CTA Case No. 2981 (Decision)

ti:PUBUC Ol' rME PtULlPPI!'<II'� ~OURT OF TAX A PPEAL.~ QUEZON Cri'Y . -:.. THE PHI LIPPI NE AMERICAN LIFE C.T.A. CASE NO, 2981 IN SURA NCE COMPANY, INC., Pet iti one r, - vers us - THE HON. COMMI SSIONER OF THE BURE AU OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - X DECISION Th i s r e r e r s t o r e s po n de n t ' s 11 ~1 o t i o n To Di s mi s s " filed on January 12, 1979 as well as petitioner's " Mo tion To Declare Respondent In Default" filed on Fe b ruar y 28, 1979. Respondent in his motion seeks the dismissal of 4 the peti tion for review on the ground of of juris- diction. 11e co ntends that the appeal in this case is premature since the assessment has not been disputed or protested, hence, there could nut be any decision that may be appe3led to this Court as contemplated in Section 7(1) of Rep ublic Act No. 1125. Thus: While pet iti oner alleged that it re- ceived f r om respondent a letter dated Augu st 10, 1978 assessing said petitioner the total amount of ?2, 353,288.12 repre - sent ing defici8ncy withholding tax for 1973 an d 1974, nowhere in the re cords does it appea r nor is it alleged in the petition itself - that said assessment-demand letter vJas contesled. The assessment not having been protested nor contested, there c ou ld not be any decision that may be appea led 10 1

DECISIO N - CTA CASE NO. 2981 - 2- to this Honorable Court, as contemplated in the above-cited provision of law. The letter dated August 10, 1978 of respondent to petitioner is not a decision since it is a mere assessment-demand letter for the collections of the amount stated therein. In order that this Court. may acquire juris- diction, it is indispensable that the assessment be protested by petitioner and a decision rendered thereon by respondent (Candyman Incorporated v. Commissioner of Internal Revenue, CTA Case No. 1872, January 20, 1970). Since no decision on Li;e contested assessment has been rendered by respondent, therefore, there is no appealable deci- sion as yet (Commissioner of Internal Revenue v. Villa, G.R. No. L-239 88, Janu- ary 2, 1968, 22 SCRA 3; Dionisio Lantin v. Commissioner of Internal Revenue, CTA Case No. 1951, April 10, 1969). Petitioner, on the other hand, in its motion to declare respondent in default con tends that since a motion to dismiss was filed instead of an answer with- in the period of ,extension 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 on October 11, 1978 petitioner received from respondent a letter dated August 10, 1978 assessing and demanding from it payment of the total amount of P2,353,288.12 representing alleged deficiency withholding tax at source for the years 1973 and 1974, inclusive of 25% surcharge and 14 % annual delinquency interest as well as compromise penalty. .1i.Q ,r..-)

DECISION - CTA CASE NO. 2981 - 3- While petitioner avers that prior to t~e assessment, it had written respondent two letters in connection with respondent's examiners threat to assess it for alleged withholding tax for 1973 and 1974, no protest or request for reconsideration of the aforementioned assessment was however made with respondent before petitioner appealed to this Court on November B, 1978. r Obviously, the assessmei;t not having been protested or contested, there could not be a decision on a dis- puted 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 Revenue on a disputed assessment and not the assessment itself. Thu s , it has been held: The la0' conferring ju r isdiction on the Court of Tax Appeals is found in Section 7 of Republic Act 1125, the pertinent part of which states: "Sec. 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal as herein provided - "(1) Decisions of the Collector (now Commis-sioner) of Internal Revenue in cases involving disputed a s sessments, 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 lav1 administered by the Bureau of In- ternal Revenue;" The vwrd "decisions" in p:nagraph 1, Section 7 of Republic Act 1125, quoted above, has been 10 8

DECISIO~~- CTA CASE NO. 2981 - 4- interpreted to mean the decisions of the Commissioner of Internal Revenue on the protest of the taxpayer against the assess- ments. Definitely, said word does not signify the assessment itself. We quote what this Court said aptly in a previous case: "In the first place, we believe th e respondent court erred in holding that the assessment in auestion is the respondent Collector's decision or ruling appealable to it, and that con- sequently, the per i od of thirty days prescribed by Secti8n 11 of Republic Act No. 1125 within which petitioner should have appealed to the respondent court must be counted from its r e ceipt of said assessment. Where a taxpayer ~uestions an assessment and asks the Collector to reconsider or cancel the same because he (the taxpayer) believe s he is not liable therefor, the assess- ment be c omes a 'disputed assessment' that the Collector must decide, and the taxpayer can appeal to the Court of Tax Appeals only upon receipt of the deci- sion of the Collector on the disputed assessment, x x x" (Cmphasis supplied) The sam�"'e interpretation finds support in Section 11 of Republic Act 1125, which states: "Sec. ' 11. Who may appeal; effect pf appeal. - Any person, association or corparation adversely affected by a decision or ruli~ of the Collector (no\'/ Commissioner) of Internal Revenue, the Collector of Customs or any pro vi n- cial or city Board of Assessment Appeals may file an app e al in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling." (Emphasis supplied) Note that the law uses the word "decisions", not "ass essments", thus further indicating the legi s lative intention to subject to judi- cial review the decision of the Commissioner on the protest against an assessment but not the assessment itself. ".J.. 0 ..I.

DECISION - CTA CASE NO. 2981 - 5- Since in the instant case the taxpayer appealed from the assessment of the Com-. missioner of Internal Revenue without pre- viously contesting the same, the appeal was premature and the Court of Tax Appeals had no jurisdiction to entertain said appeal. For, as stated, the jurisdiction of the Tax Court is to review by appeal decisions of the Commissioner of Internal Revenue on disputed assessments. The Tax Court is a court of special jurisdiction. As such, it can take cognizance only of such matters as are clearly within its juris- 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 Internal Revenue, C.T .A. Ca se No. 3432, February 25, 1983.) Under Section 319-A of the National Internal Re venue Code, as inserted by Presidential Decree No . 177 3 ! January 16, 1981, an assessment may be protested admi- nistratively by filing a request for reconsideration or reinvestigation wilhin thirty (30) days from receipt of the assessment; otherwise, it becomes final and unappealable. And if the protest is denied in whole or in part, the taxpayer adversely affected by the deci- sian on the protest may appeal to the Court of Tax Appeals within thirty (30) da ys from receipt of the said 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 reinv e stigation is the decision on the dispu t ed assessment which is appe a lable to this Court. It follows that if an 10 8 '

DECISION - CTA CASE NO. 2981 - 6- as sessment is not formally cont ested or protested ad mi nistrati vely , as what happened in the case at bar, the taxpayer has no right to appea l. On petitioner's argument i n its ~otion to declare respondent in defa ul t, suffi c e it to state that juris- dict i on ov er the subject matter is fundamental for a court to act on a given controversy. It is conferred by law, not by consent of th e ~arties. It can be challenged at any stage of the proceedings and for lack of it, a court can dismiss a case ex mero motu. To in quire into the existence of jurisdiction over the subj ect matter is the primary concern of a court 1 for thereon would depend the validity of its entire proceed- ings. (Commissioner vs. Villa, Id.) IN VIEW OF THE FORE GOING , the petition fa~ review filed in this ca ~e is hereby dismissed for lack o f j urisdic ti on at petitioner' s costs. SO ORDERED. Quezo n City, Metro Manila, June 6, 1986. ~~ AMANTE~ I~~~~ Presiding Judge vJE CONCUR: (On official le ave) CONSTAN TE C. ROAQUIN As sociate Judge ~;~ 10 9