tax digest finals revised

7/23/2019 Tax Digest Finals Revised

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Republic v. Albert, [G.R. No. L-12996. December 28, 1961.]

Facts: This is an appeal taken by Antonio Albert from the decision of the Court of First Instanceof Manila sentencing him to pay the Republic of the Philippines the sum of P6!!"#$$ as

deficiency income ta% for the year &"'& (ith ') surcharge and &) monthly interest thereon

from *ctober &6 &"'+ until full payment plus costs#

*n February ,! &"', appellant filed his income ta% return for the calendar year &"' After

e%amination and audit thereof by the personnel of the -ureau of Internal Re.enue a deficiencyta% for said year (as found due from appellant in the amount of P6!!"#$$ The -ureau of

Internal Re.enue issued and caused to be ser.ed on appellant the corresponding Income Ta%

Assessment /otice re0uiring him to pay the sum aforesaid on or before *ctober &' &"'+#

Appellant filed a letter of protest (ith the -ureau but the same (as o.erruled#After due trial the lo(er court rendered the appealed decision on the ground principally that

appellant (as already estopped from 0uestioning the assessment (hich had become final and

e%ecutory because he did not appeal therefrom to the Court of Ta% Appeals#

Issue: 1hether the ta%payer is barred from 0uestioning the ta% liability2

Ruling:In the present case therefore after recei.ing the denial of his protest against the deficiency ta%

assessment made against him appellant should ha.e appealed therefrom (ithin +$ days from

3une ,& &"'' his failure to do so ha.ing caused said assessment to become final e%ecutory anddemandable#

The ta%payer4s failure to appeal (ithin +$ days from the income ta% assessment made by the

Collector of Internal Re.enue renders said assessment final e%ecutory and demandable thereby

barring the ta%payer from in.oking any defense that (ould reopen the 0uestion of his ta% liabilityon the merits#

People v. M!il Port "ervice#, G.R. No. L-182$8 November 2%, 196&

Facts: The Manila Port 5er.ice as a subsidiary of the Manila Railroad Company entered into a

management contract (ith the -ureau of Customs (herein it (as granted the e%clusi.e right orpri.ilege to recei.e handle care for and deli.er all merchandise imported or e%ported passing

o.er the Philippine go.ernment (har.es and piers in the Port of Manila and to charge and

collect the arrastre charge pro.ided for in 5ection && of Republic Act /o# &+ Although itengaged in said arrastre business for sometime the Manila Port 5er.ice has not paid the

corresponding fi%ed and percentage ta%es imposed by 5ections &!, and &"& of the /ational

Internal Re.enue Code on arrastre contractors# /either has it filed the returns re0uired by 5ection

&!+ of the same Code# The Commissioner of Internal Re.enue on sent to it an assessment letterdemanding payment of the amount of P&+!"$"#"+ as fi%ed ta% for &"'6 and &"' and

percentage ta% on its gross receipts for the period from August ,7 &"'6 to February ,! &"'

plus the additional amount of P+$$#$$ as compromise penalty allo(ed in e%tra8udicial settlement


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of .iolations of penal pro.isions of the /ational internal Re.enue Code# The Manila Port 5er.ice

(rote the Commissioner of Internal Re.enue denying its liability for the ta%es in 0uestion on the

ground that its mother company the Manila Railroad Company is e%empt therefrom pursuant to5ubsection &, of 5ection & of Act /o# &'&$ and re0uesting (ithdra(al of the assessment#

Issue: 1hether the assessment is final and e%ecuotry2

Ruling: 9ere the assessment has already become final precisely because appellee has failed to

appeal as re0uired by la( thereby making indisputable the decision of the Commissioner ofInternal Re.enue# Thus the original assessment of the ta%es in 0uestion (as contained in a letter

sent to the Manila Port 5er.ice on 3une &$ &"' (hich (as refuted by said entity on 3uly &

&"'#

19RF*R the decision appealed from is re.ersed# Appellee is hereby ordered to payappellant the sum of P&+!"$+#"+ as fi%ed ta% for &"'6 and &"' and percentage ta% on its gross

receipts from August ,7 &"'6 to February ,! &"' inclusi.e of ,') surcharge for late

payment (ith costs against appellee#

Republic v. Lope', G.R. No. L-18$$% Mrc( )$, 196)

Facts: *n 6 ;ecember &"'$ -enito 9#


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An application of these rules (ill sho( that (hen action (as brought by the Republic the

prescripti.e period of ' years had not elapsed from the re.ision of &"'7# If from the period that

inter.ened bet(een the first re.ised assessment >," May &"'7? and the filing of the complaint>&+ August &"6$? is deducted the time consumed in considering and deciding the ta%payers

subse0uent petition for reconsideration and rein.estigation >from &6 3anuary &"'6 to ,, April

&"6$? it (ill be seen that less than ' years can be counted against the o.ernment#

The failure to appeal the Collectors ruling is a (ai.er of the defenses against it and estops theta%payer from subse0uently raising those ob8ections thereafter# *ther(ise the period of thirty

days for appeal to the Ta% Court (ould make title sense# 0ually anomalous is the fact that after

the ta%payer had promised to pay the computed ta% and after he had failed to keep his promisethe ta% authorities should still agree to a further re.ision of the assessment# Irregularities of this

kind ine.itably pro.oke suspicion o.er the competency and honesty of the ta% collecting

operations and it is e%pected that the competent authorities (ill take immediate and drastic stepsto stop such deplorable practices#

*+R v. Aveli!o, G.R. No. L-1&8&% "eptember 19, 1961

Facts: The Commissioner of Internal Re.enue seeks a re.ie( of the decision of the Court of Ta%

Appeals (hich re.ersed the decision of said officer re0uiring nri0ue A.elino to pay the sum of

P,,&,+#'' as deficiency income ta% for &"7 including surcharge interest and compromisepenalties# The corresponding assessment made on the net(orth method (as based upon an

in.estment in the sum of P6$$$$ made by nri0ue A.elino in the /ational


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Facts: Plaintiff 1alter # *lsen E Co# a corporation is a manufacturer and e%porter of cigars

composed of tobacco gro(n in the Philippine Islands# The company applied to the Collector of

Internal Re.enue for a certificate co.ering the origin of a certain consignment of &$$$$ cigarspresented to the Collector at the time of the application# *n such application plaintiff produced

the statement re0uired by the rules of the -ureau of Internal Re.enue (hich it offered to .erify

before the collector as re0uired by the rules of the -ureau co.ering shipments of cigarsdemonstrating that the cigars (ere entitled to free entry into the Dnited 5tates under the

pro.isions of the Tariff Act of the Dnited 5tates relating to commerce (ith the Philippine Islands#

The Collector of Internal Re.enue refused and still refuses to issue a certificate co.ering theorigin of the cigars on the ground that the cigars in 0uestion did not conform to a certain

regulation relating to the e%portation of the Philippine cigars to the Dnited 5tates issued by the

Collector of Internal Re.enue on the ,6th of 3anuary &"&' therefore (ere not entitled to the

standard mark (hich a certificate of origin (ould place on them# *n the refusal of the Collectorof Internal Re.enue to issue the certificate prayed for application (as made to the Insular

Collector of Customs for a certificate of origin of the material of the cigars (hich re0uest (as

refused#

Issue: 1hether (rit of Mandamus lie to compel Insular Collector of Customs to issue a

Certificate co.ering the origin and certificate of origin2

Ruling: /*#

It is necessary in the e%portation of products of the Philippine Islands to the Dnited 5tates to

satisfy the customs officials of that country that the proposed importations are of the characterdescribed in that portion of the Act of Congress of *ctober + &"&+# -y .irtue of this necessity

and pursuant to %ecuti.e *rder /o# 7

The duties of the Insular Collector of Customs are laid do(n in section + of Act /o# +'' kno(nas the Customs Administrati.e Act# A careful reading of that section and indeed of the (holeAct produces the instant con.iction that the duty of making a certificate of origin (ith respect to

