CTA Case No. 2989 (Decision)

t:.V' fJ DU� ~ 01 Tlllt t'UJLJPP ~ COURT OF TAX APPEALS nr~c1.t1 ~t' ~.,.-v ; UNION SHIPPING CORPORATION, Petitioner, - ve.trsus - C.T.A. CASE NO. 2989 COMMISSIONER OF INTERNAL REVENUE, Respondent:. X - .- - .- -X DE C I S I 0 N This is an appeal from the decision o f the Com- mi"ssioner of Internal Revenue assessing against and demanding, fr om pet.i tioner the payment of the sums of P73 , 958.76 and ~583,155.22, as deficie ncy income tax for the years 1971 and 1972, respectively, inc1u- sive of 50% surcharge, interests and compromise penalties. On December 27, 1974 (Exh. "A", p. 53, CTA rec.),. respondent issued against petitioner an assessment for deficiency income taxes due for the years 1971 and 1972 aforesaidt computed as follows: . 1971 Net income per investigation - - - - - - - Pl43,839.94 - - - - - - - . �t 40,344.00 Tax due thereon Add: 50% surcharge , - - - - - - - 20 ,172.00 - ~% mo. int. fr. 4-16-72 to 12-31-72 ~ ~ 1 ,714.62 14% int. fr. 1- 1:-73 to 12-27-74 - - - - 11,228.14. Compromise ------- 500 . 00 '1DTAL NvfJUNT DUE & cOLLECTIBLE - - ~ - - - - ~" 73,958.76 357

DECISION - CTA CASE NO. 2989 - 2- 1972 Net income .J?er j.nvestigation -- ~988,296.32 Tax due thereon - - - - - ~335,904.00 - - - - - - - 167,952.00 Add: 50% surchar.ge 14% int. fr. 4-16-73 to 12- 27-74 - - ~ 78 ,299.22 1 ,000. 00 Cornpranise - ..- - - - 'IDTAL AM:::>L'NT [)l,lE & COLLECTIBLE - - ~ - ~ - - ' ~583,155.22 This letter _o f assessment was received by petitioner on January 4, 1975. In a letter dated January 10, 1975 (Exh. B 11 11 p. 56, . CTA rec.) '� received by r e - , spondent on January 13, 1975, pe ti ~ioner protested the lette r of assessment of respondent Commissione r of Internal Revenue. However, without rendering a I ruling on the protes~, respondent issued a Warrant of Distraint and Le.vy (Exh. C 11 11 p. 46, BIR rec.),_ , which was served on petitione r's counsel, Clemente Celso, on Novembe r 25, 1976. In a letter dated November 27 1 1976; (Exh. D 11 11 1 p. 58 , CTA rec.) ~ received by respondent on Nov ember 29, 1976 (Exh. 11 D- l 11 1 p. 58, CTA rec.) '� petitioner reite- r-ated its request. for reinvestigation of the assess- men t and for the reconsi de ration of the summary col- lection thru the Wa ~ra nt of Distraint and Lev y. Without: acting on the request for reinvestigation and reconsideration of the Warrant of Distr aintand Levy, respondent: Commissioner filed a co�llection s u it before Branch XXI of the Court of First Instance of Manila and docketed as Civil Case No. 120459 aga i ns t p~~itioner. Summons (Exh. E 11 11 p. 61 , CTA rec . ) in 1 35 3

DECISION - CTA CASE NO: 29 8 9 - 3- the said collection case was issued on petitioner on Decembe r 28, 1978. On January 1 0, 1979, petitioner filed the instant . Petition for Review with this Court. The issue.s i n volved in this case ar e (1} .whether or not this Court has jurisdiction to hear and decide this cas e; and (2) yhethe r or not petitioner Union Shipping Corporation is subject to tax on the g,ross receipts or earnings of the vessel of Yee Pong Hong, Ltd. which loaded cargo from Philippine Ports. - We will discuss the two (2) _i s sues in seri a t i m. On the first i ssue of jurisdiction, petitioner contends that this Cciurt has jurisdiction ove r t he cas e . On the oth e r hand, respondent. contends other- wise. We agree wi t h the contention of p e titione r. The decision of the respondent Commissioner of Internal Revenue is the ~'lar r ant of Distraint and Levy (Exh. "C", p. 46, BIR r ec.) .which was served U:?On the p e ti t ioner on No vember 25, 1976, since t .his clearly evince his pos i t .ion �and expr e ss his mind tha t he finds no wa y. of reconsidering, his assessment and, hence, t.he warrant of dist r aint and levy becomes his adverse ~ecision on the con tested assessment . since there can be no other better proo f of the finality of the assessment of an internal revenue tax than the action of the Commiss ioner 3 5~

