CTA Case No. AC-2579 (Decision)

�~ \:PIJ1JLlL Ol' THE rUJ L! l' P1~'))~1;_ ::'OURT Of T~'X APPEAl.! (';:' 'lf.'' f'" (":1'"!"V - CASH1IRO C. OCAMPO, As Assignee In Inso lvEncy for National Mer- chandising Corporation1 Petitioner, - versus - C.T. A. CASE NO. ~579 ThE COt,iHI.S.SIOI~ER OF II~ TE:RNAL RF.VEl..JUE, Respond ent . X- - - - - - - - - -----X DECI S I 0 N Petitioner-assignee f o r � insolvent National Merchandi sillg Corpor a tion (f\:A�.1E?.CO) r~ (J declared on February 27, 1973 in Civil Case No. 88448 by the Court of First Instance of Manila, Branch IV, comes on d pp ea 1 f o r the review of r e3 1;o n dent 1s ~ssessments of advance sa les ~ nd withh o l~ing taY~s. .. ReE'pondent. Commi.s s ioner of Internal Re"er:ue , on Febru ~ry 16, 1 9 72, a .�:;s essed and de ul nnded t_he payment of P35S,~24. 5 0 r ep re se nti ng the 7 ~ n~vA nce sales tax on p etiti oner' s im(Jortat.ion of "50 units of Front End Lo a ders 1 Troj 2 n 1 Model 201-A Tr~ctor Shovels complete wi t r1 ."lcce .ss or iPs" f r e m Yale & Towne, Inc., New York, u.:::; �. ..� , and, e n Jnne S , 1972 the amount of F5?9 ,3 02 .74 as �..;it hi.c. l .l:i ~l�~l t .1 .)-". 1 incl u:-; i ve o; inc iclen ta 1 .i nc LC'li if: n t c.n th �~ 1-iayme;n t s 45 5

DECISIOti - CTA CA~ S NO. 25 79 - 2- of .int erest and fees to the Export Credi t Corpo- ration of New ,York, a non-resident fore~gn corpo- ration, both for the year 1966o Petitioner protes ted both assessments in letters d ated Ma rch 24 , 1 9 7 2 and Ju l y 3 , 1972 res- pectively, denying liabilities of the said advance sales tax and withholding tax a nd claimino as the importer of r ecord, the Bureau of Public Highways a tax ex en~t go v e rnment entity . As a consequence, res pondent on October 16, 1972 i ssued warrants of distraint and levy on pe- titioner 1 s propert ies f e r the enforco::mPnt of the collection of the t a xe s a s sessed , ackn owlPdge d by ~etitioner on March 28 , 1 973 ; subsequent l y followed on Novem ber 16, 197 3 by res ~cncent 1 s denial of the protests with a reitera tion c f the demand for the payme~ t of th P amo unts du e . PetitionP.r filed a re~on sid er ~ tion on J anua r y 9, 1974 � gro unded on thP s a me defenses and presc ri ption. Me a nwhile, the re.s po nrJ. e nt Commis s ioner of Intern al Re ven u e filed his motion for allow a nce of claim an~ order o f p ayme nt of taxes with the In solvency Court on Ja~u a ry 21, 1974. Petitioner filed this peti tion f e r review on January 30, 1974 but amended on Februa ry 18, 4 ., {" .1. \.1 )

DECISICl'l - CTA CASE Nu . 2579 - 3- 1974. Respon d ent moved for the dismi ~ sal of the appeal invoking the juri sdictic nal 30-day period for appeal prescr i bed in Section 11 of Republic Act No. 1125, which was set aside by this Court as 11 it would be more expediPnt and proper to pass upon the said que s tion in c onnection with the ccn !; id e r. iltion o f th e ca :; 8 on t h e me rit s . " (CTA Resolution dated June 26, 1 974) � The appeal pre oents the propositivns of whether o r not 1) petition fer revie w is barred for having been filed out of time, 2) petitioner is liable fer t h e 7% advance ~a les tax on thP import a tion and ;,vi t Lholuing t a x on re n:i tL.ances of interest and fees, and 3) r e s pondent�s riqht to collPct has prescri bed. The first iss ue i nvolves the jurisdic tion of this Court over the disputed asses sm ents , as inter6ose~ by th e r es , ondent, that, commencing fiom the service of the warrants cf dis t r a int and lev y the petiLicn for review was filed beyo nd the pr e scri b ed sta tu tory y eriod , i.e . , a 11 person, associ a tion or co r pora tion adversely affL cted b~ a deci s ion of the Coinmis s io n er of Internal Revenue may file an ~ppeal in the Court of Tax A p rJe~ l s within thirty d a ys after rec e iot of such dec L ; i cJ n 45 7 j