Philippine products is not imposed by that section or by any other portion of the Act# The same

may be said (ith respect to the statute imposing duties on the Collector of Internal Re.enue#There is nothing to be found in the Internal Re.enue Act >/o# ,++"? (hich authori=es the

Collector much less lays on him the duty to issue certificates of origin# 1hile as (e ha.e said

abo.e it has been the custom to issue such certificates it (as based on no statute either of theDnited 5tates or of the Philippine Islands and (as not adopted by .irtue of any duty imposed on

those officials of la(# It arose from the fact that it (as far easier for Philippine e%porters to

present to Philippine officials the e.idence necessary to procure the admission of their

e%portation into the Dnited 5tates free of duty than to offer it to the customs officials of theDnited 5tates# 1hen an e%porter in the Philippine Islands desired to e%port Philippine products to

the Dnited 5tates it became necessary either by the .irtue of some rule established by the Dnited

5tates customs authorities or for some other reason as to (hich (e are not definitely informedby the complaint to send along (ith the e%portation proof satisfactory to the customs officials of

the Dnited 5tates establishing the facts re0uired by that portion of the Congressional Tariff Act

/o# &"&+ 0uoted hereinbefore as a condition to free entry into the Dnited 5tates# This e.idence(as supplied by the certificates of origin# chanrobles.irtuala(librarychanrobles .irtual la(library


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1e deem it clear therefore that the custom of issuing certificates of origin of Philippine

products about to be e%ported to the Dnited 5tates is based on no statute of the Dnited 5tates or

of the Philippine Islands# The benefit conferred by the Congressional Tariff Act of &"&+ on thePhilippine e%porter is the right to ha.e his goods entered free of duty in the ports of the Dnited

5tates pro.ided they meet the re0uirements of the Act# This is the right and the only right (hich

the e%porter in the Philippine Islands has by .irtue of that Act# The presentation of certificates oforigin to the customs officials of the Dnited 5tates demonstrating that the article sought to be

imported falls (ithin the definition of the Tariff Act is not based on a right conferred by the Tariff

Act but is simply a method by (hich such proof can be made# The Philippine e%porter is notlimited in his proof that his e%ported article falls (ithin the pro.isions of the Tariff Act to the

presentation of a certificate of origin# 5o far as appears in this case he may present to the

customs officials of the Dnited 5tates any other e.idence (hich (ill establish the same factB and

if such e.idence is satisfactory to those officials the importation (ill be entered free of dutyalthough the importation is not accompanied by a certificate of origin# The Tariff Act sets out no

particular method by (hich the fact that the article is a Philippine product must be establishedB

and the e%porter under that Act obtains no legal right to pro.e the fact of Philippine origin by

any particular method or means#He simply gets the right to prove it. This being so it mustfollo( that he has no legal right to present a certificate of origin to the customs officials of the

Dnited 5tates nor has he a legal right to re0uire the issuance of a certificate of origin from anyofficial of the Philippine Islands# /ot ha.ing been granted by the Act no such right e%ists under

the Act and if no such right e%ists certainly it can not be enforced in any sort of action# chanrobles.irtuala(librarychanrobles .irtual la(library

Immediately on the passage of the Tariff Act of &"$" the o.ernor@eneral of the Philippine

Islands issued %ecuti.e *rder /o# 7& dated May &"$"# It dealt (ith that pro.ision of theTariff Act of &"$" (hich (as repeated in the Tariff Act of &"&+ (hich (e ha.e already 0uoted# It

pro.ides: Dpon the passage of a Congressional enactment authori=ing the free entry into the

Dnited 5tates of goods the product and gro(th of the Philippine all customs and internal@

re.enue officials (ill consider themsel.es charged (ith the duty of pre.enting the fraudulente%port for free entry into the Dnited 5tates of goods (hich are not the product and gro(th of the

Philippines# In case the Insular Collector of Customs the Collector of Internal Re.enue or their

duly authori=ed representati.e are satisfied that goods sought to be e%ported to the Dnited 5tatesfor free entry therein are really and truly the product and gro(th of the Philippines they shall

issue proper certificate to the e%porter of such goods to that effect and shall ad.ise him that a

duly authenticated copy of such certificates must accompany the goods to the Dnited states andbe presented to the proper customs officials at the port of entry in the Dnited 5tates#

The Insular Auditor is hereby directed to transmit promptly at the close of each month through

this office to the 5ecretary of Treasury of the Dnited 5tates an abstract of such e%ports#

In pursuance of this order Customs Administrati.e Circular /o# &' directed to all collectorsof customs and others concerned (as issued on the &st of August &"&7# Paragraphs & , and +

thereof are as follo(s:

The follo(ing regulations prescribing the manner of complying (ith the pro.isions of section IG

>c? of the Dnited 5tates Tariff Act of *ctober + &"&+ for the shipment for free entry in theDnited 5tates of Philippine products upon (hich no dra(back of customs duties has been


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allo(ed and (hich are for direct shipment under a through bill of lading from the Philippine

Islands to the Dnited 5tates are hereby published for the information and guidance of all

concerned#chanrobles.irtuala(librarychanrobles .irtual la(library

The term Philippine products (here.er used in these regulations shall be held to mean article

the gro(th or product of or manufactured in the Philippine Islands from materials the gro(th orproduct of the Philippine Islands or of the Dnited 5tates or of both or (hich do not contain

foreign materials to the .alue of more than ,$ per centum of their total .alue in the sense ofthis phrase as used in the aforecited section and Act#chanrobles.irtuala(librarychanrobles .irtual la(library

In accordance (ith the pro.isions of %ecuti.e *rder /o# 7& dated May &"$" collectors of

customs and all other customs officials (ill consider themsel.es charged (ith the duty ofpre.enting fraudulent e%port for free entry into the Dnited 5tates#chanrobles.irtuala(librarychanrobles .irtual la(library

Dpon the filing of e%port entries co.ering Philippine products as defined in paragraph I for

direct shipment under through bills of lading to the Dnited 5tates for free entry therein the

collector of Customs at the port of loading shall furnish the e%porter upon application thereof aduly e%ecuted certificate of origin setting forth that the articles to be e%ported are in truth and in

fact the gro(th product or manufacture of the Philippine Islands such certificates of origin to

be on one of the follo(ing forms: # # #

The other paragraphs of this circular touching the e%portation of Philippine products are:

PAR# IG# %porters shall file (ith the collector of customs prior to the e%ecution of thecertificates of origin a true copy of the original bill of lading as e.idence that the merchandise to

be e%ported is for shipment to the Dnited 5tates on through bill of lading said copy to be

attached to the duplicate copy of the certificate of origin and for(arded there(ith as pro.ided for

in paragraph H#chanrobles.irtuala(library

chanrobles .irtual la(library

PAR# G# The certificate of origin pro.ided for in paragraph III shall be re0uired for each

consignment of merchandise e%ported to the Dnited 5tates as e.idenced by each original bill of

lading issued by the e%porter and shall ha.e attached thereto a customs fee stamp in the sum oft(o pesos >P,? Philippine currency:Provided,That certificates of origin shall be issued free of

charge in all cases in (hich the consignment of merchandise does not e%ceed in .alue fifty pesos

