RIPUBLIC OF THI PHILIPPIMIS

COURT OF TAX APPEALS

QUIZOM CITY
' 'i

ESTATE OF BENEDICTO B.
ALCANTARA, represented by
Administratrix Erlinda
A. Dulay,
Petitioner,

- verSLIS - C.T.A. CASE NO. 3714

BUREAU OF INTERNAL REVENUE,

Respondent.
X - - - - - - - - - - - - X

D E C 0 N

This petition arose from respondent· s motion

for allowance of a claim and issuance of an order

to pay taxes filed in the Regional Trial Court of

Lapu-Lapu City, aimed to collect deficiency income

tax in the amount of P104,653.30, and deficiency

~ percentage tax in the amount of P6,819.22 covering

the year 1975.

As regards the assessment for deficiency

estate inc 1L1ded in respondent's motion;

petitioner has excluded it in this appeal as shown

from the prayer in her petition for review, and the

manifestation of petitioner's counsel in open court

0
made during the hearing of the instant case on

August 12, 1986. (pp. 7, 17, 19 and 20, tsn,

hearing of August 12, 1986)

.
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DECISION
CTA CASE NO. 3714

- 2 -

Petitioner Erlinda A. Dulay~ Administratrix of

the Estate of Benedicta B. Alcantara~ is the former

wife of deceased Benedicta B. Alcantara who died on

March 17 ~ 1977. (p. 143, BIR rec.} On February 4~

1980, a Letter of Authority No. 173191 was issued

by the Revenue Regional Director authorizing

Revenue E>:aminer Vic tor iano A. Fuentes to e>:amine

the books of account and other accounting records

of deceased Alcantara for income tax purposes

covering the year 1975. (p. 31 .• BIR rec.)

Likewise~ on March 24~ 1980~ the said Revenue

REgional Director issued another Letter of

Authority No. 17408 authorizing Examiner Canute

Alegarbes to investigate the estate tax of the

deceased Benedicta B. Alcantara. (p. •"\

1 .L~ BIR rec • .J

In order to avoid the mul tic i pl ic i ty of c 1 aims to

be filed against the intestate estate of deceased

for internal revenue ta>:es, the income ta>: aspect

of the investigation was consolidated with the

investigation of the deceased estate tax liability

and examiner Canute Alegarbes was assigned to

investigate the said consoli~ated revenue taxes.

,.
(p. 32, BIR rec.)

After the preliminary investigation of the

revenue taxes covering the aforesaid years in

DECISION
CTA CASE NO. 3714

- 3 -

question, the Revenue District Officer of Mandaue

City, Pedro M. Sanchez issued a letter · dated May

28, 1980 addr-essed to Erlinda A. Dulay,

Administratrix of the Estate of the deceased

Benedicto B. Alcantara stating that the 1975 return

filed by the deceased Benedicta B. Alcantara is not

supported by receipts or any books of account and

other related records. That based on the evidence

obtainable Ltnder the circumstances, it was

ascertained that the deceased Benedicto B.

Alcantara is 1 iable for deficiency percentage and

income tax in the aggregate amount of P115,388.34

inclusive of interest, surcharges, and compromise

penalty covering the said year 1975. Consequently,

the Administratri>:, Erlinda A. Dulay, was invited

to an informal conference on June 9, 1980 at the

office of the Revenue Examiner, in connection with

the result of the preliminary investigation of the

subject revenue ta>:es. (£xh. 5, p. 34, BIR rec.J

In answer to the request, the Administratrix,

Erlinda A. Dulay, sent a letter dated June 17, 1980

stating that she has no authority to confer with

regard to the result ·· of preliminary investigation

of the revenue ta>:es because her duties as

administratrix are prescribed within the provisions

DECISION
CTA CASE NO. 3714

- 4 -

of Rules 81 and 84 of the Rules of Court, and for

her to act without court order is tantamount to

contempt of court. Likewise, the said

administratri>: Dulay stated that since this

involves a claim against the estate, it is governed

by Rule 86 of the Rules of Court. (Exh. 6.~ p. 35 .~

BIR rec.)
On August 26 and September 23, 1980 the

Revenue District Officer· o ·f MandaLie City informed

the Administratrix, Erlinda A. Dulay of the result

of investigation conducted by E>:aminer Canuto S.

