GR. No.

L-37061 September 5, 1984

corresponding forest charges in the total

amount of P15,443.65 including surcharges.
The Bureau of Forestry then demanded for the
payment of said forest charges on January 15,
1949. However, the subject taxpayer, for one
reason or the other, contested this assessment
until this case reached the hands of the
Secretary of Agriculture and Natural Resources,
the undersigned cannot therefore include in his
assessment this amount in question, hence,
due course is given, recommending that this
bureau take proper action regarding this case.

MAMBULAO LUMBER COMPANY, petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, respondent.

CUEVAS, J.:
Petitioner in this appeal by certiorari, seeks the reversal of
the decision of the defunct Court of Appeals which affirmed
the judgment of the then Court of First Instance of Manila
ordering petitioner to pay respondent the amount of
P15,739.80 representing its tax liability not secured by any
bond, with legal interest thereon from August 25, 1961 until
fully paid.
Sometime in 1957 Agent Nestor Banzuela of the Bureau of
Internal Revenue, Regional District No. 6, Bicol Region, Naga
City, conducted an examination of the books of accounts of
herein petitioner Mambulao number Company for the
purpose of determining said taxpayer's forest charges and
percentage tax liabilities.
On July 31, 1957, Agent Banzuela submitted his report
wherein it was stated among others that
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
It can be stated in this connection that
sometime in the early part of 1949, the
personnel of the local office of the Bureau of
Forestry in Daet, Camarines Norte, manifested
under the name of the subject taxpayer
2,052.48 cubic meters of timber, with the

Consequently, on August 29, 1958, the Acting Commissioner

of Internal Revenue addressed a letter to petitioner, the
pertinent portion of which readsMambulao Lumber Company
R-406 Samanillo Building
Escolta, Manila
Gentlemen:
xxx xxx xxx
It was also ascertained that in 1949 you
manifested 2,052.48 cubic meters of timber,
the forest charges and surcharges of which in
the total amount of P15,443.55 was demanded
of you by the Bureau of Forestry on January 15,
1949. ...
In view thereof there is due from you the
amount of P33,595.26 as deficiency sales tax,
forest charges and surcharges, committed as
follows:
Sales Tax x x x
Forest Charges

Forest charges and surcharges for the year

1949 appealed to the Secretary of Agriculture
and Natural Resources P15,443.55

After trial, judgment was rendered by the trial court, the

dispositive portion of which reads
WHEREFORE, judgment is rendered

xxx xxx xxx

Total amount due & payable P33,595.26
Demand is hereby made upon you to pay the
aforesaid amount of P 33,595.26 to the City
Treasurer of Manila or this office within ten (10)
days from receipt hereof so that this case may
be closed.
xxx xxx xxx
Sgd.Melencio
Domingo

(a) Ordering both defendants, jointly and

severally, to pay plaintiff the amount of
P1,219.95 plus legal interest thereon from
August 25, 1961, the date of the filing of the
original complaint until fully paid, or in case of
failure to Pay the said amount, ordering the
forfeiture of GISCOR Bond No. 35 to the amount
of P1,219.95; and
(b) Ordering defendant Mambulao Lumber
Company to pay the plaintiff the amount of
P15,739.80 representing its tax liability not
secured by any bond, with legal interest
thereon from August 25, 1961, until paid.

Acting Commissioner
With costs against defendants.
of Internal Revenue
The aforesaid letter was acknowledged to have been
received by petitioner on September 19, 1958. 3 On October
18, 1958, petitioner requested for a reinvestigation of its tax
liability. Subsequently, in a letter dated July 8, 1959,
respondent Commissioner of Internal Revenue give
petitioner a period of twenty (20) days from receipt thereof
to submit the results of its verification of payments with a
warning that failure to comply therewith would be construed
as an abandonment of the request for reinvestigation.
For failure of petitioner to comply with the above letterrequest and/or to pay its tax liability despite demands for
the payment thereof, respondent Commissioner of Internal
Revenue filed. a complaint for collection in the Court of First
Instance of Manila on August 25, 1961. 4

