Allied Banking Corp. v. Commissioner, Bureau of Internal Revenue

FOURTH DIVISION [CA-G.R. SP No. 27775. May 26, 1993.] (C.T.A. Case No. 4581) ALLIED BANKING CORPORATION , petitioner , vs . COMMISSIONER, BUREAU OF INTERNAL REVENUE , respondent . D E C I S I O N BENIPAYO , J p : This is an appeal by the Allied Banking Corporation from the decision of the Court of Tax Appeals in C.T.A. Case No. 4581 dismissing its petition for review with prejudice and ruling that the Bureau of Internal Revenue's assessment against it for the payment of deficiency documentary stamp tax had become final and unappealable. In a letter dated December 28, 1990, respondent Commissioner of Internal Revenue notified petitioner taxpayer Allied Banking Corporation that it was being assessed deficiency gross receipts, documentary stamp and fixed taxes for the fiscal year 1987 in the aggregate amount of P2,233,902.99. Respondent requested payment of the assessed deficiency taxes within thirty (30) days from notice. Petitioner received the notice of assessment on January 18, 1991 and responded in a letter dated February 15, 1991, the pertinent portion of which reads: "We are pleased to advise that as part of the bank's effort to somehow contribute to the revenue generating efforts of the government, we are going to pay the gross receipts tax and the fixed tax assessments. However, owing to the fact that the documentary (stamp) tax assessment is an industry problem, we are compelled to bring the matter to the Court of Tax Appeals for adjudication." On February 18, 1991, petitioner filed a petition for review with the Court of Tax Appeals questioning the assessment of deficiency documentary stamp tax. Respondent Commissioner moved to dismiss the petition on the ground of lack of jurisdiction. Respondent argued that the petitioner had appealed to the Court of Tax Appeals without first filing against the assessment with the Commissioner, and that the failure to lodge such a protest had rendered the assessment final and unappealable in accordance with the provisions of Section 229 of the Tax Code. Petitioner opposed the motion to dismiss, contending that it had complied with Section 229 of the Tax Code "by way of its letter to the respondent dated February 15, 1991." It further argued that the respondent Commissioner's silence on the matter after receipt of its reply letter "confirm(ed) that the subject assessment was indeed an industry problem which needed no further proceedings in the respondent's office" and that the respondent was therefore estopped from claiming that the Court of Tax Appeals had no jurisdiction over the case. The Court of Tax Appeals ruled in favor of the respondent Commissioner and rendered the judgment of dismissal which petitioner taxpayer now brings to us for review. The case hinges on the issue of whether or not the deficiency documentary stamp tax assessment had become final and unappealable. We rule in the affirmative and uphold the tax court's dismissal of the case. Section 229 of the Tax Code provides: "Sec. 229. Protesting of Assessment . When the Commissioner of Internal Revenue or his duly authorized representative finds that the proper taxes should be assessed, he shall first notify the taxpayer of his findings. Within a period to be prescribed by implementing regulations, the taxpayers shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner shall issue an assessment based on his findings. " Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by implementing regulations within thirty (30) days from receipt of the assessment; otherwise, the assessment shall become final and unappealable . " If the protest is denied in whole or in part, the individual, association or corporation 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; otherwise, the decision shall become final, executory and demandable ." (Emphasis ours) According to paragraphs 2 and 3 of Sec. 229, if the taxpayer disagrees with the tax assessment, he must file a protest with the Commissioner in the form of a request for reconsideration or reinvestigation, and it is the denial of this protest which he may appeal to the Court of Tax Appeals by way of a petition for review. the taxpayer may appeal the decision of the Commissioner on his protest of the assessment, not the assessment itself. If the taxpayer fails to dispute the assessment by lodging a protest, the assessment becomes final and unappealable and the Tax Court would have no jurisdiction to entertain his petition for review. This interpretation is supported by the ruling in Commissioner of Internal Revenue vs. Villa (22 SCRA 3, 2 January 1968), which involves facts similar to the present case. In the Villa case, the Villa spouses were assessed deficiency income and residence taxes. Without contesting the assessment before the Bureau of Internal Revenue, the spouses filed a petition for review in the Court of Tax Appeals. The Tax Court took cognizance of the appeal and rendered a decision which was in turn appealed to the Supreme Court. The Supreme Court set aside the appealed judgment for lack of jurisdiction and ordered the petition for review filed in the Tax Court to be dismissed, reasoning: "Since in the instant case the taxpayer appealed from the assessment of the Commissioner 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 on disputed assessments. The Tax Court is