CTA Case No. 1903 (Resolution)

~ 81' Tl\l'a P!Wt'LJPPI�F.:. COURT 011' TA-X _..,.,..lJl ~N �cr.n r LITONJUA & COMPANY, INC., C.T.A. CASE NO. 1903 C.T.A. CASE NO. 1904 ' Petitioner, -versus- �� CONMISSIONER OF INTERNAL REVENUE, I0 Respondent. \ ALFONSO B. ENCARNACION, CONSTANTE ROSAL and ' LUIS GRANADOa, JR., � Movant-Intervenors. x------~---~~-------------x TRANSMARINE SHIPPINB CO., INC., Petitioner, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. ALFONSO B. ENCAR!1ACION, CONSTANTE ROSAL and LUIS (}RANADOS, x-----M--o-v--a-n-t--I-n-t-e-r-v-e-n-o-r-s-.-x RE S 0 L UT I 0 N The respondent seeks the dismissal of the above entitled cases on the ground that this Court has no jurisdiction over the same. Petitioners Litonjua & Co., Inc. and Trans- marine Shipping Co., Inc. are domestic corporations duly organized under the laws of the Philippines � Sometime in 1966, on the oasis of a confidential in- formation received by the Bureau of Internal Revenue, petitioners were investigated by internal revenue

< I 7-r' J ' RESOLUTION - CTA CASES NOS. 1903 & 1904 2 agents for income tax purposes. As a result of said investigation, the said revenue agents submitted a report recommending that petitioners be held liable for deficiency income tax and the corresponding penal- ties as brokers-agents of non-resident foreign ship- ping corporations (Annexes H 11 11 and 11H11 , petitions for Review). Acting on the said report, respondent, in separate letters dated November 22, 1966, invited petitioners' representatives to appear for an informal conference to look over the findings of revenue exam- iners and to present whatever objections they had to the "proposed assessments" (Annexes "A" and ttA11 , Pe- � titions for Review; Exh. A 11 11 , p. 163, CTA Case 1903). In separate letters dated December 1, 1966, petition- er.s:replied that they had authorized their lawyer, Atty. Simeon N. Ferrer, to secure a copy of the re- port of respondent's examiners on the alleged tax lia- bilities of the said foreign shipping corporations (Exh. ttB11 , PPo 164-165, CTA Case 1903). After having been furnished with a copy of the examiners� report (par$. 4 and 4, Petitions for Review), petitioners filed with respondent a joint reply memorandum con- testing the findings and recommendations of the exam- iners (Annexes ucn and nett, Petitions for Review). Respondent, in several letters all dated Oc-tober 16, 0 1967, addressed to various foreign shipping companies ' I '' ;\ +

� RESOLUTION - CTA CASES NOS. 1903 & 1904 3 and/or petitioners, demanded the payment of deficien- cy income tax, inclusive of surcharge and interest, amounting to several million pesos (Annexes 11D" to 11D-53 11 , Petition, CTA Case 1903 & Annexes 11D11 to "D-22", Petition, CTA Case 1904). These assessments were received by petitioners on December 26, 1967, but petitioners' counsel, in separate letters dated January 16, 1968, replied that petitioners had no authority to receive the assessments on behalf of the said foreign shipping firms or represent them in their tax cases (Annexes 11E11 and 11E", Petitions for Review). � On January 22, 196~, without waiting for respondent~s � reply to their letters, petitioners separately filed the instant petitions for review with this Court (p. 1, Petitions, CTA Cases Nos. 1903 & 1904). In his motions to dism~ss, respondent contends that the appeals are premature. Respondent has ap- parently treated the letters of petitioners dated Jan- uary 16, 1968 as protests against the assessments and a denial of their liability on the ground that they are not agents of said foreign shipping companies, which protests have not yet Peen decided. Hence, in- � voking the decision in Commissioner of Internal Reve- nue vs. Leonardo S. Villa and the Court of Tax Ap- peals (G.R. No. L-23988, January 2, 1968), he prays that the said appeals be dismissed for lack of juris- diction. I~

