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[G.R. No. L-39910. September 26, 1988.]

CECILIA TEODORO DAYRIT, TORIBIA TEODORO CASTANEDA, PRUDENCIO J.

TEODORO, FRANCISCO J. TEODORO, AND JOSEFINA TEODORO
TIONGSON, Petitioners, v. THE HONORABLE FERNANDO A CRUZ, Presiding
Judge, Branch XII, Court of First Instance of Rizal, and MISAEL P. VERA, in his
capacity as the Commissioner of Internal Revenue, Respondents.

Atienza, Tabora, Del Rosario & Castillo Law Offices and Tañada, Sanchez,
Tañada & Tañada Law Offices for petitioners.

SYLLABUS

1. TAXATION; DEFICIENCY ESTATE AND INHERITANCE TAXES ASSESSMENT;

PRESUMED CORRECT AND MADE IN GOOD FAITH; FAILURE TO CONTEST THE SAME
AND UPON DENIAL THEREOF TO APPEAL IN DUE TIME MADE THE ASSESSMENTS FINAL
AND EXECUTORY. — Considering that tax assessments are presumed correct unless
proven otherwise, the failure of the party affected to contest the assessments and,
upon a denial thereof to appeal within 30 days to the Court of Tax Appeals, made the
assessments in question, final executory and demandable.

2. ID.; ID.; COURT OF FIRST INSTANCE ACQUIRED JURISDICTION IN CASES OF FINAL

AND EXECUTORY ASSESSMENTS. — The assessments having become final and
executory, the CFI properly acquired jurisdiction.

3. ID.; ID.; EXCLUSIVE JURISDICTION ON THE COURT OF TAX APPEALS; APPLICABLE

ONLY IN CASES OF DISPUTED ASSESSMENTS. — The exclusive jurisdiction of the Court
of Tax Appeals arises only in cases of disputed assessments.

4. ID.; ID.; RESOLUTION OF REQUEST FOR RECONSIDERATION OF ASSESSMENTS NOT

A CONDITION PRECEDENT TO THE FILING OF AN ACTION FOR COLLECTION OF TAXES.
— In Republic v. Lim Tian Teng Sons & Co., Inc., this Court had occasion to rule that a
decision on a request for reinvestigation is not a condition precedent to the filing of an
action for collection of taxes already assessed. This Court ruled that "nowhere in the
Tax Code is the Collector of Internal Revenue required to rule first on a taxpayer’s
request for reconsideration before he can go to court for the purpose of collecting the
tax assessed. On the contrary, Section 305 of the same Code withheld from all courts,
except the Court of Tax Appeals under Republic Act No. 1125, the authority to restrain
the collection of any national internal revenue tax, fee or charge, thereby indicating the
legislative policy to allow the Collector of Internal Revenue much latitude on the speedy
and prompt collection of taxes."cralaw virtua1aw library

5. ID.; ID.; ACTION TO COLLECT INTERNAL REVENUE TAXES WHERE ASSESSMENT

HAS BECOME FINAL AND EXECUTORY SIMILAR TO AN ACTION TO ENFORCE THE
JUDGMENT. — This Court ruled earlier that a suit for the collection of internal revenue
taxes, as in this case, where the assessment has already become final and executory,
the action to collect is akin to an action to enforce the judgment. No inquiry can be
made therein as to the merits of the original case or the justness of the judgment relied
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upon.

6. ID.; ID.; TAX AMNESTY UNDER P.D. No. 23; VOLUNTARY DISCLOSURE OF A
PREVIOUSLY UNTAXED INCOME, ONE OF ITS REQUISITES; TIME FRAME TO CLAIM
BENEFIT NOT STRETCHABLE. — With respect to the petitioners’ plea that the estate is
at any rate entitled to tax amnesty, a reading of P.D. No. 23 reveals that in order to
avail of tax amnesty, it is required, among others, that there should be a voluntary
disclosure of a previously untaxed income. This was the pronouncement of this Court in
Nepomuceno v. Montecillo with respect to P.D. 370 which was decreed as a
complement of P.D. Nos. 23 and 157. In addition thereto, said income must have been
earned or realized prior to 1972 and the tax return must be filed on or before March 31,
1973. Considering that P.D. No. 23 was issued on October 16, 1972, the court rules
that the said decree embraces only those income declared in pursuance thereof within
the taxable year 1972. The time frame cannot be stretched to include declarations
made prior to the issuance of the said decree or those made outside of the time frame
as envisioned in the said decree. Thus, the estates of the Teodoro spouses which have
been declared separately sometime in the 1960’s are clearly outside the coverage of
the tax amnesty provision.

