ONE HUNDRED SERVICES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLI C O F TH E PHILIPP IN ES COURT OF TAX A PPEA LS QU EZON CITY THIRD DIVISION O N E HUNDR ED SERVICES, INC., CTA CAS E No . 8373 Pe tition er, M embers: BAUTISTA, Chairp erson - versus- PALANCA- ENRIQU EZ, COTANGCO-MANALASTAS, JJ. COMMISSIONER OF INTERNAL Promulgat ed: REV ENU E, JUN 7 2012 Re s p o n de n t. x-------------------------------- -. ------- - ~~~ -~Q~� ~zxo.-, RESOLUTION COTANGCO- MANALASTAS, !..:._: The Court is confronted with th e f ollowin g pendin g in cid ents: I. "Ans wer (with Motion to Dismiss)" 7 fil ed by res pond ent Co mm iss ion er of Intern al Revenu e (CI R} on Dece mb er 29, 20 11. Res pond ent' s answ er pl ea ds as speci al and affirm ative d ef ense th e prescription o r belat ed filin g of th e inst ant petition as a ground for di sm issal. In acco rd ance with Sectio n 6, Rul e 16 of t he Rul es of Court, t he Court d ee m s it prud ent t o f irst resolve t he sa m e as if a mot ion t o di smi ss had bee n fi led . II . "Manifestation and Mo tions f or Leave to [I} Am end Petition for Re vie w and [II} Adm it Attached Amended Petition "2 f il ed by petition er On e Hundred Services, In c., on January 19, 2012, prayin g for t hi s Court to note th e manifestat ion ; exc use t he petition er from filin g th e required comm ent t o t he motion t o di smi ss; grant 1 Docke t, pp . 129 143. 1 Docket, pp . 150-191.

RESOLUTION P<Jgc 2 of 12 CTA Case No. 8373 One Hundred Services, In c., vs. CIR petitioner leave to amend the petition; and admit the attached amended petition alleging facts and circumstances that addresses the ground raised by the respondent for the dismissal of the petition. On December 29, 2011, this Court received respondent's "Answer (with Motion to Dismiss)" 3 to the instant Petition for Review; the answer plead s as special and affirmative defense the belated filin g of the in stant petition as a ground for dismi ssal. Petitioner was ordered to file its comment on respondent's "Ans wer (with Motion to Dismiss)" on January 3, 2012 . In lieu of a comment, petitioner filed a "Manifestation and Motions for Leave to{!} Amend Petition for Review and [II} Admit Attached Amended Petition"4 on January 19, 2012. In a Resolution ~ dated January 30, 2012, respondent was ordered to comment on the above-mentioned manifestation and motions. In compliance th ereto, a "Comment and/or Opposition (to th e Manifes tation and Motions for Leave to {I} Amend Petition for Review and [II} Admit Attached Amended Petition)"6 wa s posted by respondent on February 13, 2012. On March 6, 2012 the Court received petitioner's "Reply {To Respondent's Comment and/or Opposition dated February 13, 2012}"7 filed by registered mail on Fe bruary 27, 2012. In view of the foregoing, respondent' s "A nswer {with Motion to Dismiss)", which pleads as special and affirmative defen se the belated filin g of the instant ' Docket, pp. 129-143. 4 Docket, pp . 150 191. 5 Docket, p. 194. 6 Docket, pp. 195 211. 1 Docket, pp. 213-227.

