4/2/2017 G.R.No.

168498

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RepublicofthePhilippines
SUPREMECOURT
Manila

FIRSTDIVISION

G.R.No.168498June16,2006

RIZALCOMMERCIALBANKINGCORPORATION,Petitioner,
vs.
COMMISSIONEROFINTERNALREVENUE,Respondent.

DECISION

YNARESSANTIAGO,J.:

This is a petition for review under Rule 45 of the Rules of Court assailing the Decision1 of the Court of Tax
Appeals (CTA) En Banc dated June 7, 2005 in C.T.A. EB No. 50 which affirmed the Resolutions of the CTA
Second Division dated May 3, 20042 and November 5, 20043 in C.T.A. Case No. 6475 denying petitioners
PetitionforRelieffromJudgmentandtheMotionforReconsiderationthereof,respectively.

Theundisputedfactsareasfollows:

On July 5, 2001, petitioner Rizal Commercial Banking Corporation received a Formal Letter of Demand dated
May 25, 2001 from the respondent Commissioner of Internal Revenue for its tax liabilities particularly for Gross
OnshoreTaxintheamountofP53,998,428.29andDocumentaryStampTaxforitsSpecialSavingsPlacementsin
theamountofP46,717,952.76,forthetaxableyear1997.4

On July 20, 2001, petitioner filed a protest letter/request for reconsideration/reinvestigation pursuant to Section
228oftheNationalInternalRevenueCodeof1997(NIRC).5

Astheprotestwasnotacteduponbytherespondent,petitionerfiledonApril30,2002apetitionforreviewwith
theCTAforthecancellationoftheassessmentswhichwasdocketedasC.T.A.CaseNo.6475.6

OnJuly15,2003,respondentfiledamotiontoresolvefirsttheissueofCTAsjurisdiction,7whichwasgrantedby
theCTAinaResolutiondatedSeptember10,2003.8Thepetitionforreviewwasdismissedbecauseitwasfiled
beyondthe30dayperiodfollowingthelapseof180daysfrompetitionerssubmissionofdocumentsinsupportof
itsprotest,asprovidedunderSection228oftheNIRCandSection11ofR.A.No.1125,otherwiseknownasthe
LawCreatingtheCourtofTaxAppeals.

Petitioner did not file a motion for reconsideration or an appeal to the CTA En Banc from the dismissal of its
petitionforreview.Consequently,theSeptember10,2003ResolutionbecamefinalandexecutoryonOctober1,
2003andEntryofJudgmentwasmadeonDecember1,2003.9Thereafter,respondentsentaDemandLetterto
petitionerforthepaymentofthedeficiencytaxassessments.

On February 20, 2004, petitioner filed a Petition for Relief from Judgment10 on the ground of excusable
negligenceofitscounselssecretarywhoallegedlymisfiledandlosttheSeptember10,2003Resolution.TheCTA
Second Division set the case for hearing on April 2, 200411 during which petitioners counsel was present.12
RespondentfiledanOpposition13whilepetitionersubmitteditsManifestationandCounterMotion.14

On May 3, 2004, the CTA Second Division rendered a Resolution15 denying petitioners Petition for Relief from
Judgment. la w p h !l.n e t

Petitioners motion for reconsideration was denied in a Resolution dated November 5, 2004,16 hence it filed a
petitionforreviewwiththeCTAEnBanc,docketedasC.T.A.EBNo.50,whichaffirmedtheassailedResolutions
oftheCTASecondDivisioninaDecisiondatedJune7,2005.

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Hence,thispetitionforreviewbasedonthefollowinggrounds:

I.

THE HONORABLE CTA AND CTA EN BANC GRAVELY ERRED IN DENYING PETITIONERS PETITION
FOR RELIEF, WITHOUT FIRST AFFORDING IT THE OPPORTUNITY TO ADDUCE EVIDENCE TO
ESTABLISH THE FACTUAL ALLEGATIONS CONSTITUTING ITS ALLEGED EXCUSABLE NEGLIGENCE,
INCLEARVIOLATIONOFPETITIONERSBASICRIGHTTODUEPROCESS.

II.

CONSIDERINGTHATTHESUBJECTASSESSMENT,INSOFARASITINVOLVESALLEGEDDEFICIENCY
DOCUMENTARY STAMP TAXES ON SPECIAL SAVINGS ACCOUNTS, IS AN ISSUE AFFECTING ALL
MEMBERS OF THE BANKING INDUSTRY, PETITIONER, LIKE ALL OTHER BANKS, SHOULD BE
AFFORDED AN EQUAL OPPORTUNITY TO FULLY LITIGATE THE ISSUE, AND HAVE THE CASE
DETERMINEDBASEDONITSMERITS,RATHERTHANONAMERETECHNICALITY.17

Relief from judgment under Rule 38 of the Rules of Court is a legal remedy that is allowed only in exceptional
caseswherebyapartyseekstosetasideajudgmentrenderedagainsthimbyacourtwheneverhewasunjustly
deprivedofahearingorwaspreventedfromtakinganappeal,ineithercase,becauseoffraud,accident,mistake
orexcusableneglect.18

Petitionerarguesthatitwasdenieddueprocesswhenitwasnotgiventheopportunitytobeheardtoprovethat
itsfailuretofileamotionforreconsiderationorappealfromthedismissalofitspetitionforreviewwasduetothe
failure of its employee to forward the copy of the September 10, 2003 Resolution which constitutes excusable
negligence.