7. ID.; ID.; P.D. No. 23 AND P.D. No. 67 COMPARED AND ANALIZED. — Even if P.D.
No. 67, as an amendment to P.D. 23, enlarges the coverage of tax amnesty to include
wealth such as earnings, receipts, gifts, bequests or any other acquisitions from any
source whatsoever, said decree reiterates the need of voluntary disclosure on the part
of the taxpayer filing the return in order to avail of the tax amnesty. The only
noticeable departure from P.D. No. 23 is the extension of the date for the filing of the
return from March 31, 1972 to March 31, 1973. Thus, this Court finds that the same
policy observed in the issuance of P.D. No. 23, governs P.D. No. 67. In addition thereto,
it gives the tax evaders who failed to avail of the provisions of P.D. No. 23 a chance to
reform themselves. An examination of both decrees does not show that taxpayers
availing of the tax amnesty in accordance with P.D. No. 67, are entitled to blanket
coverage of declarations made prior to the issuance of said decrees. A reading of P.D.
No. 67 reveals that tax amnesty is extendible only to those declarations made pursuant
to said decree.

DECISION

The application of tax amnesty to the estate of the Teodoros is the issue in this case.

Petitioners are the legitimate children and heirs of the deceased spouses Marta J.
Teodoro who died intestate on July 1, 1965 and Don Toribio Teodoro who died testate
on August 30, 1965. Thereafter, the heirs of the deceased filed separate estate and
inheritance tax returns for the estates of the late spouses with the Bureau of Internal
Revenue. **

In the meantime, testate and intestate proceedings for the settlement of the decedents’
estates were filed 1 by Cecilia Teodoro-Dayrit, one of the petitioners herein, in the then
Court of First Instance of Caloocan City, *** Branch XII docketed as Special
Proceedings No. C-113. 2 On August 14, 1968, said petitioner was appointed
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administratrix of the estate of Doña Marta and letters testamentary was issued in her
favor as executrix of the estate of Don Toribio.

On August 9, 1972, the respondent Commissioner of Internal Revenue issued the

following deficiency estate and inheritance tax assessments: 3

Estate of Doña Estate of Don

Marta Toribio ****

Estate Tax & penalties P1,662,072.34 P1,542,293.01

Inheritance Tax & interests 1,747,790.941, 518,458.72.

The aforementioned notice of deficiency assessments was received by petitioner Dayrit

on August 14, 1972. In a letter dated October 7, 1972, ***** petitioners through
counsel asked for a reconsideration of the said assessments alleging that the same are
contrary to law and not supported by sufficient evidence. 4 In the same letter,
petitioners requested a period of thirty (30) days within which to submit their position
paper in support of their claim.

Meanwhile, on October 16, 1972, Presidential Decree (P.D) No. 23, entitled
"Proclaiming Tax Amnesty Subject to Certain Conditions," was issued by then President
Ferdinand E. Marcos, quoted hereunder as follows: chanrob1es virtual 1aw library

(GIN KAKAS KO KAY PARA MA SHORTEN ANG CASE)

In a tax return dated March 31, 1973, petitioner Cecilia Teodoro-Dayrit declared an
additional amount of P3,655,595.78 as part of the estates of the Teodoro spouses, for
additional valuation over and above the amount declared in the previous return for
estates and inheritance taxes of the said late spouses. 5 The Bureau of Internal
Revenue issued tax payment acceptance order Nos. 1127185-86 and 1533011. 6
Pursuant to the aforesaid tax acceptance orders, the estates and heirs of the deceased
spouses Teodoro paid the amounts of P5,000.00, P30,046.68 and P250,000.00 per
official receipts Nos. 73201, 774037 and 964467 dated April 2, 1973, July 17, 1973 and
October 31, 1973, respectively, 7 amounting to a total of P285,046.68.

