Facts:
The Bohol Land Transportation Co. is a domestic corporation engaged in the land transportation business with main office at Tagbilaran, Bohol. The following deficiency assessments were issued against, it on August 4 and 5 1953: for 1945 the deficiency income tax assess P15,275.31; for 1946, P15,768.20; for 1947, P11,732.90; for 1948, P20,711.09; for 1949, 18,728.21; for 1950, P30,155.09, and for 1951, P30,189.00. The company filed with the Court of Tax Appeals an urgent motion for mandatory injunction. At the hearing on the injunction, the Collector admitted that pursuant to several decisions of the Supreme Court he has no authority to collect by summary methods the income taxes assessed against the company for the years 1945 to 1950, inclusive, it appearing that the warrant of distraint and levy and the warrant of garnishment were issued beyond the period of three years from the time the income tax returns were filed.
The Collector of Internal Revenue is appealing from that portion of the decision which holds that the right of the Government to assess and collect by judicial action the income taxes for the years 1945 to 1947, inclusive, has already prescribedbecause Sections 331 and 332 of the National Internal Revenue Code apply to internal revenue taxes in general and not to income taxes the collection of which is specifically provided for under a different title of the same Code, particularly Title II which refers exclusively to income tax, the Collector concludes that the right of the Government to assess and collect income taxes by judicial action has no definite period of limitation and so the deficiency income taxes for 1945, 1946 and 1947 which the Government is seeking to collect has not as yet prescribed.
Issue:
Whether or not the right of the government to collect has already prescribed
Ruling:
Yes. Section 51 (d) of the National Internal Revenue Code, which refers to the collection of income tax, by judicial action is concerned the prescriptive period therein mentioned being merely applicable to collection by summary methods, as interpreted by this Court. Considering this void in the law applicable to income tax, and bearing in mind that, Section 331 of the Code which provides for the limitation upon assessment and collection by judicial action comes under Title IX, Chapter II, which refers to "CIVIL", REMEDIES FOR COLLECTION OF TAXES", we may conclude that the provisions of said Section 331 are general in character which may be considered suppletory with regard to matter not covered by the title covering income tax. In other words, Title 11 of the Code is a special provision which governs exclusively all matters pertaining to income tax, whereas Title IX, Chapter II, is a general provision which governs all internal revenue taxes in general, which cannot apply insofar as it may conflict with the provisions of Title II as to which the latter shall prevail, but that in the absence of any provision in said Title, III relative to the period and method of collection of the tax, the provisions of Title 1X, Chapter II, may be deemed to be suppletory in, character. Hence, in our opinion, the Court of Tax Appeals did not err in holding that the right of the Government to collect the deficiency income taxes for the years 1945, 1946 and 1947 has already prescribed under Section 331 of the National Internal Revenue Code.
HOWEVER, the proceeding for review instituted by the company is equivalent to a judicial action within the purview of Section 332 (c) of the Tax Code. Indeed, had the company not taken the matter to the Court of Tax Appeals, the Collector would have reasonably taken a similar action for, as it should be noted, he has already taken the preliminary step, which is the collection by distraint and levy, to insure the effective collection of the tax assessed against the company. And when the company appealed the Collector's decision, the Collector was placed in the alternative of sustaining his decision, which is tantamount to a judicial action. As the Court of Tax Appeals well observed, "The objective in both cases is the same — the validity and correctness of the determination and collection of the tax." Indeed, the action of the Collector cannot be taken in any other light. It is a judicial action pure and simple.
The Bohol Land Transportation Co. is a domestic corporation engaged in the land transportation business with main office at Tagbilaran, Bohol. The following deficiency assessments were issued against, it on August 4 and 5 1953: for 1945 the deficiency income tax assess P15,275.31; for 1946, P15,768.20; for 1947, P11,732.90; for 1948, P20,711.09; for 1949, 18,728.21; for 1950, P30,155.09, and for 1951, P30,189.00. The company filed with the Court of Tax Appeals an urgent motion for mandatory injunction. At the hearing on the injunction, the Collector admitted that pursuant to several decisions of the Supreme Court he has no authority to collect by summary methods the income taxes assessed against the company for the years 1945 to 1950, inclusive, it appearing that the warrant of distraint and levy and the warrant of garnishment were issued beyond the period of three years from the time the income tax returns were filed.
The Collector of Internal Revenue is appealing from that portion of the decision which holds that the right of the Government to assess and collect by judicial action the income taxes for the years 1945 to 1947, inclusive, has already prescribedbecause Sections 331 and 332 of the National Internal Revenue Code apply to internal revenue taxes in general and not to income taxes the collection of which is specifically provided for under a different title of the same Code, particularly Title II which refers exclusively to income tax, the Collector concludes that the right of the Government to assess and collect income taxes by judicial action has no definite period of limitation and so the deficiency income taxes for 1945, 1946 and 1947 which the Government is seeking to collect has not as yet prescribed.
Issue:
Whether or not the right of the government to collect has already prescribed
Ruling:
Yes. Section 51 (d) of the National Internal Revenue Code, which refers to the collection of income tax, by judicial action is concerned the prescriptive period therein mentioned being merely applicable to collection by summary methods, as interpreted by this Court. Considering this void in the law applicable to income tax, and bearing in mind that, Section 331 of the Code which provides for the limitation upon assessment and collection by judicial action comes under Title IX, Chapter II, which refers to "CIVIL", REMEDIES FOR COLLECTION OF TAXES", we may conclude that the provisions of said Section 331 are general in character which may be considered suppletory with regard to matter not covered by the title covering income tax. In other words, Title 11 of the Code is a special provision which governs exclusively all matters pertaining to income tax, whereas Title IX, Chapter II, is a general provision which governs all internal revenue taxes in general, which cannot apply insofar as it may conflict with the provisions of Title II as to which the latter shall prevail, but that in the absence of any provision in said Title, III relative to the period and method of collection of the tax, the provisions of Title 1X, Chapter II, may be deemed to be suppletory in, character. Hence, in our opinion, the Court of Tax Appeals did not err in holding that the right of the Government to collect the deficiency income taxes for the years 1945, 1946 and 1947 has already prescribed under Section 331 of the National Internal Revenue Code.
HOWEVER, the proceeding for review instituted by the company is equivalent to a judicial action within the purview of Section 332 (c) of the Tax Code. Indeed, had the company not taken the matter to the Court of Tax Appeals, the Collector would have reasonably taken a similar action for, as it should be noted, he has already taken the preliminary step, which is the collection by distraint and levy, to insure the effective collection of the tax assessed against the company. And when the company appealed the Collector's decision, the Collector was placed in the alternative of sustaining his decision, which is tantamount to a judicial action. As the Court of Tax Appeals well observed, "The objective in both cases is the same — the validity and correctness of the determination and collection of the tax." Indeed, the action of the Collector cannot be taken in any other light. It is a judicial action pure and simple.
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