DECISION - CTA CASE NO : 2989 - 4- of Internal Revenue in enfor c ing collec~ion of the tax than by the summary remedy of distraint and levy. (Philippine Planters Investment Co., Inc. vs. Actg Comm. of Int. Rev., CTA Case No~ 1266, � Resolution, Nov. 11, 1962; . Advertising Associates, Inc. vs. Comm. of Int. Rev., CTA Case No. 3017, June 1 7 , 1981.) ~ The appealable deciijion, therefore, which was contained in the Warrant oi Distraint and Levy (Exh. C, ibid) _was later confirmed by respondent's act of filing a s1it for collection of the deficiency assessment against p e titioner. (Exh. E , .��.� cit.) . Thi"s. Eequest for reinvestigation and reconsideration which was filed with, and recei~ed by respondent on Novem be r 29, 1976 tolled the running of the 30-day peEiod of appeal , which first ran for four (4) .days starting from November 25, 1976, the date of service of Cl eme nte Cels:o, c:ou ns el for petitioner, to November 29, 1976, the date res- pendent received the request for reinvestigation and reconsideration of the warrant of distraint and levy filed by petiti ner. This request for reinvestig.ation and reconsider - at:.ion (Exh. D, .�12.� cit.) _wa.s in effect cons.idered denied by respondent when he fi led a civil. su i t for collection of the deficiency i ncome tax. against. peti- � tioner in the Court of First. Inst?nce and vJhich su mmons 3GO

~~--~~--~--------~~ - - - -- - � � - - � r DECISION - CTA CASE NO: 2989 - 5- was received by petitioner on Dece mber 28, 1978. (Exh. E, .2�� cit.) . Indeed, the civil action filed by respondent for collection of the tax clearly indicates that it is his resolve to finally deny p et itioner's. re qu est for r econs ide ration. Fr om t he date of receipt of the aforesaid summons on Dece mber 28, 1978, the period to appeal begin to run aga in. From December 28, 1978, the aforesaid date of receipt of the summons on the colle ction case ins- tituted by respondent in the Court of First I nstance to January 10 , 1979, the da te when petition"e1r. f i led with th is Cou1rt the instant petition f or review , another thirteen (13) _days elapsed. Clearly , petH:.ioneli had consume d a t otal of only seventeen (17) _days in coming to t h i s Court, well within the thirty-day period to appeal pursuant to Section 11 of Republic Act 1125, the Charter of th is Court. We are, therefor:e , of t he opinion and so hold that this Court has ju1risdiction to hear and decide t he instant case. Coming to the second issue, petitioner contended and wa s substa ntiated by s a tisfactory n ncontradicted testimonies of Clemente Cel�so , Certified Public Accountant, and Rodolfo c. Ca ba lquinto, President and General Manage r, of pe t itioner that it is actually and legally the hus- � band ing, agent of the vessel o f Yee Fon g Hong,Ltd. as (1) it ne ither performed nor tran sac ted any shipping 36 1