DEClSTON CTA CASE NO. 2579 - 4- or.ruling. " (Sec. 11, R.A. No. 1125). The settled rule i n this re s pect is that fail ure to c omp ly with the thirty-day statutory period within whic h to appeal would bar the appeal and dep rive the Court of Tax Appea ls of its jurisdiction to enter- tai n and determine the corr P- ctness of the ass ess- ment (Collector of Inte rnal Revenue v . Western Pacific Corpor atio n, L-18864~ May 27, 1965, 14 SCRA 105; Republic v. Manila Port Service, L-18208, November 27, 1964, 12 SCRA 384 ; Republic v. Li m Ti an Tena Sons & Co., Inc., L-2173, March 31, 1966, 16 SCRA 584 ; PhilAm Minin n Inco v . Court of Tax Appeals, L-23 1 9 8 , Aug u st 31 ~ 1970, 34 SCRA 498), as the period to appeal f r om t he dec is ion of the Commi ssioner of Internal Revenue is jurisdictional and non-Pxtendible (Filipinas Investment & FinancP. Corporation v. Commi ssioner of In t ernal Revenue, L-_23501: May 16, 19 67, 20 SCRA. 50; ' Ac tao r.ollector of Jnterna1 Revenue V o Jo seph, L-14034: Augus t 30, 196 2 , 5 SCRA 895), the Court of Tax Appeals may mo tu propin dismiss an appeal f iled out of time (Morales v. Colle ctor cf Int ernal Revenue, L- 16759 1 August 31, 1966 , 17 SCRA 10 1 8 ). The precise a uestion raised is nothing more than whether the s ubjec t vJa r rant s ci: (i L::.>Lra int

DECI SIUh CTA CASE NL. 2579 - 5- and levy taken as t hey must# in connecticn with the co ntested a s s e s s me nts to whi ch they exp re s sly referred# constitute a sufficient denial of the prote sts and determinative of the deci s ion/ruling of the re s :,ondent up on which t o toll th e s tatutory period for appea l. We do th i nk s o. A wa r ra nt of di3Lro int and levy is s uch a p urposef ul device neit he r intended simply to molli fy n o r to be r es orted tc as a mere bargaining ploy. It must be understood in the context of its unequivoca l renor and explicit terms in collecting the t axes due, encapsul a ting the finality of the a sse s sment and stamping a definite resolve en the p rotest~ as in the ca s e of peti- tioner at bar. The peremptoriness of the demand in the subject warrants no longer excites a q ueasv sense of speculation of whut re :;pondent might yet do but incites a tickling urg ency 0f c rit ical con- cern u pon vvhi ch pet.i ti cnc: r 1 s ri g ht- t o j uci ici a l review must be exercised or l os to Pet i tioner should nor fu rther expect t he unexpPcted towards flirting to a volte- face rulinno As sustained by s u bsec-1uent event s re s~.Jbn dc nt ren :ained u nperturbed in his denial. As readily attes ted by a host of decisions, a t a xpayer shcu l c! disp l <:< y : ... n .llt~ r t nc ::::

DEr.ISION CTA CASE NO. 2579 - 6- in ~he protec tion of his rjghts (Koppel (Phil } I nc. v. Collector of Interna l Reve nue, L-105 501 September 1 9 , 1 961, 3 SCRA 17; Ker & Co., Ltd. v. Court of Tax Appeal s & Collector of Internal Revenue, L-12396, J anuary 31. 196 2 1 4 SCRA 160 ~ and, the matter re - auired thP timely ava ilment as f ul ly as possible of the more eff e ctive means of adjudic a tion on thP merits by an appeal. Surely, it is no t beyond the wit and wis dom of th is Court to play a catalytic ~nd constructive role in ex t runc ating and if necessary revers inn the alleged unwarranted assess- ments. But this r.ourt has t o tak e the hard choice nf applyinq the basic rule that the r unninq of the 30-day period mandated in Section 11 o f R.A. No. 1125 did commence from the service of the warr a nts on ~a��h_28 , 191l and th e petition fur review came only on January 30, 1974� clearly t ime-barredQ Petitioner �cannot pry it self loose .frcm the legal c onstraint. It may be necessary t o repeat what s o often may have been said and what so plainly aoply to the petitioner in t hP case a t bar that where the warrant of distra int ahd levy was is s ued, this Court h eld that such issuance is proof of the finality of the asses sment (Philippine Planters �� 460

