Facts: Lim Tian Teng Sons & Co., a domestic corporation with principal office in Cebu City, engaged in 1951 and 1952, among others, in the exportation of copra. The copra was weighted before shipment in the port of departure and upon arrival in the port of destination. The weight before shipment was called copra outturn. To allow for loss in weight due to shrinkage said exporter collected only 95% of the amount appearing in the letter of credit covering every copra outturn. The 5% balance remained outstanding until final liquidation and adjustment.
On March 30, 1953 Lim Tian Teng Sons & Co. filed its income tax return for 1952 based on accrued income and expenses. Its return showed a loss of P55, 109.98. It took up as part of the beginning inventory for 1952 the copra outturn shipped in 1951 in the sum of P95,500.00 already partially collected, as part of its outstanding stock as of December 31, 1951.
In the audit and examination of taxpayer’s 1952 income tax return, the CIR eliminated the P95,500.00 outturn from the beginning inventory for 1952 and considered it as accrued income for 1951. This increased taxpayer’s 1952 net taxable income. Accordingly, in a letter dated January 16, 1957 received by Lim Tian. On January 30, 1957, the CIR assessed a deficiency income tax of P10,074.00 and 50% surcharge them amounting to 5,037.00 and demanded payment thereof not later than February 15, 1954.
On January 31, 1957 Lim Tian requested for reinvestigation of its 1952 income tax liability. The CIR did not reply; instead he referred the case to the solicitor general for collection by judicial action.
On September 20, 1957 the solicitor general demanded from Lim Tian the payment of P15,111.50 within five days, stating that otherwise judicial action would be instituted without further notice.
Thereupon, the Deputy Collector of Internal Revenue, by his letter dated October 15, 1957 informed the taxpayer that its request for reinvestigation would be granted provided it executed within 10 days a waive of the statute of limitations. As him Tian failed to file a waiver of the statute of limitations, the collector of I.R. instituted 8 months after, or on September 2, 1958 an action in the CFI for the collection of deficiency income tax. The CFI rendered decision ordering the defendant to pay the plaintiff as the assessment is valid.
Both parties appealed, raising only question of law.
Issue: Whether or not the Commissioner is required to rule first on the taxpayer’s request for reinvestigation before he can go to count for collecting the tax assessed.
Held: Nowhere in the Tax Code is the Commissioner required to rule first on the taxpayer’s request for reinvestigation before he can go to court for the purpose of collecting the tax assessed. According to the court, the legislative policy is to give the Commissioner much latitude in the speedy and prompt collection of taxes because it is on taxation that the government depends to obtain the means to carry in its operations.
When the commissioner did not reply to the tax payer’s request for reinvestigation/reconsideration and instead referred the case to the solicitor general for judicial collection, this was indicative of his decision against reinvestigation.
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