Petitionersargumentlacksmerit.

Itisbasicthataslongasapartyisgiventheopportunitytodefendhisinterestsinduecourse,hewouldhaveno
reason to complain, for it is this opportunity to be heard that makes up the essence of due process.19 In
Batongbakalv.Zafra,20theCourtheldthat:

Thereisnoquestionthatthe"essenceofdueprocessisahearingbeforeconvictionandbeforeanimpartialand
disinterestedtribunal"butdueprocessasaconstitutionalpreceptdoesnot,alwaysandinallsituations,requirea
trialtypeproceeding.Theessenceofdueprocessistobefoundinthereasonableopportunitytobeheardand
submit any evidence one may have in support of ones defense. "To be heard" does not only mean verbal
arguments in court one may be heard also through pleadings. Where opportunity to be heard, either
through oral arguments or pleadings, is accorded, there is no denial of procedural due process.
(Emphasissupplied)

As correctly pointed by the Office of the Solicitor General (OSG), the CTA Second Division set the case for
hearingonApril2,2004afterthefilingbythepetitionerofitspetitionforrelieffromjudgment.Petitionerscounsel
waspresentonthescheduledhearingandinfactorallyargueditspetition.

Moreover,aftertheCTASecondDivisiondismissedthepetitionforrelieffromjudgmentinaResolutiondatedMay
3, 2004, petitioner filed a motion for reconsideration and the court further required both parties to file their
respectivememorandum.Indeed,petitionerwasnotdenieditsdayincourtconsideringtheopportunitiesgivento
argueitsclaim.

Relief cannot be granted on the flimsy excuse that the failure to appeal was due to the neglect of petitioners
counsel.21Otherwise,allthatalosingpartywoulddotosalvagehiscasewouldbetoinvokeneglectormistakeof
hiscounselasagroundforreversingorsettingasidetheadversejudgment,therebyputtingnoendtolitigation.22

Negligencetobe"excusable"mustbeonewhichordinarydiligenceandprudencecouldnothaveguardedagainst
and by reason of which the rights of an aggrieved party have probably been impaired.23 Petitioners former
counselsomissioncouldhardlybecharacterizedasexcusable,muchlessunavoidable.

The Court has repeatedly admonished lawyers to adopt a system whereby they can always receive promptly
judicial notices and pleadings intended for them.24 Apparently, petitioners counsel was not only remiss in
complyingwiththisadmonitionbuthealsofailedtocheckperiodically,asanactofprudenceanddiligence,the
statusofthependingcasebeforetheCTASecondDivision.Thefactthatcounselallegedlyhadnotrenewedthe
employmentofhissecretary,therebymakingthelatternolongerattentiveorfocusedonherwork,didnotrelieve
himofhisresponsibilitiestohisclient.Itisaproblempersonaltohimwhichshouldnotinanymannerinterfere
withhisprofessionalcommitments.

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Inexceptionalcases,whenthemistakeofcounselissopalpablethatitamountstogrossnegligence,thisCourt
affords a party a second opportunity to vindicate his right. But this opportunity is unavailing in the case at bar,
especiallysincepetitionerhadsquanderedthevariousopportunitiesavailabletoitatthedifferentstagesofthis
case. Public interest demands an end to every litigation and a belated effort to reopen a case that has already
attainedfinalitywillservenopurposeotherthantodelaytheadministrationofjustice.25

Since petitioners ground for relief is not welltaken, it follows that the assailed judgment stands. Assuming ex
la v v p h il. e +

gratia argumenti that the negligence of petitioners counsel is excusable, still the petition must fail. As aptly
observedbytheOSG,evenifthepetitionforrelieffromjudgmentwouldbegranted,petitionerwillnotfareany
better if the case were to be returned to the CTA Second Division since its action for the cancellation of its
assessmentshadalreadyprescribed.26

PetitionerprotestedtheassessmentspursuanttoSection228oftheNIRC,whichprovides:

SEC.228.ProtestingofAssessment.xxx.

xxxx

Withinaperiodtobeprescribedbyimplementingrulesandregulations,thetaxpayershallberequiredtorespond
tosaidnotice.Ifthetaxpayerfailstorespond,theCommissionerorhisdulyauthorizedrepresentativeshallissue
anassessmentbasedonhisfindings.

Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation
within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by
implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting
documentsshallhavebeensubmittedotherwise,theassessmentshallbecomefinal.