RESOLUTION P<Jgc 3 of 12 CTA Case No. 8373 One Hundred Services, In c., vs. CIR petition as a ground for dismissal, and petitioner's "Manifestation and Motions for Leave to {I} Amend Petition for Review and {II} Admit Attached Amended Petition" were submi tted for resolution. In its "Answer (with Motion to Oismiss)" 8 re spondent contents that the , in stant petition was filed beyond the period allowed by law, making the assessment final, executory and demandable . Respondent emphasizes that petitioner received a copy of the Final Decision on Disputed Assess ment (FDDA) on October 10, 2011, thus, it only had thirty (30) days, or until November 9, 2011, from receipt of the same to file an appeal with this Court; hence, the filing of the instant petition on November 10, 2011 clearly shows that it was belatedly made. In lieu of a comment to respondent's answer with motion to dismiss, petitioner filed its "Manifestation and Motions for Leave to [I} Amend Petition for Revie w and [II} Admit Attached Amended Petition "9 where it seeks to amend the instant petition in order to allege fact s and circumstances that will explain the excusable, inadvertent and unintentional nature of the one-day delay in the filing of the in stant ca se; and to include the argument of prescription of respondent' s right to assess on the ground that the waivers intended to extend the period to asses are void. In the amendatory allegation s, petitioner exp lains that: by reason of the subsequent service of FDDA on October 19, 2011 through personal delivery, petitioner, then still unaided by counsel, wa s led to honest ly believe that the 30-day period to file an appeal should be reckoned from said latter service instead of the 8 Supra, Note 3. 9 Supra, Note 4.

RESOLUTION Pilgc 4 of 12 CTA Ca se No . R373 On e Hundred Se rvices, In c., vs. CIR ea rli er se rvi ce by regist ered mail received on Octob er 10, 2011; th e on e-day delay will not ca use any subst antial prejudice upon th e res pond ent; if th e case is not hea rd on th e m erit s, petition er will suffer grea t prejud ice in complyin g with erron eou s assessm ents in th e hu ge amount of P10.6 million ; thi s is on e occasion wh en th e exce ption base d on th e intere st of sub st anti al ju sti ce and th e avoid ance of a mi sca rria ge th ereof ou ght to be impl em ented. An ent th e argum ent of presc ription of res pond ent's ri ght t o assess, petition er argues t hat t he w aivers executed in t hi s case did not have t he effect of exte ndin g t he t hree (3} year period to assess as t he re qui reme nt s und er Burea u of Inte rn al Revenu e (BIR} Revenu e M emorandum Order No. 20-90 w ere not st ri ctly compli ed w it h. Petit ion er explain s t hat sin ce t he in sta nt petit ion involves assess m ents amount in g t o Pl0,613,798.04, t he w aivers shoul d have bee n signed by t he Commi ss ion er of Intern al Revenu e and not m erely by th e BIR Regi on al Director an d Reven ue Distri ct Offi ce r, as in thi s case. Re spond ent, in her " Commen t and/or Opposit ion" 10 to th e above m anifest ation , in sist s th at th e all ege d excuse is bereft of any lega l and/ or f actu al basis; ca use of th e petition er ca nnot be sa lvage d m erely by invoking prejudice as it w as given du e process thru its protest on th e preli m ina ry assess m ent noti ce (PAN } and fin al assess m ent notice (FAN} ; th e revenu e offi cers who acc epted th e three (3) w aivers are duly aut hori ze d und er t he rul es and regul ation s, it follows t hat t he PAN and FAN w ere mad e within th e validly exte nd ed period of prescript ion ; t he 10 Supra , Note 6.

RESOLUTION Pilgc 5 of 12 CTA Cas e No. 8373 On e Hundred Se rvices, Inc., vs. CIR m anifestation and motion should be deni ed for th e sa m e intend s to introdu ce new m att ers whi ch radically alter th e th eory and nature of th e action . In its "Reply {To Respondent's Co mm ent and/ or Opposition doted February 13, 2012}"11 , petition er maintain s th at th e on e-day delay m ay be excused in th e interest of sub stantial ju stic e and con sid erin g th e f actu al circum st ances of th e case it s m erit s deserve to be heard by th e Court; t he three (3) waivers signed by th e petit ion er wit h t he conform e of th e BIR offi ce rs are void , hence ri ght t o assess has alrea dy presc rib ed. Th e Court shall address first th e iss ue on prescript ion or belate d filin g of t he insta nt pet it ion as a ground for di sm issa l, pl ea ded as a special and affirmati ve def ense in t he "Answer (with Mo tion to Dismiss}" 12 of t he res pond ent, sin ce t he resolut ion of which is cru cial in determinin g wh et her t hi s Cou rt ha s juri sdi cti on over th e subj ect Petition for Revi ew; and con se qu ently, wh eth er thi s Court should procee d in con sid erin g th e m anifest ation and motion for am endm ent of th e in st ant petition . Repl et e are th e law s which ex plicitly provid e for th e period s to be obse rved in prot estin g an assessm ent to thi s Cou rt ; for on e, Section 228 of th e Nation al Intern al Re venu e Cod e (NIRC) of 1997, as am end ed, st at es th at : "SEC. 228. Protesting of Assessment. - XXX If t he protest is denied in wh o le or in part, or is not acted upon w it hin one hund red eighty {180) days fro m submission of docum ents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of 11 Supra , Note 7. l/ Do cket, pp . 1 29-143.

