CTA Case No. 5040 (Resolution)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SUPERCARS INC. ,. C.T.A CASE NO. 5040 Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE,. Respondent, X- - - - - - - - - - - X RESOLUTION Respondent herein seeks for the dismissal of the instant petition on the ground of lack of jurisdiction, there allegedly being no final decision on the disputed assessment subject thereof. On January 30, 1992, the respondent issued an assessment against the petitioner herein assessing it liable for various tax deficiencies for the years 1988 and 1989 in the total amount of ?18,214,959.58. Within the period provided for by law, the petitioner filed its protest thereto dated February 18, 1992. Subsequently it filed its final memorandum dated September 15, 1992 discussing in detail the basis for disputing the said assessment.

RESOLUTION - C.T.A. CASE NO. 5040 -2- On November 23, 1992, the respondent :filed with the Department o:f Justice a complaint :for tax evasion with the :following pertinent recommendations: "The Honorable Secretary Department o:f Justice Ma n i 1 a Attn: The Chairman, Task Force on Revenue Cases created under Department Order No. 305. Si r : I hereby recommend the criminal prosecution o:f the :following: 1. SUPERCARS, INC., 136-138 Quezon Avenue, Quezon City, Metro Manila, :for violating the provision o:f NIRC, as amended, to wit: a. Will:ful attempt to evade and de:feat payment o:f de:ficiency income taxes :for the years 1983 and 1989 in the respective amounts o:f ?5,798,714.34 and P991,279.02 due under Assessment Notice Nos. FAS-1-83-92-00527 and FAS-1-89-92-00528 all dated January 30, 1992 in violation o:f Section 45<a>, NIRC, penalized under Sections 253 and 255 o:f the same Code; b. Will:ful attempt to evade and de:feat payment o:f VAT :for the years 1988 and 1989 in the respective amounts o:f ?5,316,080.46 and P990,910.43 due under Assessment Notices Nos. FAS-4-88-90-000531-A and FAS-4-89-92-000531 both dated January 30, 1992 in violation o:f Section 45(a) and Section 110 in relation to Section 100, both o:f the NIRC, penalized under Sections 253 and 255 o:f the sa me Code. XXX XXX xxx"

RESOLUTION - C.T.A. CASE NO. 5040 - 3- From this recommendation, the petitioner Iiled this instant petition: The respondent now contends that the aiorecited recommendation Ior criminal prosecution cannot be considered as his Iinal decision on the -assessment being questioned by the petitioner. The contention oi the respondent should be sustained. Well-settled is the rule that only the Iinal decisions OI the Commissioner oi Internal Revenue on disputed assessments are cognizable by this Court. This requirement is jurisdictional in nature such that Iailure to comply will result into the dismissal oi the action Iiled by the taxpayer. The Supreme Court had laid down the basis Ior determining whether a decision oi the Commissioner oi Internal Revenue has already attained Iinality. Thus, in Surigao Electric Co. Inc. vs. Court o� Tax Appeals, (57 SCRA 523), it was held: "x x x we deem it appropriate to state that the Commissioner oi Internal Revenue should always indicate to the taxpayer in clear and unequivocal lanauaae whenever his action on an assessment questioned by a taxpayer constitutes his Iinal determination on the , disputed assessment, as contemplated by sections 7 and 11 OI Republic Act 1125, as amended. On the basis oi this statement indubitably showing that the Commissioner's communicated action is ()3

RESOLUTION - C.T.A. CASE HO. 5040 -4- his zinal decision on the contested assessment, the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. Without needless di��iculty, the taxpayer would be able to determine when his right to appeal to the tax court accrues." <Underscoring supplied) Clearly therezore; �or a decision to be accorded the character o� zinality and in order to commence the running o� the thirty <30> day period �or appealing to this Court, the same must be directed to the taxpayer and must embody, in clear and unequivocal terms, that such decision constitutes the respondent's zinal determination on the disputed assessment. On this basis, the action o� the petitioner must necessar ily �ail. It appealed �rom the recommendation o� the Commissioner o� Internal Revenue to the Department o� Justice �or the ziling o� a criminal case �or tax evasion. Th i s recommendation was never meant to be a response t o the petitioner's protest on the subject assessment. I t was not even sent a copy o� the same. The petitioner in support o� its contention asserted that had it �ailed to appeal within 30 days �rom the ziling o� the recommendation �or criminal prosecution o� tax evasion, its right to zile the present petition would have prescribed <par. 2 o� "Opposition to Motion to Dismiss">.

RESOLUTION - C.T.A. CASE NO. 5040 - 5- We do not believe so. As stated earlier, the recommendation was never addressed to the taxpayer and cannot be construed as the �inal decision o� the respondent that is appealable to this Court. In the same manner, had the petitioner �ailed to know or was never in�ormed o� the existence o� such recommendation, We could not have possibly �aulted it �or not appealing there�rom within 30 days, �or to do so will violate not only the tenor o� our tax laws, but likewise, the basic precept o� due process. We could neither make the Iinality OI the respondent,s decision be made dependent on the taxpayer's discovery, intentionally or accidentally, OI the respondent's recommendation to the Department o� Justice �or criminal prosecution. Such action will consequently leave to the will o� the taxpayer the determination o� the commencement o� the 30 day period �or �iling an appeal with this Court which may only open the gates to con�usion, �raud, and needless delays . This is precisely the situation which the Supreme Court seeks to avoid in prescribing the rule o� conduct enunciated in the a�orecited case o� S~rigao Electric Co. Inc. vs. C.T.A., <ibid.) where it was �urther added:

RESOLUTION - C.T.A. CASE NO. 5040 -6- x x x This rule oi conduct would also obviate all desire and opportunity on the part of the taxpayer to continually delay the Iinalitv oi the assessment-and, consequently, the collection of the amount demanded as taxes- by repeated requests for recomputation and reconsideration. On the part of the Commissioner, this would encourage his office to conduct a careful and thorough study of every questioned assessment and render a correct and definite decision thereon in the first instance. This would also deter the Commissioner from unfairly making the taxpayer grope in the dark and speculate as to which action constitutes the decision appealable to the tax court. Of greater import, this rule of conduct would meet a pressing need for fair play, regularity, and orderliness in administrative action." <Underscoring supplied) This is why even if a collection suit instituted by the Commissioner of Internal Revenue directly against the taxpayer has been considered as a final decision appealable to this Court, the 30 day prescriptive period for filing its action commences only Irom the time that it receives the summons from the regular court <Coamissioner o~ Internal Revenue vs. Union Shipping Corporation, 185 SCRA 547) and not Irom the time . that i t had actual knowledge of the issuance or the filing of the complaint. Moreover granting arguendo that the Iiling of the criminal complaint with the Department of Justice on November 23, 1993 is the final decision oi the respondent, the instant petition should be still be dismissed inasmuch as the "ABENDED PETJ TI ON FOR REVIEW"

RESOLUTION - C.T.A. CASE NO. 5040 -7- was :filed only on March 2, 1994, way beyond the thirty(30> day period allowed by law. WHEREFORE, premises considered the instant petition is hereby dismissed. SO ORDERED. Quezon City, Metro Manila, May 6, 1994. t-z _,..._' ~...,x.Q.. ~ RAftoN ERNESTO D. ACOSTA 0P. .cD~~yR1A'- Presiding Judge Associate Ju4/ge ~HUEL K. GRUBA Associate Judge