Republic of the Philippines vs Lim Tian Teng Sons and Co., Inc.

G.R. No. L-21731 – 123 Phil. 400 – 16 SCRA 585 – Taxation Law – NIRC Rules of Procedure – Tax Collection – Period to Collect – No need for a final and executory assessment 

In January 1957, the Collector of Internal Revenue (CIR) made an assessment against Lim Tian Teng Sons and Co., Inc. (LTTSCI) demanding from the latter payment of P15k in taxes inclusive of surcharge. In the same month, LTTSCI requested for a reinvestigation with a request to produce supporting evidence. The CIR did not reply however he remanded the case to the Solicitor General (SG) who did not grant a reinvestigation but rather reiterated the content of the assessment. In September 1958, the CIR filed a tax collection suit against LTTSCI with the Court of First Instance of Cebu. LTTSCI assailed the collection suit on the ground that the CIR cannot commence collection without a final and executory assessment notice. It alleged that the assessment notice issued in January 1957 has not yet become final and executory because of the failure of the CIR to act on the protest.

ISSUE: Whether or not LLTSCI is correct.

HELD: No. Nowhere in the Tax Code is the CIR required to rule first on a taxpayer’s request for reinvestigation before he can go to court for the purpose of collecting the tax assessed. Ruling on the protest is not a condition precedent for the commencement of tax collection. The CIR is authorized to collect delinquent internal revenue taxes either by distraint and levy or by judicial action or both simultaneously. The only requisite before he can collect the tax is that he must first assess the same within the time fixed by law – and this was complied with in the case at bar. The Supreme Court notes that in the case of a false or fraudulent return with intent to evade the tax or of a failure to file a return, a proceeding in court for the collection of such tax may be begun without assessment.

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