l I DEC IS I ON CTA CASE NO. 2579 - 7- Inves tme nt Coo, Jnc. v . Actg. Corr�is s i o ner of Internal Revenue, CTA Case Noe 1266 , November 11, 1962) becaus e a warrant of cistraint and levy, which is the most drastic of action of all media of en- forcing the collP.ction of tax, r enders hopeless a reques t for reconsidera tion or is tantamount to an outright denial th e reof, and ma kes t h e r e que s t deemed reiected. (Hilado v. Commissioner or Internal Revenue, CTA Case No. 1256, October 20, 1956; Algue, Inc. v. Commissjoner of Internal RevenuP, CTA Case No. 1620 1 ~anuarv 16, 1968; Hahn v. Com- missio n er of Internal Revenue, CTA Ca s e No. 1937 1 October 30 1 1969; Gepte v. ro rrm issio ~ ~r of Internal Rpvenue, CTA Case Nn. 1571, Octnber 29, 1970; Gonzales v. Domingo, CTA Ca se No. 1135, November 27, 1961 Adverti s ina As s o ci a tes, Tnc. v. r.ommis- sionP~ of Internal Revenue, CTA Case No. 3017, June 17, 1981; cjted jn Enage v. rommi s s i one r of Internal Re v e nu e , r.TA Ca s e No. 2094 1 April 15, 1 1982). We h e sitate t o further f a s h i o n a n is s ue into a satisfactorily settled legal s i tua tion. For rea sons obvious, the r econside ration filed by petitioner on January 9, 1974 was no longer a prospect that c ould easily be reconciled with the evident needs of the s itua t i c n . It 4G

D2 CIS IC ~1 C~T;:, C':-:.E !.~0. 2S 79 - 8- must , as i t :l i d , enc5. in e:� �Jo t r~ of in.::;ff �.:;ct uality. But such "3.n ol e!. <Jnd f.Jmi l i -J r .T;o de o� t :~ rnp orizing , I-, ' J : ~ l:-' : j :.:.r ll>.. t .....J t �tl;I. , l9v 2, ,:u ll ., 7 9 U':3 .. y� 24 7; '-"'� .'... . ' \ ~:�. ~� 1 ..': .:.. - l' ,._, ,~__.,..,'...I. c[ ~'-.(:; '} .-, !'"'.:. �..12 1 c . 1'. \. :) �.', 7 I 17 ~.:>;} ), -'- I I ...: t +-- .t'l :::� ::: o-:.- t - . '-' .1.. t� ".� �'' �'-'ll. .,. l'..l� _... : : -�~� l' ",__:'l .� l. ': .�. t i n :.:c:d - '-- - - -- - -- - . ~. i 1 -� ,- .__, . ., . ,. .. .t: r cl t 1' le '11�. .1... ~-_: .:J . ( ) ("'/ ~ ..,_ .J ~ �..: ,~...) �. ., �.:. "'"" . I. "1.(�-�-.: ~,.1 ..~..._. _,. .� , ._... � ~~ t-~ .� j ' -~. ,_�, .,.... t. _-�; C- ) rrp_�) ~J l - 4G 2

DECI SIOf�. CTA CASE NO. 2579 - 9- ceFtain availability n re an imperious need (Com- missioner of Internal Revenue v. Pineda~ L-22734~ September 15~ 1967, 21 SCI~ lOS; Coll e ctor of Intern al RevF...:r, u e v. Goodrich Internati on al Rubber Co., L- 22265 1 March 27 1 1 968 1 22 SCRA 1 25 6) ~ and being th e chief source of r evenue for the Govern- mc nt t c k eep it runnincr, must l:.>e pciid immedi ate ly anrl without delay . (Coll ector of Internal Revenue v. Yuseco~ L-12518~ October 28 , 1961, 3 SCRA 313). We do not think any differ en t c on clusi c n ouaht be reached in the case at bare The a ~ parent quibb le on the restraining for c e in the instituti o n of insolvency, all that we need to state after what has been said heretof ore .is that petitioner corpora tion had the tax assessments under notice and dema nd of February 18, 1 972 and July 5~ 1972, pending at the time of the commence- ment of the.vo luntary insolve ncy p roc e~din as on September 30 1 1972e The compre hensivenes s of the coverage of the matters requ ired to be stated ex- p licitly in the schPciule annexed t o the petition , as prescri b ed by Sectipn 15 of the In so lvency Law (Act No e 1956~ as amended ), is such that even an outline of the facts giving rise or which miaht gi.ve risf? to a cause of action against t. he ins o lv en t