Alegarbes covering the 1975 internal revenue tax

liabilities and invited said administratrix or her

authorized representative for an informal

conference to enable said administratrix to contest

the proposed assessment which shows the computation

of the percentage tax and income tax liabilities of

deceased Benedicto B. Alcantara in the total amount

of P111,389.76. If said findings of the tax

liabilities petitioner is not agreeable to her, she

may file her protest or appear for conference ·

within five days from receipt of letters dated

August 26 and September 23, 1980, and failure on

her part or her authorized representative to

appear, a statutory notice will then be sent to the

 DECISION
CTA CASE NO. 3714

' ':
- 5 -

petitioner as provided for by law. (pp. 45 and 46,

BIR rec.)

In a memorandum letter of Revenue Examiner

Canute Alegarbes dated November 3, 1980, addressed

to the Revenue District Officer of MandaLte City~

the latter was informed of the former ' s

investigation of the income and percentage taxes of

deceased Alcantara, on the basis of documents

.-
obtai nab 1 e showing the 1 iabi 1 i ty of the deceased

for deficiency income tax and percentage tax in the

amounts of P1 3 9,251.47 and P6,819.22, respectively.

This is so because the Administratrix cannot

produce any records or books of accountg in

connection with the business of the deceased as a

common carrier. (£ x h. 3, p. 5 6, BIR re c .)

On the basis of the aforesaid memorandum of

E>:aminer CanLtto Alegarbes~ respondent, through

Regional Director Salvador Hernandez, issued on

January 19, 1981 a deficiency percentage tax

assessment covering the year 1975 in the amount of

P6,519.22 addressed to the estate of the deceased,

c/o the administratrix Erlinda A. Dulay (£xh. 71

p. 97, BIR rec.)J and that likewise on January 31,

1981 the Revenue Regional Director issued again an

Assessment No. 59-1 - 07025463- 75 on the Estate of

DECISION
CTA CASE NO. 3714

-- 6 -

deceased Benedicta B. Alcantara~ c/o of the

Administratrix Erlinda A. Dulay for deficiency

income tax covering the year 1975 in the amount of

P104~653.30 (Exh. 8~ p. 113~ BIR rec.J~ computed as

follows:

a.) P6~819.22 as deficiency percentage ta>: for 1975:

Ta>:able receipts per retum P170~456.(1(1

Add: Lhdec 1 a red incO'l'le:
Gross incO'l'le per·
investigation P3 11 ~040.(X)
Gr-·oss incO'l'le per
return 1"7(1 456.00
-·-······-··--'--··········-·-·-·-··-·· E.!.1Q.~.!~~
Ta>:able receipts 311 ~ 584 • (1(1
2"/. ta>: due thereon 6~Z20.80
Less ta>: paid .____:f.,.~ -s~~
Deficiency ta>: due 3~672.80
Add: 25/. surcharge 918.20
14/. interest per
C\J"lnum ( 42"/.) 1,928.22
compromise penalty
for late payment
TOTPL Pi'O..M DLE PND PAYABLE

b.) P104,65.3.~,(1 as deficiency incone ta>: for 1975:

Net incone disclosed in

the r-·etum aLidi ted p 26~741.73

Add: Lhr-·eported inc one:

Gross receipts per
investigatic:n P331 ~040.(1(1
Gross receipts
per r·etum .._1712.s1_~.!.~~~
Net incone per investigation P167 ~325. 73
Less: Personal S( additional
e>:emption 8 ~ 000. (X)
Ara.1nt subject t.o ta>: ' 159,325.73
Ara.1nt of ta>: due
thereon 75~ 515.(X)
DECISION
CTA CASE NO. 3714

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Less: Ta>: previcx..1sly paid

per return -·-·-~.!-~7E!.!.~~
Deficiency income tax p 72~937.00
Add: 14/. interest per .:mnum (42"/.) --.-~.!.s.Z!.¢1 •.;;K~
TOTPL If\Ol"E TAX I:X..E P/110 PAYAR.E p .1,!:_~_?_~3 ~3(1

These assessments were sent to petitioner by

mail on January 30, 1981 and February 10, 1981, as

evidenced by the entry in the record book of

respondent as well as registry receipt No. 272

dated January 30, 1981 and registry receipt No. 377

dated February 10, 1981. (£xhs. ·.~-a and :~-b~ p.

