G.R. No. L-14078. February 24, 1961.
MINDANAO BUS COMPANY, petitioner, vs. THE COLLECTOR OF INTERNAL REVENUE, respondent.

FACTS

Petitioner Mindanao Bus Company, a common carrier, was assessed documentary stamp taxes totaling P15,704.16 for the period from January 1, 1948, to September 16, 1953. The assessment was based on an investigation where a BIR agent, finding it impractical to count all used freight tickets individually, examined 500 ticket booklets. From this sample, he determined an average of 2.61 freight tickets per booklet. This average was then applied to the total number of booklets used during the period to estimate the total freight tickets issued, which were presumed to cover baggage valued over P5.00, making them subject to tax.
The petitioner contested the assessment before the Court of Tax Appeals (CTA), arguing the method was arbitrary. The CTA, after initially declaring the Collector in default and hearing the petitioner’s evidence, upheld the tax liability but eliminated a compromise penalty. The CTA later granted a motion to reopen for the petitioner to present specific ticket evidence, but the petitioner failed to submit the promised 500 booklets and instead offered only stub tickets already available earlier. The CTA subsequently denied reconsideration, prompting this appeal.

ISSUE

The primary issues were: (1) whether the assessment method using an average was valid; (2) whether freight tickets for excess baggage constitute “bills of lading” subject to documentary stamp tax; and (3) whether the relevant administrative regulation (Section 127 of Regulation No. 26) is unconstitutional.

RULING

The Supreme Court affirmed the CTA’s decision, upholding the tax assessment. On the first issue, the Court ruled the average method used by the BIR agent was justified and constituted the “best evidence obtainable.” An actual count was deemed practically impossible given the volume and poor condition of the used tickets. The agent correctly presumed each ticket covered baggage valued at least P5.00, as passengers typically only demand receipts for valuable cargo. The burden shifted to the petitioner to disprove the assessment’s accuracy, which it failed to do by not presenting convincing counter-evidence despite the opportunity.
On the second issue, the Court, citing Interprovincial Autobus Co., Inc. vs. Collector, held that freight tickets issued by land carriers for goods are legally considered bills of lading or receipts subject to documentary stamp tax under Section 227 of the National Internal Revenue Code. The law’s use of the word “place” alongside “port” and “receipt” clearly encompasses land transportation. The legal essence, not the form or designation, controls; any document acknowledging receipt of goods for transport qualifies.
Finally, the Court rejected the constitutional challenge to Section 127 of Regulation No. 26. The regulation, which treats such chits or memoranda as bills of lading, was upheld under the doctrine of legislative approval by reenactment. The pertinent tax provisions were reenacted in the 1939 Tax Code, creating a presumption that the legislature approved the existing interpretive regulations. Consequently, all assigned errors were dismissed, and the assessed tax was deemed payable.