DECI S I UN CTA CAS E NC . 25 79 - 10 - debLor must be includedo "The imoortance of ren -- dering a true and complete Gtatement o f ~he ma t ters called for in the schedule c a nnot be over-emphasized; if the name of a creditor is omitted, he stands to be deprived of personal notice of the proceedings , apart from publication, and of his right to vote in thF: selection of an a s s i gnee ... (In re; Estate of Mindanao Motor Line 1 Inc., L-27944, May 28, 1971, 57 SCRA 103). As had happened in the case at bar the in so lvent corporation acted in bla~k incompre- hension of what it should have infused valid cog- nizance in its petition as r egards the tax liabilities. Such a pate nt omi s sio n is ber2ft of a ny good faith and could well La ve vitiated t .he proc eed inas or discharge. (Small v. Graves, 7 Rarg. ~.Y . 576 ). Be that as it may, in an Order dat e d Decemb e r 27, 1974 1 the Insclvenoy Cou rt held in aoeya nce res po ndent's ~oti o n for allow a nce of cl a im and for order of payment of t a xe s filed on J a nu Gry 21 1 1974, until after the arne nded pe titi on for r e vi e w of the question ed a s sessment had bee n finally disposed by thi s Court . No l e :;.c; une >�pr: ct.ed a s "th e a:..;;;e ,; s- ment, c c llEcti cn a nd r e c c v e ry of taxes , os we ll a s the matter of pres c ription thereof a r e governed by 4 {). ._

.. DECI0IU 1�' CTi.. C A:.iJ�; t~O. 25 7 9 - 11 - the provis ions of the Natio nal Intern a l Re\ e n u e Code, partic ul a rly Sections 331 and 332 thereof , and not by other provi s i on.:.; of l aw ." (Comm ission e r of Inte rnal Reve n ue Vo Ilagan El e c t ric & Ice Plant , et a l. G.R. t\!o. L- 23081 , Deceir1ber 30, 1 9 69; Lim Tio, Dy Heng and Dee Jue v. Court of Tax App eals & Coll e ctor o f I n ternal Revenue, G.R . No. L- 10681, Ma rch 29 , 1958; cited in Vera v . Fern a nde z , L- 3136 4 , March 30 1 1979 1 89 SCRA 203). Thus, under the view which we have taken o f the first q ues tion rai sed in this appe a l, we deemed it unnecessnr v to r e solve the other i ssues presented. We therefor e h o ld t ha t t he order to enfo rce co l lecti on by warra nts o f dis tra i nt and l evy serve d peti tioner on March 28 , 1 9 7 3 for the p ayme nt of ad v a nce sales tax and withh o l d ing t a x assess ~ ents fo r the year 1966 were the a ppealabl e deci s i on or r ul i ng of the re s ~ on d ent Comm i ss i oner of In tern~ ! Reven u e , s uch t h at wh en the pe titi on fe r r e view was f il ed with thi s Cou rt on J anua rv 30 , 1 S74 , th e ~ t a tutory 30- day period f o r appe a l orda i ned in Sectic n ll of R.A. No. 1125 h a d l ony l ap~ed dS to t~ke the c as e out o f t h e juri s dic t i Gn of this Co urt . WHEREFORE , the pe tition for revi e w is he r eby dis rn is ~., e d wi t n c c s t s .=:1 ': <�l Fl ~' t_ r~ P. t i t..i c�r.c.:� �

.. DEC l::.., I C'l'l - C~A CASE ~ Oo 2579 - 12 - SO ORDERED. Que zon Cit y , Metro Mani l 3 , Octcber 29 , l98 2 o vJ E CON CUR: ~J A!J'!A]\' TE F, �LK~-~ Pr es i d in Judge 4G G