------------------- ------ -~--- DECISION - CTA CASE NO : 2989 - 6- business, f o r and in r epresentation, of Ye e Fong Hon g , Ltd. or i ts vessels or oth erwise ne gotiate d OK". pr.o- cured car go to be loaded in the vessels of Yee Fong Hong, Ltd. (p. 21, t.s.n., J uly 16, 1980.) ;_ (2) _i t never s o licited o r procured cargo or freight in the Philippine s or els ewhere f o r loading in s aid vesse ls of Yee Fong Hong, , Ltd, (pp. 21 & 3 8 , ibid.) ;_ (3) _it had not collected an y freigh t incomes or rec:eipts for the sai d Yee Fong Hong, Ltd. (pp. 22 & 38, i bid. 1 pp. 46 & 48 , t.s.n., Nov. 14, 1980.) ;_ (4) _it n e ver II had possession or control, actu a l or constructive, over t he funds repr e senting payment by Philippine shippe rs fo r cargo 16aded on said vesse l s (pp. 21 & 38, ibid ; p. 48, ibid);_ petitioner never remitted to Yee Fong Hong 1 Lt d . any sum of money r epresen ting freight. income s of Yee Fong Hong , Ltd. (p. 21, lbid; p. 48, i bi d);_ and (5) _that the freight payments made for cargo loaded in the Philippine s for foreign d e sti- nation were actually paid directly by the shippe rs to the said Yee Fong Hong, Ltd. upon a r rival of the goods in the fo reign ports. Petitione r finally contended and proved satis- factorily that, as husbanding agen t s o f Yee Fong Hong, Ltd. , its duties were limited to normal husbanding activities for a fee, which acti v i t ies included (a) getting e ver y thing su ch as anchorage per.mits for. th e 362

I DECISION - CTA CAS E NO : 2989 - 7- foreign vessels of Ye e Fong Hong, Ltd .; (b) securing clearances for the s a id foreign vess e ls; (c) .a t.tended to the needs of the ves s e l , such as watering, channe l- ling, repa i r of radio and other miscellane ous items and requir e d equipment as order e d by sa id vessels - � . (pp . 49-50 , t:.s .n., ibid); and (d) a r r anging,, among o thers, the berthing and . anchoring s aid ve sse ls. The s e activit::Es and duties were performed by t he Union Shipping Corporation upon prior reques ts of the forei g n o wn e r s of the ves s els . Pet ition e r th e r e upo n concluded that, in view of the above , it is not liable for d e f i - c i en cy income tax as ~ ithholdi n g agent on the freight income or e arnings from cargo loaded on Philippine ports on bo a r d t he vessels o f Yee Fang Hong, Ltd . f o r . the period fro~ 1971 to 197 2 . On the other hand, res p ondent con t ended that peti- tioner i s liable for defic i e ncy wi t hholding income tax subject under S e ction 53 (b) (1) _and (2) _of the National Internal Re venue Code due from rec e ipts or earnings o f the vessels of Ye e Fong Hon g , Ltd . wh i ch loaded ca r go f r om Philippine ports. ~v e fi n d pet.iti o ner 's a�lle g a t ion s fully s ubstantia t ed and the responde nt's c ontention without scintilla of me rit. We note t hat, as early� as Dec e mber 9, 1 9 74, or p rior to the issuance and rec e i p t of the assessme n t in question, Clemente J . Celso, r e pr e senting peti t ioner

DECISION - CTA CASE NO; 2989 - 8- Union Shipping Corporation, requested fbr an opinion as to whether or not the latter is liable for the pay- ment of the income taxes due from the loading, cargoes in the Philippines under specific circumstances (Exh. H, p. 72, CTA rec~) ~ For illucidation, we are quoting the a foresaid request dated De cember 9, 1 9 74 v e rbatim as follows: " EXHIBIT H" Decembe r 9, 1974 The Commis s ioner of Internal Revenue M ~ n i '1 a Attent i on: The Chief, Law Division SI R: I have the honor to request for an opi- nion as to whe t her or not, my client, the Union Shipping; Corporation, a domestic: c.orpo- ration, is liable for the payment of the in- c o me taxes due from the f oreign shipowners of foreig n flag vessels loading cargoes in the Philippines, under the following circum- stances: 1. The Union Shipping Corporation has been acting only as "husband- ing agents" for the foreign ship- owners for the latte r' s vessels t ouching Philippine water for loading and unloading. As 'hus- banding agenb", its dutie s are limited only to normal husband- ing activities which include clearing the foreign fl a g ve~sels, in and out of the Philippine ports, arrange for its ' berthing and anchor- ing, attend to the vessels' require- ments as needed while at posts suc.h 364

