CTA Case No. 4088 (Decision)

P' : ) I, � ov nn: �~>:~onuc ~HrUt>f� rN~t r ~U OF TAX Al't~f:.<\1...9 Q'Uim'.OJI Q G' I' COMMERCIAL BANK OF MANILA ., Petitioner, C.T.A. CASE NO. 4088 - versus - THE COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - X DECISION Respondent Commissioner of Internal Revenue, in a motion filed on January 27, 1987 seeks the dismissal�of petitioner's appeal ~n the ground of lack of jurisdiction. He contends that the appeal in this case is premature since the assoss- ment has not been . disputed or protested, hence, there could not be any decision that may be appealed to this Court as contemplated in Section 7(1) of Republic Act No. 1125. We agree with the proposition of respondent. The pertinent facts as alleged in the petition for review disclose that on or about July 21, 1986 petitioner received an Assessment Notice dated July 9, 1986 requiring it to pay deficiency income \

DECISION - - 2- CTA CASE NO. 40 88 I' tax, interest and deficiency documentary stamp tax plus compr omise pe nalty, as follows: a. Deficiency Income Tax 1983 t' Net Income per return (~ 86,800.82) Add: Adjustments: e 1,282,745.02 20,348,733.02 Understa ted realized income 19,065,988.00 Bad debts written off Net income per investigation Income tax due thereon e 7,081,676.27 Less: Income tax already assessed e 7,081,676.27 Deficiency Add: 20% int. from 4/16/84 to 2/28/85 1,234,336.17 To t a 1 e 8,316,012.44 Less: Payment (CR #980677 dated 2/28/85) 508,966.83 Balance Add: ~0% int. from 3/1/85 to 7/9/86 e 7,807,045.61 Total amount due and collectible 2,120,379.24 b. Deficiency Documentary Stamp Tax Promissory Notes issued during the year ~-~-L-~-~-z-~-z-~-f-~-Z-f-2-~-~-Q- Documentary sta~p due thereon - E 11,205,131.37 300.00 E3,447,732,729 . 60 x e.65 = E200 .DO � Add: Compromise penalty Total amount due and collectible While petitioner avers that prior to the assessment, it had filed a detailed protest in connection with \ 420

DECISION CTA CASE NO. 4088 - 3- the pre-assessment notice of respondent dated . February 11, 1986 demanding paymen t of deficien cy income tax and documentary stamp taxes for 1983, its protest or request for reconsideration of the aforementioned assessment notice of July 9, 1986 has not as yet been acted upon by respondent, thus making the filing of the instant petition for review premature. (p. 60, CTA record.) Obviously, since no decision has as yet been rendered by respondent on petitioner's protest , there could not be a decision on a disputed assess- ment that may be appealed to this Court. Under Section 7(11 of Republic Act No. 1125, what is reviewable by this Court on appeal is the decision of the Commissioner of Internal Revenue on a dis- puted assessment and not the assessment itself. Thus it had been held: The law conferring jurisdiction on the Court of Tax Appeals is found in Sec- tion 7 of Republic Act 1125, th e pertinent part of which states: '- "Sec. 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate� jurisdiction to review by appeal as herein provided - "(1) Decisions of the Col- lector (now Commissioner) of � Internal Revenue in cases involv- \ ing disputed assessments, refunds 42'f

DECISION - CTA CASE NO. 4088 - 4- or internal revenue taxes, fees or other charges, penalties im- posed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part .of law administered by the Bureau of Internal Revenue;" The word "decisions" in paragraph 1, Sec- tion 7 of Republic Act 1125, quoted above, has been interpreted to mean the decisions of the Commissioner of Internal Revenue on the prot~st of the taxpayer against the assessments. Definitely, said word does not signify the assessment itself. We quote what this Court said aptly in a pre- vious case: "In the first place, we be- liev~ the respondent court erred in holding that the as~essment in �' question is the respondent Col- lector's decision or ru~ing appeal- able to it,. and that consequently, the period of thirty days pres- cribed by Section 11 of Republic Act No. 1125 within which peti- tioner should have appealed to the respondent court must be counted from its receipt of said assessment . Where a taxpayer questions an assessment and asks the Collector to reconsider or cancel the same because he (th~ taxpayer) believes he is not liable therefor,� the assessment becomes a 'disputed assessment' that the Collector must decide, and the taxpayer can appeai to the Court of Tax Appeals only upon receipt of the decision of the Collector on the disputed assessment, x x x" (Emphasis supplied) \

DECISION CTA CASE NO. 4088 - 5- The same interpretation finds support in Sec t ion 11 of Republic Act 1125, which states: ''Sec. 11. V~ho may a.J?pea!_; effect of appeal. - Any person, association or corporation ad- versely affected by a decision or ruling of the Collector (now Commissioner) of Internal Revenue, the Collector of Customs or any provincial or city Board of Assess- ment Appeals may file an appeal in the Court o[hTax Appeals within thirty days after e receipt of such decision or ruling." (Emphasis supplied) Note that the law uses the word "decisions", not "assessments", thus further indicating the legislative intention to subject to judicial review the decision of the Commis- sioner on the protest against an assessment but not' the assessment itself. Since in the instant case the taxpayer appealed from the assessment of the Com- .missioner of Internal Revenue without previously contesting the same, the appeal was premature and the Court of Tax Appeals had no jurisdiction to entertain said appeal. For, as stated, the jurisdiction of the Tax Court is to review by appeal decisions of the Commissioner of Internal Revenue on disputed assessments. Th e Tax Court is a court of special jurisdictirin. As such, it can take cognizance only of such matters as are clearly within its jurisdiction. (Comm i ssioner of Internal Revenue vs. Leonardo S. Villa and the Court of Tax Appeals, L-23988, January 2 , 1968, 22 SCRA 3; Perfecto V. Fernandez vs. Commissioner of Internal Revenue, C.T.A. Case No. 3432, February 25, 1983.) \

.. DECISION CTA CASE NO. 4088 - 6- Under Section 319-A of the National Internal Rev enue Code , as inserted by Presidential Decree No. 1773, January 16, 1981, now Section 270, an assessment may be protested adm{nistratively by filing a request for reconsideration or reinves- tigation within thirty (30) days from receipt of the assessment; otherwise, it becomes fin al and unappealable. And if the protest is denied in whole or in part, the taxpayer adversely affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of ' the said decision; othenvi se , the deci- sian shall become final, executory and demandable. It is thus clear beyond doubt that the deci- sian on the request for reconsideration or reinves- tigation is the decision on the disputed assessment which is appealable to this Court. It follows that if an assessment is not formally contested pr gro- tested administr~tively, o~ even if formally con- tested or protested a dmi nistratively, no decision has as yet been rendered by the Commissioner of ~nternal Revenue, the taxpayer has no right to appeal. \ 42'7

.' DECISION - CTA CASE NO. 4088 -~ 7 - As stated above, it appears in this case that petitioner Commercial Bank of Manila has protested resp6ndent 1 s assessment-demand letter of July 9, 1986, but respondent Commissioner of Internal Revenue has not yet acted or rendered a decision on the same. Clearly, therefore, the filing of the instant petition for revi ew is premature. IN VIEW OF THE FOREGOING, the petition for review filed in this case on Augu3t 5, 1986 is hereby dismissed for lack of jurisdiction at peti- tione:r 1 s costs. SO ORD[f~ED. Quezon City, Metro Manila, July 16, 1987. WE CONCUR: / ~~~{( ,A~ CON!HANTE k. ROAL1UIN /""oeiate Judge (2),;-)~/ ..-7~ Z. REYEs// Associate Judge \