CIR vs. Concepcion (GR L-23912, 15 March 1968)
En Banc, Fernando (J): 8 concur, 1 on leave

Facts: An assessment in the sum of P1,181.33 and P2,616.10 representing estate and inheritance taxes on 50 shares of stock of Edward J. Nell Company issued in the names of both spouses “as joint tenants with full rights of survivorship and not as tenants in common” was made by the Commissioner of Internal Revenue on the ground that there was a transmission to the husband of one-half share thereof upon the death of the wife, the above shares being conjugal property. Jose Concepcion, as ancillary administrator of the estate of Mary H. Mitchell-Roberts, and Jack F. Mitchell-Roberts, husband of the deceased, opposed and maintained that there was no transmission of property since under English law, ownership of all property acquired during the marriage vests in the husband, and that the shares of stock were issued to the spouses “as joint tenants with full rights of survivorship and not as tenants in common. Not being agreeable to the theory entertained by the Commissioner of Internal Revenue, Concepcion and Mitchell-Roberts, in CTA Case 168, appealed such a decision under RA 1125. The Court of Tax Appeals, however and on 29 April 1957, dismissed such an appeal as the petition for review because it was filed beyond the reglementary period of 30 days. That decision became final.

On 14 June 1957, Concepcion and Mitchell-Roberts paid the taxes in question amounting to P1,181.33 (as estate tax) and P2,616.10 (as inheritance tax), inclusive of delinquency penalties, and at the same time filed a claim for the refund of said amounts. Without waiting for the decision of the Commissioner of Internal Revenue on the claim for refund, Concepcion and Mitchell-Roberts instituted an appeal with the Court of Tax Appeals on 11 June 1959 in order to avoid the prescriptive period of two years provided for in Section 306 of the Revenue Code. The Court of Tax Appeals ordered the Commissioner of Internal Revenue to refund the inheritance and estate taxes paid in the amount of P3,797.43. The Commissioner filed a petition for review with the Supreme Court.

The Supreme Court reversed the decision of the Court of Tax Appeals under review; with costs against Concepcion and Mitchell-Roberts.

1.    Reliance on La Paz y Buen Viaje Cigar & Cigarette Factory misplaced
The very same day the decision in La Paz y Buen Viaje Cigar & Cigarette Factory was affirmed, the opinion in Republic of the Philippines v. Lopez  was handed down. The case of Republic vs. Lopez was an appeal by the Republic from an order of the CFI Baguio dismissing its complaint for collection of a deficiency income tax against Lopez on the ground that the action had prescribed. After noting that prescription as a defense did not lie, the Supreme Court statedthat another ground for reversing the dismissal of the complaint is that the proper remedy of the taxpayer against the assessment complained of was to appeal the ruling of the Collector to the Court of Tax Appeals.

2.    Effects of finality of assessment; Republic vs. Lim Tian Teng Sons & Co, Morales vs. Collector of Internal Revenue
The taxpayer’s failure to appeal to the Court of Tax Appeals in due time made the assessment in question final, executory and demandable. A subsequent action to enforce the deficiency assessment was already barred from disputing the correctness of the assessment or invoking any defense that would reopen the question of his tax liability on the merits. Thus, once the matter has reached the stage of finality in view of the failure to appeal, it could no longer be reopened through the expedient of an appeal from the denial of the taxpayer’s request for cancellation of the warrant of distraint and levy.

3.    Procedure in Section 306 NIRC not available to revive right to contest validity of assessment when appeal not taken
In the same way that the expedient of an appeal from a denial of a tax request for cancellation of warrant of distraint and levy cannot be utilized for the purpose of testing the legality of an assessment, which had become conclusive and binding on the taxpayer, there being no appeal, the procedure set forth in Section 306 of the National Internal Revenue Code is not available to revive the right to contest the validity of an assessment once the same had been irretrievably lost not only by the failure to appeal but likewise by the lapse of the reglementary period within which to appeal could have been taken.

4.    Estate administrator and deceased’s husband liable for taxes
The liability of Concepcion as an ancillary administrator of the estate of the deceased wife and of Mitchell-Roberts as the husband for the amount of P1,181.33 as estate tax and P2,616,10 as inheritance tax was beyond question. Having paid the same, they are clearly devoid of any legal right to sue for recovery.