a court of special jurisdiction. As such, it can take cognizance only of such matters as are clearly within its jurisdiction." (at p. 7) The Supreme Court, examining the provisions of Republic Act No. 1125 conferring jurisdiction upon the Court of Tax Appeals, explained that the decisions of which the Tax Court could take cognizance are the decisions of the Commissioner on the protest of the taxpayer against the assessments, and not assessments themselves. Petitioner maintains that its letter to the respondent dated February 15, 1991 constituted substantial compliance with the requirements of Sec. 229 inasmuch as it stated therein that "owing to the fact that the documentary (stamp) tax assessment is an industry problem", it was "compelled to bring the matter to the Court of Tax Appeals for adjudication." This arguments is without merit. Petitioner's letter of February 15, 1991 cannot be considered a protest under Sec. 229 of the Tax Code. As adequately explained by the Tax Court in its decision: "Paragraph 2 (of Sec. 229) requires the taxpayer to comply with three things in administratively protesting an assessment made by respondent: first, the protest must be done by filing a request for reconsideration or reinvestigation with respondent; second, that the said protest must be filed in such form and manner as may be prescribed by implementing regulations (Revenue Regulation 12-85); and (third), that such filing is done within 30 days from receipt of the assessment. Failure to comply with any or all of these requirements results in the assessment against the taxpayer becoming final and unappealable. "In the case at bar, petitioner failed to comply with any of these requirements. A review of the facts shows that petitioner's course of action upon receiving the BIR assessment dated December 28, 1990, was write a letter to the BIR adverting to the said assessment (which letter it purports to be the protest required under Section 229) on February 15, 1991; and then three days later on February 18, to file the instant case with this court. The February 15 letter merely reiterated the assessment of the BIR, and in addition thereto wrote one paragraph (quoted earlier) informing the respondent of petitioner's agreement to pay the gross receipt and fixed taxes assessed against it, and stating that: "'. . . However, owing to the fact that the documentary (stamp) tax assessment is an industry problem, we are compelled to bring the matter to the Court of Tax Appeals for adjudication." (Annex "A", Manifestation/Compliance, page 2; C.T.A. Records, page 64)' "Section 6 of Revenue Regulations No. 12-85 which implements Section 229 of the amended Tax Code, states that: "'Sec. 6. Protest . The taxpayer may protest administratively an assessment by filing a written request for reconsideration or reinvestigation specifying the following particulars: "'(a) Name of the taxpayer and address for the immediate past three (3) taxable years. "'(b) Nature of request whether reinvestigation or reconsideration specifying newly-discovered evidence he intends to present if it is a request for reinvestigation. "'(c) The taxable periods covered. "'(d) Assessment number. "'(e) Date of receipt of assessment notice or letter of demand. "'(f) Itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due which amount should be paid immediately upon the filing of the protest. For this purpose, the protest shall not be deemed validly filed unless payment of the agreed portion of the tax is paid first. "'(g) The itemized schedule of the adjustments with which the taxpayer does not agree. "'(h) A statement of facts and/or law in support of the protest. "'A request for reconsideration or reinvestigation of an assessment shall be accompanied by a waiver of the Statute of Limitations in favor of the government. "'For the purpose of the protest herein "'(a) Request for reconsideration . refers to a plea for a re-evaluation of an assessment on the basis of existing records without need of additional evidence. It may involve both a question of fact or of law or both. "'(b) Request for reinvestigation . refers to a plea for re-evaluation of an assessment on the basis of newly-discovered or additional evidences that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or law or both.'" "Clearly, petitioner's letter to respondent dated February 15, 1992, is not the protest contemplated under Section 229 of the amended Tax Court. Said letter, contrary to the provisions of Section 6 of Revenue Regulation No. 12-85, does not plead for a reinvestigation of the assessment; nor does it state that facts and/or law in support of petitioner's decision not to pay the deficiency documentary stamp tax for 1987 assessed against it by respondent. It merely informed respondent that 'owing to the fact that the documentary tax assessment is an industry problem, (petitioner) is compelled to bring the matter to the Court of Tax Appeals for adjudication'. As aptly observed by respondent in its 'Reply to Opposition': '. . . (T)he petitioner's aforequoted letter did not categorically express any disagreement to or requested (sic) for a reconsideration or reinvestigation nor contained (sic) words or similar import administratively protesting the subject assessment. . . .'