CTA Case No. 4140 (Decision)

. tniJt!r. otr 'n\i'. N't; ,,..,.,,.. t-OUR1' ~lf:' ~-.1\ Y. J:,rfi:"AU' . ~~~"' ;lf4~:r HEAVY EQUIPMENT RENTALS _ & CONSTRUCTION CO. , INC ., Petitioner , - versus - C . T . A. CASE NO . 4140 COMMISSIONE R OF INTERNAL REVENUE , Respondent . X- - - - -----X DEC I S I 0 N This refers to respondent ' s "Moti o n To Di s miss " .> filed on October 15, 1987, petitione r ' s opposition thereto as well as the latter' s "Mo tion To Declar e Respondent In De fault " filed on De cemb e r 15, 1987. Respondent in his motion s eeks the dismissal of the petition for review on the ground of lack of jurisdiction . He contends that the appe a l in this case is premature since the assessment has not been disputed or contested , hence , there could not be any decision that may be appealed to this Cou rt as con- t emp 1 ated in Section 7(1) of Republic Act No . 1125 . Thus :

DECISION - CTA CASE NO. 4140 - 2- While petitioner alleged that it received from respondent a letter dated February 19, 1987 assessing said peti- tioner the aforesaid taxes for 1981, nowhere in the records does it appear nor it alleged in the petition itself that the s a id assessme nt-demand l ette r was protes te d and a decision had been rendered by the respondent. The asse s s - ment not ha ving been protes t ed nor con- tested, the re could not be any decision that may be appealed to this Honorable Court, as contemplated in the above-cited provision of law. The l et t er dated July 9, 19 86 of respondent to petitioner is not a d e cision since fr i s a mer e assessment -demand lette r for the col- lection of the amounts stated therein . In or der that this Court may acquir e ju r i s diction, it is indispen- sable that the assessment be protested by petitioner and a deci sion rendered ther e on by respond ent {Candyman Inco r- porated vs. Comm . of Int. Rev ., CTA Case No. 1872, Jahuar y 20, 1970). Since no decision on the contes ted assessme nt has been rendered by res- pondent, therefor e , the re is no appeal- able decision as yet {Comm. of Int. Rev . vs. Villa, G.R . No. L-23988, Jan. 2 , 1968, 22 SCRA 3; Dionisio Lantin vs . Comm. of Int. Rev. , CTA Case No . 1951 , April 10, 1969) .. Petitioner, on the othe r hand, insists that this Court has jurisdiction and in its motion to declare respondent in default contends that since a motion to dismiss was filed instead of.:an answer

DECISION - CTA CASE NO. 4140 - 3- within the period granted by this Court, the same could not be a bar to the declaration of respondent in default . -. We agree with respondent. The pertinent facts as alleged in the petition for review disclose that in a letter dated February 19, 1987 , respondent assessed and demanded fr om petitioner payment of the total amount of P22,187,037.05 represent- ing alleged deficiency income, percentage and fixed taxes for the year 1981 inclusive of surcharges, in- terests and compromise penalty. While petitioner avers th at 1n a l e tter dated ... March 10, 1987 , it returned the aforesaid letter and notices of assessment in prote s t of th e sa m ~ , no action thereon has yet been made by respondent, thus making the filing of the petition premature. Obviously, since no aecision has as yet been rendered by respondent on petitioner's protest, there could not be a ~~ cision on a disputed assessment that may be appealed to this Court . Under Section 7(1) .of Republic Act No . 1125 , what is reviewable by this Court on appeal is the decision of the Commissioner of Internal

DECISION - CTA CASE NO. 4140 - 4- Revenue on a disputed assessment and not the assess- ment itself. Thus, it has been held: The law conferring jurisdiction on .. the Court of Tax Appeals is found in Section 7 of Republic Act 1125, the pet- tinent part of which states: "Sec . 7. Jurisdiction.- The Court of T~x Appeals shall exercise exclusive appellate jurisdiction to review by appea l as herein provided - ., (1) Decisions of the Colle �:.: tor � (r10w Commi ss ione r) of Internal Revenue in cases in- volving disputed assessment, refunds of internal revenue taxes , fees or other charges , penalties impose d in r e lation thereto, or other matters arising under the Nationa l Internal Revenue Code or ot her law or part of law administered by the Bureau of Internal Revenue ;" The word "decisions" in paragraph 1 , Section 7 of Republic Act 1125, quoted above, has been interpreted to mean the decisions of the Commissioner of Internal Revenue on the protest of the ~xpayer against the assessments. Definitely, said word does not signify the assessment -.

