for lack of
legal and factual basis.

petitioner issued a warrant of distrain of personal property and warrant of

levy of real property again private respondent to enforce collection of the
deficiency taxes.

petitioner filed his answer to Wyeth Suaco's petition for review praying,
among others, that private respondent be declared liable to pay the amount
of P61,155.21 as deficiency sales tax for the periods November 1, 1972 to
December 31, 1972 and January 1, 1973 to October 31, 1973, plus 14%
annual interest thereon from December 17, 1974 until payment thereof
pursuant to Section 183 (now Section 193) of the Tax Code, and the amount
of P1,973,112.86 as deficiency withholding tax at source for the 4th quarter
of 1973 plus 5% surcharge and 14% per annum interest thereon from
December 16, 1974 to December 16, 1977, pursuant to Section 51 (e) of the
Tax Code of 1977, as amended.

The Court of Tax Appeals rendered a decision enjoining the Commissioner of

Internal Revenue from collecting the deficiency taxes

ISSUE:
1. Whether or not petitioner's right to collect deficiency withholding tax at
source and sales tax liabilities from private respondent is barred by
prescription.
HELD:
The main thrust of petitioner for the allowance of this petition is that the five-year
prescriptive period provided by law to mak a collection by distraint or levy or by a
proceeding in court has not yet prescribed. The period of prescription of action to
collect a taxpayer's deficiency income tax assessment is interrupted when the
taxpayer request for a review or reconsideration of said assessment, and starts to
run again when said request is denied. After carefully examining the records of the
case, it was found that Wyeth Suaco admitted that it was seeking reconsideration of
the tax assessments as shown in a letter of James A. Gump, its President and
General Manager. Furthermore, when Wyeth Suaco thru its tax consultant SGV & Co.
sent the letters protesting the assessments, the Bureau of Internal Revenue,
Manufacturing Audit Division, conducted a review and reinvestigation of the
assessments. These letters of Wyeth Suaco interrupted the running of the five-year
prescriptive period to collect the deficiency taxes. The Bureau of Internal Revenue,
after having reviewed the record of Wyeth Suaco, in accordance with its request for
reinvestigation, rendered a final assessment. It was only upon receipt by Wyeth
Suaco of this final assessment that the five-year prescriptive period started to run
again. The final assessment issued by the Bureau of Internal Revenue declared the
issuance of deficiency sales tax assessments to be legal and valid. It was
ascertained that during the investigation, Wyeth Suaco deducted non-deductible
raw materials which were not subjected to advance sales tax thereby resulting in its

failure to pay the correct amount of sales tax under Section 183, in relation to
Section 186 and 186-B of the Tax Code, prior to and after amendment by
Presidential Decree No. 69. Wyeth Suaco was not able to refute this by submitting
supporting documents.
6. CIR vs. construction resources of Asia and CTA
FACTS:
- Petitioner is a domestic corporation, duly registered with the Overseas
Construction Board as an overseas contractor. It entered into a contract with
the Malaysian government for the construction of a road at Sabah. In
connection therewith, petitioner incurred foreign loans in the amount of
$3,900,000.00 at 9-1/16% interest per annum. For the period from December
7, 1977 to June 5, 1978, petitioner paid the sum of $179,156.25 to the foreign
creditors as interest on its loan.
- CIR examiners conducted an investigation and it was ascertained that
petitioner failed to file withholding tax return and to withhold 15% tax on
interest on foreign loans remitted abroad. It was also ascertained that
petitioner failed to purchase and affix the corresponding documentary and
science stamps on the stock certificates issued by it covering P17,880,000.00
worth of shares pursuant to Sections 222 and 224 of the Tax Code. Thus, in a
demand letter, respondent sought payment of withholding tax-at-source in
the amount of P300,170.46 and respondent demanded payment of
petitioner's documentary and science stamps tax liability in the sum of
P89,400.00.
-

Petitioner, protested the assessment for withholding tax-at-source

On apeal, the Court of Tax Appeals affirmed the assessment by the petitioner
of the withholding tax-at-source for the fourth quarter of 1977 and the first
and second quarters of 1978 in the amount of P299,720.16, plus delinquency
penalties on the interest payments remitted abroad. The respondent court,
however, denied the assessment for documentary and science stamps taxes
on the ground that "there is absolutely nothing in the records which will show
or indicate that the stock certificates on the paid-in-capital of P17,880,000.00
were issued or delivered, actually or constructively, to the stockholders,
granting that such paid-in-capital was originally issued." It ruled that the bare
statement of the petitioner's examiners that the paid-in-capital of
P17,880,000.00 which was originally issued was not subjected to
documentary and science stamps taxes, unaccompanied by inadequate
evidence, does not constitute sufficient basis to sustain the imposition of the
said taxes in the amount of P89,700.00.

ISSUE:
1. Whether or not the liability to pay documentary and science stamps taxes
attaches upon the issuance of certificates of stocks or upon delivery thereof.

