Rosa Padilla, Inc. v. Commissioner of Internal Revenue

SPECIAL THIRD DIVISION [CA-G.R. SP No. 33736. October 13, 1995.] (C.T.A. Case No. 4195) ROSA PADILLA, INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE AND COURT OF TAX APPEALS , respondents . D E C I S I O N CARPIO MORALES , J p : The present Petition for Review assails the September 15, 1993 decision of the Court of Tax Appeals in CTA Case No. 4195 and its March 23, 1994 order denying petitioner's Motion for Reconsideration of said decision. Petitioner, Rosa Padilla, Inc., owner of the University Center Building located in Sampaloc, Manila, filed its annual Income Tax Return for the fiscal year ending June 30, 1979 wherein it declared that its due income tax was the amount of P108.419.00. It however, deducted from said amount its three (3) quarterly income tax payments totaling P75,559.00 and the amount of P10,711.25 withheld by its tenants, thereby leaving the net amount of P22,148.75 as tax due from it. It paid this net amount of income tax on October 15, 1979. Petitioner later received an assessment notice January 30, 1984 signed by then Deputy Commissioner Tomas Toledo of the Bureau of Internal Revenue (BIR) declaring that the total Income tax due from it is P108,161.34 plus additional charges, to wit: P300.00 as compromise penalty, and P300.00 as penalty for failure to attach a comparative profit and loss statement. In a letter dated October 8, 1984, petitioner offered to settle her deficiency tax liability and in fact paid the amount of P5,529.14 as compromise payment therefor. On August 3, 1987, respondent BIR Commissioner through Assistant Commissioner for Collection, Pedro G. Aguillon, denied petitioner's request for compromise and demanded settlement within ten days the amount of P102,632.14 (balance of petitioner's deficiency tax liability after deducting its compromise payment in the amount of P5,529.14). Petitioner thereupon filed on September 30, 1987 a Petition for Review with the Court of Tax Appeals, herein public respondent, seeking the revocation and cancellation of the deficiency assessment made by the BIR. The court a quo , by Decision of September 15, 1993, dismissed the petition for lack of jurisdiction over the assessment, which assessment was found to have lapsed into finality for failure of petitioner to protest against the same within Thirty (30) Days from receipt thereof as mandated by Section 229 of the PD 1158 (NATIONAL INTERNAL REVENUE CODE). Petitioner's motion for reconsideration of the decision of the court a quo having been denied by order of March 23, 1994, the present petition was filed. The petition fails. The court a quo is indeed devoid of any jurisdiction over the disputed assessment Section 7, of Republic Act 1125 (AN ACT CREATING THE COURT OF TAX APPEALS) provides: "Sec. 7. Jurisdiction . The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided: 1. Decision of the Commissioner of Internal Revenue in cases involving disputed assessments, refund of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National InternalRevenueCode or other law or part of law administered by the Bureau of Internal Revenue; xxx xxx xxx" The " decision " contemplated under the foregoing provision is that rendered by the Commissioner of Internal Revenue on the protest made by the taxpayer against an assessment, and not the assessment itself (Commissioner of Internal Revenue v. Villa, 22 SCRA 3). And the protest must be made within thirty (30) days from receipt of the assessment, otherwise, the assessment becomes final and unappealable (Section 229, PD 1158 as amended). The records of the case fail to disclose that petitioner established the dated when it received the January 30, 1984 deficiency income tax assessment. In the questioned decision, however, the court a quo stated that petitioner acknowledged to have received the deficiency assessment notice on April 9, 1984. Such finding has not been disputed by petitioner. When petitioner when sent a letter on September 15, 1984 , so it claims, to the BIR Commissioner protesting the assessment, and sent another dated October 8, 1984 tendering a compromise payment several months had elapsed from its receipt on April 9, 1984 of the deficiency assessment notice. In fact by tendering compromise payment, petitioner is deemed to have acquiesced to the deficiency assessment but that it offered to pay, as it did, a reduced/compromise amount. Petitioner's protest against the deficiency assessment having been filed outside the reglementary period, the assessment had become final and unappealable . Petitioner argues that PD 1773 dated January 14, 1981 (AMENDING CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE), along with its implementing Revenue Regulations 12-85, prescribing the filing of a protest against an assessment within thirty (30) days from receipt thereof, is inapplicable as the same came into effect only in 1986 after its publication, it citing the decision of the Supreme Court in Taada v. Tuvera , 146 SCRA 446. PD 1773, which was, under Sec. 37 thereof, to become effective upon approval, was approved on January 14, 1981. Per certifications issued by Heriberto M. Bacalla, Chief of the Official Gazette Publication ( vide : Certifications dated October 29, 1993 and November 15, 1993 pp. 59 and 62, Rollo), the decree was published in the May 11, 1981 Supplement issue of the Official Gazette. The decree thus became effective fifteen (15) days from May 11, 1981 or May 26, 1981. Petitioner doubts such publication, however, in light of a failure to present a copy of the said issue of the Official Gazette. The certifications of publication aside, the Taada case would not alter the finality of the assessment. True, that case, which was promulgated on April 24, 1985, after the approval in 1981 of P.D. 1773, mandated the publication of presidential decrees, among other laws, as a condition sine qua non to their effectivity. But the Supreme Court, cognizant of the fact that certain unpublished presidential decrees has already been applied in certain cases with consequences that could not be ignored in which absolute retroactive invalidity could not be justified, declared in the same case as follows: "The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the court quite apprehensive about the possible unsettling effect this decision might have on acts done in reliance of the validity of those presidential decrees which were published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank to wit: 'The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law, that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, I. & L. Ry. Co. V. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a stature, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon finality and acted upon accordingly, of public policy in the light of the nature both of the stature and of its previous application demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of principle of absolute retroactive invalidity cannot be justified. Consistently with the above principle, this Court in Rutter vs. Esteban sustained the right of a party under the Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this Court. Similarly, the implementation/enforcement of presidential decrees prior to their publication in the official Gazette is 'an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration . . . that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified." (Taada v. Tuvera 136 SCRA 27) The BIR Commissioner and the court a quo having acted pursuant to the provisions of PD 1773 prior to the promulgation in 1985 of the decision in the Taada case and in light of the above-quoted portions of the decision in the same case, petitioner's argument against the applicability to its case of the 30-day period of protest in question is devoid of merit. Anent petitioner's claim that PD 1773 could not be made effective pending the issuance of its implementing regulations. Revenue Regulations 12-85, the same is untenable. The pertinent provision of PD 1773 provides: Sec. 33. A new section to be known as Section 319-A, is hereby inserted between Sections 319 and 320 of the National Internal Revenue Code to read as follows: xxx xxx xxx 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. (Section 33, PD 1773 [now Section 229, PD 1158])." To hold that a taxpayer cannot avail of this recourse pending the issuance of the implementing regulations is absurd. For it would entail suspending the effectivity of said law (PD 1773) and rendering the prescriptive period provided therein inutile. This situation cannot be countenanced, undue delay in the collection of taxes being proscribed, taxes being the life blood of the government (Commissioner of Internal Revenue v. Court of Tax appeals, 234 SCRA 348). WHEREFORE, the assailed decision of the Court a quo is hereby AFFIRMED. SO ORDERED Martin , Jr . and Callejo, Sr ., JJ ., concur.