GR 168498; (June, 2006) (Digest)
G.R. No. 168498 ; June 16, 2006
RIZAL COMMERCIAL BANKING CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.
FACTS
Petitioner Rizal Commercial Banking Corporation (RCBC) received a Formal Letter of Demand from the Commissioner of Internal Revenue (CIR) for deficiency taxes for 1997. RCBC filed a protest and, after the CIR failed to act upon it, filed a petition for review with the Court of Tax Appeals (CTA). The CTA dismissed the petition for having been filed beyond the 30-day period prescribed by Section 228 of the National Internal Revenue Code. RCBC did not file a motion for reconsideration or an appeal, allowing the dismissal to become final.
Subsequently, RCBC filed a Petition for Relief from Judgment under Rule 38, alleging excusable negligence. It claimed its counsel’s secretary misfiled and lost the CTA resolution of dismissal, preventing a timely appeal. The CTA Second Division denied the petition after a hearing where RCBC’s counsel was present and argued orally. Its motion for reconsideration was also denied. The CTA En Banc affirmed these resolutions.
ISSUE
Whether the CTA committed grave error in denying RCBC’s Petition for Relief from Judgment without allegedly affording it a full opportunity to prove excusable negligence, and whether the case should be decided on its merits rather than on a technicality.
RULING
The Supreme Court denied the petition and affirmed the CTA. On the procedural issue, the Court held RCBC was not denied due process. The essence of due process is a reasonable opportunity to be heard, which can be satisfied through pleadings and oral arguments. The CTA set the petition for relief for a hearing where RCBC’s counsel appeared and argued. RCBC also filed a motion for reconsideration and memoranda. Thus, it was amply heard.
On the substantive requirement for relief, the Court found the alleged negligence was not excusable. Negligence of counsel’s staff in misfiling a notice is a risk borne by the client and does not constitute the extraordinary circumstance justifying relief from judgment. The Court emphasized that to grant relief on such grounds would promote endless litigation. Furthermore, the Court upheld the CTA’s strict application of the jurisdictional 30-day period for appealing tax assessments. Failure to comply with this statutory period deprives the CTA of jurisdiction, making the dismissal of the original petition correct. The interest of the banking industry in the substantive tax issue does not override these mandatory procedural and jurisdictional rules.