Collector of Internal Revenue v. Haygood
REITERATIONFacts
The Antecedents: Claude E. Haygood died in the United States on October 9, 1934, leaving a will duly probated in the Philippines. Annie Laurie Haygood was appointed administratrix of the estate. The Collector of Internal Revenue (CIR) filed a motion claiming unpaid merchant's sales tax and surcharge, and later amended the motion to include unpaid income tax and surcharge, totaling P6,295.79. The CIR admitted that the tax in question was discovered more than three years after it should have been declared. Procedural History: The Court of First Instance (CFI) initially denied the CIR's motion, stating it should be presented to the committee on claims and appraisals. Upon reconsideration, the CFI set aside its order and required the administratrix to answer the amended motion. The administratrix opposed, insisting the claim belonged to the committee on claims and appraisals. The CIR argued that the case of Pineda vs. Court of First Instance of Tayabas was applicable. The CFI rendered an order directing the administratrix to pay the claim. The Petition: Annie Laurie Haygood appealed the CFI's order, arguing that the court erred in ordering payment based solely on the CIR's sworn statement without requiring further evidence, especially given her opposition.
Issue(s)
Whether the lower court erred in ordering the payment of the claim based solely on the sworn statement of the Collector of Internal Revenue, without requiring further evidence, notwithstanding the opposition of the administratrix. Whether the claim for unpaid taxes should be presented to the committee on claims and appraisals or handled directly in the testamentary proceedings.
Ruling
The appealed order is revoked. The record is remanded to the court of origin for the presentation of evidence by both parties and for rendition of judgment accordingly.
Ratio Decidendi
On the issue of whether the lower court erred in ordering payment based solely on the sworn statement without further evidence: The Court held that the lower court erred. While a sworn statement by the Collector of Internal Revenue constitutes prima facie evidence of unpaid taxes, this evidence is destroyed by the mere objection and denial of the allegations by the administrator. In such cases, the burden of proof falls upon the claimant, who must substantiate the claim with material and competent evidence. The Court distinguished this from situations where the discovery of error occurs within three years, where a summary proceeding might be permissible. However, when the discovery is made after three years, as in this case, the claim partakes of the nature of a civil suit and requires the presentation of evidence. The Court cited Knowles vs. Government of the Philippines Islands as controlling in this instance. On the issue of whether the claim should be presented to the committee on claims and appraisals or handled directly: The Court clarified the procedure based on the timing of the discovery of erroneous tax returns. When discovery is made within three years, the claim can be presented by motion in the testamentary proceedings, and the court may summarily order payment if funds are available. However, when discovery occurs after three years, the claim must be presented as a civil suit, requiring a written answer and presentation of evidence. In this case, since the discovery was made after three years, the claim should have been prosecuted as a civil suit, necessitating the presentation of evidence by both parties.
Main Doctrine
When the discovery of erroneous tax returns is made after three years from the date such returns should have been filed, the Collector of Internal Revenue shall present the claim in the testate or intestate proceedings by filing a motion accompanied by a sworn statement of the unpaid taxes, which motion is in the nature of a civil suit that must be prosecuted through the filing of a written answer and the presentation of evidence.