>P'$? Philippine currency# chanrobles .irtual la(library

PAR# GII# Certificates of origin co.ering cigars cigarettes manufactured tobacco or leaftobacco shall not be e%ecuted by collectors of customs until there has been presented to them a

s(orn statement of the e%porter co.ering such shipment of tobacco accompanied by a certificatefrom the Collector of Internal Re.enue co.ering the origin of such tobacco and in the case ofmanufactured tobacco the grading of the sameB nor shall certificates of origin be issued for

consignments of manufactured tobacco unless such certificates (hen presented by the e%porter

for appro.al shall sho( by indorsement of the Collector of Internal Re.enue that Dnited [email protected] stamps ha.e been attached to each and e.ery package of said consignment as

re0uired by la( and regulations# chanrobles.irtuala(librarychanrobles .irtual la(library


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PAR# H# The certificates of origin pro.ided for in paragraph III for tobacco shall be e%ecuted

and signed in triplicate and for general merchandise shall be e%ecuted and signed in duplicate

the original to be deli.ered to the e%porter and by him for(arded to the consignee in the Dnited5tates and the duplicate to be immediately for(arded to the Insular Collector of Customs at

ManilaB the triplicate tobacco certificate being for file in the -ureau of the Internal Re.enue# chanrobles.irtuala(librarychanrobles .irtual la(library

PAR# HII# Certificates of origin (ill not be issued for opium or preparations thereof li0uorsplaying cards or other articles >(ith the e%ception of manufactured tobacco? sub8ect to Dnited

5tates [email protected] ta%B goods (hich are not Philippine products as defined in paragraph IB

and articles upon (hich dra(back of customs duties has been claimed or allo(ed#

The Customs Administrati.e Act authori=e the Insular Collector of Customs to make proper rulesand regulations for carrying into effect the statute creating and go.erning his department (hile

the Internal Re.enue


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predicated or one (hich may be enforced against the officials charged (ith the formulation of

the re0uired e.idence by any process kno(n to the la(# chanrobles.irtuala(librarychanrobles .irtual la(library

The matter before us may be looked at from another point of .ie(# %ecuti.e *rder /o# 7& isnothing more or less than a command from a superior to an inferior# It creates no relation e%cept

bet(een the official (ho issues it and the official (ho recei.es it# 5uch orders (hether e%ecuti.eor departmental ha.e for their ob8ect simply the efficient and economical administration of the

affairs of the department to (hich or in (hich they are issued in accordance (ith the la(go.erning the sub8ect@matter# They are administrati.e in their nature and do not pass beyond the

limits of the department to (hich they are directed or in (hich they are published and therefore

create no rights in third persons# They are based on and are the product of a relationship in(hich po(er is their source and obedience their ob8ect# ;isobedience to or de.iation from such

an order can be punished only by the po(er (hich issued itB and if that po(er fails to administer

the correcti.e then the disobedience goes unpunished# In that relationship no third person orofficial may inter.ene not e.en the courts# 5uch orders may be .ery temporary they being

sub8ect to instant re.ocation or modification by the po(er (hich published them# Their .ery

nature as determined by the relationship (hich produced them demonstrates clearly theimpossibility of any other person enforcing them e%cept the one (ho created them# An attempt

on the part of the courts to enforce such orders (ould result not only in confusion but

substantially in departmental anarchy also# The enforcement of such an order and the

punishment (hich follo(s disobedience thereof being at the (ill of the superior (ho issued itinstant conflict bet(een him and the courts (ould be the necessary result of an effort on the part

of the courts to enforce it# If courts can enforce they can punish for disobedienceB and (hat that

punishment shall be and (hat form it (ill take (hether fine or imprisonment or both restse%clusi.ely (ith them# The inter.ention of the courts (ould thus produce this situation: The

official (ho issued the order and upon (hom alone and e%clusi.ely rests the responsibility for

the due orderly and efficient administration of his department is not permitted to determine

(hether the order has been fulfilled or .iolated or if there is disobedience or .iolation ho( or(hen it shall be punished# Indeed he might be depri.ed of a number of his subordinates by

reason of 8ail sentences imposed by the courts for refusal to comply (ith their orders and for

reasons (hich the official (ho issued the order might not think sufficient to 8ustify anypunishment at all# The most serious results (ould almost necessarily follo( if the courts should

undertake to compel the e%ecution of the orders or the rules and regulations of any department of

the go.ernment e%cept perhaps that in (hich the courts are supreme# Moreo.er if the courtsshould enter that field of acti.ity there (ould be great difficulty in finding a stopping place# If

they may enforce the orders of the o.ernor@eneral directed to the -ureau of Customs ad

Internal Re.enue (hy not proceed and enforce all other e%ecuti.e orders rules and regulationsin all branches of the o.ernment2 Certainly the courts should confine themsel.es to the

enforcement of legal and e0uitable rights lea.ing the administrati.e affairs of the go.ernment to

administrati.e officials#chanrobles.irtuala(librarychanrobles .irtual la(library

Taking as admitted all of the material allegations of the complaint as (e ha.e taken them underthe demurrer the plaintiff is not entitled to the relief prayed for# Its remedy lies (ith the superior

po(er (hich issued the order (hich is sought to be enforced#chanrobles.irtuala(librarychanrobles .irtual la(library


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The demurrer is sustained and the plaintiff gi.en ' days in (hich to amend its complaint# In case

an amendment is not made (ithin that time the complaint (ill be dismissed on the merits# 5o

ordered#

;ecember ,7 &"&7

#R# /o#


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testimony in any court in the Philippine Islands until such time as the sentence against him is

re.ersed# From that sentence the defendant appealed to this court and made the follo(ing

assignments of error:

The trial court erred in holding section + of Act /o# &6"to be applicable in this case#

,# The trial court manifestly erred in sentencing the appellant for .iolation of section + of Act

/o# &6" (hen the prosecution did not present any e.idence demonstrating that he had (illfully

and corruptly s(orn or taken an oath#

+# The trial court erred in not sustaining the defense set up by the appellant Tupasi (ith referenceto the construction he placed upon the fifth 0uestion of %hibit A of the prosecution#

7# The trial court erred also in holding that the (ords (hich he does not belie.e to be true used

in Act /o# &6" are e0ui.alent to the term kno(ingly used in section +& ofAct /o# &6

'# The trial court erred in not ac0uitting the defendant#

It appears from the record that on the &$th day of 5eptember &"&, the defendant signed apetition to be permitted to take the e%amination for the position of municipal policeman# 5aid

petition (as signed by the defendant and s(orn to by him before a notary public# 5aid petition

contained a number of 0uestions (hich the applicant (as re0uired to ans(er# Among other0uestions (e find that /o# ' (as as follo(s:

9a.e you e.er been indicted tried or sentenced in any court for .iolation of any la( ordinance

or regulations or ha.e you e.er been tried or sentenced for .iolation of regulations of the Army

/a.y of the Constabulary in any court martial of the Army or of the Constabulary or in any

other court2

To said 0uestion the defendant ans(ered: /o sirB I cannot remember any#

;uring the trial of the cause the prosecuting attorney presented %hibits - C and ;#

%hibit - sho(s that one Francisco Tupasi and others on the !th day of February &"&& had

been arrested by an order of the 8ustice of the peace of the municipality of Tayum Pro.ince ofIlocos 5ur and charged (ith disturbing the public peace (ere found guilty and sentenced on

the ,$th day of February &"&& to be imprisoned for a period of fifteen days and each to pay a

fine of ,' pesetas and to pay the costs#

%hibit C sho(s that Francisco Tupasi on the &!th day of May &"&& had been arrested andtaken before the 8ustice of the peace of the municipality of Tayum Pro.ince of Ilocos 5ur

charged (ith the crime of in8urias gra.es and (as sentenced on the ,,d day of May &"&& to

be imprisoned for a period of fifteen days and to pay a fine of ' pesetas and the costs#