151, BIR rec.; and Exhs. 10, 10-a and 10-b, p. 152,

BIR rec.)

The Assessment No. 59-1-07025463-75 issued by

respondent on January 30, 1981 for deficiency

income tax covering the year 1975 in the amount of

P104,653.30 was confirmed by Deputy Commissioner

Romulo N. Villa in his letter dated May 13, 1984

addressed to Erlinda A. Dulay, Administratri>: of

the Estate of Benedicta B. Alcantara. (£xh. 8~ p.

6:~~ BIR rec.)

On February 10, 1982, respondent issued a

Warrant of Distraint and Levy against the

properties of the petitioner and Warrant of

,.
Garnishment against the estate's bank deposit to

enforce the collection of the aforesaid deficiency

taxes involved in the instant case. The said

DECISION
CTA CASE NO. 3714

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Warrant of Distraint and Levy was served on

petitioner on June 16~ 1982 and the Warrant of

Garnishment was served upon the Insular Bank of

Asia and America~ Cebu Branch~ on April 7~ 1982.

(pp. 72-91, BIR rec.)

On October 17~ 1983~ respondent Commissioner

of Internal Revenue filed before the Regional Trial

Cour·t Branch X, Cebu City~ a motion for all owanctt

of c 1 aim and for an order to pay ta>:es together

with the proof of claim in Special Proceedings No.

58-L which is special remedy to enforce

collection of the deficiency revenue taxes involve

in this case. (p. 134, BIR rec.) Copy of said

motion, together with appendix attached thereto,

was sent to the petitioner on October 21, 1983.

(p. 183, respondent ' s memorandum, p. 183, CTA rec.;

admitted by petitioner in par. 3, Petition for

Review, p. 1, CTA rec.)

On November 22, 1983, respondent received a.

copy of petitioner· s opposition to the motion for

allowance and for an order to pay taxes together

with the proof of c 1 aim f i 1 ed by petitioner with

the Intestate Court. ' (pp. 138 and 139 .• BIR rec.)

Likewise, respondent, on December 5, 1983, received

a letter of protest from petitioner for deficiency

DECISION
CTA CASE NO. 3714

- 9 -

income and business taxes dated November 18~ 1983.

(pp. 142-143 .. BIR rec.) Without waiting for a

decision on her protest~ petitioner Administratrix

Erlinda A. Dulay on December 29, 1983 interposed

this appeal. (p. 1 .. CTA rec.)

After the hearing of this case on the merits,

petitioner was given thirty days from receipt of

this Court's resolution dated September 10, 1987

within which to file her memorandum in support

of her case but since said petitioner had failed

to do so within the time allowed her~ this Court

had considered said case submitted for dec is ion.

(p. 151, CTA re c .)

The issues before this Court for resolution

are:

1) Whether the right of respondent

to assess the deficiency income and
percentage ta>:es covering the year 1975
has prescribed; and

2) Whether or not petitioner i9

liable for the deficiency income tax in
the amount of P104,653.30 and deficiency
percentage tax in the amount of P6,819.22
for the year 1975.

A close scrutiny of petitioner's petition for

review reveals that said petitioner had appealed

from the motion of the respondent for allowance of

c 1 aim and for an order to pay ta>ces covering the

deficiency income and percentage ta>:es~ but does

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DECISION
CTA CASE NO. 3714

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not include the deficiency estate tax as clearly

shown in the petition for review which merely prays

for the cancellation and withdrawal of the

deficiency income and percentage ta>: assessments.

(see p. 3 .• CTA rec • .> DLiring the hearing before

this Court on August 1' 1986, counsel for

petitioner manifested that she does not question

the estate tax in the petition for review. (pp. 7,

8 and 19, tsn .• hearing of' August 1, 1986)

I
onsidering, therefore, that petitioner did not

appeal to this Court the issue involving the estate

tax, the Court has no jurisdiction to pass upon the

validity of the subject assessment.