RESOLUTION P<Jgc 6 of 12 CTA Case No . 8373 One Hundred Services, Inc., vs. CIR Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. Another one is that found on Section 11 of Repub li c Act (RA) 1125, An Act Creating th e Court of Tax App ea ls, as amended by RA 9282, which provide s that: "SEC. 11. Who May Appea l; Mod e of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissio ner of Customs, the Secretary of Finance, t he Secretary of Trad e and Indu stry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30} days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2} herein. Appeal shall be made by filing a petition for review under a procedure ana logo us to that provid ed for under Rule 42 of the 1997 Ru les of Civil Proce dure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. A Division of the CTA sha ll hear the appea l: Provided, however, That with respect t o decisions or ru lings of the Central Board of Assessment Appeals and the Regional Tria l Court in the exe rcise of its appe ll ate jurisdiction appeal sha ll be made by fi ling a petition for review under a procedure analo gous to that provided for under rul e 43 of the 1997 Rul es of Civil Procedure with the CTA, which sha ll hear the case en ban e. xxx" Co nsi ste nt with t h e above provi sion s is Section 3 (a), Rule 8 of the 2005 Revise d Rul es ofthe Court of Tax Appeal s (RRCTA), viz: " SEC. 3. Wh o may appeal; period to file petition. - (a) A party adversely affected by a decision, ruling or the inaction of the

RESOLUTION Pogc 7 of 12 CTA Ca se No. 8373 On e Hundred Services, Inc., vs. CIR Commissioner of Internal Revenue on disputed assessments or claims for refund of internal reven ue taxes, or by a decision or ru ling of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiratio n of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments . xxx" Lik ewi se, in varying but consistent lan gua ge, the Supreme Court ha s emp ha size d that "t he ri ght t o appeal is not a natura l right or a part of due process, it is merely a statutory privilege, and may b e exercised only in the manner and in accordance with the provisions of t he law. The party who see ks to avai l of t h e sa m e must comp ly with the requirements of the rules. Failin g to do so, the right to appeal is lost " .13 In fine, the failure to comply with the 30-day statutory peri od would bar th e app ea l and deprive th e Co urt of Tax App ea ls of its jurisdiction to entert ain and det erm ine th e correctn ess of the assessment.H Nonetheless, th e limitation on the period to app ea l is not without exceptions, in Department of Justice Secretary Raul M. Gonzales v. Pennisi, 15 th e Supreme Court elucidated on the exception to the rule s on reglementary period s: "xxx. By way of exception, unintended lapses are disregarded so as to give due co urse to appeals filed beyond the reglementary period on the basis of strong and compe lling reasons, such as serving the ends of justice and preventing a gra ve miscarriage thereof. The purpose behind the limitation of the period of appeal is to avoid an unreasonable delay in the administra tion of justice and to put an end to controversies ." 13 Producers Bank of the Philippines vs. CA, G.R. No . 1266 20, April 17, 200 2 citing Orti z vs. Court of Appe als, 299 SCRA 708 {1998) . 14 Rizal Commercial aonking Corporation vs. Commiss ion er oj Int ernal Revenue , G.R. No. 168498, Jun e 16, 2006 citing Commissioner of Internal Revenue v. Western Pa cific Corporation, 121 Phil. 889, 89 3 {1965} . 1 G.R. No . 169958, March 5, 2010, 614 SCRA 29 2. "

RESOLUTION Pilgc 8 of 12 CTA Case No . R373 One Hundred Services, Inc. , vs. CIR Some of such strong and compelling reason s, warranting the relaxation of the period to appeal, were exemplified in the following cases, to wit: � In Heirs of Rodolfo Crisostomo vs. Rudex International Development Corporation 16 the delay was excused because it was aptly explained and proved that the secretary of the party's counsel, who failed to file the petition, indeed brought her children to the doctor on the deadline for filing the petition for review; petitioners submitted an affidavit from the secretary, who narrated her ordeal that day and why she was not able to inform her employer of the whereabouts of the petition and a certification from the doctor of one of the secretary's chi ldren. � In Gonzales vs. Pennisi 17 the respondent had a valid excuse , for the late filing of the petition as there wa s a pending petition for prohibition before the trial court that had to be withdrawn before the filing of the petition for review with the appellate court. � In Dalton-Reyes vs. Court of Appeals78, the reason for the delay given by petitioner, a stenographic reporter of the Office of the Ombudsman, that she was not assisted by a lawyer at that time was considered as an excusable negligence under the policy of social justice where the law bends over backward to accommodate the 16 G.R. No . 176129, August 24, 2011 ci ting Philippine llmusemenl and Gaming Corporation v. 1\ngara, 17 Supra , Note 15 . 1 G.R. No . 1495RO, March 16, 2005. B

RESOLUTION Page 9 of 12 CTA Case No. 8373 One Hundred Services, Inc., vs. CIR interest s of th e workin g cl ass on th e hum ane ju stifi ca tion th at tho se with less privil ege in life should have more in law ; more so in th e case of on e who pursues her case even without th e ass ist ance of coun se l. Aft er a m eticulou s exa mination of th e record s, argum ents, relevant law s and ju risp rud ence, We are convin ce d t hat t he reason advance d by petition er t o ju stify t he belate d filin g of t he in stan t petit ion, ca nnot be cata logued as on e of t he exce pt ion s suffici ent t o exempt petit ion er from t he strin ge nt appli cation of t he law s and rul es limit in g th e period to appeal wit h thi s Court. In t hi s case, petition er ex pla ined t hat t he delay is excu sabl e, in advert ent an d uninte nt ional and it is by rea son of t he subse qu ent se rvi ce of FDDA on Oct ob er 19, 2011 t hrou gh personal delivery, that petit ion er, t hen sti ll unaid ed by coun se l, w as led to hon estly beli eve that th e 30-day period to fil e an app ea l should be reckon ed from sa id latt er se rvic e in st ea d of th e ea rli er se rvi ce by regist ered m ail rece ived o n Octob er 10, 2011. W e have noted a number of significant and pec uliar circum st ances in thi s case whi ch preclude thi s Court from app re ci atin g th e foregoin g reasonin g/cl aim as a matt er fact and from con sid erin g th e sa me as an exc usa bl e negli ge nce . First , a peru sal of the in stant petition shows th at petition er di sclo sed, as part of hi s ju risdi ctional allegation , its rece ipt of t he FDD A t hrou gh regist ered mail on Octob er 10, 2011, acknowled gin g th e sa m e as t he reckon ing of t he 30-day period to app ea l; t here wa s no ment ion of th e subse qu ent personal se rvi ce on Octob er 19, 2011 . It wa s only after res pond ent moved to dismi ss t he petit ion on th e ground of

RESOLUTION P<Jgc 10 of 12 CTA Case No. 8373 One Hundred Services, In c., vs. CIR lat e filing, that petitioner rai sed its reasoning/claim that the subsequent personal se rvi ce on October 19, 2011 led it to hon estly believe that th e latter date is th e reckoning of the 30-day period to appe al. Ind eed, thi s Court cannot help but view thi s reasonin g/claim , which is in che ckered contra st to th e origin al allegation , as a m ere aft erthou ght to ju stify th e late filin g. It bears to stress that the instant petition for revi ew wa s verified as t ru e and correct based on personal knowled ge and auth entic re cord s by the petitioner itse lf, t hrou gh on e of its officer, thu s, If petiti on er 'hon est ly beli eved' th e subsequ ent personal se rvice on October 19, 2011 to be th e reckonin g of t he 30-day period t o app eal , it should have indicated so in thi s petit ion for revi ew . Second, t he Court refu se to give credence t o petit ioner's cry of ignorance as t o t he reckonin g of the 30-day period ; a scrutiny of th e record s show that petition er w as abl e to tim ely fil e its protest to th e PAN and FAN in th e admini strative level, such f act f airly establi shes petitioner's aw areness to th e procedures in protestin g an assess m ent. Lastly, th e acts of petition er which cause d the lat e filing of the petition could hardly be con sidered as excu sa ble, mu ch less unavoid able . Fully aware of th e f act th at th e defici ency assess ments again st petition er involve a hu ge amount of P10.6 million, petition er still f ail ed to exerci se ordin ary diligen ce by f ailin g to transmit th e FDDA to its counsel within a rea sonabl e period of t im e; t he FDDA wa s tran smitted only on November 9, 2012, deadlin e for th e filin g of app eal to t his Cou rt. Ass umin g arguendo t hat t he reckonin g is on Oct ob er 19, 2011, even so, ordinary prud ence wa s

