CTA Case No. 3017 (Decision)

&IPUIUC OP TUK PIIILIPPNU8 COURT OF TAX APPEALS OT:azoN CITY ADVERTISING ASSOCIATES, INC., C.T.A. CASE NO. 3017 Peti tioner, - versus - COHMISSIONER OF INTERNAL REVENUE , Respondent . X- - - - - - - - - - - - - X DE C I S I 0 N Petitioner was assessed by respondent for ~297,927.06 as defidiency percentage tax inclusive of surcharge for the taxable years 1967-1971 under Letter of Demand Nos. BT-73-00122 to BT-73-00126 ~ated May 18, 1973 and ~84,773.10 as deficiency per centage tax, surcharge, interest and compromise penalty for the year 1972 under Letter of Demand No. BT-24-0 20 dated February 13, 1974. These assess- ments were brought about by the rental income which were considered fees or compensation subject to the 3% contractor's tax derived by petitioner from the lease of bill boards and neon signs to its customers. Petitioner is a domestic corporation organized and existing under the laws of the Philippines, pri- marily engaged "to conduct a general advertising business, both as principal and agent, including the ~) b ()

DECISION - CTA CASE NO. 3017 - 2- preparation and arrangements of advertising devices and novelties; to erect, construct, purchase, lease or otherwise acquire fences, billboards, signboards, buildings and other structures suitable for adver- tising purposes; to carry on the business of printers, publishers, binders, and decorators in connection with advertising business and to make and carry out contracts of every kind and character that may be necessary or conducive to the accomplishment of any of the purposes of the company; to engage in and carry on a general adve ti~ing business by the circula ti on and distribution and the display of cards, signs , posters, dodgers, handbills, programs, banners and flags to be placed in and on railroad cars, streets cars, steam boats, cabs, hacks, omnibuses, stages and any and a ll k inds of conveyances used fo~ passengers or for any other purposes: to display moveable or changeable signs, c a rds , pictures, designs, mo tto es , etc., operated b y cloc kwork, elect ricity or any other power; to use, place and display the same in depots, hote l s, halls, and other public p laces, to advertise in the air by airplanes, steamers, s ky- writ ing and other similar or disimilar operation." (Exhibit 14-A, pp. 48-49, BIR Records, Vol. I) On June 25, 1973 and March 7 , 1974 petitioner protested t he May 18, 197 3 and Feb ruary 1 3 , 1974 \

DEC I SION - CTA CASE NO . 3017 -3 - assessments, respectively, and requested withdrawal and/or cancellation thereof. Respondent under letters dated Septembe r 16, 1974 and July 12, 1974 denied the pro tests and reiterated demand for payment of the amounts due. On November 21, 1974 and September 13, 1974 pe t i tioner filed recons i derations rei- terating i ts original defense without any substantial variat i on. On September 15, 1975 respondent invited the atte ntion of petitioner to t he compromi s e benefits accorded under Presidential Let te r vf Instructions No. 308 issued on August 2 2, 1975 with the advice t hat " f ai l ur e to respond as suggested above will be construed a s indifference to L.O.I. No. 308 a nd th i s Of f ice wil l t h erea ft e r av ai l o f al l c oll e ction en- f orce ment r emedi e s without f urth er notice to y o u ." (Page 15 5, B.I. R. r ecor d s, Vol. l) ~ Apparently , petitione r o bdurately refused to ve e r from t he cour s e i t has s et, t hu s, re spondent c aused co be s e r ved on Ap r i l 1 8 , 1 9 7 8 and Ma y 25, 1978, war r ants o f di s - t r aint and l evy on pe t it i oner's p roperties t o en- fo rce collec t ion of the deficienc y asse ssments for r e s pec tive tax a ble year s o f 1 967-197 1 a nd 1 972 whi c h pe tition e r has tene d t o d efe r and s uspend i mmediatel y following the issuances. Responde nt's f inal letter r ei t e ra ting t he demand for ~ yme nt o f an aggreg a te amount o f ~ 382 ,700. 1 6 re p rese nting d ef icienc y con- q .c._'') ') ;::..., /~