(Reply to Opposition, page 3, C.T.A. Records, page 67)'" (pp. 15-18, Rollo; pp. 8-11, C.T.A. Decision) Indeed it would seem that petitioner itself did not consider its reply letter as a protest against the assessment as it considered the Commissioner's letter of December 28, 1990 to be the Commissioner's decision on the matter. As stated by the Tax Court: "It is certainly not amiss for the court to point out that petitioner in both its original and amended petitions for review states that: "'3. This is a petition for review of the final decision of the respondent contained in his letter dated December 28, 1990 , addressed to and received by the Petitioner on January 19, 1991, relating his final decision on his assessment of deficiency gross receipts tax (amended to documentary stamp tax ) in the amount of P199,491.44 for the year 1987. Copy of said letter decision is hereto attached as Annex "A"; xxx xxx xxx "'WHEREFORE, premises considered, it is most respectfully prayed for that after due hearing, judgment be rendered reversing the decision (Annex 'A' hereof) of the respondent and declaring the assessments contained therein as well (sic) and void and without force and effect. (Amended Petition for Review; C.T.A. Records, pages 19 to 23) (Emphasis supplied)' "These allegations, together with the fact that it was only after respondent filed his motion to dismiss that petitioner made any mention of its February 15, 1991 letter (copy of which was not even attached to petitioner's opposition to motion to dismiss) show clearly that petitioner itself did not consider or intend its February 15, 1991 letter to be a protest of respondent's assessment. Petitioner was of the mistaken impression that respondent's assessment is its final decision which is already appealable to this court." (pp. 18-19, Rollo; pp. 11-12, C.T.A. Decision) While on the one hand, petitioner maintains that its February 15, 1991 letter substantially complied with the requirements of protest, on the other, it contends that the filing of a protest was not necessary in this case. It argues: "The reason behind the law requiring administrative protest is to give the BIR a chance to rectify its mistake which did not apply in the case because the BIR's position on the matter was already set as against the whole banking industry. Such has been the position of the BIR for some time, that the petitioner deemed it necessary to elevate the matter to the Honorable Court of Tax Appeals for the latter to decide the matter once and for all." (p. 5, Petition for Review) Even if the BIR's position on the matter was "already set as against the whole banking industry" (an allegation which is not supported by anything in the petition), the petitioner was not excused from filing a protest with the Commissioner, for without a protest (a formal protest complying with the requirements of Section 229 of the Tax Code and Revenue Regulations 12-85), there could be nothing to appeal to the Court of Tax Appeals. It should have informed the Commissioner of the grounds for its disagreement on the question of the documentary stamp tax, and it was only the decision of the Commissioner on the protest which it could appeal to the Tax Court. Finally, petitioner argues that respondent Commissioner was estopped from claiming that the Court of Tax Appeals had no jurisdiction over the case because of his silence despite the petitioner's informing him of its intention to bring the matter to the Tax Court for review: "It is respectfully submitted that the petitioner had complied with Section 229 of the Tax Code by way of its letter to the respondent dated February 15, 1991. In said letter the petitioner informed the respondent that it did not agree with the documentary (stamp) tax assessment and owing to the fact that the said assessment is an industry problem, the petitioner is compelled to bring the matter to the Court of Tax Appeals for adjudication. "The respondent, despite receipt of the said letter, kept silent on the matter thereby confirming that the subject assessment was indeed an industry problem which needed no further proceedings in the respondent's office. It is therefore respectfully submitted that the respondent is now estopped to claim that (the Court of Tax Appeals) has no jurisdiction over the case for failure to lodge a protest because the letter dated February 15, 1991 could be considered as the protest itself. Thus Rule 131, Section 3(a) of the Revised Rules of Court provides: "'(a) Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsity it." (p. 5, Petition for Review) This is clearly erroneous. The principle of estoppel cannot apply in this case. The Commissioner cannot be charged with estoppel because of any alleged omission or silence on his part. The Commissioner, upon being informed of petitioner's intention to elevate the matter to the Tax Court, was under no obligation to inform the petitioner that the latter was first required to file a protest. The requirement of the filing of a protest with the Commissioner is a matter of law of which the petitioner is presumed to have knowledge. As we find that the questioned assessment of documentary stamp tax against petitioner had become final and unappealable, we rule that the decision of the Court of Tax Appeals dismissing the petition for review filed before it is proper. WHEREFORE, judgment is hereby rendered dismissing that instant petition for review. SO ORDERED. Camilon and Martin, Jr . , JJ . , concur.