DECISION - CTA CASE NO : 2989 - 9- as bunkering, watering, chand- ling, repa : rs of its radio and equipments, assign surveyors and supercargo upon instruction only , and t o settle these expen- ditures from funds already depo- sited prior to the acceptance by client of its appointment as !'husbanding agent" for the f.aeigJn shipowners. 2. The Union Shipping Corporation pays the 2~ carrier's tax on fre i g,ht revenue der'ved in the Philippines only when duly author- ized by the foreign shipowners fr om funds deposited by the latteE and specifically earmarked only for this pu rpose. tl 3. My cli e nt has received no auth or- ity whatsoever from the foreign shipowners to file its income tax returns. 4. After receipt of appointment either thru cable or telex from foreign shipowners to "husband" their ves- sels while at Philippine ports, either for loading or discharging, t h e Union Shipping Corporation requires advance deposits in local bank funds to cover port disburse- . ments and its husbanding fees the amount of which varies as to the number or ports called on by the foreign vessels and quantity of cargo to be loaded or discharged . 5. The Union Shipping Corporation does not have any control, at anytime, either actual or symbolic, of the freight revenBe due the shipowners . Based on the circumstances aforee,ited, I would highly appreciate an early ruling on this rna t.t:e r i. Very respectfully, (SGD.) CLEMENTE J. CELSO 365

DECISION - . CTA CASE NO. 2989 - 10 - Under and by virtu e of the act.ivit.ies s"t.ated in the request, and actually performed by p e t .itioner as shown heretofore, Commissioner of Internal Revenue Misael P. Vera was correct in ruling, in his still unrevo ked BIR Ruling dated December 12, 197 4, t hat petitioner is a hu sba nding agent becau~e it was only authori ze d to perform such limited duties as are normal to hus- banding activities which included the clearing of t he foreign flag vessels, in and out of Philippine ports; arranging for the ships' berthing and anchorage; attend- � ing to the vessel's _part.icular requests which it. needed to be serviced while ~t port, such as bunkering, wate r- ing, chandling, repairing of their radio and equipme nt, and assigning surveyors and super c argo but only upon� i nst ructions; pays the 2% carrier's tax on freight revenue derived from the Philippines only when so authorized; and that, consequently, it is hi s opinion that petitioner being merely a hu sba nding agen t is no t liable for the payment of t he income taxes due from the foreign ship owners loading cargoes in the Philippines. (Exh. I, p. 74! CTA rec.; see also Memo for Petitioner, pp. 109-111, CTA rec.) Unrtumbered BIR Ruling dated Decembe r 12, 1974 of Commissioner of Interna l Reve nue Misael P . Vera is quoted belm{ .in full: 3GG

DECISION - CTA CASE NO; 2989 - 11 - "EXHIBIT I" De c e mber 12, 1974 Mr. Clemente J. Celso Ce r tified Public Accountant 662 Gui l lermo St., Gagalangin Ma n ~ 1 a Si r This refers to your letter dated Dec e mbe r 9 1 1974 requ e sting opinion as to whether or not your cli e nt, the Union Shipping Corporation, a domestic corpor a tion, is liable f o r the payment of the income taxes due from the for e ign ship owners of for e i gn flag ves- s e ls loading cargoes in the Philippins, under t h e f ollowing, circumstances : "1 . The Union Shipping Corpo- ra t ion has bee n acting only a s husband- ing agents,� for the foreign shipowners f o r the 1atters' ve ssels touching Philippine water for load i ng or unload- ing. As 'husbanding agent', its dutie s a re limited only to normal husbanding, activities which include clearing the fo r eign flag ve~s e ls, in and out of the Philippine ports, arrange for i t s be rthing and anchoring, at t e nd to the: vessels' requ i rements a s needed while at ports such as bunkering, wa t ering, chandling, repairs of i t s radio and equipments, assign s urve yors and super- cargo upon instruction only, and to settl e these expendi t ures from funds already deposited prior to the accept - ance by the client of its appointme nt a s 'husbanding a gent' f or the foreign shipowners. "2. The Union Sh ipping Corpo- ration pays the 2% c a rrier's tax on freight reve nue derived i n the Philippines only wh e n duly a uthoriz e d by the fo r eign shipowne rs f rom f und s deposited by the latter and specific- a lly earmar ked only for this purpose . 3 0'/ () r

