Guerrero vs Commissioner (19 SCRA 25)

Commissioner of Internal Revenue vs Guerrero
19 SCRA 25 [GR No. L-19074 January 31, 1967]

Facts: Antonio G. Guerrero was, during the years of 1949 and 1950, a dealer of logs, which he used to sell to Aparri Lumber Company,  hereinafter referred to as the company. On April 2, 1954, the then collector of internal revenue made an assessment and demands requiring Guerrero to pay the sum of Php4,014.91, representing fixed and percentage taxes and forests charges, as well as surcharges and penalties, in connection with his aforementioned business transactions with the company. Upon Guerrero’s requests, the matter was submitted to the conference staff of the Bureau of Internal Revenue (BIR), which, in due course, thereafter on January 11, 1956, recommended that the assessment be increased to Php5,139.17. In addition to, the sums of Php20 and Php100 as compromise penalties in extrajudicial settlement of his penal liabilities under sections 208 and 209 of the NIRC should be reiterated. That another sum of Php50 as compromise penalty for his violation of the bookkeeping regulations should be imposed against the taxpayer, he having admitted during the hearing of this case that he did not keep books of accounts of his timber business. This recommendation was approved by the collection of internal revenue, who, accordingly made the corresponding reassessment upon receipt of notice which Guerrero requested, on February 10, 1956, a rehearing before the conference staff. Instead of acting on this request, on April 20, 1956, the corresponding internal revenue director issued an assessment of distraint and levy against the properties of Guerrero, in order to effect the collection of his tax liability under said reassessment. Hence, on June 8, 1956, Guerrero filed with the court of tax appeals the corresponding petition for review. Subsequently, said court rendered the decision appealed from. Hence, these appeals.

Issue: Whether or not reassessment by the BIR is proper.

Held: No. The foregoing circumstances clearly indicate that the logs involved in said reassessment were obtained from illegal sources, and that the forest charges due thereon had not been paid. Since these charges “are lieu on the products and collectible from whomsoever is in possession” thereof, unless he can show that he has the required auxiliary and official invoice and discharge permit – which Guerrero has not shown – it follows that he is bound to pay the aforementioned forest charges and surcharges, in the sum of Php 3,775.66.

At this juncture, it may not be amiss to advert to a problem of semantics arising from the operation of section 1588 of the revised administrative code, the counterpart of which is is now section 315 of the NIRC, pursuant to which:

Every internal revenue tax on property or on any business or occupation, and every tax on resources and receipts, and any increment to any of them incident to delinquency, shall constitute a lien superior to all other charges or liens not only on the property itself upon which such tax may be imposed but also upon the property used in any business or occupation upon which the tax is imposed and upon all property rights therein.

The enforcement of this lien by the commissioner (formerly collector) of internal revenue, has often induced the parties adversely affected thereby to raise the question whether a given charge is a tax or not, on the theory that there would be no lien if said question were decided in the negative. In connection therewith, said parties had tended to distinguish between taxes, on the one hand – as burdens imposed upon persons and/or properties, by way of contributions to the support of the government, in consideration of general benefits derived from its operation – and license fees – charged in the exercise of the regulatory authority of the state, under its police power – and other charges – for specific things or special or particular benefits received from the government – on the other hand.


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