%hibit ; is the certificate of the clerk of the Court of First Instance of the Pro.ince of Ilocos 5ur

and sho(s that the 9onorable ;ionisio Chanco on the ,6th day of April &"&& in an appealed
http://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1761.htmlhttp://philippinelaw.info/statutes/act1761.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1697.htmlhttp://philippinelaw.info/statutes/act1761.html


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case for disturbing the public peace sentenced the said Francisco Tupasi and others to pay a fine

of 6$ pesetas in case of insol.ency to suffer subsidiary imprisonment and to pay the costs#

%hibit A (as the s(orn petition presented by the defendant for permission to take thee%amination# 5aid petition (as signed by Frank Tupasi y Molina# It (as sho(n during the trial of

the cause by the admission of the defendant himself that he (as the same person accused andsentenced in %hibits - C and ;# It (as argued that the defendant signed said application in the

name of Frank Tupasi y Molina (hen he had theretofore been kno(n as Francisco Tupasifor the purpose of a.oiding identity# The defendant said that Francisco (as the same as Frank

and that he had adopted the name of Frank instead of Francisco# The ans(ers to the

0uestions in said application (ere made in nglish#

1ith reference to the first assignment of error that the lo(er court committed an error in

applying section + of Act /o# &6"to the facts in the present case it may be said that said article

pro.ides that:

Any person (ho ha.ing taken an oath before a competent tribunal officer or person in any casein (hich a la( of the Philippine Islands authori=es an oath to be administered that he (ill testify

declare depose or certify truly or that any (ritten testimony declaration deposition or

certificate by him subscribed is true (illfully and contrary to such oath states or subscribes any

material matter (hich he does not belie.e to be true is guilty or per8ury and shall be punishedetc#

Act /o# ,&6"of the Philippine


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gi.en the force of la(# 5aid manual prescribed a form in blank kno(n as Municipal Form /o#

&& (hich form each applicant (as re0uired to fill in order to be permitted to take said

e%amination# 5aid application re0uired the applicant to s(ear to the facts stated therein# 1e ha.etherefore a la( (hich authori=es the administration of an oath in the present case#

*f course the regulations adopted under legislati.e authority by a particular department must bein harmony (ith the pro.isions of the la( and for the sole purpose of carrying into effect its

general pro.isions# -y such regulations of course the la( itself can not be e%tended# 5o longho(e.er as the regulations relate solely to carrying into effect the pro.isions of the la( they are

.alid# A .iolation of a regulation prescribed by an e%ecuti.e officer of the o.ernment in

conformity (ith and based upon a statute authori=ing such regulation constitutes an offense andrenders the offender liable to punishment in accordance (ith the pro.isions of la(# >Dnited

5tates .s# -ailey " Pet# ,+! ,', ,'7 ,'6B Caha .s# Dnited 5tates &', D# 5# ,&& ,&!B Dnited

5tates .s# aton &77 D# 5# 6#?

In the .ery nature of things in many cases it becomes impracticable for the legislati.e department

of the o.ernment to pro.ide general regulations for the .arious and .arying details for themanagement of a particular department of the o.ernment# It therefore becomes con.enient for

the legislati.e department of the o.ernment by la( in a most general (ay to pro.ide for theconduct control and management of the (ork of the particular department of the o.ernmentB

to authori=e certain persons in charge of the management control and direction of the particular

department to adopt certain rules and regulations pro.iding for the detail of the management andcontrol of such department# 5uch regulations ha.e uniformly been held to ha.e the force of la(

(hene.er they are found to be in consonance and in harmony (ith the general purposes and

ob8ects of the la(# Many illustrations might be gi.en# For instance the Ci.il 5er.ice -oard is

gi.en authority to e%amine applicants for .arious positions (ithin the o.ernment ser.ice# Thela( generally pro.ides the conditions in a most general (ay authori=ing the chief of such

-ureau to pro.ide rules and regulations for the management of the conduct of e%aminations etc#The la( pro.ides that the Collector of Customs shall e%amine persons (ho become applicant toact as captains of ships for the coast(ise trade pro.iding at the same time that the Collector of

Customs shall establish rules and regulations for such e%aminations# 5uch regulations once

established and found to be in conformity (ith the general purposes of the la( are 8ust asbinding upon all of the parties as if the regulations had been (ritten in the original la( itself#

>Dnited 5tates .s# rimaud ,,$ D# 5# '$6B 1illiamson .s# Dnited 5tates ,$ D# 5# 7,'B Dnited

5tates .s# Dnited Gerde Copper Co# &"6 D# 5# ,$#?

-y reference to %hibit A the application made and s(orn to by the defendant (e find that theoath (as taken before a notary public a person 0ualified to administer an oath in accordance

(ith the pro.isions of la(#

The defendant in support of his first assignment of error argues that the purpose of Act /o#

&6"(as not intended to co.er cases like the present# 9e argues that said Act (as an Act onlyauthori=ing the appointment of commissioners to make official in.estigations fi%ing their

po(ers for the payment of (itness fees and for the punishment of per8ury in official

in.estigations# The same 0uestion (as presented to this court in the case of (nited States vs.!oncepcion>&+ Phil# Rep# 7,7?# In that case the court decided against the contention of the
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defendant in the present case# It is true that the title of said Act >/o# &6"? does not seem to

indicate that said la( contained a pro.ision punishing the crime of per8ury generally# Reading the

title alone it (ould seem to be a la( punishing the crime of per8ury in particular cases# The la(>Act /o# &6"? is a general la(# It is not a pri.ate or local la(# In the Dnited 5tates the

constitutions in the different 5tates generally pro.ide that the title of a la( shall indicate the

general purpose of the la(# There seems to be no pro.ision in the Philippine Islands that the titleof a general la( shall contain a statement of the sub8ect matter of the la(# 5ection ' of the Act of

Congress of 3uly & &"$, pro.ides:

That noprivateor localbill (hich may be enacted into la( shall embrace more than one sub8ect

and that sub8ect shall be e%pressed in the title of the bill#

1e held in the case of (nited States vs. !oncepcionsupra that said Act of Congress did not

apply to general la(s and that said section + (as a pro.ision punishing the crime of per8ury

generally# >D# 5# .s# ;e Cha.es &7 Phil# Rep# '6'B D# 5# .s# stra2a&6 Phil# Rep# ',$B D# 5#

.s# Fonseca ,$ Phil# Rep# &"?

In the case of (nited States vs. )umlao>R# # /o# !,& not reported? this court held the

defendant guilty of the crime of per8ury under facts e%actly analogous to those in this case under

the pro.isions of section + of Act /o# &6"# 1e find no reason either in la( or in the argument

of the appellant in the present case to modify or re.erse our conclusions in that case >/o# !,&?#

1ith reference to the second assignment of error the appellant alleged that the lo(er court

committed an error in finding that he had committed the crime of per8ury .oluntarily and

corruptly# There is nothing in the record (hich sho(s that he did not present to the properauthorities %hibit A .oluntarily# It is difficult to understand in .ie( of the fact that the

defendant had theretofore been con.icted of t(o different offenses and in one of them by t(o

courts ho( he could (ithin a fe( months thereafter make a s(orn statement that he did notha.e a criminal record unless he ans(ered said 0uestion /o# ' in the manner indicated in saidapplication for the e%press purpose of decei.ing the authority to (hich said application (as

presented#

1ith reference to the third assignment of error it may be said that the language of 0uestion /o# '

seems to be perfectly clear# The defendant admitted that he could read and understand 5panish# Itis to be noted that at the .ery beginning of said application there are three paragraphs de.oted to

instructions to the applicant (hich he should ha.e read and no doubt did# 5aid instructions (ere

sufficient to indicate to the defendant that if there (ere any 0uestions (hich he did not fullyunderstand he should ha.e ac0uired a full understanding of the same before ans(ering them# If

there (as any fault in understanding said 0uestion /o# ' it (as (holly due to his o(n

negligence#

1ith reference to the fourth assignment of error the appellant contends that the lo(er courtcommitted an error in holding that the phrase (hich he does not belie.e to be true found in

section + of Act /o# &6" is e0ui.alent to the (ord kno(ingly used in other la(s# The lo(er

court cited the case of (. S. vs. *in +asa>& Phil# Rep# 76+? in support of his conclusion# 5aidsection + in effect pro.ides that any person (ho takes an oath before a competent tribunal
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officer or person in any case in (hich a la( of the Philippine Islands authori=es an oath that he

