Oceanic Wireless Network, Inc. v. Commissioner of Internal Revenue

SECOND DIVISION [CA-G.R. SP No. 35581. October 31, 2000.] OCEANIC WIRELESS NETWORK, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS , respondents . D E C I S I O N GARCIA , J p : Via this petition for review, petitioner Oceanic Wireless Network, Inc. asks this Court to nullify the decision dated September 16, 1994 of the Court of Tax Appeals (CTA) in C.T.A. Case No. 4668, dismissing petitioner's appeal thereto from an earlier denial by the Bureau of Internal Revenue (BIR) of petitioner's protest against a certain deficiency tax assessment. The factual backdrop: On March 17, 1988, petitioner received from the BIR deficiency tax assessments for taxable year 1984 in the total amount of P8,644,998.71, broken down as follows: Kind of Tax Assessment No. Amount Deficiency income tax FAR-4-1984-88-001130 P8,381,354.00 Penalties for late payment of income and failure to file quarterly returns FAR-4-1984-88-001131 3,000.00 Deficiency contractor's tax FAR-4-1984-88-001132 29,849.06 Deficiency fixed tax FAR-4-88-001133 12,083.65 Deficiency franchise tax FAR-4-84-88-001134 227,712.00 (See Annex "A", Petition). In a letter dated April 12, 1988 to the BIR Commissioner, petitioner filed its protest against the subject tax assessments and requested for a reconsideration and/or cancellation thereof. THCSAE In a letter dated January 24, 1991, Mr. Severino B. Buot, Chief of the BIR Accounts Receivable/Billing Division, acting for and in behalf of the BIR Commissioner, reiterated the assessments and denied the petitioner's request for reinvestigation. The said letter contains a notation on the bottom left-side portion thereof, stating: " Note : Your request for reinvestigation has been denied for failure to submit the necessary supporting papers as per endorsement letter from office of the Special Operation Service dated 12-12-90 " (See Annex "A", Petition). Consequently, the Assistant Commissioner for Collection, acting for the BIR Commissioner, issued warrants of distraint and/levy and warrant of garnishment which were served on the petitioner on October 10, 1991 and October 17, 1991, respectively. On November 8, 1991, petitioner filed a petition for review with the CTA to contest the action of the Commissioner of Internal Revenue in issuing the warrants to enforce collection of the subject assessments. The petition was docketed as CTA Case No. 4668. In the herein assailed decision of September 16, 1994, the CTA ruled that it had no jurisdiction to entertain petitioner's suit since the petition for review was filed out of time, emphasizing that the start of the thirty day (30) period to file the petition for review should have been reckoned from petitioner's receipt of the BIR's letter of January 24, 1991 denying its protest, and not from the date of receipt of the warrants, as the petitioner had done. In addition, the CTA held that the issuance of the warrant of distraint and/levy and warrant of garnishment by the respondent BIR Commissioner was not barred by prescription. Says the Tax Court: " On the second issue, we find it again for the respondent, Petitioner also completely ignored the fact that it filed a letter of protest and reconsideration on April 12, 1988 against subject assessments which was given due course by the respondent . This suspends the running of the statute of limitations as expressly provided under Section 224 of the Tax Code : 'SEC. 224. Suspension of running of statute . The running of the statute of limitations provided in Section 203 and 223 on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection, in respect of any deficiency, shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty days thereafter ; when the taxpayer requests for a reinvestigation which is granted by the Commissioner ; when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected; Provided , That, if the taxpayer inform the Commissioner of any change of address, the running of the statute of limitations will not be suspended; when the warrant of distraint and levy is duly served upon the taxpayer, his authorized representative, or a member of his household with sufficient discretion, and no property could be located; and when the taxpayer is out of the Philippines ' (Emphasis supplied) Since the protest was finally decided by respondent on January 24, 1991, the issuance of the corresponding warrant of distraint and/or levy and warrant of garnishment on October 10 and 17, 1991, respectively, has not yet prescribed " (Annex "A", Petition). On October 7, 1994, petitioner filed a Motion for Reconsideration, therein positing the argument that the BIR's letter of January 24, 1991, contrary to the belief of the CTA, cannot be considered as the final decision of the Commissioner of Internal Revenue on its protest since it was signed by a mere subordinate and not by BIR Commissioner himself as required by law (Annex "B", Petition). ICASEH With the denial of its motion for reconsideration, petitioner is now before US, claiming that the CTA erred in "1. . . . finding that demand letter issued by the (then) Chief of Accounts Receivable/Billing Division of the Bureau of Internal Revenue was the decision on the disputed assessments appealable to the Court of Tax Appeals ; and 2. . . . declaring that the denial of the protest has become long (sic) final and executory for failure of the Petitioner to institute the appeal from the demand letter of the Chief of the Accounts Receivable/Billing Division within thirty (30) days from