G.R. No. L-32391 - D.N. Roque and Hipolito Bugaoisan vs. Hon. Judge Jacinto Callanta, Herminia Alvarez, Benjamin Alvarez, and others as heirs of Doroteo Alvarez

The late Doroteo Alvarez, father of the respondent heirs, was assessed for fixed and percentage taxes and a 25% surcharge by the Bureau of Internal Revenue, amounting to P6,124.56 for 1957 and 1958 and P1,966.09 for 1959 – a total of P8,090.65 (exclusive of compromise penalties).
The taxpayer received letters of demand dated August 11, 1959, and February 16, 1961.
On January 23, 1962, Doroteo Alvarez sent a letter to the Acting Regional Director of the BIR in Baguio City, requesting that certain assessments (specifically an independent contractor’s tax assessed at P2,296.09) be held in abeyance pending the resolution of CTA Case No. 951 (“Leon Balbas, et al. v. The Commissioner of Internal Revenue”). He also stated his willingness to waive the right to invoke prescription under those circumstances.

Sometime in 1963, Doroteo Alvarez died intestate in Pasuquin, Ilocos Norte, leaving behind children and grandchildren as his survivors.
Following the adverse decision in CTA Case No. 951 (later affirmed by the Supreme Court in G.R. No. L-19804 on October 23, 1967), D.N. Roque, in his capacity as Revenue Regional Director of Baguio City, issued warrants of distraint and levy dated December 12, 1968, for the collection of the assessed taxes against the personal and real properties of the deceased.
Hipolito Bugaoisian, acting as the BIR Collection Agent, carried out the seizure and levy. The warrant of levy and accompanying notices were served on Juana Bumanglag, who was the common-law wife of the late taxpayer.

On January 16, 1969, the respondent heirs filed a special civil action for Prohibition, Mandamus with Injunction in the Court of First Instance of Ilocos Norte (Civil Case No. 4454-11), challenging the validity of the warrants and seeking to enjoin the scheduled sale of the properties.
On February 19, 1969, the petitioners moved to dismiss the complaint on the ground that the Court of First Instance lacked jurisdiction, contending that seizure and levy actions pertained solely to the taxpayer rather than to third parties such as the heirs.

The lower court entertained the case as it proceeded with various pleadings: the petition was docketed, respondents filed their answer on September 25, 1970, petitioners filed a brief on December 15, 1970, and respondents on March 24, 1971.
Although petitioners had filed for a reply brief, the case was considered submitted for decision in the resolution rendered on December 3, 1971, without the filing of the reply.
The petition for review on certiorari was later filed to reverse both the decision of the Court of First Instance dated March 13, 1970, and its Order dated April 8, 1970.

In their briefs, petitioners raised issues regarding the lower court’s jurisdiction over the case, whether the government’s right to collect the tax had prescribed, and whether enforcement against a deceased taxpayer should necessarily be pursued through judicial proceedings for the settlement of the estate.
Respondents argued that the action was aimed not at questioning the tax assessments per se but at protecting their propriety rights over the levied properties.

Whether the Court of First Instance of Ilocos Norte or the Court of Tax Appeals has jurisdiction over the dispute involving the seizure and levy of the properties of the deceased taxpayer.
Whether the filing of a special civil action for prohibition, mandamus with injunction by the respondent heirs properly falls within the competence of the lower court.

Whether the right of the government to enforce the collection of the tax through summary proceedings of distraint and levy had already prescribed by the time the warrants were issued.
Whether the letter by Doroteo Alvarez (which mentioned waiver with respect to an independent contractor’s tax) could waive the prescription period for all assessments.

Whether the government may only enforce the collection of the tax through the judicial process, particularly by instituting intestate proceedings for the settlement of the deceased taxpayer’s estate, especially when the period for collection may not have prescribed.