(ill testify etc# or that any (ritten testimony declaration etc# by him subscribed is true and

thereafter (illfully and contrary to such oath states or subscribes any material matter (hich hedoes not belie.e to be true is guilty of per8ury# Dnder said section three things are necessary in

order to constitute the crime of per8ury:

The person must ha.e taken an oath in a case (here the la( authori=es an oath before a

competent person or a person authori=ed to administer an oathB

,# That the person (ho has taken the oath (ill testify declare dispose or certify truly or that

any (ritten testimony declaration deposition or certificate by him subscribed is trueB

+# That he (illfully and contrary to such oath states or subscribes any material matter (hich he

does not belie.e to be true#

It is difficult to understand ho( a person can state under oath that a fact is true or subscribe a

document asserting that the same is true (hich he does not belie.e to be true# If under his oathhe declares that said facts are true (e must conclude that he belie.ed that they (ere true# If as a

matter of fact they (ere not true and he had full kno(ledge of the fact that they (ere not truethen his declaration that they (ere true (ould certainly be a s(orn statement that a certain fact

(as true (hich he did not belie.e to be true and therefore he must ha.e made a false statement

kno(ingly# 1ithout attempting to sho( or assert that the phrase (hich he does not belie.e to betrue is e0ui.alent to the (ord kno(ingly as the lo(er court held (e are of the opinion that

(hoe.er makes a statement or subscribes a document under the circumstances mentioned in said

section + (hich is false and (hich he at the time he makes the same does not belie.e to be trueis guilty of the crime of per8ury# In other (ords under the circumstances mentioned in said

section if one s(ears positi.ely that a fact is true (hich he does not belie.e to be true and it

turns out that it is false he is guilty of the crime of per8ury# /o one should s(ear positi.ely that afact is true or subscribe a document asserting that the facts stated therein are true unless he atleast belie.es that they are true at the time he takes such oath or subscribes such document# It can

scarcely be belie.ed that the defendant in the present case belie.ed that the ans(er to said

0uestion /o# ' (as true# 9e must ha.e signed or ans(ered said 0uestion not only belie.ing thatit (as not true but as a matter of fact signed the same kno(ing that the ans(er (as false#

1ith reference to the fifth assignment of error (e are of the opinion that the e.idence adduced

during the trial of the cause clearly sho(s that the defendant is guilty of the crime charged and

therefore the sentence of the lo(er court should be and is hereby affirmed (ith costs#

#rellano, !.J., *orres, !arson and #raullo, JJ., concur.

5eparate *pinions

MRLAND, J. dissenting:

I dissent# The case of Dnited 5tates .s# eorge >,,! D# 5# &7? is decisi.e of this holding that an

indictment for per8ury can not be based on an affida.it not authori=ed or re0uired by any la( of


15/26

the Dnited 5tates# There is no la( of the Philippine Islands (hich authori=es or re0uires the

affida.it (hich is the basis of the charge of per8ury in this case# >D# 5# .s# Panlilio ,! Phil# Rep#

6$!#?

[G.R. No. &&1$$. "eptember 22, 19)8.]

M. . ANDR"N, Plaintiff-Appellee, v. 3AN P"ADA", R., *ollector o +!ter!l

Reve!ue, Defendant-Appellant.

"olicitor-Ge!erl ilo, or Appellant.

(!ic: ; pi##o, or Appellee.

"+LLA-RAL, J.7

This is an appeal taken by 3uan Posadas 3r# as Collector of Internal Re.enue from the 8udgment

rendered by the Court of First Instance of Manila the dispositi.e part of (hich is as follo(s: 8gc:chanrobles#com#ph

For the foregoing considerations 8udgment is rendered: chanrob&es .irtual &a( library

7# Appro.ing the deduction of the sum of P7,'7,#6+ representing &$$ per cent surcharge onincome ta% disappro.ed in &",&B

'# 9olding that the amount of P&''$$$ presenting the alleged proceeds of the supposed sale of
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the 4ood(ill Account4 is not sub8ect to income ta% and

6# 9olding that the amount of P&,'$$$ representing an allegedly reco.ered loss is not sub8ectto income ta%#

It is ordered that a ne( assessment of said plaintiff4s income ta% returns (ith reference to thesesi% >6? items be made as abo.e@indicated and upon the termination of said reassessment the

defendant is ordered to return to the plaintiff any amount in e%cess of (hat should be paid under

said ne( assessment (ithout interest or costs# It is so ordered# crala( .irtua&a( library

In support of his appeal the appellant assigns the follo(ing alleged errors as committed by the

court a 0uo in its 8udgment in 0uestion to (it: 8gc:chanrobles#com#ph

The lo(er court erred in appro.ing a deduction made in the appellee4s income ta% return for

&",& in the amount of P7,'7,#6+ paid as &$$ per cent surcharge on the income ta% due for

&"&! and &"&"#

,# The lo(er court erred in holding that the amount of P&,'$$$ found by the appellant as

losses reco.ered is not sub8ect to income ta%#

+# The lo(er court erred in holding that the amount of P&''$$$ found by the appellant as

proceeds from the sale of good (ill is not sub8ect to income ta%#

7# The lo(er court erred in ordering the appellant to make a ne( income ta% assessment against

the appellee and to return to him (hate.er amount he had paid in e%cess of the amount that he

should pay under the ne( assessment#

'# The lo(er court erred in denying the appellant4s motion for ne( trial on the ground that the

decision (as contrary to la( and that the e.idence (as insufficient to 8ustify the same# crala( .irtua&a( library

The first 0uestion to be decided (hich is raised in the first assignment of alleged error is

(hether or not the sum of P7,'7,#6+ paid by the appellee 1m# 9# Anderson as penalty forfraud committed in his income ta% returns corresponding to the years &"&! and &"&" may be

deducted from the income ta% return made by him for the year &",

5ection ' of Act /o# ,!++ of the Philippine


17/26

/o# ,$ entitled Income Ta% Regulations section ++ of (hich in interpreting the (ord ta%es

pro.ides among other things as follo(s: The (ord 4ta%es4 means ta%es proper and no

deductions should be allo(ed for amounts representing interest or penalties incident todelin0uency# crala( .irtua&a( library

-lack in his book Income Ta% ;igest section +'' page &66 states as follo(s:8gc:chanrobles#com#ph

FI/5 A/; P/A'" Phil# ,,? that 5ee also '" corpus 3uris &$,' sec# 6$"#?