DECISION - CTA CASE NO. 3017 - 4- tractor's tax assessment dated May 23, 1979 was received by petitioner on June 18, 1979, and appealed to this Court on July 7 , 1979. The case finds a threefold concern - whether or not 1 ) .Petition for review i s barred for having been filed out of time, 2) ~et i tioner'~ income de- rived fro~ the re ntals of neon signs and billboards leased to custo me rs is subject t o a 3% contractor ' s tax, and 3)~ espondent's right to collect has prescribed. The first has r �eference to jurisdiction and the d ispu t ed assessments under consideration ob- v i ously come within the competence of this Court under Sect ion 7 o f Republi c Ac t No . 1 125, thus, "Decisions of the Commi s sioner of I nternal Revenue in cases involving di ~ puted assessments, refu ~ d s of internal revenue t 3xes, fee s or other c harges, penalties i mposed in r elation theret~or other matters arising under the National Internal Revenue Code or o ther law or part of law administered by the Bureau of Internal Revenue. " But was said jurisdic t ion i nvo ked by the petitioner with in the period prescribed by Section ll of the same Act, which provides - "Sec. 11. Who may appeal; Effect of appeal. - Any person, associ a t ion or c orporation adver sely affected by a -j f." 'I ~.~ ,)

DECISION - CTA CASE NO. 3017 - 5- decision or ruling of the Commissioner of Internal Revenue, the Commissioner of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within t h irty days after the receipt of such decision or ruling ... The precise question raised is nothing more than which was the appealable decision of the respondent Commissioner of Internal Revenue - the orders to collecc by warrants of distraint and levy issued on Ap ri l 18, 1978 and May 25, 1978 as the respondent contends, or the May 23, 1979 letter (received on � June 18, 1979) _as petitioner insists? If the latter, then the petition for review f i led with this Court on July 7, 1979 was ti mely: if not, the assessments in question had become final and executory. We hold that the point from which the period to appeal should be counted i s the receipt b_ pe- tit i oner on Ap r il 18, 1978 and Ma y 25, 1978 of the warrants of distraint and levy on its properties. By the p attern and sequence of events it appears that as a consequence of the reconsideration which simply reiterated an earlier protest filed by petitioner, respondent in a letter dated Sep- tember 15, 1976 invited the attention of petitioner to avail o f the be n efi t s of a compromise payment o f the tax liability under Letter of Instructions 2 ~r�) �j

DECISION - CTA CASE NO. 3017 No. 308 as "this Office will thereafter avail all collection enforcement remedies without further notice to you." Evidently it was a monition whereby petitioner is apprised of the operative patina of finality of the demand for payment to be enforced thru warrants of distraint and levy which were sub- sequently issued on April 18, 1978 and May 25, 1978. The unmistakable tenor explicitly premised on a caveat of resorting to such legal remedies \vi thou t further notice clea~ly indicates the firm posture of the respondent against the reconsideration of the di sputed assessme nt and tantamount to a denial there- of. This being so, the warrants became determinative of t~e final action and embodied the decisionjrulin9 of t e r espondent appealable to this Court. There can no longer be any occasion for petitioner to ancicipate or speculate upon what respondent might yet do. This brings us to the rules of repeated decisions, that "~vhere the warrant of distraint and levy was issued, this Court held that such issuance is proof of the finali ty of the assessment (Philippine Planters In- vestment Co., Inc. vs. Actg . Commissioner of Internal Revenue , CTA Ca se No . 1266, No vembe r 11, 1962) ~ because a wa rran t of distraint and levy, which is the most drastic action of all medi a of enforc ing the collection of tax, renders hopeless a request for

DECISION - CTA CASE NO. 30 17 -7 - r econs i der ation, or i s tantamount to an outr i ght denial thereof , and makes the said request deemed r ejected. (Hilado vs. Commissione r of Internal Revenue, CTA Case No . 1256 , Oc t ober 20, 1956, Algue Inc. vs. Corn- missioner of Internal Revenue, CTA Case No. 1620, January 16 , 1968) ~ To sustain the petitioner's contention that re spondent's lette r of May 23, 19 79 denying its re- quest for further reconsideration and reiterating demand for paymen t of an aggregate amount of ~382,700.16 constitutes the final ruling reviewable by the Court and that t he thirty-day period should, therefore, be counted from its receipt on Jun e 18, 1979 , would, in effect, "leave solely to t he petitioner 's will the de te r min at ion of the commencement o f the statu- tory thirty-day period, and place the petitione r - and for that matter any taxpaye r - in a posi tion b delay at will on convenience the fi nality of the tax assessment. This absurd interpretation espoused by the petitioner would result in grave detrimen t to the interest of the Government, considering that t axes constitute its li fe-blood and their prompt and certain availability is an imperative need." (Roman Ca thol ic Arch b ishop of Cebu vs. Collector of Internal Revenue, L-16683, January 31, 1962, 4 SCRA 279; Bull vs . U.S. 795 US 247 ; Ker & Co . , Inc. vs. ';:.)., dt' ~)