On March 14, 1974, respondent Commissioner of Internal Revenue filed a motion for
Allowance of Claim against the estates of spouses Teodoro and for an order of payment
of taxes in S.P. No. C-113 with the then Court of First Instance of Rizal, Branch XII,
praying that petitioner Dayrit be ordered to pay the Bureau of Internal Revenue the
sum of P6,470,396.81 plus surcharges and interest. 8 Petitioners filed two (2) separate
oppositions alleging that the estate and inheritance taxes sought to be collected have
already been settled in accordance with the provisions of P.D. No. 23, as amended by
P.D. No. 67 and that at any rate, the assessments have not become final and
executory. 9 In reply thereto, respondent Commissioner alleged that petitioners could
not avail of the tax amnesty in view of the existence of a prior assessment. 10
Petitioners insisted that the tax amnesty could still be availed of invoking Section 4, BIR
Revenue Regulation No. 8-72. 11
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On July 10, 1974, respondent Judge issued an order approving the claim of respondent
Commissioner and directing the payment of the estate and inheritance taxes. 12
Dissatisfied with the decision, petitioners filed a motion for reconsideration 13 but it
was denied 14 in an order dated September 30, 1974. ******

Hence, the present petition.

Petitioners contend that respondent Judge acted without jurisdiction or in excess of

jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in
granting the respondent Commissioner’s claim for estate and inheritance taxes against
the estates of the Teodoro spouses on the ground that due to the pendency of their
motion for reconsideration of the deficiency assessments issued by the Commissioner,
said tax assessments are not yet final and executory. Petitioners stressed that the
absence of a decision on the disputed assessments was a bar against collection of
taxes. Finally, petitioners insist that their act of filing an estate and inheritance tax
return of a previously untaxed wealth of the estates entitles said estates to tax amnesty
under P.D. No. 23, as amended by P.D. 67 and hence, it is an error to grant respondent
Commissioner’s claim for collection of estate and inheritance taxes.

On the other hand, respondent Commissioner contends that petitioners cannot avail of
the tax amnesty in view of the prior existing assessments issued against the estates of
the deceased spouses before the promulgation of P.D. No. 23. In support thereof,
respondent cited Section 4 of Revenue Regulation No. 15-72, amending Section 4 of
Regulation No. 8-12. Respondent Commissioner contends further that neither may
petitioners’ act of filing a return of a previously untaxed income or wealth in the
amount of P3,655,595.98 entitled the estates to tax amnesty where petitioners failed to
pay the 10% tax in full within the time frame required under P.D. No. 23, and that to
allow petitioners to avail of the tax amnesty will render nugatory the provisions of P.D.
No. 68. Moreover, said respondent argues that certiorari is not the proper remedy in
that respondent Judge committed no grave abuse of discretion in allowing the claim for
collection of taxes and that if at all, it was merely an error of judgment which can be
corrected only on appeal, and in which case the reglementary period for the same has
already prescribed.

The main issue in this petition is whether an estate may avail of tax amnesty under
Presidential Decree No. 23 where there is already an existing assessment made prior to
the issuance of the said decree on the basis of the submitted estate and inheritance tax
returns by merely filing separate estate tax returns of an undeclared and untaxed
income over and above the original amount of the estate declared.

Anent petitioners’ claim that the tax assessments against the estates of the Teodoro
spouses are not yet final, the court finds the claim untenable. In petitioners’ motion for
reconsideration of the aforementioned assessments, petitioners requested then
Commissioner Misael P. Vera for a period of thirty (30) days from October 7, 1972
within which to submit a position paper that would embody their grounds for
reconsideration. However, no position paper was ever filed. 15 Such failure to file a
position paper may be construed as abandonment of the petitioners’ request for
reconsideration. The court notes that it took the respondent Commissioner a period of
more than one (1) year and five (5) months, from October 7, 1972 to March 14, 1974,
before finally instituting the action for collection. Under the circumstances of the case,
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the act of the Commissioner in filing an action for allowance of the claim for estate and
inheritance taxes, may be considered as an outright denial of petitioners’ request for
reconsideration.

