Republic Of The Philippines v. Ricarte

MAKASIAR, J.:

The former Court of Appeals, in its resolution dated August 4, 1977, certified this case to this Court on the ground that the issues involved therein are purely questions of law. On March 2, 1959, defendant-appellee Francisco Ricarte filed his income tax return for the year 1958. On April 6, 1959, the Office of the Collector of Internal Revenue made the corresponding assessment and fixed at P222.00 the defendant's income tax liability pursuant to the express provision of Section 51(a) of the National Internal Revenue Code (Commonwealth Act No. 466), then in effect.

Defendant paid his income tax in two equal installments of P 111.00 each the first on May 15, 1959 and the second on August 17, 1959. On June 20, 1959, Republic Act No. 2343 took effect amending Commonwealth Act No. 466 including Section 51(a). Under the amendatory act, the taxpayer assesses himself, files his return and pays the tax as shown in his return upon filing thereof.

In the year 1961, the Bureau of Internal Revenue, after investigation, found that the defendant had a deficiency of P 1,136.87 in his income tax for 1958. On January 19, 1961, assessment notice No. 17-A-708424-58 for the amount aforestated was issued and, together with the corresponding audit sheet and letter of demand, was mailed to the defendant on January 25, 1961. For failure of defendant to pay his deficiency income tax liability, plaintiff, on January 14, 1966, filed a complaint for collection of unpaid taxes before the City Court of Cebu.

After trial and hearing, the court a quo rendered a decision dated October 29, 1966 dismissing the case on the ground of prescription of action. The trial court reasoned out that the assessment was made by the Bureau of Internal Revenue on April 6, 1959, but the present case was filed only on January 14, 1966 or more than the prescriptive period of five years as provided for in Section 332(c) of the National Internal Revenue Code. On appeal to the former Court of First Instance of Cebu, the parties entered into a stipulation of facts: "1.

That the plaintiff is a political entity with capacity to sue and may be served with processes thru the Revenue Regional Director, Bureau of Internal Revenue, Revenue Region No. 13, Cebu City; while defendant Francisco Ricarte is of legal age, with postal address at 278 South Expressway (formerly at 451-C Tres de Abril Street), Cebu City, where he may be served with summons. "2. That on or about March 2, 1959, defendant, an arrastre contractor, filed his income tax return for the year 1958 showing on the face thereof a net income of P 12,271.26; copy of which is hereto attached as Annex 'A' and made an integral part hereof.

"3. That the amount of P 222.00 was assessed on April 6, 1959 per Assessment No. 17-A-708424-58 by the plaintiff as defendant's 1958 income tax liability per return filed by the latter which amount was duly stamped 'Assessed' on defendant's 1958 income tax return. "4.

That the aforesaid amount of P222.00 was paid by the defendant in two installments under Official Receipt No. 1671571 dated May 15, 1959 for the amount of P111.00 and under Official Receipt No. 2466278 dated August 17, 1959 for P111.00. "5. That in the verification of defendant's 1958 income tax return by the plaintiff thru the Bureau of Internal Revenue on January 19, 1961, there was found due from him the amount of P l,136.87 as deficiency income tax for said year, computed as follows: "Net income per return.

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. P 12,271.28 Add: Personal living expenses. .

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7,800.00