101 Dayrit V Cruz.docx

DAYRIT et al v CRUZ and CIR VERA G.R. No. L-39910|September 26, 1988|1st Division|GANCAYCO|Rule 65|Remedies Effect of Failure to File Protest| fgdlj DOCTRINE: From the date of reception of assessment, the taxpayer must appeal w/in 15 days to CTA in order for the assessments to remain disputed and will not become final and executory. CASE SUMMARY: Spouses Teodoro died. Dayrit et al were their heirs. They filed estate proceedings of their parents’ estate. CIR issued assessments to the estates. They failed to file a position paper for the reconsideration of the assessments and they filed to timely appeal to CTA. CIR filed a claim with the estate court w/c allowed the same. SC affirmed the allowance. FACTS:  Cecilia Teodoro Dayrit, Toribia Teodoro Castaneda, Prudencio Teodoro, Francisco Teodoro, and Josefina Teodoro Tiongson are the legitimate children and heirs of the deceased spouses Marta J. Teodoro who died intestate and Don Toribio Teodoro who died testate (both 1965).  The heirs filed separate estate and inheritance tax returns for the estates of the late spouses with BIR.  Intestate and testate proceedings were filed by Dayrit in CFI Caloocan and she was appointed administrator and executor.  CIR issued deficiency estate and inheritance tax assessments and were received by Dayrit: Estate of Dona Marta Estate of Don Toribio Estate Tax & penalties P1,662,072.34 P1,542,293.01 Inheritance Tax & interests 1,747,790.94 P1,518,458.72  Dayrit et al asked for reconsideration and requested 30 days w/in w/c to file their position paper. o No position paper was filed.  FEM signed PD23 (1972) "Proclaiming Tax Amnesty Subject to Certain Conditions" and subsequently, PD67 amended PD23 thus providing that: o In all cases of voluntary disclosure of previously untaxed income and/or wealth such as earnings, receipts, gifts, bequests or any other acquisitions from any source whatsoever which are taxable under NIRC realized here or abroad by any taxpayer, the collection of taxes, civil and criminal liabilities are condoned and in lieu thereof a tax of 10% on such previously untaxed income or wealth is imposed on the ff conditions:  a. Such previously untaxed income and/or wealth must have been earned or realized prior to 1972;  b. The taxpayer must file a return with the Commissioner of Internal Revenue on or before March 31, 1973, showing such previously untaxed income and/or wealth;  In a tax return dated March 31, 1973, 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. o BIR issued tax payment acceptance order thus the estates and heirs of the deceased spouses paid P5T, P30,046.68 and P250T per ORs totaling to P285,046.68.  CIR filed a motion for Allowance of Claim against the estates of spouses and for an order of payment of taxes amounting to P6,470,396.81 plus surcharges and interest. o Dayrit filed 2 oppositions alleging that the taxes were settled pursuant to PD67and that the assessments have not become final and executory. o In reply, CIR alleged that they could not avail of the tax amnesty in view of the existence of a prior assessment. o Dayrit insisted that they could avail of tax amnesty invoking Section 4, BIR Revenue Regulation No. 8-72.  Judge approved the CIR claim and directed payment thereof. RULING: W/N the assessment became final and executory? YES  The assessment has become final and executory. No position paper was filed.  Such failure to file a position paper may be construed as abandonment of the request for reconsideration.  As the CIR took 1 year and 5 months before filing an action for collection, such act of filing an action for allowance of the claim for estate and inheritance taxes, may be considered as an outright denial of Dayrit’s request for reconsideration.  From the date of receipt of the copy of the CIR's letter for collection of estate and inheritance taxes against the estates of the late Teodoro spouses, heirs must contest or dispute the same and, upon a denial thereof, they have a period of thirty (30) days within which to appeal the case to the CTA.  Tax assessments made by tax examiners are presumed correct and made in good faith. A taxpayer has to prove otherwise.  Failure to appeal to CTA in due time made the assessments final and executory, and demandable.

W/N CFI had jurisdiction? YES W/N CTA has jurisdiction? NO.  

The assessments having become final and executory, the CFI properly acquired jurisdiction. The CTA’s exclusive jurisdiction arises only in cases of disputed tax assessments.

W/N absent a decision on their request for reconsideration of the assessments is a bar to granting the claim for collection? NO 

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In Republic vs. Lim Tian Teng Son & Co., Inc., a decision on a request for reinvestigation is not a condition precedent to the filing of an action for collection of taxes already assessed. o Nowhere in the tax code is the CIR 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. A taxpayer's right to contest assessments, particularly the right to appeal to the CTA, may be waived or lost The requirement for CIR 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. A suit for the collection of internal revenue taxes where the assessment has already become final and executory, the action to collect is akin to an action to enforce the judgment.

W/N an estate may avail of tax amnesty under PD23 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. NO 

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PD23, in order to avail of tax amnesty, requires a voluntary disclosure of a previously untaxed income. o 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. o 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. o 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. o 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. MODIFICATION: 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.

DISPOSITION: WHEREFORE, the Order is AFFIRMED w/MODIFICATION. NOTES: