CTA Case No. 2032 (Resolution)

f� ~EPUBLIC OJ' THE PHILIPPINE! OOU'RT OF TAX APPEALS QUEZON CITY LEALDA ELECTRIC CO., I NC. , Pe t itioner, - versus - C. T. A. CASE No . 2032 COW~ISSIONER OF INTERNAL ' REVE~WE, Respondent. x- - - - - - - - - - - - -x RES 0 LUTI 0 N A petition for review was filed by petitioner on August 1 , 1969 , seeking a llreview of income tax as- sessments for 1963 to 1968 .9;nd refund of income tax paid for the year 1968 of first 50% and also (of) for deficiency fr anchise taxes . 11 Respondent has filed a motion to dismiss the herein appeal on the ground that this court has n0 jurisdiction to take cognizance of the case. Petitioner is the grant�ee of a franchise to operate and maintain an electric light , hea t and power system in the City, of Legaspi and in the town of Lee- sin , Albay . On the theory tha t under Republic Ac t No . 3730, app roved on June 22 , 1963 , p3titioner �s tax lia- pility is limited to 2% of its gross receipts in lieu of all other taxes on all its properties, except real property , used by petitioner under its franchise , peti- t ioner did not file anY income tax return for the years 1963 (second half) up to 1967 . Respondent , how- ever , assessed against petitioner income tax for the

RESOLUTION - CTA CASE No . 2032 2 years 1963 to 1966 in the aggregate sum of ~78 , 453 . 14 . In add ition, an assessment was issued against pe t i - tioner for deficiency fra nchise tax for �the years 1963 to 1966 , inclusive , in the sum of ~140 , 746 . 64 . on May 20 , 1968 , petitioner re quested r~ considera tion of the above- mentioned assessments . No formal r esolution was rendered by r.espondent on t he said r e- quest for reconsideration. However , on February 24 , 1969 , the Regional Director of the Bureau of Internal Revenue in Naga City i s sued a warrant of distraint and levy to enforce . collection of the defic.iency income tax for 1963 in the amount of �6 , 875. 86 , a copy of \'lhich was served on petitioner on February 26 , 1969 . In connection with t he claim for r efund of i:4, 590 . 93 , representing 50% of the income tax f or the yea r 1963 , i;Jhich was paid under Republic Act No. 5431, but which , in a subsequent ruling , respondent held was not applicable to grantees of franchises , petitioner claims to have filed a claim for r efund which has also r emained unresolved by respondent . A copy of the claim for refund was att ached to the "Opposition to Respond- ent 1 s Motion for Dismissal" as Annex B. . (See pp . 33- 37, c. T.A. record . ) Respondent 1 s motion to dismiss is anchored on the gro und tha t �he has not to date �re ndered a decis ion on

RESOLUTION - CTA CASE No . 2032 3 petitioner ' s reques t for reconsideration of the as- ses sments herein involved and t hat he has not re- ceived t he alleged 1.-1ritten claim for refund of the tax paid in 1969 . / Petitioner insists t hat notwithstanding the ab- se nce of a de cision on its re quest for r econsider a tion the warrant of distraint and levy i ssued is equivalent to a denial of t he re quest for reconsideration. On its claim for r efu nd , petitioner maint ains tha t it has fil ed with t he Commissioner of Internal Revenue a wr i t - ten clai m for r efund as evidenced by its letter dated July 15, 1969, marked as HAnnex B- Oppos ition, 11 wherein peti tioner demanded t he refund of t he income tax pai d on April 11, 1969. The 'IJ.Tarrant of dis traint and levy i ss ued by the B. I . R. Regional Director at Naga City cannot be con- sidereq as a decision denying petitioner ' s reques t for rec onsideration because it did not cover all the defi- ciency taxes being contested by petit:ioner . Also, it is admitted that enforcement of the said warrant of dis - traint and levy was held in �abeyance upon re quest of petitioner . The delay in the resolution of petitioner ' s re- quest for reconsideration is due , according to respond- ent , 11 to t he complicated issues of the cas e and the

RESOLUTION - CTA CJ;.GE No . 2032 4 difficult questions of law raised by the taxpayer ." Respondent has , however, given as surance that the re- quest of petitioner for r econsideration will be given due course. We quote from the memorandum of counsel 1 for respondent, _ \fuile the responde nt's Regional Of- fice in Naga City might have issued a vJ'ar- rant of Distraint of Personal Property agains t petitioner Lealda Electric Co ., Inc ., coveri ng the amount of �6 ,875. 86 as deficiency income tax for 1963, (p . 126, BIR Rec . ) the same , however , do not stand as a formal denial or as the decision of the respondent Commissioner of Internal Revenue on the petitioner 1 s pending re- quest for r eco nsideration of the assess- ments for defi ciency income and deficien- cy franchise taxes for the period from 1963 to 1966. Indeed , such requests of t he t axpayer for reconsideration and can- cellation of the assessments in question have never been i gnored by the Commission- er of Internal Revenue to just i fy the con- clusion reached by herein petitioner . It should be noted from the facts of this cas e t ha t from the time res pondent issued the assessments against petitioner on Augus t 25, 1967 up to the time the appeal was taken to this Ho norable Court on August 1 , 1969, there exists no fact from .which it mi ght be deduced that respondent Com- missioner has ceased consideration of the assessments adverted to by the petitioner. It is true tha t there was some delay in the issuance of a final decision, but this is � due to the complicated issues of the case a nd the difficult questions of law raised by the t axpayer . Though a \IJ'arrant of Dis- traint of Personal Properties of the peti- tioner might have been inadvertently is- sued by the res pondent ' s Regional Office in Naga City on February 24, 1969 , nonethe- less such issuance i s not t antamount to an �

RESOLUTION - CT CASE No . 2032 5 outright denial of petitioner ' s request for reconsideration . It is worthwhil~ to note that the said warrant was only par- tially issued and covered only the defi- ciency income tax for the year 1963 . Had respondent Commissioner of Internal Reve- nue intended to i gnore petitioner ' s re- quest for tha ca ncellation of the asse?s- ments in question, his Office would have issued a ~arrant of Distraint against peti- tioner 1.-Jhich would have coV'ered not only the amount of � 6, 875o86 but the total amount of 219 , 199. 78 to fully satisfy the deficiency income tax and the deficiency franchise tax assessed against the peti- tioner for 1963 to 1966. No decision having as yet been rendered on peti- tioner ' s request for reconsideration of respondent ' s assessmen t s against it and there being no evidence as to the filing of a claim for refund of the sum of ~4,590 . 93, the herein a Dpeal i s hereby dismissed, without prejudice. SO ORDERED . quezon City, July 10, 1970 ROl N. ill�lALI Presiding Judge Vie Concur: ~~~~~0L YISLAO R. ALV "" ,ssociate Judge ~ -1 ~' RAMON 1 . V . CENA ssociate Judge