Tektite Insurance Brokers, Inc. v. Commissioner of Internal Revenue

SIXTEENTH DIVISION [CA-G.R. SP No. 61400. September 10, 2002.] TEKTITE INSURANCE BROKERS, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N BUZON , J p : Petitioner seeks a review of the decision of the Court of Tax Appeals, which dismissed its petition for review of the decision of respondent for lack of jurisdiction. On May 23, 1996, petitioner received from Socorro Z. Duran, Chief, Assessment Division, Bureau of Internal Revenue (BIR), a pre-assessment notice, dated May 2, 1996, informing it that it has a deficiency income tax of P89,922.70, exclusive of interest, for the year 1993. Petitioner protested said pre-assessment notice contending that the salaries and wages which it claimed as deductions were completely and adequately supported. On September 23, 1996, petitioner received Assessment Notice No. 000422 from the Chief, Assessment Division, regarding its deficiency value added tax in the amount of P2,027.96 and deficiency income tax in the amount of P144,573.04 for the year 1993. Said assessment was protested by petitioner, claiming that the salaries and wages claimed as deductions were completely and adequately supported. In a letter dated August 4, 1997, petitioner was informed of its reduced deficiency income tax in the amount of P90,604.19, exclusive of interest, and demanding its payment, as well as the deficiency value added tax, within fifteen (15) days from notice. Said letter carried the following complimentary close: "Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue, By: (SGD.) Ma. NIEVA A. GUERRERO Actg. Chief, Assessment Division" On October 10, 1997, petitioner filed a petition for review with the Court of Tax Appeals seeking the nullity of the decision of respondent Commissioner of Internal Revenue demanding the payment of deficiency income tax and deficiency value added tax for the year 1993. An answer was filed by respondent alleging that the letter dated August 4, 1997 is not her decision but a mere communication of the Chief; Assessment Division, relative to petitioner's protest to the assessment notice; that under Section 7, in relation to Section 11, of Republic Act No. 1125, only the decision of the Commissioner of Internal Revenue, among others, is appealable to the Court of Tax Appeals; that the remedy of petitioner is to appeal the letter dated August 4, 1997 of the Chief, Assessment Division, to the Appellate Division, BIR; that the petition for review is premature and the court has no jurisdiction over the case; and that her demand on petitioner for deficiency income tax is in accordance with law. EIAScH On August 8, 2000, a decision was rendered by the Court of Tax Appeals, through Associate Judges Ramon O. de Veyra and Amancio Q. Saga, dismissing the petition for review for lack of jurisdiction on the ground that under the 1996 Tax Code, which was the law in force at the time the assessment was issued and the protest was filed, only the decisions of the Commissioner of Internal Revenue or Regional Director over protested assessments are appealable to said Court. A dissenting opinion was written by Presiding Judge Ernesto D. Acosta, who voted to decide the case on the merits, citing jurisprudence to the effect that lower ranking officials of the BIR, acting for and in behalf of the Commissioner, have the delegated authority to act with finality on matters involving request for reinvestigation or reconsideration of protested assessments. Petitioner's motion for reconsideration of the decision of the CTA was denied, again with the dissenting opinion of Presiding Judge Ernesto D. Acosta. Hence, the instant petition for review on the following grounds: "1. The CTA committed grave and serious reversible error when it ruled that the Petition for Review instituted by TIBI before said court was premature. 2. The CTA committed grave and serious reversible error when it did not rule on the merits of the case, and hold that TIBI is not liable to pay deficiency value added tax and deficiency income tax." We agree with petitioner that the Court of Tax Appeals erred in dismissing its petition for review for lack of jurisdiction. In Commissioner of Internal Revenue vs. Ayala Securities Corporation , 1 the Supreme Court considered the letter signed by the Chief, Manila Examiners, Office of the Commissioner of Internal Revenue, as tantamount to a denial of the protest of the taxpayer on the tax assessment and, therefore, a decision on a disputed or protested assessment which is appealable to the Court of Tax Appeals. In the petition at bench, although the letter dated August 4, 1997 was signed by the Acting Chief, Assessment Division, she did so by authority of Commissioner Liwayway Vinzons-Chato, as shown by the complimentary close thereon, unlike the previous letters sent to petitioner by the Chief, Assessment Division, which did not bear the name of the Commissioner of Internal Revenue in the complimentary close thereon. Moreover, said letter advised petitioner to settle its deficiency taxes within fifteen (15) days from receipt, otherwise, the BIR may enforce collection thru summary remedies provided for by law without further notice, which is a clear indication of the final decision of the Commissioner on the protest filed by petitioner. Moreover, the National Internal Revenue Code of 1997 provides in Section 7 thereof that the Commissioner may delegate the powers vested in him under the pertinent provisions thereof to any or such subordinate officials with the rank equivalent to a division chief or higher. Likewise, Section 228 of said Code provides that when the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings, which may be protested by the latter and, in case the protest is denied, the taxpayer may appeal to the Court of Tax Appeals. As pointed out in Frivaldo vs. Commission on Elections : 2 "It is true that under the Civil Code of the Philippines, '(l)aws shall have no retroactive effect, unless the contrary is provided.' But there are settled exceptions to this general rule, such as when the statute is CURATIVE or REMEDIAL in nature or when it CREATES NEW RIGHTS. According to Tolentino, curative statutes are those which undertake to cure errors and irregularities, thereby validating judicial or administrative proceedings, acts of public officers, or private deeds and contracts which otherwise would not produce their intended consequences by reason of some statutory disability or failure to comply with some technical requirement . They operate on conditions already existing, and are necessarily retroactive in operation. Agpalo, on the other hand, says that curative statutes are `healing acts . . . curing defects and adding to the means of enforcing existing obligations . . . (and) are intended to supply defects, abridge superfluities in existing laws, and curb certain evils . . . By their very nature, curative statutes are retroactive . . . (and) reach back to past events to correct errors or irregularities and to render valid and effective attempted acts which would be otherwise ineffective for the purpose the parties intended.' On the other hand, remedial or procedural laws, i.e., those statutes relating to remedies or modes of procedure, which do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of such rights, ordinarily do not come within the legal meaning of a retrospective law, nor within the general rule against the retrospective operation of statutes." Petitioner contends that since a finding of facts had already been made by the Court of Tax Appeals, it is not necessary to remand this case to said court and that this Court may already render a ruling that it is not liable for deficiency value added tax and deficiency income tax. It bears stressing that the Court of Tax Appeals is a highly specialized body specifically created for the purpose of reviewing tax cases. 3 Said court, by the very nature of its function, is dedicated exclusively to the consideration of tax problems and has necessarily developed an expertise on the subject. 4 WHEREFORE, the decision of the Court of Tax Appeals dismissing the petition for review for lack of jurisdiction is REVERSED and SET ASIDE and said Court is directed to resolve said petition on the merits. SO ORDERED. ISCcAT Tria-Tirona and Maambong, * JJ . , concur. Footnotes 1. 70 SCRA 204, 209. 2. 257 SCRA 727, 754-755. 3. Philippine Refining Company vs. Court of Appeals, 256 SCRA 667, 675-676. 4. Cyanamid Philippines, Inc. vs. Court of Appeals, 322 SCRA 639, 654. * Acting Third Member, per Office Order No. 129-02-CG, dated September 5, 2002.