Administratrix Erlinda A. Dulay raised the

issue that the authority of the respondent to make

the assessments have long prescribed. Likewise, in

paroli\graph 10 of petitioner's petition for review,

it is alleged that the act of assessment being

personal to the ta>:payer, they cannot be enforced

against her as the deceased wife.

In short, the thrust of counsel for petitioner

is that since Benedicto B. Alcantara died on March

17, 1977 and that these deficiency taxes were

assessed long after his death, and that the

assessments were served only upon the decedent's

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DECISION
CTA CASE NO. 3714

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wife, therefore these deficiency income and

percentage taxes could no longer be collected

against the estate. <see p. 10~ tsn~ hearing of

August 1~ 1986).

We find petitioner's contentions to be devoid

of merit. On the issue of prescription, the

provision of law then applicable and relied upon by

petitioner is Section 331 of the Ta>: Code which

provides as follows:

Sec. 331. Perio~ of_ timitat.ioD__h\.P.on

asse_~~ment and cpllect.i,p_fl. E>:cept as
provided in the succeeding section,
J. n t_~rf1~_L_..r::Ji:?Ve1J_UfL ....t~ >:~§.._M~ 11 ·-9~-~~es_~-~.f!
~ i_t._h in_ i!..Y..~--Y-g_§ir_~.. -~.f..t.f.1.r:........... the ret'=' r n -~E-?.
f i !.ed, and no proceeding in court without
assessment for the collection of such
taxes shall be begun after the expiration
of such period. For the purpose of this
section, a return filed before the last
day prescribed by law for the filing
thereof sha 11 be considered as filed on
such last days Provided, that this
limitation shall not apply to cases
already investigated prior to the
approval of this Code". (1976 Tax Code,
Underscoring supplied.)

The individual income ta>t return of deceased

Benedicta e. Alcantara for the year 1975 was filed

by him in the Bureau of Internal Revenue of Cebu

City on April 19, 1976 <Exhibit 2, p. 29 .~ BIR rec.)

while the assessment for percentage ta>t in the

amount of P6,519.22 was issued by respondent on

January 19, 1981_ <Exhibit p. 97 .~ BIR rec • .'. ? • I I I-

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 DECISION
CTA CASE NO . 3714

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Likewise~ the assessment for deficiency income tax

in the amount of P104~653.30 was dated .J__§\_r:l..l:'.P..CY.....~.l.!.

J,_~J~.!. (Exh. 8 .¥ p. 11.3 _¥ BIR re c ,) and ~Jhich ~Jas sent

by mail by respondent to the Administratrix Erlinda

A. Du 1 ay of the estate of de c eased on E~J:.>.r..!::!..~.r..Y...... J,.~!. 1 _

).,_5.>_1?._-!.. (Exhibit s 10 and 10-A~ p. 1.52 _¥ BIR rec.).

Definitely~ from the date of petitioner ' s filing of

his return on BR.r.J. .L ...J..9...! .....J .9..Z.9. up to the respondent· s

issuance of hi s asses s men t on Y..?.D..h!.§..C_'i.__ ,___ +. _

9.. . . . . . [email protected]..
+..
E.!?...!?..r:.'=.~P.LY........ ~2. 1 .....J. 9..1;!A ~ pre sc r i p t ion has not yet set in .

As to the contention that the acts of

assessment being personal to the deceased taxpayer~

they cannot be enforced again s t the wife which we

believe is erroneous. In the instant case~ the

deficiency assessments issued by the respondent is

directed to the surviving wife Erlinda A. Dulay, as

Administratri>: of the Estate of her late husband

Benedicto B. Alcantara. The s urviving wife being

an heir to the estate of her late husband cannot

reason out that the deficiency assessments for

percentage and income taxes is person al to t he

t.:n:payer considering that under the law of

succession, the e state of the deceased is 1 ia b le

for said deficiency ta>:es as the said deficiency

ta>:es are sti 11 outstan ding obligations inherited

100
DECISION
CTA CASE NO. 3714
- 13 -

by the heirs as a consequence of the transmission

of the estate of the deceased to the heirs. This

is so because Articles 774 and 776 of the New Civil

Code provides that rights and obligations are

transmitted through his death by operation of law

and not extinguished by death.

