FILIPINAS INVESTMENT & FINANCE CORPORATION, PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Filipinas Investment and Finance Corporation versus Commissioner of Internal Revenue

The Case

This is a petition brought by Filipinas Investment and Finance Corporation against the Commissioner of Internal Revenue, asking the Supreme Court to reverse a resolution of the Court of Tax Appeals that dismissed the corporation's petition for review for having been filed out of time. The case matters because it fixes, with precision, the moment when a tax assessment becomes a "disputed" assessment, the moment when the Commissioner's denial of a protest becomes the appealable decision, and the rule that the thirty-day period to appeal to the Tax Court is jurisdictional and cannot be extended by mere repeated requests for reconsideration.

Procedural History

The Commissioner, through the Director of Regional District Number 3, assessed the corporation for advance sales tax on an automobile, plus a compromise penalty. The corporation disputed the assessment in writing and asked that it be cancelled or withdrawn. The Commissioner denied the request. After further exchanges, the corporation filed a petition for review in the Court of Tax Appeals, questioning the legality of the advance sales tax.

The Commissioner moved to dismiss, arguing that the Tax Court had no jurisdiction because the petition was filed beyond the thirty-day period fixed by law. The Tax Court held a preliminary hearing, received the parties' memoranda, and then issued a resolution sustaining the motion to dismiss. It found that the corporation had consumed thirty-three days in all: three days from the deemed receipt of the decision to the filing of the request for reconsideration, and thirty days from receipt of the denial of that request to the filing of the petition for review. The corporation appealed that resolution to the Supreme Court.

Facts

On April 18, 1961, the Commissioner, through the Director of Regional District Number 3, issued a letter assessing against Filipinas Investment and Finance Corporation the sum of 5,007 pesos as advance sales tax on an automobile it had purchased from a tax-exempt individual, plus 300 pesos as compromise penalty, for a total of 5,307 pesos. Believing itself not liable, the corporation, through counsel, disputed the assessment in a letter dated May 15, 1961, and requested that it be cancelled or withdrawn.

The Bureau of Internal Revenue followed up with a demand letter dated June 21, 1961, to which the corporation replied, calling attention to its pending protest. On August 17, 1962, the Commissioner denied the request for cancellation and withdrawal. The record does not show when the corporation received that denial, but in a letter dated September 28, 1962, received by the Commissioner on October 1, 1962, the corporation reiterated its request. Meanwhile the Bureau transmitted the corporation's record to its Collection Branch for collection by summary remedies, and a regional director sent the corporation, not its counsel, another demand letter dated September 25, 1962, enclosing a copy of the August 17, 1962 denial. The corporation answered on October 18, 1962, and on January 23, 1963, through counsel, moved to reconsider the denial.

On July 22, 1963, the Commissioner again denied the requests for reconsideration, and the corporation received that denial on August 12, 1963. On September 11, 1963, the corporation filed its petition for review in the Tax Court. The Commissioner moved to dismiss on the ground that the petition was filed beyond the thirty-day period. The Tax Court granted the dismissal, and the corporation appealed to the Supreme Court.

Issues

• Whether or not the Commissioner's letter of August 17, 1962, denying the request for cancellation and withdrawal, is the decision on the disputed assessment that is appealable to the Court of Tax Appeals.
• Whether or not the corporation's letter of September 28, 1962 was a mere pro-forma request for reconsideration that did not suspend or restart the thirty-day period to appeal.
• Whether or not the petition for review was filed within the thirty-day period fixed by law, the period being jurisdictional and non-extendible.

Applicable Provisions

Section 7 of Republic Act Number 1125, as discussed in the decision, confers on the Court of Tax Appeals jurisdiction to review decisions of the Commissioner of Internal Revenue on disputed assessments. It bears on the case because the Court treats the denial of the protest as the decision that opens the door to the Tax Court.

Section 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided, decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue.

Section 11 of Republic Act Number 1125 fixes the thirty-day period within which an appeal to the Tax Court must be taken. It bears on the case because the entire dispute turns on when that period began to run and whether it was observed.

Section 11. Who may appeal; effect of appeal. Any person, association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling.

Ruling

On the first issue, the Court held that the assessment of April 18, 1961 became a disputed assessment when the corporation requested its cancellation and withdrawal in its letter of May 15, 1961. The Commissioner's letter of August 17, 1962, denying that request, therefore constituted the decision on the disputed assessment that is appealable to the Tax Court. The Court rejected the argument that the August 17, 1962 letter did not pass upon the corporation's claim that the automobile had passed through three previous non-tax-exempt owners, because the letter expressly declared that, according to the findings of the examiners, the corporation was the first non-tax-exempt entity to acquire ownership over the car, and those words directly contradicted and overruled the claim.

On the second issue, the Court held that the corporation's letter of September 28, 1962, received on October 1, 1962, was a mere pro-forma request for reconsideration of the August 17, 1962 decision. It did not adduce new facts or arguments. The Commissioner's letter of July 22, 1963, received on August 12, 1963, was merely the resolution of that request. The Court thus counted three days from the deemed receipt of the decision to the filing of the request for reconsideration, and thirty days from receipt of the denial of that request to the filing of the petition for review, for a total of thirty-three days.

On the third issue, the Court held that the period to appeal from a decision of the Commissioner to the Tax Court is jurisdictional and non-extendible, and that a taxpayer may not delay indefinitely a tax assessment by reiterating his original defenses over and over again without substantial variation. The Tax Court therefore correctly dismissed the petition for review.

Doctrine

An assessment becomes a disputed assessment the moment the taxpayer requests its cancellation or withdrawal. The Commissioner's denial of that request is the decision on the disputed assessment that is appealable to the Court of Tax Appeals under Section 7 of Republic Act Number 1125.

A subsequent letter that merely reiterates the original defenses, without new facts or arguments, is a pro-forma request for reconsideration. It does not restart or extend the thirty-day period under Section 11 of Republic Act Number 1125, which is jurisdictional and non-extendible. A taxpayer cannot delay a tax assessment indefinitely by repeating the same defenses.

Disposition

The Supreme Court affirmed the resolution of the Court of Tax Appeals dismissing the petition for review, with costs against Filipinas Investment and Finance Corporation.

Remember This

The single line worth memorizing: the denial of a protest against an assessment is the appealable decision, and the thirty-day period to appeal to the Tax Court is jurisdictional and cannot be revived by pro-forma requests for reconsideration. Examiners use this case to test the reckoning of the appeal period in tax cases and the distinction between a genuine protest and a mere repetition of original defenses.