receipt thereof " (Petition, p. 6). The recourse is not impressed with merit. When an adverse decision or ruling has been rendered by the Commissioner of Internal Revenue with reference to a disputed assessment, the taxpayer may appeal the same within thirty (30) days from receipt thereof (Section 11, Republic Act No. 1125). As in the agency a quo , petitioner presently insists that the 30-day period to appeal should not have been reckoned from its receipt of the January 24, 1991 letter of the Chief of Accounts Receivable/Billing Division of the BIR because the said letter was not the Commissioner's final decision on petitioner's protest as it not was signed by the BIR Commissioner himself. To petitioner's mind, the power to issue final tax assessments and to decide protests thereon lies solely with the Commissioner of Internal Revenue and cannot be delegated to a subordinate. In sum, petitioner contends that there is no final decision to speak of since the Commissioner has yet to make a personal determination of the merits of petitioner's case. We are not persuaded. Patterned as Our system of government is largely with that of the United States. We can seek guidance on matters concerning administrative law from American jurisprudence. The rule in the United States is: " [w]hen the nature of the powers of an administrative agency is such that they are impossible of personal execution, the said agency can delegate its powers, including its discretionary or quasi-judicial powers, to subordinates within the agency " (2 Am Jur 2d Administrative Law, Section 224p). The same source of jurisprudence even went to the extent that " [n]o matter how strict or stubborn the statutory requirement may be, the law does not preclude practicable administration procedure in obtaining the aid of assistants in the department, apparently to any extent so long as the agency does not abdicate its power and responsibility and perseveres for itself the right to make the final decision ." (2 AmJur 2d Administrative Law, Section 224). In the absence of any claim from the petitioner that a specific provision of the NIRC prohibits the Commissioner of Internal Revenue from availing the services of a subordinate, the aforequoted ruling finds relevance to the case at hand. The sub-delegation of power has been justified by " sound principles of organization " which deemed that " those at the top be able to concentrate their attention upon the larger and more important questions of policy and practice, and their time be free, so far as possible, from the consideration of the smaller and far less important matters of detail " (American Tobacco Co. vs. Director of Patents, 67 SCRA 287, 294, citing Davis, Administrative Law, p. 201). The major work of the head of agency is normally supervision and direction. When agency heads permit themselves to be overwhelmed by detail, they rob themselves of time essential for their most important tasks. The nature of administrative agencies necessitates that delegation of function and authority be a predominant feature of the organization (Hector S. De Leon and Hector M. De Leon, Jr. ADMINISTRATIVE LAW, TEXT AND CASES. 3rd ed., 1988, p. 32, citing W. Gelhorn and C. Byse, Administrative Law: Cases and Comments, 4th ed., 1960). Considering the myriad of responsibilities imposed by the Revenue Code on the Commissioner of Internal Revenue, We cannot expect the Commissioner himself to attend to all those chores personally. The sheer number of taxpayers alone makes it impossible for the BIR Commissioner to perform, all by himself, the tasks of tax assessment and collection. Surely, Congress could not have intended that the burden of tax administration should rests on the shoulders of the Commissioner of Internal Revenue alone. Thus, the CTA correctly held that the thirty (30) day period allotted by law to the petitioner to appeal the denial of its protest should be reckoned from its receipt of the January 24, 1991 letter of the Chief of Accounts Receivable/Billing Division. Since the said letter was presumed to have been received by the petitioner within a reasonable time, it is not irrational to conclude that the filing of the petition for review before the CTA on November 8, 1991 was way past the prescribed period to appeal. Besides, petitioner's argument is self-defeating: if it is still awaiting the final decision of the Commissioner of Internal Revenue on its protest, why did it appeal the issuance of the warrants of distraint/levy and of garnishment to the CTA, which can resolve only questions involving final decisions of the Commissioner. Considering that the subject warrants were signed by an Assistant Commissioner for and in behalf of the Commissioner of Internal Revenue, petitioner's pretension of lack of faith on the capacity of subordinates to sign communications for and on behalf of their superior crumbles. IaHSCc Nor are We inclined to subscribe to petitioner's explanation, which, in its bid to escape from the trap of its own making, claims that the filing of its appeal with the CTA was an honest mistake, and that unless it is allowed to exhaust all administrative remedies, the courts have no jurisdiction to continue with the current proceedings. The said explanation, aside from being self-serving, also amounts to a recognition by the petitioner of the legitimacy of the act of the Commissioner of Internal Revenue in resolving disputed assessments through his subordinates. WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED. Brawner and Reyes, Jr., JJ . , concur.