CIR v. CAG.R. No. 104151, Mar. 10, 1995; Regalado, J;

Facts: Atlas Consolidated Mining and Development Co. (Atlas) is a domestic corporation which owns and operates a mining concession at Toledo City, Cebu, the products of which are exported to Japan and other countries. Based on reports of BIR examiners on 2 separate investigations, CIR served assessment notice and demand for payment against ACMDC: P12,391,070.51 deficiency ad valorem percentage tax for year 1975. P13, 531,466.80 deficiency ad valorem percentage tax for year 1976. Atlas protested both assessment but were denied. So it filed 2 separate petitions for review with the CTA. Both were eventually consolidated. CTA: Rendered a decision saying Atlas is not liable for deficiency ad valorem tax on copper and silver for year 1975 and 1976 Sustained Atlas theory that in computing the ad valorem tax on copper mineral the refining and smelting charges should be deducted. BUT it held Atlas liable for P1.572,637.48 as 25% surcharge for late payment of ad valorem tax and late filing of notice of removal of minerals (gold, silver, pyrite), and for deficiency in manufacturers sales tax and contractors tax for leasing out personal property. Both CIR and Atlas appealed the decision Atlas in particular said contractors tax cannot be assessed on it given that leasing out of its property was a mere isolated transaction.Issue: WON Atlas is liable for the assessed contractors tax YES.Ratio: Contractor's tax is provided for under Section 191 of the Tax Code, paragraph 17 of which declares that lessors of personal property shall be subject to a contractor's tax of 3% of the gross receipts. Said tax falls under Privilege Taxes on Business and Occupation which are taxes imposed on privilege of engaging in business; essentially excise taxes. To be held liable person must be engaged on business. GR: said phrase conveys the idea of sustained activity business being done, not from time to time but all the time. EXN: One act may be sufficient to constitute carrying on a business. An isolated transaction, if proved to have been undertaken with the intent that it should be the first in several transactions, that is, with the intent of carrying on a business, then it is a first transaction in an existing business. HERE: Atlas claims exemption from contractors tax for the lease of its personal property claiming that said transactions are merely isolated. BUT its book of accounts show that several distinct payments were made for the use of its plane, motor boat, and dump truck. Considering there was a series of transactions and apparent and protracted intention to profit from such activities, it can be held that Atlas was habitually engaged in leasing out its plane, motor boat and truck hence subject to contractors tax. Assessments are prima facie presumed correct and made in good faith. Contrary to the theory of Atlas it is the taxpayer and not the Bureau of Internal Revenue who has the duty of proving otherwise. It is an elementary rule that in the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed. All presumptions are in favor of tax assessments. Verily, failure to present proof of error in the assessment will justify judicial affirmance of said assessment. Finally, we deem it opportune to emphasize the oft-repeated rule that tax statutes are to receive a reasonable construction with a view to carrying out their purposes and intent. They should not be construed as to permit the taxpayer to easily evade the payment of the tax. On this note, and under the confluence of the weighty considerations and authorities earlier discussed, the challenged assessment against Atlas for contractor's tax must be upheld.