CTA Case No. 2345 (Decision)

RF.PURI,lG OF THE Plli.LIPPIN�8 . COURT OF'' AX APPEALS QUEZ0t'h CITY ':.'LO IC~;~.L DIS'r::::U3T.:-':COHS, IITC . , etitioner , - versus - C . '.L' . � CAS2 HO q 2345 '.-�:.~~ G0lu .. I:.JuiG~:~l~ C1~ IHT..~i,i'! L _:.wV~i.TUB, hes:Jondent . X- ---- ------X . D �2 C I S I 0 N espondent assessed at;ainst )etitioner the sum of P11,255 . 89 , re}resGntinc deficiency income tax and penalties for the year 1968 . Petitioner is a cor}or~tion or~a~ized and exis~ing under tile laws oi' the Republic of the ~llilippines , 1di th bt:siness adc.ress at ~305 J?asonL; J:ano ..wxtension , L.a.,cc.tl, {izal . etitioner 1 s taxaole year or accounting period is the calendar year so that on ~pril 15, 1969, it filed its income tax return for the calendar year 1 968 ~ In conputing its income tax for 1968 , petitioner applied the 2~;- 30; income tax rates as provided io Section 24 of the ~ evenue Code, .)rior to its amendr:1ent by Hepublic .~ct '.,o . 54-31, _vrhich took effect on June 27 , 1968 , and based on the aforesaid rates arrived at the amount of 96 , 0 1 3~00 as income tax due for 1968o after investigation, respondent assessed against petitioner the aaount of 1?11 ., 255. 89 , representing de lin~ ql,ency income tax for 1968 , incll'.Sive of interest and coinpromise penalty Q This assessment resulted from the

� DECIGI 'II C':Cl~ C.d.GJ; 1:0 . 234-5 2 a~plic&tion of tiw new cor)orate income tax rates of 25;.; and 35>~ under Hepublic ..'A.ct no . 5l.Jj 1 on l)etitioner ' s incmae for the per i od from J"uly 1, 1968 to December 31 , 1968 0 ~he said assessment was protested by Jetitioner in a letter dated pril 29 , 1971 and was received by respondent on the saoe date . v :Iithout reso1vin6 the protest of petitioner , a \-Tarrant of distraint and levy "dO.S issued by respondent on .:u..;ust 10 , 1971, �\\T:1ich appe.:.~rs to l1ave been. sel'Ved on petitioner qn . illgust 19 , 197 1o Petitioner protested t11e issu.a..nce of t:1e \�Tarrant of distraint and levy on ..1.1..1~ust 23 , 1971, alleging that the assessment had been previ ously c ontested in a letter dated ..:'pril 29 , 1971 but no action l:ras tal-:en. by respondent on trw aforesaid pro- tes t, :cwci. , therefore , t!1e vrarrant of o.istraint and levy should be uithdr ~n--m as it 'i�Tt..s prematurely issued . In an indorse~erit dated SeJtember 21, 1971 by the Chief , Collection branch , the ~ssi s tant regional Director Has asked 'illlet!:wr� or not the execution of tiw uarre.nt of distrai~"lt and levy served on August 19 , 1971 should be On Octouer 7 , 1971, trw . cting Le,_,ional Director rendered a decision denyin.~ petitioncr 1 s protest und reiterated t11e payment of' the auount of F-11 , 255 . 89 as assessed , ot.::wriiis e, res)O~lc".ent i.WUlci enforce the collection of the same ':Ti thout further notice . �Tne aforesc~id letter 1vas received by petitioner o~ October 29 , 1971 . 3enc e, on

