G.R. No. L-11238; August 21, 1958
ST. STEPHEN’S ASSOCIATION and ST. STEPHEN’S CHINESE GIRLS SCHOOL, petitioners, vs. THE COLLECTOR OF INTERNAL REVENUE, respondent.

FACTS

Petitioner St. Stephen’s Association is a non-stock corporation organized to support schools for children of Chinese parentage. Petitioner St. Stephen’s Chinese Girls School is a school maintained by funds from the Association. On January 21, 1950, the Association transferred P9,252.48 to the School, which was entered in the School’s books as a “donation.” A Bureau of Internal Revenue examiner discovered this entry and reported it. Consequently, the Collector of Internal Revenue sent Assessment Notice No. GA-3008-50 dated October 15, 1954, demanding payment of donor’s and donee’s gift taxes, including surcharges and interest.
On November 13, 1954, petitioners requested cancellation of the assessment, arguing the amount was erroneously booked as a donation; it was actually public contributions allocated for the School’s maintenance. The Collector denied this request by letter dated April 6, 1955 (received April 21, 1955). Petitioners filed a rebuttal and request for reconsideration on May 9, 1955. The Collector again denied the request by letter dated July 11, 1955 (received July 25, 1955), stating: “This decision becomes final thirty days after your receipt hereof unless an appeal is taken to the Court of Tax Appeals within the same period, in accordance with the provisions of Republic Act No. 1125 .”
On August 13, 1955, petitioners filed a petition for review with the Court of Tax Appeals. The court required arguments on whether the petition was filed within the 30-day period under Section 11 of Republic Act No. 1125 . Subsequently, the court dismissed the petition for lack of jurisdiction. It ruled the appeal period started from receipt of the assessment notice (November 12, 1954), was interrupted by the two reconsideration requests, but resumed upon their denial. After deducting the time the requests were pending, 37 days had elapsed, making the petition untimely. Petitioners appealed this dismissal to the Supreme Court.

ISSUE

Whether the Court of Tax Appeals correctly dismissed the petition for review on the ground that it was filed beyond the 30-day period prescribed by Section 11 of Republic Act No. 1125 .

RULING

No. The Supreme Court reversed the resolution of the Court of Tax Appeals and ordered the records remanded for a decision on the merits.
The Court held that the Court of Tax Appeals erred in computing the 30-day appeal period from the petitioners’ receipt of the assessment notice. When a taxpayer questions an assessment and requests its reconsideration or cancellation, the assessment becomes a “disputed assessment.” Under Section 7(1) of Republic Act No. 1125 , the Court of Tax Appeals has appellate jurisdiction to review “decisions of the Collector of Internal Revenue in cases involving disputed assessment.” Therefore, the appeal period runs from receipt of the Collector’s decision on the disputed assessment, not from the assessment itself.
The Collector’s final decision on the disputed assessment was his letter of July 11, 1955. This was evident from the letter’s express statement that it was a “decision” that would become final in 30 days unless appealed. The Collector’s prior letter of April 6, 1955, was merely a tentative ruling, as he held the matter under advisement until his final determination. Since petitioners received this final decision on July 25, 1955, and filed their appeal on August 13, 1955 (the 19th day), the appeal was timely. The Collector did not extend the appeal period; he simply rendered his final decision on July 11, 1955. Consequently, the Court of Tax Appeals had jurisdiction over the petition.