If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days
fromsubmissionofdocuments,thetaxpayeradverselyaffectedbythedecisionorinactionmayappeal
totheCourtofTaxAppealswithin(30)daysfromreceiptofthesaiddecision,orfromthelapseofthe
one hundred eighty (180)day period otherwise the decision shall become final, executory and
demandable.(Emphasissupplied)

TheCTASecondDivisionheld:

Followingtheperiodsprovidedforintheaforementionedlaws,fromJuly20,2001,thatis,thedateofpetitioners
filingofprotest,ithaduntilSeptember18,2001tosubmitrelevantdocumentsandfromSeptember18,2001,the
Commissioner had until March 17, 2002 to issue his decision. As admitted by petitioner, the protest remained
unactedbytheCommissionerofInternalRevenue.Therefore,ithaduntilApril16,2002withinwhichtoelevate
thecasetothiscourt.Thus,whenpetitionerfileditsPetitionforReviewonApril30,2002,thesameisoutsidethe
thirty(30)period.27

As provided in Section 228, the failure of a taxpayer to appeal from an assessment on time rendered the
assessment final, executory and demandable. Consequently, petitioner is precluded from disputing the
correctnessoftheassessment.

InKer&Company,Ltd.v.CourtofTaxAppeals,28theCourtheldthatwhiletherighttoappealadecisionofthe
CommissionertotheCourtofTaxAppealsismerelyastatutoryremedy,neverthelesstherequirementthatitmust
bebroughtwithin30daysisjurisdictional.Ifastatutoryremedyprovidesasaconditionprecedentthattheaction
toenforceitmustbecommencedwithinaprescribedtime,suchrequirementisjurisdictionalandfailuretocomply
therewithmayberaisedinamotiontodismiss.

Infine,thefailuretocomplywiththe30daystatutoryperiodwouldbartheappealanddeprivetheCourtofTax
Appealsofitsjurisdictiontoentertainanddeterminethecorrectnessoftheassessment.29

WHEREFORE,inviewoftheforegoing,theDecisionoftheCourtofTaxAppealsEnBancdatedJune7,2005in
C.T.A.EBNo.50affirmingtheResolutionsoftheCourtofTaxAppealsSecondDivisiondatedMay3,2004and
November5,2004inC.T.A.CaseNo.6475denyingpetitionersPetitionforRelieffromJudgmentandMotionfor
Reconsideration,respectively,isAFFIRMED.

SOORDERED.

CONSUELOYNARESSANTIAGO
AssociateJustice

WECONCUR:

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ARTEMIOV.PANGANIBAN
ChiefJustice
Chairperson

MA.ALICIAAUSTRIAMARTINEZROMEOJ.CALLEJO,SR.
AssociateJusticeAssociateJustice

MINITAV.CHICONAZARIO
AssociateJustice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts
Division.

ARTEMIOV.PANGANIBAN
ChiefJustice

Footnotes

1Rollo,pp.3542.PennedbyAssociateJusticeJuanitoC.Castaeda,Jr.andconcurredinbyAssociate
JusticesLovellR.Bautista,ErlindaP.UyandCaesarA.Casanova.

2Id.at4346.

3Id.at4748.

4CTASecondDivisionrecords,pp.89.

5Id.at2.

6Id.at17.

7Rollo,pp.8794.

8Id.at9599.

9CTASecondDivisionrecords,p.113.

10Id.at115129.

11Id.at130.

12Id.at131.

13Id.at134144.

14Id.at145148.

15Id.at149152.PennedbyPresidingJusticeErnestoD.AcostaandconcurredinbyAssociateJustices
LovellR.BautistaandJuanitoC.Castaeda,Jr.

16Id.at188189.

17Id.at18.

18Quelnanv.VHFPhilippines,G.R.No.138500,September16,2005,470SCRA73,80.

19Estaresv.CourtofAppeals,G.R.No.144755,June8,2005,459SCRA604,623.

20G.R.No.141806,January17,2005,448SCRA399,410.

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21Insular Life Savings and Trust Company v. Runes,Jr., G.R. No. 152530, August 12, 2004, 436 SCRA
317,326.

22Ragudov.FabellaEstateTennantsAssociation,Inc.,G.R.No.146823,August9,2005,466SCRA136,
146.

23 Philippine Phosphate Fertilizer Corporation v. Commissioner of Internal Revenue, G.R. No. 141973,
June28,2005,461SCRA369,388.
24Azucenav.ForeignManpowerServices,G.R.No.147955,October25,2004,441SCRA346,356.

25Mesinav.Meer,433Phil.124,137(2002).

26Rollo,pp.170171.

27Id.at9798.

28G.R.No.L12396,January31,1962,4SCRA160,163.

29CommissionerofInternalRevenuev.WesternPacificCorporation,121Phil.889,893(1965).

TheLawphilProjectArellanoLawFoundation

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