G.R. No. L-8685 - Collector of Internal Revenue vs. Reyes

The petitioner, the Collector of Internal Revenue, issued a letter dated October 13, 1954 demanding deficiency income taxes for the tax years 1946 to 1950, amounting to P641,470.04 as of October 31, 1954.
The demand included surcharges, interests, and penalties, with instructions to pay either at the Bureau of Internal Revenue or the City Treasurer of Manila.
Accompanying the assessment was a warrant of distraint and levy on the properties of respondent Dr. Aurelio P. Reyes in the event of non-payment by the deadline.

The City Treasurer of Manila, following instructions from the Collector, was set to execute the warrant if payment was not made on or before November 10, 1954.
Respondent Reyes, having been informed of these developments, sought legal redress:

He filed a petition for review with the Court of Tax Appeals (CTA) on November 15, 1954 challenging the Collector’s assessment.
The following day, on November 16, 1954, Reyes filed an urgent petition to restrain the Collector from executing the warrant of distraint and levy, raising several legal arguments.

Reyes contended that the right of the Collector to collect by summary administrative methods had already prescribed under Section 51 (d) of the National Internal Revenue Code, as his last income tax return for the year 1950 was filed on April 27, 1951.
He argued that enforcing a distraint and levy would result in irreparable injury to him and render any potential final judgment meaningless.
He further asserted that the bond or deposit condition prescribed under Section 11 of Republic Act No. 1125 was not applicable in his case.
Reyes also highlighted that most of his assets were in the form of real properties and encumbered stocks, minimizing any risk that he would abscond with or conceal said properties.

The CTA did not have the authority to restrain his collection methods.
The taxpayer had an adequate remedy by paying first, after which any recovery action could be initiated.
Section 51 (d) of the National Internal Revenue Code did not preclude execution via distraint and levy even after the lapse of the three-year period.

On January 8, 1955, the CTA issued a resolution siding with Reyes, ordering the Collector to desist from using summary administrative procedures pending the outcome of the appeal.
The Solicitor General then filed a notice of appeal on January 21, 1955, and certiorari proceedings were instituted on January 22, 1955.
It was undisputed that Reyes had duly filed his income tax returns for the years 1946 to 1950.
However, the issuance of the warrant for distraction and levy occurred more than three years (specifically, 3 years, 5 months, and 16 days) after the filing of the last return for 1950.

Whether the Court of Tax Appeals had the authority to restrain the Collector of Internal Revenue from enforcing the collection of deficiency income taxes by summary administrative methods after the expiration of the three-year prescriptive period provided under Section 51 (d) of the National Internal Revenue Code.

Whether the Court of Tax Appeals, in granting the injunction, was required to compel the Collector to file a bond or make a deposit as provided under Section 11 of Republic Act No. 1125, given the particular circumstances of the case.