Regulations /o# ,$ issued by the ;epartment of Finance (ere promulgated on August &&",& and published in .olume HH /o# &! page +,+ of the *fficial a=ette on February &&

&",, that is more than &6 years ago# The -ureau of Internal Re.enue has constantly been

enforcing them and no 0uestion as to their .alidity has e.er been raised by anybody# /eitherha.e they been amended by the '" Corpus 3uris &$+sec# 6&+?# 1hile it is true that the abo.e@cited doctrine of this court establishes the e%ception that

the interpretation be not clearly erroneous yet it does not appear for the foregoing reasons that

the interpretation gi.en by the ;epartment of Finance to the case under consideration is

erroneous#

This court therefore finds the first assignment of alleged error to be (ell founded#

1ith respect to the second assignment of alleged error it is contended that the court a 0uo erred

in holding that the amount of P&,'$$$ found by the appellant as losses reco.ered is not sub8ect

to the payment of income ta%#

1illiam 9# Anderson had purchased the business of rlanger E alinger# In &"&' he

incorporated said partnership under the firm name of rlanger E alinger Inc# (ith an

authori=ed capital of P6$$$$$ di.ided into &,$$ shares at the par .alue of P'$$ each# All of


18/26

said shares (ere subscribed by the incorporator Anderson (ho paid in cash on different dates

the total amount of P$$$$# The unpaid balance of P'+$$$$ (as entered in an intermediary

account called under(riting account (hich (as opened in the corporation in Anderson4s namein place of his personal account#

*n 3anuary & &"&! there (as opened in Anderson4s name a good (ill account upon the debitside of (hich (as entered the sum of P+$$$$$# *n the same date the sum of P+$$$$$ (as

entered upon the credit side of Anderson4s under(riting account thereby reducing the balance

thereof from P'+$$$ to P,+$$$$#

*n said date 3anuary & &"&! Anderson sold to 5imon Feldstein ,$$ shares at the rate of & to &

recei.ing in payment thereof the sum of P'$$$$ (ith a loss of P'$$$$#

*n 3anuary ,d of the same year Anderson sold +$$ more shares to Feldstein at the rate of + to &

and recei.ed in payment thereof the sum of P'$$$$ ha.ing lost P&$$$$ in the transaction#

In .ie( of said losses Anderson deducted the sum of P'$$$$ from the ta%able income stated byhim in his return for the year &"&! and the sum of P'$$$ from his return for the year &"&" or

a total amount of P&,'$$$# 5aid deductions (ere appro.ed by the -ureau of Internal Re.enue#

As the Collector of Internal Re.enue attempted to collect a ta% on the P+$$$$ at (hich

Anderson assessed the good (ill of the business the latter on ;ecember ," &",+ agreed (iththe former to eliminate said good (ill (hich in effect (as so done by him by debiting said sum

in his capital account and crediting it in the good (ill account# 1ith said elimination Andersons4

debt of P'+$$$$ (as restored# To Feldstein4s account (as debited the sum of P&,'$$ (hich

together (ith the P&$$$$ paid by him for the '$$ shares (hich he had bought of Anderson tothe latter4s loss amounts to P,,'$$# 5aid sum of P&,'$$ (as the proportional part of the

P+$$$$ (hich corresponded to Feldstein for the abo.e@stated '$$ shares at the rate of K&, for

Anderson and 'K&, for Feldstein#

*n 3anuary , &",7 the sum of P&+7&6" (as debited in Anderson4s personal account and that of

P"'!+& in Feldstein4s capital account in the same proportion of K&, for the former and 'K&, forthe latter that is the amount of P,+$$$$ thereby eliminating the under(riting account in said

amount#

It appears therefore that (ith the P&$$$$ paid by Feldstein on account of the '$$ shares soughtby him of Anderson plus the sum of P&,'$$ debited to Feldstein4s account (hich is

e0ui.alent to 'K&, of the good (ill of P+$$$$ (hich corresponds to Feldstein for his

participation in the share of the corporation and the abo.e@stated sum of P"'!+& the totalamount debited in 5imon Feldstein4s account is P+,$!+!# This amount e%ceeds the sum of

P,'$$$$ (hich represents the .alue at the rate of P'$$ each of the '$$ shares sold to

Feldstein by Anderson# Therefore as the total .alue of the '$$ shares at the par .alue of P'$$each has been debited in Feldstein4s account the loss of P&,'$$$ suffered by Anderson at the

beginning by reason of the sale of said '$$ shares has been reco.ered and it is but 8ust that the

sum of P&,'$$$ deducted from the profits by reasons of losses suffered temporarily on the

capital be restored thereto#


19/26

It is not attempted to consider the sum of P&,'$$$ as profit obtained from the sale of the '$$

shares to Feldstein by Anderson but as the restoration of a temporary loss in the same amount(hich (as deducted from the income corresponding to the years &"&! and &"&"#

The second assignment of alleged error is like(ise (ell founded#

The ruling of the lo(er court that the amount of P&''$$$ found by the appellant as proceeds

from the sale of good (ill is not sub8ect to income ta% is assigned as third alleged error#

According to Reynolds a (itness for the plaintiff the good (ill account of P&''$$$ (as

created because the conditions of the business deser.ed the establishment of this item# The

phrase good (ill is defined in ,! Corpus 3uris ," section & as follo(s:8gc:chanrobles#com#ph

ood (ill may be defined to be the ad.antage or benefit (hich is ac0uired by an establishment

beyond the mere .alue of the capital stock funds or property employed therein in conse0uence

of the general public patronage and encouragement (hich it recei.ed from constant or habitualcustomers on account of its local position or common celebrity or reputation for skill affluence

punctuality or from other accidental circumstances or necessities or e.en from ancientpartialities or pre8udices# # # #crala( .irtua&a( library

According to the abo.e@0uoted definition good (ill is the reputation or good name of anestablishment# If the good (ill that is the good reputation of the business is ac0uired in the

course of its management and operation it does not form part of the capital (ith (hich it (as

established# It is an intangible moral profit susceptible of .aluation in money ac0uired by the

business by reason of the confidence reposed in it by the public due to the efficiency andhonesty sho(n by the manager and personnel thereof in conducting the same and on account of

the courtesy accorded its customers (hich moral profit once it is e.aluated and used becomes a

part of the assets# The good (ill of P&''$$$ created by Anderson has been beneficial not only tohim but also to Feldstein in the proportion of K&, for Feldstein (hich is the proportion of the

participation of each in the shares of the corporation rlanger E alinger Inc# that is P"$7&,

for Anderson and p67'!! for Feldstein inasmuch as Anderson4s personal debt for the balance ofthe unpaid shares (as diminished by said sum of P"$7&, and Feldstein4s capital account

increased by P67'!!#

The benefit recei.ed by Anderson does not consist merely in the sum of P"$ 7&,# 9e alsoreali=ed a gain of P$!+! from the sale of '$$ shares to Feldstein# 5aid benefits added together

make a total of P&6&,'$ that is P6,'$ more than the sum of P&''$$ on (hich the defendant

and appellant Collector of Internal Re.enue is attempting to collect ta% from him#

In .ie( of the foregoing considerations this court is of the opinion and so holds: >&? That the

fines paid as penalty by a ta%payer cannot be deducted from the amount sub8ect to the paymentof income ta%B >,? that the amount deducted from the income by reason of temporary partial loss

from the capital should upon the reco.ery of said loss be restored to the profits and pay the

corresponding ta% and >+? that the good (ill created by an incorporator in the course of the

business of a corporation and appraised to pay the unpaid price of shares subscribed to by said


20/26

incorporator is a profit and is sub8ect to the payment of income ta%#

1herefore the appealed 8udgment is re.ersed in so far as it >&? appro.es the deduction of theamount of P7,'7,#6+ (hich represents &$$ per cent surcharge on income ta%B >,? holds that the

amount of P&,'$$$ deducted from the income as loss (hich (as reco.ered later is not sub8ect

to income ta% and >+? holds that the amount of P&''$$$ representing the proceeds of the sale ofgood (ill is not sub8ect to income ta% and the defendant is absol.ed from the complaint (ith

the costs to the plaintiff# 5o ordered#

G.R. No. L-919) M 29, 19/%

3GN+ PR?,petitioner.s#

*3R0 4 0A@ APPAL", ! . AN0N+ ARAN0A, Acti! *ollector o +!ter!l

Reve!ue,respondents#

lorentino #mansec for petitioner.Office of the Solicitor eneral #mbrosio Padilla and Solicitor Jose P. #le"andro for respondents.

