CTA Case No. 4668 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY OCEANIC WIRELESS NETWORK. INC .� Petitio n er, - versus - C.T.A. CASE NO. 4668 THE COMMISSIONER OF INTERNAL REVENUE, Responde n t. X- - - - - - - - - - - - - - X DEc I sI 0 N This is a petition to review t h e d enial of t h e prote s t filed b y petit i oner against t h e assess me n t issued by the r- espondent covering the total a mo un t of P8,644,998.88 for� various internal reven u e tax liabilities. It appears from t h e records t h a~ on March 17 , 1988, petitio n er r� ecei v ed from resp ond ent t h e following deficie n cy ._ assessments fo r� taxa bl e y ear 1 98 4 , to wit: Kind of Ta x As sessment No. Amount Deficien c y i n c ome tax FAR- 4- 1984- 88- 001130 P8,381,354 . 00 Penalties for late FAR- 4- 1984- 88- 001131 3,000.00 payme nt of inc ome tax and failure to fil e quarterly returns 915

DECISION CTA CASE NO. 4668 - 2- Deficiency contractor's tax FAR- 4- 1984- 88-001132 20,849.06 12,083.65 Deficiency fixed tax FAR- 4- 88- 001133 227,712. 00 Deficiency franchise tax FAR- 4- 84- 88- 001134 In a letter dated April 1 2, 1988, petitio n er t h ro ugh co un se l, filed it s protest against s ubject a ssess me nt s a nd r�e qu ested fol" t h e l" econ s ideration and/or ca n cellation ther e of. In a l etter d ate d Ja n uai"Y 2 4, 1991, t he Ch ief, Acco unt s Recei va bl es /Billing Divi s ion , acti ng f 0 I" t h e Co mm i ss ion e r of In t e I" n a 1 He ven u e , l"e iterated t h e assess me nt s a nd deni e d t h e p etit ion er ' s reque s t for r e in vesti gation. Conseq u ently, on Octo b er 10 , 1991 and Oc tober 1 7 , 1991, warrant of di st raint a nd/l ev y and warrant of gar n is hm e nt were s erved on t h e petition er r es pectively on the sa id date s to e nfor ce collect ion . Hence, this appeal by wa y of p et ition for review wa s filed by th e petition e r on Nove mb er 8, 1994 . P et itioner� a ll eges that the right of t h e res p o nd e nt to e n �for ce col le ct ion h as alrea dy pl"escribed c onsidering the failure of t h e re s pond e n t to e nfoi"Ce the sa rn e l,Jithin thr ee (3) year s fro rn the i ss u a n ce of the assess ment s pur s u a nt to Sec tion 223 (c) of the Tax Code. Furt h ermore, 916

DECISI ON CTA CASE NO . 4668 - 3- that petitioner co uld not be held liable to p a y sai d de �ficiency taxes because of t h e "in lieu of any a nd all taxes" pro visio n of the p e titioner' s fr a n c hi se und er Hepublic Act No. 2357, as a mended by R.A. 4 555. Res p o nd ent o n t h e other h a nd , b e lie ves that this court h as not acq uir ed juri s di c tion over this case becau s e the decision of t h e respondent d e nying the pr otest ha s long become final a nd executory eve n before petitioner �filed the instant p et ition for t� eview. In ot h er wor d s, the assessments became final i n view of t h e failut� e of the petitionet� to institute t h e appeal I,Jithin thirty ( 3 0) day s from t� eceipt of t h e final d ecisio n of the Commissioner of I nt er n al Revenue. Granting for purpo ses of argument t h at the assess me nt s a re not yet final, t h e "in li eu of a ny a nd al l taxes" pro vis ion in the franchise of petition e t� h as a lready been repealed by Sectio n 2 of Republi c Act No . 5431 dat e d June 27, 1 968, by way o �f a me ndm e nt to Sectio n 2 4 of the National Intet�nal Reve nu e Cod e. Furthermore, her righ t to e nfor ce co ll ect ion h as not yet pre sc ribed b eca u se t h e running of the prescriptive period ha s b ee n s u s pend ed whe n petitioner filed it s prote s t on 91 /

DECISI ON CTA CA SE NO. 4668 - 4- April 12, 1988 whic h was given due course by the respondent. Ba se d on the for� ego ing facts, the following issues are pre se nt e d for re so lution by this c.ourt: (1) lt-Jh et rr er o r� not this court ha s ac quired jur" i sd i c tion over the di s puted assessme nt ; (2) Whether or not r�es pondent can s t i l l validly enforce h er assess ment s; ( 3 ) Whether or not the "in lieu of any and all taxe s " pr� ovi s ion in the franchise of petitioner ha s alr�ea dy been repealed by Sect ion 2 of Republic Act No. 5431. On th e f i r�s t issue, find for the re s pond e nt . Th e recor� d s will s how that respondent denied the prote st or reque s t for reinvestigation filed by t h e p e t i t i o n e r� i n a 1 e t t e r� d a t e d J a'n u a r y 2 4 , 1 9 9 1 s igned by th e Chi ef, Account s Receivable/Billing Di vision fo r� the Co mmi ss ioner� of Internal Hevenue with a particular not atio n.on the left bottom s ide of th e letter a s follow s: "Note: Your request for reinve s tigation ha s been denied for �f a i l u r e to s ubmit the ne cessary

