52 TUPAZ V ULEP GR No.

127777, Oct 1, 1999

Facts: June 8, 1990, an information against accused Petronila C. Tupaz and her late husband Jose J.
Tupaz, Jr., as corporate officers of El Oro Engravers Corp., was field for non-payment of deficiency
corporate income tax for the year 1979 in violation of Sec. 51(b) in relation to Sec. 73 of the 1977 Tax
Code. The information was dismissed for the lack of jurisdiction by the MeTC of Q.C.
January 10, 1991, 2 information were filed before the RTC of Q.C. against spouses for the same alleged
non-payment of deficiency corporate income tax for the year 1979.
Prior to this, petitioner was charged with nonpayment of deficiency corporate income tax for the year
1979, which tax return was filed in April 1980. On July 16, 1984, the BIR issued a notice of assessment.
Petitioner contends that the July 16, 1984 assessment was made out of time.
Petitioner avers that while Sec. 318 and 319 of the 1977 NIRC provide a 5-year period of limitation for
the assessment and collection ofinternal revenue taxes, BP700, enacted on February 22, 1984, amended
the 2 sections and reduced the period to 3 years to assess the tax liability, counted from the last day of
filing the return or from the date the return is filed, whichever comes later. Since the tax returnwas filed
in April 1980, the assessment made on July 16, 1984 was beyond the 3-year prescriptive period.

Issue: Whether the governments right to assess has prescribed.
Held: The shortened period of 3 years prescribed under BP700 is not applicable to petitioner. BP700,
effective April 5, 1984, specifically states that the shortened period of 3 years shall apply to assessments
and collections of internal revenue taxes beginning taxable year 1984. Assessments made on or after
April 5, 1984 are governed by the 5-year period if the taxes assessed cover taxable years prior to January
1, 1984. The deficiency income tax under consideration is for taxable year 1979. Thus, the period
of assessment is still 5 years, under the old law. The income tax return was filed in April 1980. Hence,
the July 16, 1984 tax assessment was issued within the prescribed period of 5 years, from the last day of
filing the return, or from the date the returnis filed, whichever comes later.
At the outset, it must be stressed that internal revenue taxes are self-assessing and no
further assessment by the government is required to create the tax liability. An assessment, however, is
not altogether inconsequential; it is relevant in the proper pursuit of judicial and extrajudicial remedies
to enforce taxpayer liabilities and certain matters that relate to it, such as the imposition of surcharges
and interest, and in the application of statute of limitations and in the establishment with tax liens.
66 Aznar v CTA GR No. 20569, 23 August 1974
Facts: Petitioner, as administrator of the estate of the deceased, Matias H. Aznar, seeks a review and
nullification of the decision of the Court of Tax Appeals ordering the petitioner to pay the government
the sum of P227,691.77 representing deficiency income taxes for the years 1946 to 1951. An
investigation by the Commissioner of Internal Revenue (CIR) ascertained the assets and liabilities of the
taxpayer and it was discovered that from 1946 to 1951, his net worth had increased every year, which
increases in net worth was very much more than the income reported during said years. The findings
clearly indicated that the taxpayer did not declare correctly the income reported in his income tax
returns for the aforesaid years. Petitioner avers that according to the NIRC, the right of the CIR to assess
deficiency income taxes of the late Aznar for the years 1946, 1947, and 1948 had already prescribed at
the time the assessment was made on November 28, 1952; there being a five year limitation upon
assessment and collection from the filing of the returns. Meanwhile, respondents believe that the
prescription period in the case at bar that is applicable is under Sec. 332 of the NIRC which provides
that: "(a) In the case of a false or fraudulent return with intent to evade tax or of a failure to file a
return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun
without assessment, at any time within ten years after the discovery of the falsity, fraud or omission".
Petitioner argues said provision does not apply because the taxpayer did not file false and fraudulent
returns with intent to evade tax.
Issue: Whether or not the deceased Aznar filed false or fraudulent income tax returns and subsequently,
whether the action has not prescribed.
Held: The petition is without merit. The respondent CTA concluded that the very "substantial under
declarations of income for six consecutive years eloquently demonstrate the falsity or fraudulence of
the income tax returns with an intent to evade the payment of tax." The ordinary period of prescription
of 5 years within which to assess tax liabilities under Sec. 331 of the NIRC should be applicable to normal
circumstances, but whenever the government is placed at a disadvantage so as to prevent its lawful
agents from proper assessment of tax liabilities due to false returns, fraudulent return intended to
evade payment of tax, or failure to file returns, the period of ten years from the time of the discovery of
the falsity, fraud or omission even seems to be inadequate. There being undoubtedly false tax returns in
this case, We affirm the conclusion of the respondent Court of Tax Appeals that Sec. 332 (a) of the NIRC
should apply and that the period of ten years within which to assess petitioner's tax liability had not
expired at the time said assessment was made.

81 Dayrit v. Cruz
Facts: Petitioners are the children of the deceased Spouses Teodoro. Thereafter, the heirs filed separate
estate and inheritance tax returns for the estates of the late spouses with the BIR. In 1972, the CIR
issued the deficiency estate and inheritance tax assessments. The notice of deficiency assessments was
received by Dayrit and she thereafter asked for a reconsideration of the said assessments alleging that
the same are contrary to law and not supported by sufficient evidence.
CIR filed a motion for Allowance of Claim against the estates of spouses Teodoro and for an order of
payment of taxes with the CFI praying that petitioner Dayrit be ordered to pay the BIR the sum of 6M.
Petitioners filed 2 separate oppositions alleging that the assessments have not become final and
executory.

Respondent Judge issued an order approving the claim of respondent Commissioner and directing the
payment of the estate and inheritance taxes. Dissatisfied, petitioners filed an MR, denied. Hence this
petition.
Petitioners contend that CFI Judge acted with GADLEJ in granting the Commissioner's claim for estate
and inheritance taxes against the estates of the Teodoro spouses on the ground that due to the
pendency of their motion for reconsideration of the deficiency assessments, said tax assessments are
not yet final and executory. Petitioners stressed that the absence of a decision on the disputed
assessments was a bar against collection of taxes.
Issues: Whether or not BIR can claim the deficiency taxes despite pendency of MR.
Held: Yes. Anent petitioners' claim that the tax assessments against the estates are not yet final, the
court finds the claim untenable. In petitioners' MR, they requested the Commissioner for thirty (30) days
within which to submit a position paper that would embody their grounds for reconsideration. However,
no position paper was ever filed. Such failure to file a position paper may be construed as abandonment
of the petitioners' request for reconsideration.
Petitioners' contention that the absence of a decision on their request for reconsideration of the
assessments is a bar to granting the claim for collection is likewise without merit. This Court had
occasion to rule that a decision on a request for reinvestigation is not a condition precedent to the filing
of an action for collection of taxes already assessed. This Court ruled that "nowhere in the Tax Code is
the Collector of Internal Revenue 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.
From the date of receipt of the copy of the Commissioner's letter for collection, petitioners must contest
or dispute the same and, upon a denial thereof, the petitioners have a period of thirty (30) days within
which to appeal the case to the Court of Tax Appeals. This they failed to avail of.