Fort Bonifacio Development Corp. v. Commissioner of Internal Revenue

FIRST DIVISION [CA-G.R. SP No. 79010. November 27, 2006.] FORT BONIFACIO DEVELOPMENT CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N REYES, R.T ., P.J p : APPEALED in this petition for review under Rule 43 of the 1997 Rules of Civil Procedure is the Resolution 1 of the Court of Tax Appeals (CTA), which modified its earlier Decision 2 ordering petitioner to pay deficiency documentary stamp tax for the year 1995, by imposing twenty (20%) percent delinquency interest. Likewise sought to be reviewed is the action of the CTA entertaining respondent's partial motion for reconsideration of the Decision after petitioner has appealed it to this Court. The Antecedents Petitioner Fort Bonifacio Development Corporation is a domestic corporation duly registered and existing under Philippine laws. It was originally incorporated as a wholly owned subsidiary of the Bases Conversion and Development Authority (BCDA) for the purpose of developing portions of Fort Bonifacio in accordance with the Fort Bonifacio Master Development Plan. On February 8, 1995, the Republic of the Philippines (Republic) sold to petitioner portions of Fort Bonifacio for a total consideration of P71,227,503,200.00. 3 On even date, the Republic assigned to the BCDA the Promissory Note (PN) executed in its favor by petitioner in the amount of P71,227,503,200.00 as the Republic's capital contribution in the BCDA. Petitioner issued the PN in favor of the Republic in consideration of the transfer to it of the subject property. TDcEaH On February 10, 1995, BCDA assigned back to petitioner the former's receivable from the latter, as covered by the PN, in full payment of BCDA's subscription to the capital stock of petitioner. As a result of the transaction, BCDA acquired ownership of 100% of the shares of stock of petitioner. On September 15, 1998, respondent Commissioner of Internal Revenue issued Letter of Authority No. 19135 authorizing the examination of petitioner's books of accounts and other accounting records covering all internal revenue liability for taxable year 1995. After investigation, petitioner was assessed for deficiency documentary stamp tax (DST) in the amount of P1,068,412,560.00 pursuant to a final notice of assessment. 4 Petitioner received the assessment on December 27, 1999. According to the Bureau of Internal Revenue (BIR), the sale of the Fort Bonifacio property by the Republic to petitioner on February 8, 1995, is subject to DST pursuant to Section 196 of the then National Internal Revenue Code (NIRC) and BIR Building Ruling No. 34 (B) 000-99-19-95. 5 On January 6, 2000, petitioner administratively protested the said assessment by filing a request for reconsideration. It argued that the sale of the subject property by the Republic to petitioner is exempt from all forms of taxes, including the DST. Petitioner's request for reconsideration was filed with respondent on January 6, 2000, and the 180-day period provided for in Section 228 of the NIRC expired on July 4, 2000. Thus, petitioner had 30 days from July 4, 2000, or up to August 3, 2000, within which to file an appeal with the Court of Tax Appeals. On August 2, 2000, petitioner filed a petition for review with the CTA 6 appealing the deficiency tax assessment. On December 26, 2000, in the course of the pre-trial, the parties entered into a stipulation of Facts, Documents and Issues, which they submitted to the CTA. DCIAST The CTA Dispositions On March 5, 2003, the CTA promulgated its Decision 7 , the decretal portion of which reads: "WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby DENIED for lack of merit. Petitioner is hereby ORDERED to PAY the amount of P1,068,412,560.00 representing the deficiency documentary stamp tax for the year 1995. SO ORDERED." On March 25, 2003, respondent filed a motion for partial reconsideration, 8 while petitioner filed an opposition 9 to it on June 10, 2003. On April 10, 2003, petitioner appealed 10 the March 5, 2003 Decision of the CTA to the Court of Appeals. On August 14, 2003, the CTA promulgated the appealed Resolution disposing as follows: "WHEREFORE, in view of the foregoing, the instant Motion for Partial Reconsideration filed by respondent is hereby PARTIALLY GRANTED. Accordingly, the dispositive portion of our decision promulgated on March 5, 2003 is hereby modified to read as follows: 'WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby DENIED for lack of merit. Petitioner is hereby ORDERED to PAY the amount of P1,068,412,560.00 representing the deficiency documentary stamp tax for the year 1995, plus 20% delinquency interest reckoned from January 26, 2000 until the amount is fully paid .' SO ORDERED." ( Emphasis supplied ) Hence, this appeal. Issues Petitioner raises the following grounds: IcADSE "A. THE COURT OF TAX APPEALS ERRED IN IMPOSING DELINQUENCY INTEREST ON THE DOCUMENTARY STAMP TAX ASSESSMENT AGAINST PETITIONER AND IN NOT HOLDING THAT ON THE ASSUMPTION THAT PETITIONER IS LIABLE TO PAY DOCUMENTARY STAMP TAX, NO BE IMPOSED THEREON. B. THE COURT OF TAX APPEALS ERRED IN ENTERTAINING OR TAKING COGNIZANCE OF RESPONDENT'S "MOTION FOR PARTIAL RECONSIDERATION" DATED MARCH 24, 2003 NOTWITHSTANDING THAT PETITIONER HAD THEN ALREADY APPEALED THE AFORESAID DECISION TO THIS HONORABLE COURT." 