G.R. No. 68385 May 12, 1989
ILDEFONSO O. ELEGADO, as Ancillary Administrator of the Testate Estate of the late WARREN TAYLOR GRAHAM, petitioner, vs. HON. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.

FACTS

Warren Taylor Graham, an American national, died in 1976, leaving shares of stock in the Philippines. His son filed an estate tax return in 1976, leading to an assessment by the Commissioner of Internal Revenue (CIR) for P96,509.35 in 1978. The estate protested, but the CIR denied the protest in July 1978. The estate took no further appeal, allowing this first assessment to become final and executory. Subsequently, ancillary probate proceedings were initiated in the Philippines, with Ildefonso Elegado appointed as ancillary administrator. Elegado filed a second estate tax return in 1980, prompting the CIR to issue a second, provisional assessment of P72,948.87.
While the estate’s protest against this second assessment was pending, the CIR filed a motion in the probate court for the allowance and payment of the first, final assessment of P96,509.35. Interpreting this motion as an implied denial of its protest against the second assessment, Elegado filed a petition for review with the Court of Tax Appeals (CTA) challenging the second assessment. The CIR later cancelled this second assessment via a letter dated March 31, 1982, and moved to dismiss the CTA petition as moot. The CTA granted the dismissal.

ISSUE

Whether the Court of Tax Appeals erred in dismissing the petitioner’s appeal for lack of a cause of action.

RULING

The Supreme Court upheld the CTA’s dismissal. The legal logic is straightforward: a cause of action requires a justiciable controversy. The CTA petition sought to review the second assessment of P72,948.87. However, the CIR’s unequivocal cancellation of that specific assessment extinguished the very subject of the appeal. With the assessment withdrawn, there was no longer any disputed tax liability for the CTA to adjudicate, rendering the petition moot and academic. The petitioner’s attempt to argue the merits of the first assessment (e.g., nature of the property as conjugal or exclusive, valuation date) was procedurally improper. The first assessment had become final and executory in 1978 due to the estate’s failure to appeal the CIR’s denial of its protest within the 30-day reglementary period. A final assessment is no longer subject to judicial review. Consequently, the CTA correctly dismissed the petition for lack of a cause of action, as there was no live controversy for it to resolve. The petition was denied.