DECISION - CTA CASE NO. 29 8 9 - 12 - "3. My client has received no a6thority whatsoe ver from the fo~eign shipowners to file its income tax � returns. "4. After receipt of appointment either thr.u cable or telex from foreign shipowners to 'husband' the ir ve ssels while at Philippine ports, either for loading or discharg,ing, th e Union Shipping Cor poration requires advance deposits in local'bank funds to cover por t disbursements and its husbanding fe es the amount of which varies as to the number of port:s called on by the fo reign vessels and quantity of cargo to be loaded or discharged. "5. The Union Shipping Corpo- r at ion does not have an y control~ at anytime , either actual or symbolic, of the frei~ht revenue due the ship- owne rs." In reply , I have t he honor to inform you that since your client is a husbanding agent, which is only authorized to such limited duties as are normal to husbanding activities includ- ing clearing the foreign flag vess els, in and out of Philippine ports , arrange for their berthing and anchoring,, attend to the vessel's requirements as needed while at ports such a s bunkering, watering , chandling, repairs of their radio and equipments, as sign surveyors and supercargo upon ins tructions only and pays the 2% c arri er's tax on freight revenue derived in the Philippines only when duly authorized , your a foresai d cli ent is not liab~ for t he Eavment of the income taxes due from t he foreign shlEowners loading carg_oes_ in the Philippines. In this connection, this ruling is issued on condition t h at your ' client merely acts as husbanding agent for foreign shipowners . If upon verification, your clien t act as -~hip agent repiesenting the own ers hip of the vessel, i t is "answerable f or tax~ on the earnings of such foreign corporation in the Philippines ". (Commissioner of Internal Revenue vs. u.s. Lines Company, G.R. No. L-16850, May 30, 1962) ~ 3G 8

~===~=� =�=�====� ~~~- ======�==========--=~-=z==============� � =====-=~�======� ~ -~�~~~~~-~-=~�� =�=�~ DECISION - . CTA CASE NO. 2989 - 13 - The foregoing forei gn vesseli of which your clien~ is their husbanding agents as hereinabove s~ate, fall under the category of tr a mp vessels or those which do not re- gularly call on Philippine ports. Accord- ingly, this Office has consistently ruled that the income tax of 2~% on gros s pass- enger and cargo receipts as prescribed by Section 24(b) (2) of the Tax Code, shall be paid before such �vessels leave the Philippines. � very truly yours, (SGD) MISAEL P. VERA Commissionei of Internal Revenue Tan-1601-593-5. Truly, the acts actually performed by pe titioner, as it viaS represented by it in its request for opinion, clearly shows that these are husbanding activities natural on ly to a "hus banding agent." A "husbanding agent" has been defined as the general agent of the owner in relation t~ the ship, with powers, among others , to engage the vesse l for general freight and the usual condit ions and s e ttle for freight and adjust coverages with the mer chant." (Comm. of Int. Rev. vs. United State s Lines Company, 5 SCRA 175, 1 8 0, citing Bouvier's Law Dictionary, p. 3064.) "Husbandi ng " is a set of activities of a principal confined to equipping, supply- ing and maintaining, or oth~r w ise servicing a ship. (p. 1104, ~IJebster Third New International Oiction a ry 1 Unabridged, 1976 Phil. Ed., G ,& C Merriam Co.)~ In this particular instance, petitioner cannot be held liable for withholding tax under Section 53 of 369