RESOLUTION Page 11 of 12 CTA Ca se No. 8373 One Hundred Services, In c., vs. CIR not dutifully exe rci sed in thi s ca se as th e FDDA w as transmitted to coun se l barely t en {10) days before the deadline . rud ence could not have reason of whi ch the ri hts of an a Section 228 provides that the failure of a taxpayer to app eal from an assess m ent on time rendered the assess ment final , execu t ory and demandable . Accordin gly, petitioner is barred from di sputin g th e correctne ss of the assess ments. In Rizal Comm ercial Banking Corporat ion vs. Commission er of Internal Revenue20, t he Suprem e Court had th e occasion t o reite rate th e rulin g in In Ker & Comp any, Ltd. v. Court of Tax Appeols21, vi z: "the Court held t hat wh ile the rig ht to appea l a decis ion of t he Comm iss ion er to th e Court of Tax Appea ls is merely a sta tuto ry remedy, neverth eless th e requirement th at it must be bro ught wit hin 30 days is ju risdictio nal. If a sta tu to ry remedy pro vi des as a co ndit ion precedent t hat the acti on to enforce it must be comme nced wi t hin a prescri bed time, such re quirement is j urisdiction al and fai lu re t o com ply t herewith may be raise d in a moti on to dismiss." The f ailure of petition er to comply with th e 30-d ay st atutory period bars its app ea l and deprive s th e Court of Tax App ea ls of its juri sdiction to entert ain and det ermin e th e correctness of the assess m ents. n 1 ~ Rizal Commercial Banking Corporation vs. Commissioner of Internal Revenue, G.R. No. 168498, Jun e 16, 2006 citi ng Philipp ine Phosp hate Fertilizer Corporation v. Commissioner of Internal Revenu e, G.R. No. 141973, June 28, 2005 , 461 SCR/\ 369, 388 . 20 Supra . n G. R. No. L- 12396, Jan uary 31, 1962,4 SCRA 160, 163.

RESOLUTIO N PCJgc 12 of 12 CTA Ca se No . 8373 One Hundred Services, In c., vs. CIR In view thereof, the re solu t ion of the "Mamfes tation and Motion s for Leave to {!} Amend Pe tition for Review and {II] Admit Attached Amende d Petition" f il ed by petition er is hereby con sidered moot and acad emic. WHEREFORE, premi ses con sid ered, th e prayer of respondent for th e di smi ss al of th e in stant petition, on th e ground of prescription or belated filin g, pl ead ed as a special and affirmative def ense in th e "Ans wer (with Motion to Dism iss}"23, is hereby GRANTED . Accordin gly, t he insta nt Petition for Revi ew is hereby DISMISSED, the failure of petitioner to comp ly with t he 30-day statutory period to appeal effectively deprived thi s Court of its juri sdiction to ent ertain and dete rmin e the correctne ss of t he subj ect ass ess ments. SO ORDERED . WE CONCUR: AMELIA R. COTANGCO- MANALASTAS Associate Ju stic e ~ OLGA PALANCA- ENRIQUEZ Ass ociate Ju stic e 22 Commissioner of Interna l Revenue v. Western Pacific Corporation, 121 Phi l. 889, 893 (1965). 73 Supra, Not e 1.