University of the Philippines College of Law

CPE, 1-D

Topic ACCOUNTING PERIODS AND METHODS

Case No. Case No. / Date
Case Name COLLECTOR V. REYES
Ponente PONENTE, j.

RELEVANT FACTS
NOTE: Chito and I couldn’t find the case in Escra or in Google. It might be an unpublished SC ruling; will try to ask
the library to confirm. Will just put what other cases cited from it. If you’re able to find the case, just message
me. -Carli

Case name What it cited from Collector v. Reyes

Consolidated Books of account may therefore be admissible under the rule. In tax cases, however, this
Mines v. CTA Court appears not to place too high a probative value on them, considering the
G.R. No. Nos. L- statement in the case of Collector of Internal Revenue v. Reyes 32that "books of account
18843 and L-18844 do not prove per se that they are veracious; in fact they may be more consistent than
August 29, 1974 truthful." Indeed, books of account may be used to carry out a plan of tax evasion.
Republic v. General
Sales Supply Co. We stress the first statement which reads "Except as provided in the succeeding section,"
G.R. No. L- 18543 and the succeeding section clearly provides:

October 31, 1968
SEC. 332. Exceptions as to period of limitation of assessment and collection of
taxes. — (a) In the case of a false or fraudulent return with intent to evade tax or
of a failure to file a return, the tax may be assessed, or a proceeding in court for
the collection of such tax may be begun without assessment, any time within ten
years after the discovery of the falsity fraud, or omission.

There is no doubt that the income tax returns filed by the appellant corporation were
false and fraudulent with the intent to evade payment of taxes. Hence, under Section 332
of the Tax Code, the 10-year prescriptive period within which to file action in court shall
commence not from the filing of the income tax returns nor from the assessment of the
tax but from the "discovery of the falsity, fraud or omission." We said so in the case
of Collector of Intemal Revenue vs. Aurelio P. Reyes, G.R. Nos. L-11534 and L-11558,
November 25, 1958:

This finding of fraud, also disposes adversely to the taxpayer, of his contention
that reassessment of his taxes was barred because more than five years had
elapsed since the disputed returns were filed. Under Section 332 of the Internal
Revenue Code, collection of taxes may be started within ten years from the
discovery of the fraud.

Sy Po v. CTA
G.R. No. 81446 In the case of Collector of Internal Revenue vs. Reyes, 6 we ruled:
August 18, 1988
Where the taxpayer is appealing to the tax court on the ground that the
Collector's assessment is erroneous, it is incumbent upon him to prove
there what is the correct and just liability by a full and fair disclosure of
all pertinent data in his possession. Otherwise, if the taxpayer confines
 University of the Philippines College of Law
CPE, 1-D

himself to proving that the tax assessment is wrong, the tax court
proceedings would settle nothing, and the way would be left open for
subsequent assessments and appeals in interminable succession.

Tax assessments by tax examiners are presumed correct and made in good faith. The
taxpayer has the duty to prove otherwise. 7 In the absence of proof of any irregularities in
the performance of duties, an assessment duly made by a Bureau of Internal Revenue
examiner and approved by his superior officers will not be disturbed. 8 All presumptions
are in favor of the correctness of tax assessments. 9

ISSUE AND RATIO DECIDENDI

Issue Ratio
W/N … YES/NO.

1. Reason 1.

2. Reason 2.

3. Reason 3.

RULING