DECISI ON CT A CASE NO. 466 8 - 5- supporting paper s a s per e ndor se ment letter �from the Office of the S pecial Operation Service dated 12 - 12- 90." Thi s receipt of denial of petitioner's protest �' was affir med by its witness, Ms. Monna Brenda Camin s , Finance t'lanager, during her direct examination (T.S.N., July 2 4, 1992, pp. 10-11). It was during this direct exa mination that s aid denial of prote st was marked by petitioner's counsel as Exhibit "F" . In the absence of proof of the exact date said denial wa s received by the petitioner, it is pre s umed that the same was received within reasonable time from January 2 4 ' 1991 in the regular course of mail pur s uant to Section 2(v) of Rule 131 o�f the Rule s of Court. The finality of the said d e nial of the prote s t is further supported by the fact that su b se quently, the respondent . served on October 10 and 17, . 1991, warrants of di s traint and/ot' l evy a nd warrant of garnishme n t, re s pective ly , to enforce collection of the defi ciency taxes. Petitioner filed the� instant _petition for review on November 8, 1991, counting the thirty ( 3 0) day period from the receipt of the aforementioned warrants, ignoring totally the 91 ~J

DECISI ON CT A CASE NO. 4 6 68 - 6- denial o�f the prote s t which �following the regular course of mail s hould have been received by the peti tione r� in one or two weeks time. Even if we will double this per iod, the filing of the petition for review wi ll st ill be beyond the required thirty (30) day period. Whil e the denial of the protest was in the form of a demand letter, the notation in the sai d letter making reference to the protest filed by p etiti oner clearly s how s the intention of t he re s pondent to mak e it as her final decision. In fact, this circumstance is a clearer manif estatio n of the finality of her decision taking into acc ount the Supreme Court case of Surig ao Electric c 0 �� Inc. vs. Court of Tax Appeals, L- 25289, June 28, 1974, (57 S CRA 523) wherein a mere demand letter was considered as the final de cisio n of the Commissioner of Internal Re ve nu e. On the seco nd issue, we find again for the respondent. Petitioner also co mpletely ignored the fact that it filed a .letter of protest an d reconsideration on April 1 2, 1988 against s ubject assessment s which was given due course by the respondent. Thi s s u s pend s the running of the 9 2(J

DECISION CTA CAS E NO . 4668 7- statute of limitation as expressly provided under Section 224 of the Tax Code: t " SEC. 224 . .;;.~.l.!..t?..e.f!...'.?.~..!... e..r..~. ....~!..t.. ...r..:.~::~.~7..~7..!.n.!l......e.. . ?..~.f:.e..f..l.!..f..f!. � T h e r u n n i n g o f t h e s t a t u t e o f limitation provided in Section 203 and 223 on the making of assessment and the beginning of di stra int or levy or a proceeding in court for collection, in re s pe ct of any defi c iency, shall be s u s pended for the period during which the Commissioner is prohibited from making the a ssess ment or beginning distraint or levy or a proceeding in court and for� s i x t y d a y s t h e r e a f t e r ; .~. h. ~.D..........~..~...E.l..........!:. ~.~..F.?...~..Y.. ~..r:::. .r.. ~..9..~. ~...~..!:..~......:f...9. .r.......~.... .. r:::..~..~.D..Y...~. :?..!:. ~.9...~..!:.!...9..n......~.h. ~.s.h.....J ..!?.. ..9...r.. ~.D...1;.~..9........~.Y...............!:.':!.E.l.............f . .9.'!'.'!'.! ..!?....!?...!. .9. n..E.l...r..; wh e n t h e taxpayer ca nnot be located in the address given by him in the return filed upon which a tax is being assessed or collected: Provided, That, if the taxpayer� inform the Commissioner of any change of addres s , the running of the statute of limitations will not be suspende d; t.Jhen the warrant of distraint and levy is duly ser ved upon the taxpay e r, hi s authorized representative, or a member of his household with s ufficient discretion, and no pro~erty could be located; and when the taxpayer is out of the Philippines." (Underscoring s upplied.) Since the protest was finally decided by respondent on January 24, 1991, the issuance of the corresponding warrant of distraint and/or levy and warrant of garnishment on October 10 and 17, 1991, respectively, has not yet pre sc ribed. In view of the foregoing, the discussion of the third i ss ue is no longer necessary. It becomes 92.1

DECISION CTA CASE NO . 4668 - B- mo ot a n d a c a d e mic to d i s c u ss t h e me rit s of t h e case co n s id e rin g th e f i n a l it y of t h e assess me nt s. WHEREFORE. the petition for review is hereby dismi ss ed for lack of jurisdiction. SO ORDERED. ~Q- ~ ERNESTO D. ACOSTA Presiding Judge WE CONCUR: P yI ~~- RA7 ~,0. i'EY.o/J A / As sociate J udg I CERTIFICATION I h e r- eb y ce rt if y t h at thi s d ec i s ion wa s r e a c h e d afte r du e con s ult a ti o n a mong th e memb e r s of th e Co urt of Ta x App ea l s in accordan ce with Sect ion 1 3, Ar tic l e VIII o f t h e Constitution . ~Q,~ ERNESTO D. ACOSTA Pr es iding Judge Court of Ta x App e al s