Art. 774. Success ion is a mode of

acquisition by virtue of which property,
rights and og1_!_gaj;J:J.:;!n~ to the extent
of the value of the inheritance, of a
person are transmitted through his death
to another or others either by his wi 11
or by operation of law. (Underscoring
supplied)

Likewise Article 776 of the New Civil Code

provides:

Art. 776. The inheritance includes

all the property, rights and ~qL~g~tign~
of a person which are not extinguished by
his death. (Underscoring supplied)

Clearly, the heir of the deceased husband,

particularly the wife, who is now also the

Administratrix of the Estate of the Deceased

Husband Benedicta B. Alcantara, inherits not only

the property, but also the rights and obligations

of the deceased. In this particular case, since

the deceased Benedicta B. Alcantara is being

assessed for deficiency income and percentage

taxes, the estate of the deceased is answerable in

the event the court finds the deceased liable for

DECISION
CTA CASE NO. 3714

- 14 -

deficiency ta>:. As administratri>:, petitioner is

entitled to be notified of the assessments made

against the estate as what the officials of the

Commissioner of Internal Revenue had done in this

C:ase which is to ca 11 for a conference with the

former. These acts of the officials of the

Commissioner enable petitioner as administratri>: to

protect the estate against the subject taH c 1 aim.

It is within the power and duty of the

administratri>: under the Rules of Court to defend

the estate against such a claim but she has failed

in this regard. It is not correct for petitioner

to say that she has no authority to confer with the

respondent and that she needs a court order for

that purpose since a court order is not really

unavailing under the rules in the first place.

In the instant case, respondent, by

documentary evidence, has shown that the formal

assessments for percentage and income ta>:es were

sent by mail to the administratri>: on January 19,

1981 (Exh. 7, p. 97, BIR rec.) and January 31, 1981

CExh. 8, BIR rec.), respectively. Before the

mai 1 ing or sending of the forma 1 assessments in

question, petitioner had knowledge of such pending

assessments because the Revenue District Office of

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DECISION
CTA CASE NO. 3714

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Mandaue City had informed petitioner of the result

of the preliminary investigation, in his letter

dated May 28, 1980, and which petitioner answered,

on June 17, 1980, saying that she cannot act

without court order because it wi 11 be tantamount

to contempt of court being the administratri>: of

the estate of deceased Alcantara. (pp. 34 and 35 1

BIR rec.)
Administratrix Erlinda A. Dulay has knowledge

of such assessments but refused to receive the same

merely upon the ground that she cannot protest the

deficiency assessment because that is the personal

business of the husband and not her as the wife and

Administratri>: of the Estate so much so that the

letters of assessment were returned several times.

(p. 12 1 tsn 1 hearing of August 1 1 1986).

As we have said, considering that the

Administratrix is also an heir to the Estate of the

Deceased Benedicta B. Alcantara, she should have

protested and contested the said assessments

because being an heir and administratrix of the

Estate of Deceased Alcantara, she inherits not only

the property but the rights and ob~_.t_g_at_!.9n of the

estate of her deceased husband.

Since petitioner failed to protest or contest

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DECISION
CTA CASE NO. 3714

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the formal assessments issued by respondent, the

assessments have definitely become final and

e>:ecutory, pursuant to Section 319-A of the Ta>:

Code of 1977 which we hereby quote as follows:

E_rotestinq of i='SSe~fSmJF_nt. . When the

Commissioner of Internal Revenue or his
duly authorized representative finds that
proper taxes should be assessed~ he shall
first notify the taxpayer of his
findings. Within a period to be
prescribed by implementing regulations~
the taxpayer shall be required to respond
to said notice. If the taxpayer fails to
respond~ the Commissioner shall issue an
assessment based on his findings.

Such assessment may be protested

administratively by filing a request for
reconsideration or reinvestigation in
such form and manner as may be prescribed
by imp 1 emen ting regu 1 a tions ~.!J;_tlto. __:t;_l}_:!. rt_y_
( 30 ) __Q_@y_~_._f r OIJLL.§!_I;_~,t_p_t_...Q..f...._t.b.~-....A..?..?.~2§.f!.l_!?n .t_ ;
otherwise~ the assessment shall become
final and unappealable.