DECISION - CTA CASE NO. 4140 - 5- itself. We quote Mhat this Court s a i d aptly in a previous case: "In the first p lac e , we be - lieve the respondent court erred in holding that the assessment in ~stion is the respondent Col- lector's decision or ruling appea l- able to it, and that conseque ntly, the period of thirty days pr es- cribed by Section 11 of Republ ic Act No. 1125 within which peti ti oner should have appealed to the res- pondent court rnus~ be counted � from its receipt of said assessment . Where a taxpayer questions an as se ssme nt a nd asks the Coll~c tor to reconsider or cancel th e.:sarne because he (the taxpayer ) believes he is not liabl e therefor , the assessment becomes a 'di sputed assessmen t ' that th ~~ collector must decide, and the taxpayer can appea l t o the Cou rt of Tax Appeals only upon r eceipt of the decis ion of the Co l lectpr o n the disputed assessment, x x x" (Emphasis supplied) The ~arne interpret ation find s s up port in SectiOI! 11 of Republic Act 1125 , which states: "Sec . 11. Who may appeal; effect of appeal.- Any person, association or corporation ad- versely affected by a decision or !1Iling of the Collector (now Commissioner) of Internal Revenue, the Collector �of Custo~s or any

DECISION - CTA CASE NO. 4140 - 6- provincial or city Board of Assessme nt Appeals ma y file an appeal in the Court of Tax Appeals within thirty d ays after the receipt of such d ~~ cision or ruling." (Emphasi s supplied) Note that the law uses th~ word "de cisions'', not "assessment", thus further indicating the legislativ e inte~tion to subject to judicial review the decision of the Com- missioner on the protest against an assess- ment but n �..~ t the assessment its e lf. Since in the instant case the taxpayer appealed from the assessme nt of the Commis- sioner of I nternal Revenue without previously contesting the same, the a pp ea l was pr e matur e and the Court of Tax Appea l s had no juri s - diction to entertain said appeal. For, as stated, the jurisdiction of the Tax Court is to revi e w by appeal decisions of the Commissione r of Internal Revenue on dis- puted assessments. The Tax Court is a court of special jurisdiction. As such, it can take cognizance only of such matters as are crearly wifuin its juris~

DECISION - CTA CASE NO. 4140 - 7- diction. (Commissioner of Internal Revenue vs. Leonardo S . Villa and the Court of Tax Appeals, L-23988, January 2, 1968, 22 SCRA 3; Perfecto V. Fernandez vs. Commissioner of Inter nal Revenue, C.T.A. Case No. 3432, February 25, 1983.) Under Section 319-A of th e National Inter nal Revenue Code, as inserted by Presidential Decree No . 1773, January 16, 1981, now Se~.ti on 270, an assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment; otherwise , it becomes final and unappealable. And if the protest is denied in wh le or in part, the taxp ay er a dv erse ly affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the sa id decision; otherwise, the decision shall become final, executory and demandable. It is thus clear � beyond doubt that the decision on the request for reconsideration or reinvestigation is the decision on the disputed assessment which is appealable to this Court. It follows that if an

DECISION - CTA CASE NO. 4140 - 8- assessment is no t formally contested or protested administratively, or eve n if formally conte s t e d or protested administratively , no decision has as ye t been rendered by the Commissioner of Internal Revenue , the taxpayer has no right to appeal . As stated above, it appears in thi s ca se th at petitioner has -- �rotested respond ent 's assess me nt-d e mand letter of February 19, 1987, but respondent Commissioner of Internal Revenue has not yet acted or rendered a decision on the same . Clearly, therefore , the f iling of the instant petition for revi ew is premature . IN VIEW OF THE FOREGOING, the petition for review filed in this c ase on April 8, 1987 i s hereby di smissed for lack of jurisdiction at petitioner' s cos ts . SO ORDERED. Quezon City , Metro Manila, April 27 , 1988. Presidin WE CONCUR: 369-H

- DECISION - CTA CAS E NO . 4140 - 9- CERT I F I CAT I 0 N I her e by ce rtif y th a t th is dec i sion was r eache d after du e conS IJltation among the me mbers o f t h e Co urt of Tax Appe als in a ccordance with Sec tion 13, Art icle VIII of the Con s titution . l\MANTE �'I LLER Pres i d i g :Judg e Cour t of Tax l\ppeals