G.R. No. L-16441 March 31, 1965
ALFREDO BOLLOZOS, petitioner, vs. COURT OF TAX APPEALS and COLLECTOR OF INTERNAL REVENUE, respondents.

FACTS

Petitioner Alfredo Bollozos operated a shop for the construction and repair of mechanical devices in Cebu City from 1950 to 1955. He paid the annual fixed tax of P10.00 under Section 182 of the National Internal Revenue Code, except for the year 1952. However, he failed to pay the full percentage taxes on his gross receipts as imposed by Section 191 of the Tax Code, resulting in a total deficiency percentage tax of P3,111.52 for the period from the first quarter of 1950 to the third quarter of 1955. The Bureau of Internal Revenue (BIR) initiated an investigation based on information about his irregular tax payments. A revenue agent submitted a report on November 29, 1955, detailing his gross receipts for the period. After several notices and a formal letter of demand dated August 31, 1956, which was sent to his authorized representative, the BIR issued a warrant of distraint and levy on June 23, 1958. Bollozos filed a petition for review with the Court of Tax Appeals on January 24, 1959. He admitted the non-payment but contended that the right of the Commissioner of Internal Revenue to collect the taxes had already prescribed.

ISSUE

Whether the right of the Commissioner of Internal Revenue to collect the deficiency fixed and percentage taxes from petitioner has prescribed.

RULING

No, the right to collect has not prescribed. The Court affirmed the decision of the Court of Tax Appeals. The applicable provision is Section 332(a) of the National Internal Revenue Code, which states that in case of a failure to file a return, the tax may be assessed or a proceeding for collection may be begun without assessment at any time within ten years after the discovery of the omission. The Court of Tax Appeals found as a fact that the petitioner failed to file his tax returns, except for the first and fourth quarters of 1950. The petitioner offered no proof to substantiate his claim that he filed the returns and merely relied on the rebuttable presumption of regularity. This presumption was set aside when the respondents explicitly asserted his non-compliance. The burden of proving the affirmative defense of prescription rested on the petitioner, which he failed to discharge. Since the failure to file was discovered on November 29, 1955, the BIR had until November 29, 1965, to collect. The filing of the petition for review on January 24, 1959, and the respondent’s answer on March 13, 1959, constituted a proceeding for collection within the ten-year period. Therefore, the right to collect had not yet prescribed.