FILIPINAS-ESLON MANUFACTURING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPP I NES COURT OF TAX APPEALS QUEZON CITY FILIPINAS - ESLON MANUFACTURING CORPORATION, Petit i onet~, C.T.A. CASE NO. 5663 COMM I SSIONER OF INTERNAL REVENUE, Respondent. RESOLUTION Before Us for resolution is a Motion to Dismiss filed by the herein respondent alleging that this Court cannot take cognizance of the Amended Petition for Review filed on Novembet~ 11, 1998, on the ground of lack of jtwisdict i on. Respondent's theory is that petitioner's appeal is premature since there is no decision yet on the disputed assessment within the purview of Section 7(1) of R. A. 1125. Records show t hat on April 1o, 1997 t~espondent issued Assessment Notice No. LA#0000625-90 - 3 25 against the petitioner f or deficiency income taxes for the year 1990 in the amount of P2,918,592.90, inclusive of intet~est, and compromise penalty. Having failed to receive an affirmative response from the petit i onet~, the t~espondent subsequently issued a Preliminary Collection Letter, dated October 27, 1997,

RESOUJT I ON - C.T.A. CASE NO. 5663 demanding the payment of the aforesaid amount, otherwise, it wi 11 be constrained to enforce collection administrative remedies provided for by law without ft.n~ther~ not ice. Copy of the said demand was received by the petitioner~ on November~ 17, 1':3'37. Within th i t~t y (30) days from receipt or on December 12, 1 '3'37, petitioner, thr~ough its counsel, filed a request for reinvestigation with the respondent, and in compliance with the requirements of Section 228 of the Tax Refot~m Act of 1'3':37, it submitted on Febr~uat~y 6, 1'3'38 all relevant documents in support of its protest. In the belief that the respondent will no longer act on the disputed assessment, petitioner filed on August 3, 1'3'38 a Petition for Review with this Court praying that after due notice and hearing, judgment be l�~ender~ed declaring it not liable for any deficiency income tax. On Novembet~ 26, 1'3'38, the respondent filed a Motion to Dismiss reiterating the ground stated in its Answer~ that this Court has no jurisdiction to act on the Petition. Respondent submits that Section 228 of the NIRC 1 of 1'3'37, the provision invoked by the petitioner, is not applicable in the instant case since, as alleged in the amended petition, both the assessments and the administrative protest were made before January 1, 1'3'38, the effectivity date of the 1'3'37 Tax Code. 1 National Internal Revenue Code

RESOLUTION �- C.T.A. CASE NO. 5553 .._ 3 - In support thereto, the respondent avers that even in the assumption that the 1997 Tax Code is applicable, still, the Petition for Review is premature on the ground that it was filed based on the inaction of the Commissioner, before the lapse of the 180-day period from Petitioner's submission of documents as ~~equi ~~ed by Section 228 of the same Code. On Januat~y 7, 1998, petitioner filed its Opposition to Motion to Dismiss and raises the following defenses, viz: I THE PETITIONER HAS SUBSTANTIALLY COMPLIED WITH THE PROVISIONS OF SECTION 228 OF R.A. 8424 II ASSUMING THAT THE PETITION IS PREMATURE, SUCH FACT RESULTS IN THE LACK OF CAUSE OF ACTION, AND NOT NECESSARILY A LACK OF JURISDICTION III ASSUMING THAT THE PETITION IS PREMATURE, EQUITY WILL CURE THE DEFECT OF LACK OF CAUSE OF ACTION Petitioner would stress in its Opposition that it has substantially complied with the provisions of Section 228 of R.A. 8424 otherwise known as the National Internal Revenue Code of 1997 which reads, thus: X 11 X X XXX XXX

RESOLUTION - C.T.A. CASE NO. 5663 -- 4 Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days f-r~om filing of the p-r~otest, all relevant supporting documents shall have been submitted; otherwise the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180) day period; otherwise, the decision shall become final, executory and demandable." It is the main theory of the petitioner that even if the original Petition for Review was filed one hundred seventy-eighty (178) days from the submission of the documents, while seemingly premature, the same can be considered already as substantial compliance with the requirements of the above-quoted provision and Section 7 of R. A. 1125. The petitioner reasoned out that the Court of Tax Appeals is created with the aim in view of speedily resolving tax controversies. Such being the case, since the revenue examiner failed to act on the protest within a period of one hundred seventy eight (178) days, the filing of the Petition for Review on August 3, 1'3'38, even if the same was made two (2) days in advance, can be constl�~ued al t~eady as substantial compliance with the aforesaid law.