11 Our Ruling The petition lacks merit. The CTA Correctly Imposed The Twenty Percent 20% Delinquency Tax Pursuant To The 1977 Tax Code . Petitioner points out that the CTA did not impose the 25% surcharge against it, finding that "its non-payment of the DST was not tainted with bad faith or willful intent to evade payment." Hence, it argues that the CTA should have also ruled that petitioner is not liable for the deficiency interest of twenty percent (20%). We do not agree. The imposition of the twenty percent (20%) interest finds basis in Sections 248 and 249 of the Tax Code of 1977, which provides: STHAID "SEC. 248. Civil Penalties. (d) In the case of failure to affix the proper documentary stamps to a document or instrument, there shall, for every violation, be imposed, in addition to the amount of documentary stamp tax required to be paid, an amount equivalent to twenty-five percent (25%) of such unpaid amount which shall be in lieu of the interest prescribed in Section 249: Provided, that when the amount is not paid within the time prescribed in the notice and demand there shall be collected on the total unpaid amount, including the surcharge, the interest prescribed in Section 249 (a) from the due date prescribed in the notice and demand until the amount is fully paid, which interest shall form part of the tax ." "SECTION 249. Interest. (a) In general. There shall be assessed and collected on any unpaid amount of tax, interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by regulations, from the date prescribed for payment until the amount is fully-paid xxx xxx xxx (c) Delinquency interest. In case of failure to pay: (1) . . . (2) . . . (3) A deficiency tax, or any surcharge or interest thereon, on the due date appearing in the notice and demand of the Commissioner, there shall be assessed and collected, on the unpaid amount, interest at the rate prescribed in paragraph (a) hereof until the amount is fully paid, which interest shall form part of the tax " ( Emphasis supplied ) We thus agree with the CTA that when the amount is not paid within the time prescribed in the notice and demand, there shall be collected on the total unpaid amount the interest prescribed in Section 249(a). Since petitioner did not, pay the amount of the DST within thirty (30) days from receipt of the notice and demand on December 27, 1999, the CTA correctly ruled that it is liable for delinquency interest at the rate of twenty percent (20%). HASTCa Also, it has been the long standing policy and practice of this Court to respect the conclusions of quasi-judicial agencies, such as the Court of Tax Appeals. By the nature of its functions, it is dedicated exclusively to the study and consideration of tax cases and has necessarily developed an expertise on the subject, unless there has been an abuse or improvident exercise of its authority. 12 The CTA Did Not Err In Taking Cognizance Of Respondent's Motion For Partial Reconsideration Of The Decision Dated March 5, 2003 . Petitioner claims that the CTA erred in taking cognizance of respondent's motion for partial reconsideration despite petitioner's appeal to the Court of Tax Appeals. It further insists that respondent should have ventilated the motion in the other appeal, docketed as CA-G.R. SP No. 76017, before the Court of Appeals. We rule that the CTA had jurisdiction to entertain respondent's motion for partial reconsideration. Respondent filed the motion within the fifteen (15)-day period to file a petition for review. Section 4 of Rule 43 of the 1997 Revised Rules on Civil Procedure provides: "SECTION 4. Period of Appeal . The appeal shall be taken within fifteen (15) days from notice of the award, judgment , final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed . Upon proper motion and the payment of the full amount of the docket fee before the expiration of the reglementary period, the Court may grant an additional period of fifteen (15) days only within which to file the petition for review. No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days." AcHaTE The records show that respondent received the March 5, 2003 Decision of the CTA on March 12, 2003. It filed a motion for partial reconsideration of the Decision on March 25, 2003, before the lapse of the fifteen (15) day period to appeal. Thus, the filing of the motion was made in accordance with the rules. More importantly, it gave the CTA the opportunity to correct the errors imputed to it. Finally, We cannot subscribe to petitioner's argument that respondent should have ventilated the issue of penalty in CA-G.R. SP No. 76017, instead of filing a motion for partial reconsideration with the CTA. It must be stressed that the CTA had already taken cognizance of respondent's motion filed on March 25, 2003, even before petitioner appealed the Decision to the Court of Appeals on April 10, 2003. In fact, respondent was not opposed to the consolidation of this case with CA-G.R. SP no. 76017. However, the motion for consolidation was denied 13 since CA-G.R. SP no. 76017 had already been decided 14 in favor of respondent by the Court of Appeals. WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED. Enriquez, Jr. and Veloso, JJ., concur. Footnotes 1. Dated August 14, 2003 in CTA Case No. 6149, Rollo , pp. 295-300 2. Dated March 5, 2003, Ibid ., pp. 199-215 3. By virtue of R.A. No. 7227 and Executive Order No. 40, dated December 8, 1992 4. Assessment No. ST-DST-95-0131-99 dated December 10, 1999. 5. Dated February 13, 1995. 6. Docketed as CTA Case No. 6149 7. Rollo , pp. 199-215 8. Ibid ., pp. 216-221 9. Ibid ., pp. 223-231 10. Docketed as CA-G.R. SP no. 76017 11. Rollo , p. 15, underscoring supplied. 12. Commissioner of Internal Revenue vs. Court of Appeals, et al ., G.R. No. 125355, March 30, 2000; citing Commissioner of Internal Revenue v. Court of Appeals , 204 SCRA 183, 189-190 (1991). 13. In Our Resolution dated September 2, 2004. 14. Decision dated June 11, 2004 penned by Justice Conrado Vasquez and concurred by Justice Rebecca De Guia-Salvador and Justice Jose Reyes.