2. Whether or not said private respondents issued the certificates of stock

covering the paid-in-capital of P17,880,000.00.
HELD:
The Supreme Court ruled that delivery either actual or constructive, is not
necessary. It is clear from the Section 224 of NIRC that for the aforestated tax to
attach, the certificates of stocks only need to be issued but not delivered.
Ordinarily, when a corporation issues a certificate of stock (representing the
ownership of stocks in the corporation to fully paid subscription) the certificate of
stock can be utilized for the exercise of the attributes of ownership over the stocks
mentioned on its face. The stocks can be alienated; the dividends or fruits derived
there from can be enjoyed, and they can be conveyed, pledged or encumbered. The
certificate as issued by the corporation, irrespective of whether or not it is in the
actual or constructive possession of the stock holder, is considered issued because
it is with value and hence the documentary stamp tax must be paid as imposed by
Section 212 of the National Internal Revenue Code, as amended. The delivery of the
certificates of stocks to the private respondent's stockholders whether actual or
constructive, is not essential for the documentary and science stamps taxes to
attach. What is taxed is the privilege of issuing shares of stock and, therefore, the
taxes accrue at the time the shares are issued. The private respondent never
disputed the amount of the documentary and science stamps taxes assessment but
only asked that it be given more time to be able to pay them after it had formally
transferred in its favor the contributed capital of its stockholders. As a logical out
growth of the presumption in favor of the validity of assessments, when such
assessments are assailed, the burden of proof is upon the complaining party.
7. Meralco vs savellano
FACTS:
- the late Juan G. Maniago (substituted in these proceedings by his wife and
children) submitted to petitioner Commissioner of Internal Revenue
confidential denunciation against the Meralco Securities Corporation for tax
evasion for having paid income tax only on 25 % of the dividends it received
from the Manila Electric Co. for the years 1962-1966, thereby allegedly
shortchanging the government of income tax due from 75% of the said
dividends.
- Petitioner CIR caused the investigation of the denunciation after which he
found and held that no deficiency corporate income tax was due from the
Meralco Securities Corporation on the dividends it received from the Manila
Electric Co., The Commissioner accordingly rejected Maniago's contention
that the Meralco from whom the dividends were received is "not a domestic
corporation liable to tax under this Chapter." In a letter dated April 5, 1968,
the Commissioner informed Maniago of his findings and ruling and therefore
denied Maniago's claim for informer's reward on a non-existent deficiency.
This action of the Commissioner was sustained by the Secretary of Finance in
a 4th Indorsement.
-

Maniago filed a petition for mandamus, and subsequently an amended

petition for mandamus, in the Court of First Instance of Manila, against the

Commissioner of Internal Revenue and the Meralco Securities Corporation to

compel the Commissioner to impose the alleged deficiency tax assessment
on the Meralco Securities Corporation and to award to him the corresponding
informer's reward under the provisions of R.A. 2338.
-

The Commissioner filed a motion to dismiss, arguing that since in matters of

issuance and non-issuance of assessments, he is clothed under the National
Internal Revenue Code and existing rules and regulations with discretionary
power in evaluating the facts of a case and since mandamus win not lie to
compel the performance of a discretionary power, he cannot be compelled to
impose the alleged tax deficiency assessment against the Meralco Securities
Corporation. He further argued that mandamus may not lie against him for
that would be tantamount to a usurpation of executive powers, since the
Office of the Commissioner of Internal Revenue is undeniably under the
control of the executive department.

On the other hand, the Meralco Securities Corporation filed its answer,
interposing as special and/or affirmative defenses that the petition states no
cause of action, that the action is premature, that mandamus win not lie to
compel the Commissioner of Internal Revenue to make an assessment and/or
effect the collection of taxes upon a taxpayer, that since no taxes have
actually been recovered and/or collected, Maniago has no right to recover the
reward prayed for, that the action of petitioner had already prescribed and
that respondent court has no jurisdiction over the subject matter as set forth
in the petition, the same being cognizable only by the Court of Tax Appeals.

The respondent judge rendered a decision granting the writ prayed for and
ordering the Commissioner of Internal Revenue to assess and collect from the
Meralco Securities Corporation the sum of P51,840,612.00 as deficiency
corporate income tax for the period 1962 to 1969 plus interests and
surcharges due thereon and to pay 25% thereof to Maniago as informer's
reward.

Hence, the Commissioner filed a separate petition with this Court, praying
that the decision of respondent judge and his order be reconsidered for
respondent judge has no jurisdiction over the subject matter of the case and
that the issuance or non-issuance of a deficiency assessment is a prerogative
of the Commissioner of Internal Revenue not reviewable by mandamus.

The Meralco Securities Corporation (now First Philippine Holdings Corporation)

likewise appealed the same decision of respondent judge and in the Court's
resolution the two cases were ordered consolidated.