From the aforesaid decision, petitioner appealed to the Court

of Appeals 5 that portion of the trial court's decision ordering
it to pay the amount of P15,443.55 representing forest
charges and surcharges due for the year 1949.
As herein earlier stated, the then Court of Appeals affirmed
the decision of the trial court. Petitioner filed a motion for
reconsideration which was denied by the said court in its
Resolution dated June 7, 1973. Hence, the instant appeal,
petitioner presenting the lone issue of whether or not the
right of plaintiff (respondent herein) to file a judicial action
for the collection of the amount of P15,443.55 as forest
charges and surcharges due from the petitioner Mambulao
Lumber Company for the year 1949 has already prescribed.
Relying on the provisions of Section 332 of the National
Internal Revenue Code which reads-

Section 332. Exemptions as to period of

limitation of assessment and collection of taxes

xxx xxx xxx

(c) Where the assessment of any internal
revenue tax has been made within the period
of limitation above prescribed such tax may be
collected by distraint or levy or by a proceeding
in court, but only if begun (1) within five years
after the assessment of the tax, or (2) prior to
the expiration of any period for collection
agreed upon in writing by the Collector of
Internal Revenue and the taxpayer before the
expiration of such five-year period. The period
so agreed upon may be extended by
subsequent agreements in writing made before
the expiration of the period previously agreed
upon.
petitioner argues that counting from January 15, 1949 when
the Bureau of Forestry in Daet, Camarines Norte made an
assessment and demand for payment of the amount of
P15,443.55 as forest charges and surcharges for the year
1949, up to the filing of the complaint for collection before
the lower court on August 25, 196 1, more than five (5)
years had already elapsed, hence, the action had clearly
prescribed.
Petitioner's aforesaid argument lacks merit. As correctly
observed by the trial court and the Court of Appeals in the
appealed decision, the letter of demand of the Acting
Commissioner of Internal Revenue dated August 29, 1958
was the basis of respondent's complaint filed in this case
and not the demand letter of the Bureau of Forestry dated
January 15, 1949. This must be so because forest charges
are internal revenue taxes 6 and the sole power and duty to
collect the same is lodged with the Bureau of Internal

Revenue 7 and not with the Bureau of Forestry. The

computation and/or assessment of forest charges made by
the Bureau of Forestry may or may not be adopted by the
Commissioner of Internal Revenue and such computation
made by the Bureau of Forestry is not appealable to the
Court of Tax Appeals. 8Therefore, for the purpose of
computing the five-year period within which to file a
complaint for collection, the demand or even the
assessment made by the Bureau of Forestry is immaterial.
In the case at bar, the commencement of the five-year
period should be counted from August 29, 1958, the date of
the letter of demand of the Acting Commissioner of Internal
Revenue 9 to petitioner Mambulao Lumber Company. It is
this demand or assessment that is appealable to the Court
of Tax Appeals. The complaint for collection was filed in the
Court of First Instance of Manila on August 25, 1961, very
much within the five-year period prescribed by Section 332
(c) of the Tax Code. Consequently, the right of the
Commissioner of Internal Revenue to collect the forest
charges and surcharges in the amount of P15,443.55 has
not prescribed.
Furthermore, it is not disputed that on October 18, 1958,
petitioner requested for a reinvestigation of its tax liability.
In reply thereto, respondent in a letter dated July 8, 1959,
gave petitioner a period of twenty (20) days from receipt
thereof to submit the results of its verification of payments
and failure to comply therewith would be construed as
abandonment of the request for reinvestigation. Petitioner
failed to comply with this requirement. Neither did it appeal
to the Court of Tax Appeals within thirty (30) days from
receipt of the letter dated July 8, 1959, as prescribed under
Section 11 of Republic Act No. 1125, thus making the
assessment final and executory.
Taxpayer's failure to appeal to the Court of Tax
Appeals in due time made the assessment in
question final, executory and demandable. And

