GR L 18804; (May, 1965) (Digest)
G.R. No. L-18804 May 27, 1965
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. WESTERN PACIFIC CORPORATION, respondent.
FACTS
On March 2, 1959, the Commissioner of Internal Revenue assessed respondent Western Pacific Corporation for a deficiency income tax of P3,731.00 for the year 1953, arising from the disallowance of certain expense items and written-off “bad debts.” The respondent received the assessment on the same date. A letter of demand was sent on March 5, 1959. On June 29, 1959, the respondent, through its auditors, formally contested the assessment on grounds of prescription and the propriety of the deductions. The Commissioner denied this request on July 30, 1959, and reiterated the demand for payment. Further correspondence ensued, with the Commissioner’s last letter dated October 28, 1959, giving a ten-day payment period. On December 18, 1959, the respondent filed a petition for review with the Court of Tax Appeals (CTA) challenging the assessment on three issues: prescription of the assessment, deductibility of expenses for securing IGC licenses, and deductibility of the written-off bad debts. The CTA ruled the assessment was timely but absolved the respondent from liability on the merits. The Commissioner appealed, contesting the CTA’s jurisdiction and the merits of the deductibility rulings.
ISSUE
1. Whether the Court of Tax Appeals had jurisdiction to entertain the respondent’s petition for review.
2. Whether the assessment had become final and executory.
RULING
The Supreme Court set aside the CTA’s decision for lack of jurisdiction. It held that the assessment had become final, executory, and demandable before the petition for review was filed. Under Section 11 of Republic Act No. 1125 , a petition for review must be filed within thirty (30) days from receipt of the assessment; this period is jurisdictional. The respondent received the assessment on March 2, 1959. Its first formal protest was filed only on June 29, 1959, which was beyond the 30-day period. Even if the period were counted from the Commissioner’s last letter of October 28, 1959, the petition filed on December 18, 1959, was still untimely. Consequently, the CTA lost jurisdiction to review the assessment. The Supreme Court ordered the respondent to pay the deficiency tax, plus a 5% surcharge and 1% monthly interest from April 1, 1959, until full payment.