If the protest is denied in whole or

in part, the individual, association or
corporation adversely affected by the
decision on the protest may appeal to the
Court of Ta>: Appea 1 s within thirty ( 30)
days from receipt of said decision;
otherwise, the decision shall become
final, e>:ecutory and demandable. (Art.
319-A of the Tax Code .; UnderlinirH}
supplied}.

In the case at bar, the assessments involved

have long become final and executory, and when

respondent filed a motion for allowances of claim

and for an order to pay ta>:es together with proof

of claim in the Intestate Court on the settlement

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DECISION
CTA CASE NO. 3714
- 17 -

of the deceased estate on October 17, 1983, it was

respondent Commissioner ' s motion filed in the

Intestate Court can be said to be the final

decision appealable to this Court.

It is worthy to note that even during the

hearing of this case petitioner did not present

evidence, either testimonial or documentary, which

would show that said deficiency assessments were

erroneously or arbitrarily issued. In the absence

of evidence to the contrary, these assessments are

presumed valid and legal. In this jurisdiction,

settled is the rule that a taxpayer contesting the

validity or correctness of an assessment must prove

not only that the Commissioner of Internal Revenue

is wrong but that he (the ta>:payer) is right. All

presumptions are in favor of the correctness of tax

assessments. (Tan Guan vs. Court o'f Tax App~tal s,

L-23676 .~ April 27 .~ 1'967 .~ 19 SCRA 90 .3 ;

Interprovincial Autobus Co., Inc. vs. Coll~tctor o'f

Internal Revenuft, L -6741, ,.Jartuary 31, 1956.1 citing

United States vs .. Andersort, 269 U .. S .. 422 .~ 428, 70

L .. ed .. 347, 46 Sup .. Ct .. Rep .. 131 and other cases).

Hence, in the absence of proof to contrary, the

said assessments against petitioner should be

considered valid and legal.

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DECISION
CTA CASE NO. 3714

- 18 -

The Supreme Court in the case of

Interprovincial Autobus Co., Inc. vs. Collector o~

Internal Revenue, supra, categorically stated that:

"All presumptions are in favor of

the correctness of ta>: assessments. The
good faith of tax assessors and the
va 1 idi ty of their actions are pr·esumed.
They will be presumed to have taken into
consideration all the facts to which
their attention was called. No
presumption can be indulged that all of
the public officials of the state in the
various counties who have to do with the
assessment of property for taxation will
knowingly violate the duties imposed upon
them by law.

"As a log ical outgrowth of the

presumption in favor of the validity of
assessments, when such assessments are
assailed, the burden of proof is upon the
complaining party. It is incumbent upon
the property owner clearly to show that
the assessment was erroneous, in order to
relieve himself from it." (51 Am • ..7ur,
pp. 620-621 • .>

"The burden is on him who seeks the

recovery of a tax already paid to
establish those facts which show its
invalidity. United States ~~s. Anderson,
269 U.S. 422, 428, 70 L. ed. 347, 46 Sup.
Ct. Rep. 131; Fidelity Title & T. Co. vs.
United States, 259 U.S. 304, 306, 66
L. ed., 953 .~ :~54.~ 42 Sup. Ct. Rep. 514.
;t: ;t: :t. " (Co•pania General de Tabacos
vs. Collector o"f Int. Rev., 73 L. ed • .•
704, 706,) X X Xo

WHEREFORE, petitioner i9 hereby ordered to pay

the government the sum of P104,653.30 from the

Estate of the late Benedicta Alcantara representing

DECISION
CTA CASE NO. 3714

- 19 -

deficiency income tax for the year 1975 inclusive

of interest. Likewise, petitioner is ordered to

pay the deficiency percentage tax from the Estate

of Benedicta B. Alcantara in the amount of

P6,519.22, inclusive of surcharge and interest.

With costs against petitioner.

SO ORDERED.

Quezon City, Metro Manila, June 199(1 •

....___
CO~fANTE C. ROAQUIN
/ssociate Judge

WE CONCUR:

~~
AMANTE ILLER
Presid ' g Judge

AL X Z.~
CERTIFICA
\
TION

I hereby certify that this decision was

reached after due consultation among the members of

the Court of Tax Appeals in accordance with

Section 13, Article VIII of the Constitution.

Presid ng Judge
Court of Tax Appeals

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