RIECKERMANN PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION RIECKERMANN CTA CASE NO. 8 715 PHILIPPINES, INC., Members: Petitioner, -versus- CASTANEDA, JR., Chairperson CASANOVA, and MANAHAN, JJ. COMMISSIONER OF Promulgated : INTERNAL REVENUE, MAY ~ Z ZOlq 1/ ~ Pill Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X RESOLUTION CASTANEDA, JR., J.: For the Court's resolution is respondent's Motion for Partial Reconsideration, fi led on January 31, 2018, with petitioner's Comment to Respondent's Motion for Partial Reconsideration, filed February 19, 2018. Respondent moves for the reconsideration of the Decision promulgated on January 15, 2018, the dispositive portion of which is quoted as follows: "WHEREFORE, premises considered, the Petition for Review is PARTIALLY GRANTED . The assessments issued by respondent against petitioner for the calendar year 2007 covering deficiency income tax, value-added tax, expanded withholding tax and withholding tax on compensation are PARTIALLY UPHELD. Accordingly, petitioner is ORDERED TO ~

RESOLUTION CTA CASE NO. 8715 PAY the amount of ONE HUNDRED THIRTY-ONE THOUSAND ONE HUNDRED PESOS AND SIXTY- SEVEN CENTAVOS (P131,100.67), inclusive of the twenty-five percent (25�/o) surcharge imposed under Section 248{A)(3) of the NIRC of 1997, as amended, computed as follows: Tax Type Basic 250/o Surcharge Total p 8,607.51 Income Tax p 6 886.01 p 1,721.50 Value-Added Tax 81,635.95 Expanded Withholding 65 308.76 16,327.19 13 704.07 Tax 10 963.26 2 740.81 Withholding Tax on 27 153.14 21,722.51 5 430.63 Compensation P131,100.67 P104,880.54 P26,220.13 Total In addition, petitioner is ORDERED TO PAY: (a) Deficiency interest at the rate of twenty percent (20�/o) per annum on the basic deficiency income tax, value-added tax, expanded withholding tax and withholding tax on compensation computed from the dates indicated below until full payment thereof pursuant to Section 249(8) of the NIRC of 1997, as amended: Tax Type Basic Tax Deficiency Interest Income Tax Computed From Value-Added Tax p 6 886.01 April 15 2008 Expanded Withholding Tax January 25, 2008 Withholding Tax on Compensation 65 308.76 January 15, 2008 January 15, 2008 10 963.26 21 722.51 (b) Delinquency interest at the rate of 20�/o per annum on the total amount of P131,100.67, and on the 20�/o deficiency interest which have accrued as afore- stated in (a), computed from September 3, 2013 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended. However, the following partial payments made by petitioner shall have to be deducted in the final settlement of the above deficiency taxes including surcharge, deficiency interest and delinquency interest: Tax Type Basic Tax Interest Total Income Tax p 512 461.70 p 13,259.66 p 512 461.70 Value-Added Tax Withholding Tax on 878 959.36 878 959.36 21 722.51 34 982.17

RESOLUTION P1,413,143.57 p 13,259.66 P1,426,403.23 CTA CASE NO. 8715 Compensation Total SO ORDERED." Respondent invokes the following grounds: (1) the subject assessments had become final, executory and demandable by reason of the failure of petitioner to timely file its Petition for Review pursuant to the provisions of Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended; (2) petitioner was fully informed of the factual and legal bases of the subject deficiency assessments; and (3) petitioner is liable for deficiency taxes subject of the assessments. On the other hand, petitioner argues that respondent's motion absolutely lacks merit and deserves scant consideration. It contends that the it is a pro-forma motion that does not toll the reglementary period of appeal under Section 2 of Rule 37 of the Rules of Court. At the outset, it must be noted that respondent's motion is merely a rehash or a mere reiteration of the grounds and arguments already passed upon and resolved by the Court. To reiterate, in case of disputed assessment, the taxpayer has two (2) options, either: (1) file a petition for review with the Court of Tax Appeals (CTA) within thirty (30) days after the expiration of the 180-day period from submission of documents; or (2) await the final decision of the Commissioner of Internal Revenue (CIR) or his authorized representative on the disputed assessment and appeal such final decision to the CTA within thirty (30) days after the receipt of a copy of such decision. In arguing that the assessment became final, executory and unappealable by the sole reason that petitioner failed to file the Petition for Review within thirty (30) days after the 180-day reglementary period, respondent, in effect, limited the remedy of petitioner, as a taxpayer, under Section 228 of the NIRC of 1997, as amended, to just one, that is - to appeal the inaction of the CIR or his authorized representative on the protested assessment after the lapse of the 180-day period. Jt---

RESOLUTION CTA CASE NO. 8715 A taxpayer cannot be prejudiced if he chooses to wait for the final decision of the CIR or his authorized representative on the protested assessment. Accordingly, considering that petitioner opted to await the Final Decision of the Regional Director on the protested assessment, it then had the right to appeal such final decision to the Court by filing a Petition for Review within thirty (30) days after receipt of a copy of such decision or ruling, even after the expiration of the 180-day period.-Thus, Petitioner filed its Petition for Review on October 3, 2013, which was within thirty (30) days after its receipt of the Final Decision dated August 28, 2013 on September 3, 2013. Clearly, the Court had acquired jurisdiction over the instant case since the assessments had not become final, executory, and demandable. Moreover, the Court already ruled that considering that the Final Decision is just a reiteration of the assessments in the Formal Letter of Demand (FLD) dated January 3, 2011, the reference to the latter is sufficient to inform petitioner of the factual and legal bases of the Final Decision. Likewise, the Court had exhaustively discussed petitioner's liability for the subject assessments. After thorough study of both parties' evidence, the Court partially upheld respondent's assessments and found that petitioner is liable to pay only the amount of P131,100.67, representing deficiency income tax, value- added tax (VAT), expanded withholding tax (EWT) and withholding tax on compensation (WTC), inclusive of twenty-five percent (25�/o) surcharge, for the calendar year (CY) 2007. It is an elementary rule enshrined in the 1987 Constitution that no person shall be deprived of property without due process of law. In balancing the scales between the power of the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a citizen's right is amply protected by the Bill of Rights under the Constitution. Thus, while "taxes are the lifeblood of the government," the power to tax has its limits, in spite of all its plenitude. 1 Even as we concede the inevitability and indispensability of taxation, it is a requirement in all ~ 1 Commissioner ofInternal Revenue vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010.

RESOLUTION CTA CASE NO. 8715 democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure.2 Thus, the Court finds no compelling reason to justify the reversal of the assailed Decision. WHEREFORE, premises considered, respondent's Motion for Partial Reconsideration is DENIED for lack of merit. SO ORDERED. JU~_i_QT,O~~co. C- ~~~ g_ CASTANEDA,(/jlt Associate Justice WE CONCUR: t:J~'r.~ ;-- CATHERINET.MANAHAN CAESAR A. CASANOVA Associate Justice Associate Justice 2 Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014.