ISSUE:

1. Whether or not the respondent judge has no jurisdiction over the subject
matter of the case and that the issuance or non-issuance of a deficiency
assessment is a prerogative of the Commissioner of Internal Revenue.
2. Whether or not the issuance or non-issuance of a deficiency assessment is
reviewable by mandamus.
HELD:
1. Respondent judge has no jurisdiction to take cognizance of the case because
the subject matter thereof clearly falls within the scope of cases
now exclusively within the jurisdiction of the Court of Tax Appeals. Section 7
of Republic Act No. 1125, enacted June 16, 1954, granted to the Court of Tax
Appeals exclusive appellate jurisdiction to review by appeal, among others,
decisions of the Commissioner of Internal Revenue in cases involving
disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under
the National Internal Revenue Code or other law or part of law administered
by the Bureau of Internal Revenue. The determination of the correctness or
incorrectness of a tax assessment to which the taxpayer is not agreeable,
falls within the jurisdiction of the Court of Tax Appeals and not of the Court of
First Instance, for under the provisions of Section 7 of Republic Act No. 1125,
the Court of Tax Appeals has exclusive appellate jurisdiction to review, on
appeal, any decision of the Collector of Internal Revenue in cases involving
disputed assessments and other matters arising under the National Internal
Revenue Code or other law or part of law administered by the Bureau of
Internal Revenue." Thus, even assuming that the right granted the taxpayers
affected to question and appeal disputed assessments, under section 7 of
Republic Act No. 1125, may be availed of by strangers or informers like the
late Maniago, the most that he could have done was to appeal to the Court of
Tax Appeals the ruling of petitioner Commissioner of Internal Revenue within
thirty (30) days from receipt thereof pursuant to section 11 of Republic Act
No. 1125. 3 He failed to take such an appeal to the tax court. The ruling is
clearly final and no longer subject to review by the courts.
2. It is furthermore a well-recognized rule that mandamus only lies to enforce
the performance of a ministerial act or duty and not to control the
performance of a discretionary power. Purely administrative and discretionary
functions may not be interfered with by the courts. Discretion, as thus
intended, means the power or right conferred upon the office by law of acting
officially under certain circumstances according to the dictates of his own
judgment and conscience and not controlled by the judgment or conscience
of others. Mandamus may not be resorted to so as to interfere with the
manner in which the discretion shall be exercised or to influence or coerce a
particular determination. Likewise, we have held that courts have no power to

order the Commissioner of Customs to confiscate goods imported in violation

of the Import Control Law, R.A. 426, as said forfeiture is subject to the
discretion of the said official, nor may courts control the determination of
whether or not an applicant for a visa has a non-immigrant status or whether
his entry into this country would be contrary to public safety for it is not a
simple ministerial function but an exercise of discretion. "Discretion," when
applied to public functionaries, means a power or right conferred upon them
by law of acting officially, under certain circumstances, uncontrolled by the
judgment or consciences of others. A purely ministerial act or duty in
contradiction to a discretional act is one which an officer or tribunal performs
in a given state of facts, in a prescribed manner, in obedience to the mandate
of a legal authority, without regard to or the exercise of his own judgment
upon the propriety or impropriety of the act done. If the law imposes a duty
upon a public officer and gives him the right to decide how or when the duty
shall be performed, such duty is discretionary and not ministerial.
8. city lumber vs dominggo
FACTS:
- Petitioner seeks the review of a decision of the Court Tax Appeals,
upholding an assessment by respondent on an additional income of
P16,678.63 representing minor deductions from the alleged expenses, on
undisclosed sales of plywood, nails and GI sheets amounting to P7,902.07,
and on a cash credit balance of P7,896.80.
ISSUE:
1. Whether or not the respondent court erred in not holding that plywood and GI
sheets were actually lost in a fire occuring in the city and in not considering
the credit cash balance as a loan secured by petitioner.
2. Whether or not the alleged loan of the sum of around P8,000.00 which
petitioner claims to be the cash credit balance appearing petitioner claims to
be his book of account
3. Whether or not the alleged violation of an order of Commissioner granting
Regional Directors authority close tax cases involving deficiency assessments
not exceeding P10,000.00 in taxes and penalties for it appears that after a reinvestigation of the tax liability of petitioner by the corresponding regional
director the latter reviewed the case and reduced the assessment from
P5,028.00 to P176.00.
HELD:
1. Petitioner introduced as a witnesses in his favor the Chief of Police of the City
of Dumaguete to testify on the existence of a fire in the city by reason of
which the store of petitioner was looted of plywood and kegs of nails. But said
witness declared that they recovery only 100 pieces of plywood and 5 kegs of
nails, but these were returned to petitioner. The Court below, however,
rejected the alleged loss of plywood because said loss was never reported in
the books of petitioner; and neither was such loss reported in the income tax
return of petitioner for the year, submitted some months after the alleged

loss. The conduct of petitioner in not reporting said loss in his book of account
or in his income tax turn proves that the alleged loss had not been suffered.
2. Petitioner's book of account failed to show such a loan also. Neither were any
receipts or other evidence produced to show that said amount was a loan
secured by petitioner, or that a loan was ever secured. The respondent court
did commit the error charged.
3. The order in question (Memorandum Order No. V-634 dated July 3, 1956) was
applicable only to subordinate officers of the Bureau of Internal Revenue and
could not bind the Commissioner himself, who has been entrusted by law to
make final assessments. The Commissioner cannot delegate this power to
make a final assessment to his subordinate.