From the date of receipt of the copy of the Commissioner’s letter for collection of estate
and inheritance taxes against the estates of the late Teodoro spouses, petitioners must
contest or dispute the same and, upon a denial thereof, the petitioners have a period of
thirty (30) days within which to appeal the case to the Court of Tax Appeals. 16 This
they failed to avail of.

Tax assessments made by tax examiners are presumed correct and made in good faith.
A taxpayer has to prove otherwise. 17 Failure of the petitioners to appeal to the Court
of Tax Appeals in due time made the assessments in question, final, executory and
demandable. 18

The petitioners’ allegation that the Court of First Instance (CFI) lacks jurisdiction over
the subject of the case is likewise untenable. The assessments having become final and
executory, the CFI properly acquired jurisdiction. Neither is there merit in petitioners’
claim that the exclusive jurisdiction of the Court of Tax Appeals (CTA) applies in the
case. The aforesaid exclusive jurisdiction of the CTA arises only in cases of disputed tax
assessments. 20 As noted earlier, petitioners’ letter dated October 7, 1972 asking for
reconsideration of the questioned assessments cannot be considered as one disputing
the assessments because petitioners failed to substantiate their claim that the
deficiency assessments are contrary to law. Petitioners asked for a period of thirty (30)
days within which to submit their position paper but they failed to submit the same
nonetheless. Hence, petitioners’ letter for a reconsideration of the assessments is
nothing but a mere scrap of paper.

Petitioners’ contention that the absence of a decision on their request for

reconsideration of the assessments is a bar to granting the claim for collection is
likewise without merit. In Republic v. Lim Tian Teng Sons & Co., Inc., 21 this Court had
occasion to rule that a decision on a request for reinvestigation is not a condition
precedent to the filing of an action for collection of taxes already assessed. This Court
ruled that "nowhere in the Tax Code is the Collector of Internal Revenue required to
rule first on a taxpayer’s request for reconsideration before he can go to court for the
purpose of collecting the tax assessed. On the contrary, Section 305 of the same Code
withheld from all courts, except the Court of Tax Appeals under Republic Act No. 1125,
22 the authority to restrain the collection of any national internal revenue tax, fee or
charge, thereby indicating the legislative policy to allow the Collector of Internal
Revenue much latitude on the speedy and prompt collection of taxes." cralaw virtua1aw library

Petitioners argue, however, that the Commissioner of Internal Revenue must first rule
on the taxpayer’s protest against tax assessment so as not to deprive the taxpayer of
the remedy of appeal and that it is only from the receipt of the decision that the right to
appeal to the Court of Tax Appeals should run, citing for the purpose San Juan v.
Velasquez 23 as well as Commissioner of Internal Revenue v. Gonzales. 24

The aforementioned cases are both not in point. In San Juan, the taxpayer concerned,
through his accountant, disputed the assessments of income tax and deficiency income
tax by adducing the reasons and explanations why said assessments of income tax
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were not due and owing from the taxpayer. Thus, it was therein ruled that having
disputed the assessments at the opportune time, the Commissioner of Internal Revenue
cannot ignore the disputed assessments by immediately bringing an action to collect.
By the same token in Commissioner of Internal Revenue v. Gonzales, the assessments
of estate and inheritance taxes were disputed by the taxpayer by invoking prescription
as a defense claiming that the assessments were made after the lapse of more than
five (5) years.

Payment of taxes being admittedly a burden, taxpayers should not be left without any
recourse when they feel aggrieved due to the erroneous and burdensome assessments
made by a Bureau of Internal Revenue agent or by the Commissioner. Said right is
vested upon adversely affected taxpayers under Republic Act No. 1125. It cannot be
rendered nugatory through the Commissioner’s act of immediately filing an action for
collection without ruling beforehand on the disputed assessments. 25 However, the
remedy of an aggrieved taxpayer is not without any limitation. A taxpayer’s right to
contest assessments, particularly the right to appeal to the Court of Tax Appeals, may
be waived or lost as in this case. 26

The requirement for the Commissioner to rule on disputed assessments before bringing
an action for collection is applicable only in cases where the assessment was actually
disputed, adducing reasons in support thereto. In the present case where the
petitioners did not actually contest the assessments by stating the basis thereof, the
respondent Commissioner need not rule on their request.