DECISION CTA CASE NO. 2989 - 14 - the Inte rnal Re venue Code since it is not in possession, custody o r control of the funds .re ce ived by and re:mi tted to Lee Fong Hon g , Ltd., a non-resident t ax payer. (p. 21 , t.s.n., July 16, 198 0) ~ Under said law , before remit- t ing the fu nds ~ a bro a d, either by an individual or cor- porate ta}{payer , said person who has posse s sion, cus- tody a nd contr ol of the funds is duty bound to withhold the tax and pay it over to t he Bureau of Internal Re- venue. However, if an individual or corporation , like the petit ioner in thi s cas e , i s not in the a ctual ~ possession, custody or control of the funds , i t can neither be physically nor l egally liable or oblig a t e d to pay the so-called wi thholding tax on income claime d by Yee Fong Hong, Ltd. It i s thus clear tha t peti- tioner wi ll never be subjec t to withholding tax on the said rece ipts of Ye e Fong Hong,, Ltd . of Hongkong o r a defici e0 cy income ta x o f ~73 ,9 58.78 and P5 8 3,1~ 5.22 , for the year s 1971 a nd 1972 in question. Moreover, in t he declaration of responden t's witnes s , Potenciano Pin eda , Ch ief, Public Ut ility Se ction, Bureau o f In terna l Revenue, he stated tha t the assessment of the defi ciiency income tax above shou ld have been properly d irec t ed against. Yee Fong Hong, Ltd . becau se it was the latter, not. the pe t .it.ioner , that earned t he fr e ight , and which fr eight income were col- lected abroad. (p. 23, t.s.n., J u ly 23, 1981.) Said

DECISION - . . CTA CASE NO. 2989 - 15 - witness admitted, in effect , that the freight earnings did not pass the hands of petitioner Union Shipping Corporation (p. 23, tt.s.n., ibid.}. Witness also admitte d that the 2% common carrie1r's tax petition er had paid for Yee Fang Hong, Ltd. wa s made only after pe titioner had received the 2% common carrie1r's tax money from the latter . (p �. 26, t.s.n., ibi�_.}. Fu rther- more, witness Cleme nte J . Celso undisputedly tes ti f ie d t h at the 1973 d ef iciency income tax liability was settled by Yee Fang Hong , Ltd . under LOI 308 and not herein petitioner, hence, no l o n g.er litig,ated in this case, which is evidence that. the lat.ter. is n ot liable for the 1971 and 1972 deficie ncy income tax assessment. (pp. 35-~7, t .s.n., July 16, 1980.} IL i s then clear that petitioner is ~ot being a ssessed as a withholding agent, but instead directly as principal taxpayer which cannot be done. It simply means that the respondent Commis- sioner now seeks t o collect from peti tioner a t ax on inc ome it never earned, or rec e ived from another, such as for Yee Fang Hong, Ltd., or which otherwise never belonged to it as income. Indeed, to collect a defi- ciency income tax on income � which petitioner ne ver received would be abs 1.' r d a nd unju st ified � .The case of Commissioner of: Internal Reven�ue vs. United States Lines Co. (Comm. of Int. Rev. vs. u.s. Li nes Co., 5 SCRA 175, 180} cannot be cited in support of respondent's position 371

DECISION CTA CASE NO . 298 9 - 16 - in this inatant case because the u.s. Lines Co. truly had acted as the ship agent or managed the Philippine Shipping b usiness of its principal , li:he "West Coast Tr ans-Oce a nic Steamship Lines , .. the owner of t he foreign vessei. - the 11 SS Por tr.la nd Trader. 11 In this instant ca se , petitioner d~d no t repr ese nt Yee F ong Hong , Ltd . in its shippihg business in the Phil ipp ines but performed only husba nd i ng activities as illuminated heretofor e . It did not hold itse lf to the public and to the Gov er n me nt as the shi pown er ' s local age nt and # this is not e ven apparent throughout the breathe o f the recor ds a nd proceedings of this case. Nowh e re in the records will it show that petitioner has s igned in the docu ments that. it i s the "owne r 's a gents ", or "ag.ents for Yee Fong Hon g , Ltd. 11 , unlike in the case o f u.s . Lines Co. cited above. It cannot be said t.Lerefore tha t pet itio!'ler, und e r the circumstance s , is the 11 loca l ag,ent: " of Yee Fong Hong, Ltd . The type of job p e rformed by peti t .ioner for Yee Fong Hong, Ltd . is t .hat. o f a hu sband ing agent. In shor t , petitioner perfo rmed only limited or particular acts of husband ing on t he vesse ls of Yee Fong Hong, Ltd., which acts performed , taken either sing ly or collectively, n eve r consti tu ted~etitioner as a ship agent. or manager of, the Yee Fong Hong, Ltd. of Hongkong. Con se q uently, petitioner is not subj ect 3'1~