DECISION - CTA CASE NO. 3017 - 8- court of Tax Appeals & Collector of Internal Revenue, L-12396, January 31, 1962, 4 SCRA 163; North Camarines Lumber Co. vs. Collector of Internal Revenue, L-12353, September 30, 1960; Surigao Electric Co., Inc. vs. Court of Tax Appeals & Commissioner of Internal Reven ue, L-25289, June 28, 1974, 57 SCRA 525) �. Mo reove r , no reason is apparent and none is vouch- safed wh y the collection of the deficiency tax assess- me nts canno t be foreclosed on the basis of the warrants o f distrain t and levy which petitioner did no t only pay but also fai l ed t o contest by f iling a petition fo r review within the prescribed 30-day period from rece ipt thereof. The warrants cannot be naively viewed for a mere uneasy antic ipation but rather o f definiteness and finality upon which petitioner 's r ight of judicial review mus t oe exer c ised or lost. Subsequent� r e- quests for reconsider ation ther eof made pr o - f o rma and for dilatory purposes should be ignored for the purpose o f computing the ru nning of the thirty-day per iod prescribed under Sec tion ll of Republic Act No. 1125. We canno t have the running of the pe riod of appeal left entirely at the discretion o f the tax- payer. (Jo se Ma. d e l Rosario vs. Cour t o f Tax Appeals~ et al., L-17991, October 31 , 197 2, 6 SCRA 541; cited in Dy Pac & Co., Inc. v s. Court of Tax Appeals & Commissioner o f In t erna l Revenue, G.R. L- 31369,

DECISION - CTA CASE NO. 3017 - 9- . October 18, 19 77, 79 SCRA 448) .. Nei ther, can we countenance the dilution of the enforcement of the warrants to the point where col lection would be rendered ineffective or may be suffered to petrify at petitioner's pleasure. Thus, we find a great deal of force in such holding that a taxpayer should display mo r e alertness in the protection of his rights (Koppel (Ph i l) .Inc . vs. Collector of Internal Revenue, L-10550, September 19, 1961; Ker & Co . , Ltd . vs . Court of Tax Appeals & Collector of Internal Revenue , L-12396, January 31, 1962 , 4 SCRA 160) ~ considering that the thirty-day period prescribed by Section ll of R. A. Act No. 1125, as amended, with- in which a taxpayer adversely affected by a decision of the Commi s sioner of Int e rnal Revenue should file hi s a ppeal wi th the tax court , is a jurisdictional requi r eme nt (Actg . Commissioner of Interna l evenue v s. J oseph, et al. L-146034, August 30, 1962, 55 SC RA 8 96) ~ and the failure of a taxpayer to lodge his a p peal within the prescri bed period bars his appeal and renders the q uestioned decision final , and exe- cuto ry. (Re pu b l i c of the Philipp ine s vs . Lim Tian Ten g So n s Co., Inc. L-2173 1 , Ma r ch 31, 1966 , 16 SCRA 584) �. We cannot validly :irfuse cognizance to an appeal t o l l e d from a letter o f ine f f e ctuality . The case having bee n reduc ed t o the q uestion of ') ~f-'; .0')

DECISION CTA CASE NO. 3017 - 10 - whether this Court has been made competent to exercise jurisdiction and considering that the circumstances constituting the essential points on which this case depends find sufficient to arrest this Court's jurisdiction, we de P.m it unnecessary to resolve the other issues pr esented. We therefore hold that the orders to en f orce collection by warrants of distraint and levy on April 18, 1978 and May 25, 1978 for th-e respective assessments of the taxable periods of 1967-1971 and 1972 were the appealable decisions or rulings of the respondent Commiss i oner of Internal Revenue, so that when the petition for review was filed wi t h th is Court on July 7, 1979, the 30-day statutory period had long lapsed, and the assess- ments had become final, executory and demandable. WHE REFORE, the petition for review is her e by dismissed wi th c osts against petitioner. SO ORDE RED . Quezon City, June 17, 1981. ~~~~ Assoc i ate Judge WE CONCUR: .. AI1ANTE Presidi ( � ROAQUIN Judge