D0CISION CT.~ C..l&~ lJO . 23 45 3 ~ovember 11, 197 3, )etitioner filed the herein appeal . The i ssues raised are : ( 1) dhether or not the a11peal of peti- tioner vas filed within the 30- day period piescribed in Section 11 of Republic ~ct ~o . 1125; and (2) hether or not the increased rates of corJorate inco~e tax prescribed in Ee~ub lic ..l.ct J.;o . 5l.U 1 s{lould apply to income re- '~ cei\l: ed beginninb July 1, 1968 by corporations re)ortin~ income on a calenuar year basis o On the 1ssue of jur i sdi ction , respo~dent contends that the issuance of the warrant of distraint and levy i s considered a decision denying t~e protest of the petitioner , and Jllrsuant to Section 7, in relation to Secti on 11 of Le..mblic ..:l..ct No . 11 2 5, petitioner should h&ve appealed to this Court uithin 30 days from August 19 , 1971, the date tne sai~ warrant was served upon it , or not later than Se~Jtember 18 , 19'71 ; and since the petition for review was filed on uovember 11, 1971, t~e a~peal was filed out of time . 'rhe reco1'd sl.10'i.1TS th<...t after ti.1e ivarrant of distraint and levy ivas served on the )etitioner on a ugust 19 , 1971, "resportdent did not enforce the collection tnereof a s evidenced by t:..e indor se_:1Gnt of the Ch. ief , Collection . .3r,::.nch dated Septeinber 2 1 , 1971 , seeii:ing the advice of the ~~ssistant �.e;;ional Director vrhet 1er or not the col- lection of the tax assessed a6ainst petitioner should be enforced . Thereafter , that is , on Octooer 7, 1971 , a formal decision was rendered denying )etitioner ' s � ]retest.

DECISION CTI CA3~ hO . 2345 I t is true that trte issuance of a warrant of distraint and levy to enforce collectiorr of a tax as- sessed against a ta~payer is considered a decision of the Commissioner of Internal nevenue whic~1 is appealable to this Court . .aut this is true only i.�There no formal deci - sian has been rendered by the Commissioner . '.!.'he reason is t hat where no formal decision is rendered by the Comwissioner of Internal Itevenue on the protest of a taxpayer , tne issuance of a ~arrant of distraint and levy is consitiered as a decision impliedly denyin~ the p1�otest because by the issuance of such \:�Tarrant the Commissioner considers his assessl)lent as final . In this ca se, a formal decision was actually rendered on peti- tioner 1 s pl'otes t so th<?._t the thirty- day period for appeal should be counted from the date of receipt there- of by petitioner and not from the date of service of a copy of tlle \�Tarrant of distraint and leV;<l o de are , therefore , of the opinion tha~ the appeal- able decision is the letter of respondent dated October 7, 1971, which was received by petitioner on October 29 , 1971. From the date of receipt by petitioner on October 29 , 1971 of res~ondent 1 s decision dated October 7, 1971 to the date of filinz of the petition for review on LOVen1be1" 11 , 1971, only 13 days el apsed . Consequently , the herein appeal was timely filed . Tne second issue is not one of first impressiono In The Manila Times Publishing Co ., Inc . vs . Comm . of

DGCISION C'r~:i. G& 6.C: lJO . 234-5 � 5 )nt . Rev ., C. T . A. Case No . 2262 , dated December 17 , 1973 , certiorari denied in G. ll . I:o .; L- 38154- , Hay 10 , � 197tt; hil . i-1atch Co ., LtcL vs . The Commissioner of Internal Levenue , C. T. Ao Case No . 24-22 , Fe!J . 19 , 1975 , and cases cited t~-wrein , it vias hald that the i n c reased rates prescr:.L bed in l e.~:mblic ~:..ct :Jo . 54-3 1 are appl i cable t �o income s of a calendar year corjloration:� beginning. J"anuary 1, 1969 o..nd not July 1, 1968 , because tile begin- ning or the taxable year of calendar year corpor&tions after June 30 , 1968 is J-anuary 1 , 1969 . The income of a c alendar year corporation from July 1 , 1968 to Dec- ember 31, 1968 is still subject to the old rates pres- scribed in Section 24- of the ~avenue Code , before its a uendmont by repubiic :ct !iO . 54-31 � .JILr.!;l..C:FOH:J: , the dec i sion appealed from is hereby rev~rsed . ~o costs . su o:m~lt=:D . uezon City , October 10 , 1975 . ~;~~~~ HOl- ' r; H. t.E�I.t-~L I . . \11:. CC��Cl.J'"R : Presiding Judge. - ~&zL. tJ' <:S\.,u.ISLAO !:. , 'i,:,, _-0;~ ssociate J"udg e Jl~ . f . ~ � ~ .:01-J L o ~..\v~ 1-"iC.ci:ft Associnte Judge � �