DECISION - . CTA CASE NO. 2989 - 17 - to the de f iciency income tax on the fr~ight earnings of said Yee Fang Hong, Ltd. for the ye ars 1971 and 1972. \-�mEREFORE, the dec is ion of the Commissioner of Internal Revenoe appealed from, assessing against and demanding from petitioner the payment of deficiency income tax, inclusive of � SO % surcharge, interests and compromise penalties, in the amounts of P73,958.76 and P583,155.22 for the ye ars 1971 and 1972, respect- ively, is hereby reversed . Without pronouncement as t o costs . SO ORDERED. Quezon City , Metro Manila, De cember 9, 1983. -� ROAQUIN Judge I CONCUR: ~~~/ Presiding �Judg.e Dissent in separate opinion ALEX z. REYES Associate Judge 3'13

} REPUBLIC OF THE PHILIPPli'\ES COURT OF TAX APPEALS Q UC:ZO N CITY UNION SHIPPING CORPORATION, C.T.A. CASE NO. 2989 Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE, Res pondent. X- - - - - - - - - - - - X DISSENTING OPINION The precise question raised is no t hing more than whether the subject Warrant of Distraint a nd Levy taken as it must, in connection with the contested assessment to which it expressly referred constitutes II a sufficient denial of the petitioner's protest and determinative of the 'decisionjruling of the respon- dent Commissioner of Internal Revenue upon which to t oll the statutory period for appeal. The question is neither new nor novel and the views thereon have been frequently e xpressed with more or less distinctness and have been carried into adju- dications in numer~us cases. In a unanimous decision of recent. memory under closely analogous facts and issue, I spoke for this Court, holding that: "We do think so. A wa rrant of distraint and levy �is such a purposeful device neither intended simply to mollify nor to be . resorted to as a mere bargaining ploy. It must be understood in the context of its unequivoc a l tenor and explicit terms in collecting the taxes due, encapsulating the finality of the assessment and stamping h definite resolve on the protest, as in the case of petitioner at bar. The per e mptoriness of the demand ih

DISSENTING OPINION - CTA CASE NO. 2989 - 2- the subject warrants no -longer exci t es a queasy sense of speculation of what respondent might yet 9o but incite s a tickling urgency of critical concern upon which petitioner ' s right t o judicial review must be exe rcised or lost. Peti- tioner should not further expect the unexpected towards flirting to a volte- face ruling. As sustained by subsequent events r~s pondent remained unperturbed in his denial. As readily attested by a host of decisions, a taxpayer should display more alertness in the pr o tection of his rights (Koppel (Phil . ) Inc. v. Collector of Internal Revenue; L-10550, September 19, 1961, 3 SCRA 17; Ker & Co., Ltd. v. Court of Tax Appeals & Collector of Internal Revenue, L-12396, J a nuar y 31, 1962, 4 SCRA 160), and, the matter re- quir e d the timely �availment as fully as possible of the more effective rn e an~of adjudication on the merits by an appeal. Surely , it is not beyond the wit and wi s dom of th i s Court to play a catalytic and constructive role in extruncating and if necessary reversing the alleged unwarranted assessments. But this Court has to take the hard choice of applying the basic rule that the running of the 30-day period mandated in Section 11 of R.A. No. � 1125 did commence from t he s ervice of the warrahts on March 28, 1973 a nd the p e tition for revi ew came only on January 30, 1974, clearly time-barred. Peti t ioner cannot pry itself loose from the legal constraint. "It ma y b G necessary to repeat what so often may have been said and what so plainly apply t o the petitioner in the cas~ at bar that where the warran t of distraint and levy was issued, this Court held that such issuance is proof of the fin a lity of the asses.sment (Philippine . Planters Investme nt Co., Inc. v. Actg. Commissioner of Internal Revenue, CT~ Case No. � 1266, November 11, 1962) because a warrant of distraint and levy, ~hich i s the most drastic of actton of all media of enforcing the collection of tax , renders hopeless a request for reconside ration or 3'1 5