4L+@, J.7

This is a petition for certiorarifiled by ugenio Pere= to re.ie( a resolution of the Court of Ta%

Appeals dated April &' &"'' denying petitioners motion that he be allo(ed to present

additional e.idence after counsel for the Collector of Internal Re.enue shall ha.e rested his case#The facts of the case may be briefly stated as follo(s:

Petitioner ugenio Pere= filed his income ta% returns for the years &"76 &"7 &"7! &"7" and

&"'$ (ithin the time prescribed by la(s based on his declared net income# *n 5eptember +&"', after an in.estigation conducted by an e%aminer of the -ureau of Internal Re.enue therespondent Collector demanded of said ta%payer the payment of P+6"$!#, inclusi.e of

surcharge and compromise as deficiency income ta% for the years &"76 to &"'$# The ta%payer

then re0uested that he be gi.en full opportunity to present his side before the Conference 5taff ofthe -ureau of Internal Re.enue (hich (as granted and as a result of (hich his income ta%

deficiency (as reduced to P&"&"#!' eclusiveof surcharge and interests# Then the Collector

of Internal Re.enue re0uired said petitioner to pay the same not later than February ,! &"'7#

*n March &! &"'7 after the ta%payers motion to reconsider said decision (as denied by theCollector of Internal Re.enue ugenio Pere= filed a petition for re.ie( of said assessment (ith

the defunct -oard of Ta% Appeals (hich (as docketed as Case /o# -TA &!" but pursuant to5ection ,& of Republic Act /o# &&,' the Court of Ta% Appeals took cogni=ance of the case# Inthat instance the parties entered into an agreed stipulation of facts (ith reser.ation to present

further or additional e.idence (hich (as duly appro.ed by the Court of Ta% Appeals on August

,+ &"'7 and in accordance there(ith petitioner presented e%pert (itnesses and documentarye.idence in support of his petition# Inasmuch as petitioner (as at that time confined at the 3ohns

9opkins 9ospital in -altimore Maryland D#5#A# (here he (as under going treatment and as

counsel for said petitioner (anted to get his deposition to be submitted as part of the oral


21/26

e.idence the Court issued letters Rogatory on ;ecember &+ &"'7 after the Collector of Internal

Re.enue had submitted (ritten cross interrogatories# -ut before said (ritten interrogatories

could be ser.ed upon petitioner he left the hospital for the Philippines# Counsel for petitionerthen orally manifested in open court that petitioner (ould be presented as a (itness# Respondent

(as then proceeding (ith the presentation of his e.idence and during the hearing of 3anuary &"

&"'' due to the inability of respondents (itness to appear and in .irtue of the fact that petitionerhad already returned to the Philippines counsel for respondent manifested that they (ould

continue (ith the presentation of his e.idence after petitioner (ould ha.e testified on his behalf

to (hich manifestation counsel for petitioner offered no ob8ection#

At the hearing of March ,, &"'' after the case had been postponed se.eral times at the re0uestof petitioner the latters counsel mo.ed that he be allo(ed to present his additional e.idence

after respondent rests his case# The lo(er Court denied this .erbal motion in a resolution dated

April &'&"'' on the ground that to allo( the prayer of counsel for petitioner (ould be mostirregular and (ould create confusion in the proceedingsB that it (ould not pre8udice the interest

of petitioner if he (ould be allo(ed to testify in his behalf as agreed upon by the parties to be

recalled later as rebuttal (itness after respondent (ere through (ith the presentation of hise.idence in chiefB that there e%ists the presumption of regularity in fa.or of respondents

deficiency ta% assessment against petitioner and the burden of pro.ing the same to be illegal lies

in the latterB and that although the Court of Ta% Appeals is not re0uired to follo( strictly the

technical rules of procedure such discretion (ould not be e%ercised by the Court if it (ouldunnecessarily prolong the case instead of e%pediting its early ad8udication# A motion for the

reconsideration of said ruling filed by petitioner on April ,! &"'' ha.ing been denied

petitioner filed the present action and in this instance alleged that the Court of Ta% Appeals erred:

In holding that the petitioner is a party plaintiff and ordering him to open and close thecase at the trial for the re.ie( of the deficiency income ta% assessments of the respondent

Collector of Internal Re.enue against the petitioner despite the fact that said assessments(ere made after the lapse of the three >+? years prescripti.e period fi%ed by 5ection '&>d? of the /ational Internal Re.enue CodeB

,# In not ordering the respondent Collector of Internal Re.enue as party plaintiff to open

and close the case at the trial despite the fact that the latter merely to 8ustify his

deficiency income ta% assessments (hich ha.e already prescribed alleged that thepetitioner committed fraud in filing his income ta% return (hich the la( presumesprima

facie correctB and

+# In allo(ing the respondent Collector of Internal Re.enue to discontinue (ithout

resting his case (ith the presentation of his e.idence in chief (hich he had alreadybegun and almost completed and in ordering the petitioner to testify in his behalf and

present his e.idence in chief if he so desires and close his case first before said

respondent Collector of Internal Re.enue (ould resume the presentation of his e.idencein chief and rest his case#

1ithin the period for the filing of respondents brief the 5olicitor eneral filed a motion to

dismiss this action on the ground that the main issue that is (hether or not petitioner should be


22/26

allo(ed to present additional e.idence in chief after the respondent shall ha.e rested his case has

become moot because the parties ha.e already closed their e.idence and submitted the case for

decision of the trial Court on *ctober &" &"'' by .irtue of an agreed stipulation of fact (hich(as admitted by the Court on /o.ember &$ &"''# 5aid motion to dismiss (as opposed by

petitioner for the reason among others that:

The appeal interposed by petitioner does not co.er only the issue of (hether or not said

petitioner should be allo(ed to present additional e.idence in chief after the respondentshall ha.e rested his case but includes the fundamental issue of (ho should open and

close the case at the trial before the respondent Court of Ta% Appeals co.ering deficiency

income ta% assessment of the respondent Collector of Internal Re.enue made after thelapse of + years prescripti.e period fi%ed by section '&@d of the /ational Internal

Re.enue CodeB and (hich assessment could no longer be collected through the summary

methods of distraint and le.yB that this 0uestion raised in this appeal has not as yet beendecided by this 9onorable 5upreme CourtB

and by resolution of ;ecember &, &"'' this Court ruled that the 0uestion raised by respondent(ill be acted upon (hen the case is decided on the merits#

The prayer of the petition for certiorari filed in this instance reads as follo(s:

PRMI55 considered it is respectfully prayed that this 9onorable 5upreme Court inthe interest of 8ustice and to afford fair and e0ual opportunity to both parties to pro.e

their case in appropriate and 8udicious proceedings annul the resolution of respondent