.. RESOLUTION - CTA CASES NOS. � 1903 & 1904 � 4 On the other hand, petitioners contend, among others, that the assessments in question are deci- sions appealable to this Court, and that the same need not oe further protested inasmuch as the latter would only be tantamount to a motion for reconsidera- tion which would not stop the running of the 30-day period for appeal. The jurisdiction of this Court in matters in- volving internal revenue taxes is governed by Sec- tion 7 of Republic Act No. 1125, pertinent portions of which read as follows: 11SEC. 7. Jurisdiction.- The Court of Tax Appeals shall exercise exclusive ap- pellate jurisdictio~ to review by appeal, as herein provided - (1) Decisions of the Collector* of Internal Revenue in cases involving dis- puted assessments, refunds or internal revenue taxes, fees or other charges, penalties imposed in relation t hereto, or other matters arising under the Na- tional Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;" Respondent's reliance on Commi s sioner v. Villa, supra, is well taken. However, it may be pertinent to inquire into the jurisdiction of this Court in matters involving internal revenue taxes. In cases involving assessments of internal revenue taxes, this Court has exclusive appellate jurisdiction to review on appeal not only decisions *now Commissioner

. .. RESOLUTION - CTA CASES NOS. " � 1903 & 1904 5 � of the Commissioner of Internal Revenue in cases in- .:; volving "disputed assessments" but also in 11other matters" arising under the National Internal Revenue � Code. The term "other matters" mentioned in Section 7(1) of Republic Act No. 1125 has been interpreted to include cases of the same nature as disputed as- sessments and refunds of internal revenue taxes, fees or charges imposed by the National Internal Revenue Code. 11Note that the law gives to the Court of Tax Appeals exclusive appellate jurisdiction to review the decisions of the Collector of Internal Revenue, the Commissioner of Customs, and the provin- cial or city Boards of Assessment Ap- peals. Note also that in defining the cases that may be reviewed the law be- gins by enumerating them and then adds a general clause pertaining to other matters that may arise under the Nation- al Internal Revenue Code, the customs Law and the Assessment Law. This shows that the 11other matters 11 that may come under the general clause should be of the same nature as those that have preceded them applying the rule of construction known as ejusdem generis. In other words, in order that a matter may come under the general clause, it is necessary that it belongs to the same kind or class therein specifioally enumerated. Otherwise, it should be deemed foreign or extraneous and is not included. 11 (Ollada v. Court of Tax Ap- peals, 99 Phil. 604, 609-610.) To the same effect is the decision in The Acting Collector of Customs v. Court of Tax Appeals,

RESOLUTION - CTA CASES NOS. 1903 & 1904 6 "It will be noted that the final sentence of paragraph 2 of this Section 7, "or other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs", comes after an enumeration of the class of cases cognizable by the Court of Tax Appeals, namely, those involving liabi- lity for customs duties, fees or other money charges, and as contended by re- spondent intervenor, by the doctrine of ejusdem generis, in order that the "other matters arising under the Customs Law or other law or part of law adminis- tered by the Bureau of Customs 11 may come within the jurisdiction of the Court, they should involve also liability for payment of money to the Government (see Ollada vs. Court of Tax Appeals et al., (99 Phil. 604), penned by Mr. �� Justice Felix Bautista Angelo, squarely interpreting the provisions of the aforequoted Section 7-(2) of Rep. Act Noo 1125). 11 Evidently, an assessment of income tax made by the Commissioner of Internal Revenue against a tax- payer is a matter which can hardly be considered foreign or extraneous to those matters specifically enumerated in the law as coming within the juris- 0 diction of this Court. And since an assessment is a decision (Bull v. u.s., 247 u.s. 259) which becomes final and executory if not appealed(Rep. v. Del Ro- sario, 105 Phil. 277; Rep. v. Magalona, G.R. No. L- 15802, Sept. 30, 1960; Rep. v. Gamboa, G.R. No. L- 16504, Oct. 27, 1961; Rep. v. Albert, G.R. No. L- 12996, Dec. 28, 1961), it would seem that an assess- ment against a taxpayer for income tax is an appeal- able decision within the meaning of Section 7(1) of I

.�./ RESOLUTION - CTA CASES NOS. .~ 1903 & 1904 � 7 Republic Act No. 1125. But, while we are of the opinion that an assessment, even if not protested, is appealable to this Court, we are bound by the de- cision of the Supreme Court in Commissioner v. Villa, supra, to the effect that an assessment in itself is not an appealable decision. To enable a taxpayer to appeal, he must first file a protest against the as- sessment and the Commissioner must render a decision o.n such protest. These observations have been made solely to provoke a re-examination of the issue at the proper time. WHEREFORE, the herein appeals are hereby dis- missed, without prejudice. No pronouncement as to costs. SO ORDERED. Quezon City, July 31, 1968 � ROMAN M. UMALI Presiding Judge L+~� ~C ~.Lw AO R.~ ALV~~ Associate JudgV' RAMON L. AVANCENA Associate Judge ~)