Taxes are the lifeblood of the nation through which the government agencies continue
to operate and with which the State effects its functions for the welfare of its
constituents. We cannot tolerate taxpayers hampering expedient collection of taxes by
their failure to act within a reasonable period. No government could exist if all litigants
were permitted to delay the collection of its taxes. 27 Thus, this Court ruled earlier that
a suit for the collection of internal revenue taxes, as in this case, where the assessment
has already become final and executory, the action to collect is akin to an action to
enforce the judgment. No inquiry can be made therein as to the merits of the original
case or the justness of the judgment relied upon. 28

In view of the foregoing discussions, petitioners’ allegation of grave abuse of discretion

on the part of the respondent judge must perforce fall. Considering further that the
court a quo properly acquired jurisdiction over the subject matter of the case,
petitioners should have appealed the case. The order of the court a quo dated
September 30, 1974, was received by the petitioners on October 16, 1974. Petitioners
should have appealed within a period of fifteen (15) days from receipt thereof but they
failed to do so. ******* As petitioners failed to file a timely appeal from the order of
the trial court, they can no longer avail of the remedy of a special civil action
for certiorari in lieu of appeal. There is no error of jurisdiction committed by the trial
court. 29

On the other hand with respect the petitioners’ plea that the estate is at any rate
entitled to tax amnesty, a reading of P.D. No. 23 30 reveals that in order to avail of tax
amnesty, it is required, among others, that there should be a voluntary disclosure of a
previously untaxed income. This was the pronouncement of this Court in Nepomuceno
v. Montecillo 31 with respect to P.D. 370 32 which was decreed as a complement of
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P.D. Nos. 23 and 157. In addition, thereto, said income must have been earned or
realized prior to 1972 and the tax return must be filed on or before March 31, 1973.
Considering that P.D. No. 23 was issued on October 16, 1972, the court rules that the
said decree embraces only those income declared in pursuance thereof within the
taxable year 1972. The time frame cannot be stretched to include declarations made
prior to the issuance of the said decree or those made outside of the time frame as
envisioned in the said decree. Thus, the estates of the Teodoro spouses which have
been declared separately sometime in the 1960’s are clearly outside the coverage of
the tax amnesty provision.

Petitioners argue, however, that even if a notice of deficiency assessment had already
been issued, the estates may still avail of tax amnesty if the basis of such deficiency
assessment is either the failure to file a return or the omission of items of taxable
income for a return already filed or the under declaration of said return, citing P.D. No.
67 and Section 4 of BIR Revenue Regulation No. 8-72.

There is no merit in this contention. Even if P.D. No. 67, as an amendment to P.D. 23,
enlarges the coverage of tax amnesty to include wealth such as earnings, receipts,
gifts, bequests or any other acquisitions from any source whatsoever, said decree
reiterates the need of voluntary disclosure on the part of the taxpayer filing the return
in order to avail of the tax amnesty. The only noticeable departure from P.D. No. 23 is
the extension of the date for the filing of the return from March 31, 1972 to March 31,
1973. Thus, this Court finds that the same policy observed in the issuance of P.D. No.
23, governs P.D. No. 67. In addition thereto, it gives the tax evaders who failed to avail
of the provisions of P.D. No. 23 a chance to reform themselves. An examination of both
decrees does not show that taxpayers availing of the tax amnesty in accordance with
P.D. No. 67, are entitled to blanket coverage of declarations made prior to the issuance
of said decrees.

Petitioners argue that the estates of their parents declared for estate tax valuation
sometime in the 1960’s can avail of the tax amnesty when petitioners declared an
additional amount of the estates over and above that which was previously declared. A
reading of P.D. No. 67 reveals that tax amnesty is extendible only to those declarations
made pursuant to said decree. Thus, if at all, it is only the estates in the amount of
P3,655,595.78 declared pursuant to P.D. No. 67 that is covered, upon payment of 10%
of the said amount within the period prescribed under P.D. No. 23, which was up to
June 30, 1973. Considering that there has been partial compliance with the said
requirement by the payment of P285,046.68, petitioner may claim the benefit of
amnesty for said declared amount upon payment of the balance of 10% thereof
required to be paid.

WHEREFORE, with the above modification of the questioned order of July 10, 1974, said
order is hereby affirmed in all other respect. No pronouncement as to costs.