COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. WESTERN PACIFIC CORPORATION, RESPONDENT.

On March 2, 1959, the respondent
Western Pacific Corporation, was assessed for P3,731.00, as deficiency income tax for the year 1953. This
assessment was brought about by the disallowance of P8,265.82, listed in respondent’s return for 1953, as expense
items, and P10,387.50, as written off “bad debts.” The assessment was received
by respondent on the same date (March 2,
1959). On
March 5, 1959, the Commissioner of Internal Revenue wrote the respondent
corporation a letter of demand for the payment of the amount, including therein
a breakdown of said assessment. Under date of June 29, 1959, respondent
corporation, thru Rufino Melo & Company, Consulting and Examining Auditors,
requested for non-assessment, claiming” that there has been prescription in
making the assessment, that the expense items and bad debts were allowable
deductions. The letter was accompanied by a Resolution of the corporation, dated
February 2, 1954, where it was resolved to write off the debts of the people
appearing in another annex. The Commissioner on July
30, 1959
replied to the request, denying the same, and demanding the payment of the
amount due within thirty (30) days from receipt of said demand. On
September 19,
1959,
respondent corporation requested that it be permitted
until September 25,
1959, to
submit formal objections to the assessment. The formal objections appearing in
the letter of September 22, 1959, were identical to those of the June 29, 1959
communication, reason for ‘which the Commissioner did not give any favorable
action. The last letter of the Commissioner, dated October 28, 1959, among
others, requested payment of the assessment within ten (10) days from receipt
thereof.

On December 18, 1959, respondent
Western Pacific Corporation, presented with the Court of Tax Appeals a petition
for Review the assessment made by the Commissioner, on three (3) counts, to
wit:

(1) whether or not the making of the assessment had
prescribed;

(2) whether expenses incurred in securing ICC Licenses are
capital expenditures, and, as such, not deductible from the income;
and

(3) whether the bad debts written off should likewise be
deducted.

When the issues
were joined, by the filing of the Answer, end after hearing, the CTA rendered
judgment absolving the Western Pacific Corporation from the
assessment.
It, however, ruled out prescription, stating that March 2, 1959, was the last
day of the five (5) year period within which to make the assessment. On this
point, the CTA ruled:

“However, we do not agree with
petitioner that the assessment «n question was issued beyond the 5-year
statutory limitation. February 28, 1959 fell on a Saturday. Pursuant to Republic
Act No. 1880, as implemented by Executive Order No. 25, effective July 1, 1959,
all bureaus and offices of the government, except schools, courts, hospitals and
health clinics, hold office only five days a week or from Monday to Friday.
Saturday and Sunday are constituted public holidays or days of exemption from
labor or work as far as government offices, including that of respondent
Commissioner, are concerned. The offices and bureaus concerned are officially
closed on those days. So that on February 28, 1959, which were Saturday and Sunday, respectively, the office of
respondent was officially closed. And where the last day for doing an act
required by law falls on a holiday, the act may be done on the next succeeding
business day. (Section 31, Revised Administrative Code.) Similarly, in computing
any period of time prescribed by statute, the day of the act after which the
designated period of time begins to run is not included. But the last day of the
period so computed is to be included, unless it is a Sunday or a legal holiday,
in which event the time shall run until the end of the next day which is neither
a Sunday or a holiday (Section 1, Rule 28, Rules of Court). Consequently, since
February 28, 1959 was a Saturday and the next day, March 1, 1959, a Sunday,
respondent had until the next succeeding business day, March 2, 1959, Monday,
within which to issue the deficiency assessment. The assessment in question
having been issued on March 2, 1959, it was, therefore, seasonably
made.”

We concur in the above findings
and conclusions, convinced as we are, that they are
factually and legally correct.

The above ruling notwithstanding,
the Commissioner of Internal Revenue, appealed against the judgment which
absolved respondent Western Pacific Corporation from liability, alleging that
the CTA erred:

(1) In taking cognizance of the
case, notwithstanding lack of jurisdiction; and

(2) Granting it had jurisdiction,
in considering the expense items and the written off bad debts, as
deductible.

Without going into the merits of
the decision absolving the respondent corporation of tax liability, We find that the assessment made by the Commissioner should
be maintained, for the simple reason that when the petition for review was
brought to the CTA by the respondent corporation, the said Court no longer had
jurisdiction to entertain the same. The assessment had long become final. A
petition for review should be presented, within the reglementary period, as provided for in Section 11, Republic
Act No. 1125, which is “thirty (30) days from receipt of the assessment.” The
thirty (30) day period is jurisdictional (Pangasinan
Transportation Co. vs. Blaquera, 107 Phil.,
975).

It will be noted that the
assessment was received by the respondent corporation on March 2, 1959. It was
only on June 29, 1959, when said corporation formally assailed the assessment,
on the grounds of prescription in making the assessment and the impropriety of
the disallowance of the listed deductions. From March 3 to June 29, 1959,
manifestly more than thirty (30) days had lapsed and the assessment became
final, executory and demandable (Entanilla vs. Bd. of Tax Appeals, et al., L-7384, Dec.
19,1955). Of course, in the interim, a number of communications were exchanged
between the parties, the latest of which was dated October 28,
1959.
Even if this date is considered PS the commencement of the thirty (30) day
period, still the petition for review with the CTA was out of time, because it
was only on December 18, 1959, that said petition was presented. Failure to
comply with the thirty day statutory period, would bar
appeal and deprive the CTA of its jurisdiction to entertain and determine the
correctness of the assessment (Gibbs & Gibbs vs. Coll. of Int. Rev. &
CTA, 107 Phil., 232).

In view of the foregoing, the
decision of the CTA is hereby set aside for having been rendered without
jurisdiction, the assessment in question having been already final, executory and demandable before the petition for Review was
presented; and another entered, ordering the respondent Western Pacific
Corporation to pay the assessments made by the Collector of Internal Revenue,
and the further amounts of 5% surcharge and 1% monthly interest on the amount
assessed, from April 1, 1959 until date of full payment. Costs
against the respondent corporation.

Bengzon, C. J., Concepcion, Reyes, J. B. L., Barrera, Regala, Dizon, Makalintal, Bengzon, J.
P., and Zaldivar, JJ.,
concur.