DISSENTING OP INION - CTA CASE NO~ 2989 - 3- is tantamount to an outright denial there- of, and makes the request deemed rejected. (Hilaao v . Commissioner of Internal Revenue, CTA Case No. 1266, October 20, 1956; Al gue , Inc. v. Commissioner o f Inte rnal Revenue, CTA Case No. 1620, January 16, 1968 ; Hahn v. Commissioner of Intern a l Revenue, CTA Case No . 1 9 37, October 30, 1969; Gepte v. Commissi o ner of Internal Revenue, CTA Case No. 1571; Oc t ober 2 9 , 1970; Gonza l es v. Domingo , CTA Case No. 1135, November 27, 1961: Advertising Associates, Inc. v. Commissioner� of Interrial Revenue, CTA Case No. 3017, J une 17, l98l; cited in Enage v. Commissioner of Internal Revenue, CTA Case No. 2094, April 15, 1982). We h es itate to further fashion an issue into a satisfactory settled legal situation. "For reasons obvious , the r econsider- ation filed by petitione r on January-9, 1974 was no longer a prospect that could easily be reconciled with the evident needs of the situation. It must, as it did, end in a note of ineffectuality . But such an old and familiar mode of temporizing, more so often pro-forma and protracted, seriously and unjustifiably fetters perfectly legi- timate methods of e nforcement. (Manila Banking ~orporation v. Commissioner of Internal Revenue, CTA Case No. 2993, October 30, 1981). Consider ation of the convenience of th~ petition e r or any tax- payer for that matter, stands a s an aber- ration from the otherwise intended imperative. We ca nn ot subs t itute and indulge in any amorphous rule as to leave solely to the petitioner's will the determination of the commencement of the statutory thirty-day period and delay at will the fin a lity of t he - tax assessments (Roman Catholic Arch- bishop of Cebu v. Collector of Inte rnal Revenu e , 'L-16683, Jan u ary 31 1 1962, 4 SCRA 79 US 247; Ker & Co., 279; Bull v. u.s. Inc. v. Court of Tax Appeals & Collector of Int e rnal Revenue, L-12396, Januar~ 31, 1962, 4 SCRA 163; cited in Advertising Associates, Inc. v. Commissioner of Internal Re venue, C . T . A. Case No.' 3017 , June 17, 1981) ~ and suffer the corne rstone of 3 t/G

.I DISSENTING OPINION - CTA CASE ~0 . 2989 - 4- effective collection to petri fy at the cost of the animati ng principles� tinged with "strong issues of public pol i cy that taxes are the lifeblood of government and their prompt and certain availability are an imperious need (Commissione r of Internal Revenue v. Pineda, L-22734, September 15, 1967, 21 SCRA 105; Co l lec tor of Internal Revenue v . Goodrich Inter- n a tional Rubber Co., L-22265, March 27, 196 8 , 22 SCRA 1256), and bein g t he chief s ource of revenu e fcir the Governme nt to ke ep it runn i ng, must be paid immediately and without delay. (Collector of Inter- nal Revenue v. Yuseco , L-12518 , October 28, 1961 , 3 SCRA 313). We do no t think a ny different conclusion ought be reached i n the case at bar. 11 (pp. 5-9, Casimiro C. Ocampo v. Commi ss i o ner of Inter na l Revenue, CTA Case No. 2579, October 29, 1982.) I hold therefore that the order to enfor c e col lection by warrant of distr~int and le vy served the p etiti on er on Nove mber 25, 19 7.9. f o r the payment of its income tax defi- ciency for the years 1971 and 1 9 72 wa s the ap pe alable decision or rul ing of the respondent Commissioner of Internal Revenue, such that wh e n the p et ition for review was filed with this Court on January 10, 1979 or some two (2) years thereafter, t he statutory 30-day period f or app~al ordained in Se ct i on 11 of R.A. No. 1125 had long lapsed as to take the case out o f the juri s diction of this Court. Thus, under the view I have taken on the q ue st ion ra ised in this appeal, it is de e med unnecessary to resolve the other issue s prese nted. Accordingly , the pet.i tion must. be dismissed with cos .ts.