when the action was instituted on September

2, 1958 to enforce the deficiency assessment in
question, it was already barred from disputing
the correctness of the assessment or invoking
any defense that would reopen the question of
its tax liability. Otherwise, the period of thirty
days for appeal to the Court of Tax Appeals
would make little sense.
In a proceeding like this the taxpayer's
defenses are similar to those of the defendant
in a case for the enforcement of a judgment by
judicial action under Section 6 of Rule 39 of the
Rules of Court. No inquiry can be made therein
as to the merits of the original case or the
justness of the judgment relied upon, other
than by evidence of want of jurisdiction, of
collusion between the parties, or of fraud in the
party offering the record with respect to the
proceedings. As held by this Court in Insular
Government vs. Nico the taxpayer may raise
only the questions whether or not the Collector
of Internal Revenue had jurisdiction to do the
particular act, and whether any fraud was
committed in the doing of the act. In that case,
Doroteo Nico was fined by the Collector of
Internal Revenue for violation of subparagraphs (d), (e) and (g) of Section 28 as
well as Sections 36, 101 and 107 of Act 1189.
Under Section 54 of the same Act, the taxpayer
was given the right to appeal from the decision
of the Collector of Internal Revenue to the
Court of First Instance within a period of ten
days from notice of imposition of the fine. Nico
did not appeal, neither did he pay the fine.
Pursuant to Section 33 of the Act, the Collector
of Internal Revenue filed an action in the Court
of First Instance to enforce his decision and
collect the fine. The decision of the Collector of

Internal Revenue having become final, this

Court, on appeal, allowed no further inquiry
into the merits of the same. 10
In a suit for collection of internal revenue taxes, as in this
case, where the assessment has already become final and
executory, the action to collect is akin to an action to
enforce a judgment. No inquiry can be made therein as to
the merits of the original case or the justness of the
judgment relied upon. Petitioner is thus already precluded
from raising the defense of prescription.
Where the taxpayer did not contest the
deficiency income tax assessed against him,
the same became final and properly collectible
by means of an ordinary court action. The
taxpayer cannot dispute an assessment which
is being enforced by judicial action, He should
have disputed it before it was brought to
court. 11
WHEREFORE, the decision appealed from is hereby
AFFIRMED and the petition DISMISSED. No costs.
SO ORDERED.

MAMBULAO LUMBER CO. vs. REPUBLIC

132 SCRA 1
GR No. L-37061, September 5, 1984
"Forest charges are internal revenue taxes and the BIR has

the sole power and duty to collect them. Thus, an

assessment made by the Bureau of Forestry cannot be
considered an assessment made by the BIR."
FACTS: The Bureau of Forestry sent a demand letter dated
January 15, 1949 to Mambulao Lumber Co. demanding for
the payment of forest charges and surcharges. Mambulao
protested the assessment. On August 29,1958, the BIR
likewise wrote a letter to the company demanding payment,
which subsequently requested reinvestigation. The BIR gave
the company twenty (20) days from receipt within which to
submit the results of its verification of payments. For failure
to comply and failure to pay its tax liability despite
demands, CIR filed a complaint for collection with CFI-Manila
on August 25, 1961. The CFI-Manila and Court of Appeals
decided against Mambulao ordering it to pay the tax liability.
Petitioner argued that the collection is barred by the statute
of limitations under Sections 332 of the NIRC. As stated, the

collection should be made within the five (5) year period.

From 1949 (date when the Bureau of Forestry assessed and
demand payment as forestry charges and surcharges) up to
1961 (date of filing of complaint), it is already more than
five years.
ISSUE: Has the period of filing of collection complaint
prescribed?
HELD: No. The action for collection is not barred by
prescription. The basis of the complaint filed on August 1961
was the demand letter made by the CIR on August 29, 1958
and not the demand letter of the Bureau of Forestry on
January 1949. So that the reckoning date of the 5-year
period should be from the date of the BIR letter and not that
of the Bureau of Forestry. This must be so because forest
charges are internal revenue taxes and the BIR has the sole
power and duty to collect them.