Case Digest (G.R. No. L-45277)
Facts:
The case involves Augusto Basa as the petitioner against the Republic of the Philippines, represented by the Solicitor General, and Judge Guillermo F. Villasor of Branch XV, Court of First Instance of Manila, as respondents. The events leading to this case began with a demand letter dated August 31, 1967, from the Commissioner of Internal Revenue, who assessed Basa for deficiency income taxes amounting to P16,353.12 for the years 1957 to 1960. The assessment was based on Basa's failure to fully report his capital gains from land sales, which led to a 50% surcharge due to underreporting. Basa did not contest these assessments in the Tax Court. The Commissioner issued a letter-decision on December 6, 1974, and subsequently, on September 3, 1975, filed a suit in the Manila Court of First Instance for the collection of the assessed amount, assuming the assessments had become final and incontestable.
On April 20, 1976, the trial court affirmed the assessments and ordered Ba...
Case Digest (G.R. No. L-45277)
Facts:
Background of the Case
- The case involves Augusto Basa, who was assessed by the Commissioner of Internal Revenue for deficiency income taxes for the years 1957 to 1960, totaling P16,353.12.
- The deficiencies arose from Basa's failure to fully report his capital gains from the sale of land, which led to an underdeclaration of income. This justified the imposition of a 50% surcharge.
Assessment and Legal Proceedings
- On August 31, 1967, the Commissioner issued a demand letter to Basa for the deficiency taxes.
- Basa did not contest the assessments in the Tax Court. The Commissioner's final decision on the case was issued on December 6, 1974.
- On September 3, 1975, the Commissioner filed a case in the Court of First Instance of Manila to collect the assessed amount, assuming the assessments had become final and incontestable.
Trial Court Decision
- The trial court, in its decision dated April 20, 1976, affirmed the assessments and ordered Basa to pay P16,353.12, plus a 5% surcharge and 1% monthly interest from August 31, 1967, to August 31, 1970.
Appeal Attempt
- Instead of appealing directly to the Supreme Court under Republic Act No. 5440, Basa attempted to appeal to the Court of Appeals. However, he failed to perfect his appeal within the reglementary period.
- The trial court dismissed his appeal on October 1, 1976.
- On December 23, 1976, Basa filed a special civil action of certiorari with the Supreme Court, challenging the trial court's decision.
Issue:
- Whether the decision of the Court of First Instance of Manila in an income tax case is reviewable by the Appellate Court or by the Supreme Court.
- Whether Basa's failure to appeal directly to the Supreme Court rendered the trial court's decision final and executory.
- Whether the issue of prescription raised by Basa has merit.
Ruling:
- The Supreme Court held that the petition was devoid of merit.
- The trial court acted within its jurisdiction in rendering its decision and dismissing Basa's appeal.
- Basa should have appealed directly to the Supreme Court instead of the Court of Appeals. His failure to do so rendered the trial court's decision final and executory.
- The Court also ruled that Basa's claim of prescription was baseless. The assessments were made within the allowable period, as the underdeclaration of income was considered a false or fraudulent return, extending the prescriptive period to ten years from the discovery of the falsity or omission.
- The Court affirmed the trial court's judgment.
Ratio:
- Jurisdiction and Appeal Process: In income tax cases, decisions of the Court of First Instance are reviewable directly by the Supreme Court, not the Court of Appeals. Basa's failure to follow the proper appeal process rendered the trial court's decision final.
- Prescription of Assessments: Under Section 332 of the Tax Code, if a taxpayer files a false or fraudulent return, the tax may be assessed within ten years from the discovery of the falsity or omission. Basa's underdeclaration of income justified the extended prescriptive period.
- Suspension of Prescriptive Period: The prescriptive period for collection was tolled during the time Basa requested reinvestigations, as per established jurisprudence (e.g., Commissioner of Internal Revenue vs. Capital Subdivision, Inc.).
- Finality of Decisions: A taxpayer who fails to contest assessments in the Tax Court cannot later challenge them in the Court of First Instance. Basa's failure to act timely barred him from contesting the assessments.
Conclusion:
The Supreme Court affirmed the trial court's decision, ruling that Basa's petition lacked merit. The assessments were valid, and Basa's procedural errors and untimely appeal rendered the decision final and executory. No costs were awarded.