Court of Ta% Appeals denying petitioners motion and issue an order directing therespondent Collector of Internal Re.enue shall continue (ith the presentation of his

e.idence in chief (hich he has already begun before petitioner testify in his behalf and

rest his case#

This being the only and leit motivof the remedy sought for in this case and e.en assuming thatsince *ctober &" &"'' (hen the parties herein submitted their case for decision of the lo(er

court this tribunal has not taken any action on the matter for 1e ha.e not been informed that

any decision has been rendered thereon it seems clear to Ds that any other point that might ha.e

been raised in the course of the proceedings must be subordinate to the 0uestion of (hether ornot the lo(er court erred in denying the motion 1e ha.e no( under consideration# In this

respect there is no dispute that petitioner as (ell as the respondent Collector of Internal Re.enue

had already presented part of their respecti.e e.idence and the contro.ersy is only circumscribedas to (ho of the parties should be the last to present e.idence the petitioner claiming that

respondent Collector of Internal Re.enue is in truth and in fact the petitioner because he has

the burden of pro.ing his case against the petitioner herein and hence he>the Collector? shouldclose his e.idence ahead of the ta%payer (hereas said respondent claims other(ise# As there is

no sho(ing of any specific rules go.erning the presentation of e.idence in the Court of Ta%

Appeals the general rules of procedure concerning the order of trial outlined in the Rules ofCourt shall go.ern# Petitioner in this case assails the deficiency assessment made by the

Collector of Internal Re.enueB conse0uently it is incumbent upon him to pro.e that said

assessment is erroneous# The fact that the of Ta% Appeals decided not to alter the ordinary order


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of trial does not militate against its ruling for although it could ha.e done so its po(er to

de.iate from technical rules of e.idence is discretionary and hence not sub8ect to re.ie( by this

Court# Aside from this fact respondent Collector of Internal Re.enue (as able to sho( that theparties had already come to an understanding as to the e.idence that (as to be presented to the

Court a uoand had agreed to and filed an amended stipulation of facts (hich (as admitted by

the trial court to (hich the case (as submitted for decision# In such state of affairs the 0uestionof (ho bet(een the parties herein has the right to rest his case last becomes entirely moot for a

decision on this case (ould ser.e no purpose#

19RF*R the Court hereby resol.es to declare that the present recourse of certiorari filed

by petitioner ugenio Pere= has become moot and to dismiss the petition (ithoutpronouncement as to costs# It is so ordered#

G.R. No. L-1/)86 April 29, 1961

+N0"0A0 "0A0 4 MAR+A L+M >DA. D 3


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in the sum of P,!6!+7#"& by (ay of transfer ta%es an penalties as sho(n in a proof of debts

like(ise attache to said complaint# The inter.enor prayed therefore that said sales be declared

null and .oidB that the afore@mentioned petitioned properties be deemed part of the gross estateof the deceasedB and that the latter be ordered to pay to the inter.enor said sum of P,!6!+7#"

In his un.erified ans(er to the complaint of inter.ention the special administrator stated that hehad no kno(ledge or information sufficient to form a belief as to the truth of its main allegations

and that he accordingly denied the same specially and specifically#

*n motion of the inter.enor the court admitted on /o.ember , &"'+ o.er the ob8ection of

Pacita 3esus and 3osefina Dy hereinafter referred to as appellants a amended complaint in

inter.ention (hich included in it claim against the estate of the deceased the addition sum ofP7",'#++ allegedly representing (ar profits ta% and penalties said to be due as of *ctober +&

&"'+ pursuant to another proof of debt attached to said pleading#

The special administrator filed on ;ecember && &"'+ manifestation to the effect that he had

not submitt an in.entory of the properties of the deceased because he had found none aftere%erting all efforts and making a thorough in.estigation#

In their un.erified ans(er to the amended complaint in inter.ention J (hich ans(er (as filed

on ;ecember & &"'+ J appellants denied that the sales therein mentioned (ere fictitious or

simulated and alleged inter alia that the deceased had left no propertiesB that the proceedings forthe settlement of her estate should ne.er ha.e been commencedB and that appellants had no

kno(ledge or information sufficient to form a belief as to the truth of the other allegations in the

amended complaint in inter.ention (hich they accordingly denied specifically#

*n /o.ember , &"' appellants filed their ans(er to the complaint in inter.ention# They

denied in said ans(er the fictitious or simulated nature of the sales aforementioned as (ell asthe alleged indebtedness to the o.ernment and alleged that the probate court had no

8urisdiction to pass upon the legality of said sales# At the foot of this pleading 3ose Dy deniedunder oath the genuineness and due e%ecution of the aforementioned Memorandum of

Agreements and Ackno(ledgments# In a motion dated February &, &"'! appellants asked

permission to (ithdra( said ans(er to the complaint in inter.ention and prayed that an

Amended Ans(er to the Amended Complaint in Inter.ention attached to said motion beadmitted# The motion (as granted on February &' &"'!# In said pleading appellants reiterated

substantially the contents of their ans(ers of ;ecember & &"'+ to the amended complaint in

inter.ention and their ob8ection to the 8urisdiction of the probate court as set forth in theirans(er dated /o.ember , &"' to the complaint in inter.ention#

5ubse0uently or on March ' &"'! the court admitted a second amended complaint in

inter.ention filed by the Republic of the Philippines (hich amended the first amended

complaint in inter.ention by including in the prayer a re0uest that 8udgment be rendereddeclaring that the abo.e@mentioned sales are transfers in contemplation of death falling under

section !!>-? of the /ational Internal Re.enue Code#


25/26

*n ;ecember ," &"'! the inter.enor filed a motion alleging that inasmuch as its claims for

P,!6!+7#" as (ar profit estate and inheritance ta%es and P7",'#++ as (ar profit ta% J as

set forth in the complaint in inter.ention and the amended complaint in inter.ention J ha.ebeen contested and the liability therefor denied this case in.ol.es disputed assessments of

internal re.enue ta%es and a special ta% J the enforcement of (hich is imposed by la( upon the

Commissioner of Internal Re.enue J pending in the Court of First Instance (hen Republic Act/o# &&,' creating the Court of Ta% Appeals (as appro.ed on 3une &6 &"'7 and praying that

the pertinent records be remanded to the latter court pursuant to section ,, of said Act# *.er

appellants ob8ection the motion (as after due hearing granted by an order dated February ,'&"'"# 9ence this appeal by said appellants (ho allege that:

The lo(er court erred in ordering the records of this case insofar as pertinent to the

claim of inter.enor@appellee to be remanded to the Court of Ta% Appeals#

,# The lo(er court erred in not holding that the Court of First Instance sitting as a regular

court has original and e%clusi.e 8urisdiction o.er the claim of inter.enor@appellee#

In support of the first assignment of error appellants maintain: >a? that inter.ention being

merely ancillary cannot alter the nature of the main actionB and >b? that the instant case is not

one of disputed assessment# 1e find no merit in this pretense#

The main action to (hich the inter.ention is said to be ancillary is the proceeding >notaction? for the settlement of the estate of the deceased Maria a? that estate and

inheritance ta%es are based on the fact of transmission of property of the deceased and receipt

thereof by his heir or legatee (hich appellants claim cannot possibly take place (hen theproperty in 0uestion is sub8ect to a claim of o(nership ad.erse to the deceasedB and >b? that the

0uestion (hether or not there (as a transfer of property (hen denied by alleged recipient is a

0uestion of o(nership#


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Precisely for these reasons the probate court has no 8urisdiction to settle the issue bet(een the

parties herein in this special proceeding for the settlement of the estate of the deceased# Dpon the

other hand since the determination of the 0uestion (hether the deceased had really or fictitiouslytransferred properties to her children and (hether or not the transfer had been made in

contemplation of death as pro.ided in section !!>-? of the Ta% Code are merely incidental to

the issue on the .alidity or legality of the disputed assessments (hich is (ithin the 8urisdictionof the Court of Ta% Appeals it follo(s that the latter J not the court of first instance not e.en as

a regular court J is like(ise competent to hear and decide said 0uestions concerning the nature

of the transfers aforementioned#

19RF*R the order appealed from is hereby affirmed (ith costs against the appellants# Itis so ordered#

tax digest finals revised

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