RESOLUTION - C.T.A. CASE NO. 5663 5 We find for the respondent. A closer scrutiny of all the allegations in this case cann ot hide the fact that the instant controversy shall be resolved in the light of the provisions of the old Tax Code instead of the NIRC of 1997. Thus, We find petition et~' s t~e 1 i a nee on the provisions of the 1997 Tax Code since it is quite evident that a mere glance at the pleadings submitted to this Court would readily reveal that both the assessment made on Apt~i 1 10, 1997 and the filing of the corresponding administrative protest, occurred before the effectivity of the said Code. Ace o t~d in g 1 y, the petitioner cannot validly invoke the 180 day period referred to in Section 228 since it only covers assessments issued on or after 1' 1998, the effectivity date of the 1997 Tax Code. (National Steel Corporation vs. Commissioner of Internal Re v enue, CTA Case No. 5574 ) CBIR Ru l i ng No. 22- 98, February 19, 1998) In the instant case, therefore, Section 229 of the old NIRC shall apply and We quote, thus: "Sec. 229. Protesting of a s sess�ent. XXX XXX XXX Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by implementing regulations within thirty (30) days from receipt of the assessment; otherwise, the assessment shall become final and unappealable.

RESOLUTION - C.T.A. CASE NO. 5663 �- b If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision; otherwise, the decision shall become final, executot~y and demandable". (Underscoring Ours) Clearly from the above mentioned provision, cases may be elevated only to this Court via an appeal within thirty (30) days from receipt of the decision. Hence, in the absence of any adverse ruling from which an appeal any case involving disputed assessments brought before Us shall be dismissed for being premature. Anent the issue of jurisdiction, petitioner equated, and wr~ongly at that, lad< of jm~isdiction with failur~e to state cause of action. Jurisdiction may be defined as the authority of the Courts to hear and decide a case. It is fixed by law and cannot be conferred by the parties. Mor~e impor~tantly, in relation to the case at bar, jurisdiction of the Court is determined by the statute in force at the time of the commencement of the action. The law jurisdiction to this Court is Section 7, of R. A. 1125 otherwise known as the law creating the Court of Tax Appeals. The said law provides: "Section 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided -

RESOLUTION - C.T.A. CASE NO. 5663 -7 1) 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. XXX XXX XXX The above quoted section is the very law where this Court derives its authority to hear and decide a case. Once a decision has been rendered by the Commissioner of Internal Revenue involving a disputed assessment, this Court, in the event a Petition for Review is filed before it, does not have any option but to take cognizance thereof. This is so, because in all cases where the authority to proceed is conferred by a statute and the manner of obtaining jurisdiction is mandatory, the same must be strictly complied with, otherwise, the proceedings will be utterly void. However, pending the outcome of the protest filed by a taxpayer, this Court cannot arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with a body of special competence. Having been mooted by the above pronouncements, this Court deems it unnecessary to dwell on other issues raised by the petitioner in its Opposition to Motion to Dismiss. WHEREFORE, in view of the foregoing, this Petition for Review hereby DISMISSED without prejudice to

RESOLUTION - C.T.A. CASE NO. 5553 - 8- recourse to this Court by the Petitioner if and when the protest filed on December 12, 1997 is finally rejected by the Com missioner of In t ernal Revenue. SO ORDERED. Lta. o......-.-L ERNESTO D. ACOSTA Pr~esidi n g Ju d g e ~ AM'4-7~~ RAMON 0. DE V RA Ass ociate J dge