Facts:
The Manila Port Service as a subsidiary of the Manila Railroad Company, entered on February 29, 1956 into a management contract with the Bureau of Customs wherein it was granted the exclusive right or privilege to receive, handle, care for and deliver all merchandise, imported or exported, passing over the Philippine government wharves and piers in the Port of Manila, and to charge and collect the arrastrecharge. The Commissioner of Internal Revenue on June 10, 1957, sent to the respondent an assessment letter demanding payment of the amount of P138,909.93 as fixed tax for 1956 and 1957 and percentage tax on its gross receipts for the period from August 24, 1956 to February 28, 1957, plus the additional amount of P300.00 as compromise penalty allowed in extrajudicial settlement of violations of penal provisions of the National internal Revenue Code.
On July 17, 1957, the Manila Port Service wrote the Commissioner of Internal Revenue denying its liability for the taxes in question on the ground that its mother company, the Manila Railroad Company, is exempt therefrom. Noting that the Manila Port Service had no intention of paying the taxes assessed against it notwithstanding the fact that the assessment had already become final and executory, the Commissioner of Internal Revenue commenced the present action on November 22, 1960 before the Court of First Instance of Manila.After trial, the court a quo rendered decision dismissing the complaint on the ground that the assessment of the taxes which plaintiff seeks to recover is erroneous, even if such assessment had become final and executory in view of defendant's failure to appeal within the reglementary period. In due time, plaintiff has appealed.
Issue:
Whether or not the dismissal of the complaint was proper
Ruling:
No. Under Section 7 of Republic Act No. 1125, the Court of Tax Appeals is given exclusive appellate jurisdiction to review by appeal decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, or other matters arising under the National Internal Revenue Code. And pursuant to Section 11 of the same Act, any person or entity adversely affected by the decision of the Commissioner of Internal Revenue shall appeal to the same court within 30 days after the receipt thereof, and if the assessment of the Commissioner, or his decision thereon, is not appealed to the Court of Tax Appeals within the aforesaid period, such assessment becomes final, demandable and executory.
Here the assessment has already become final precisely because appellee has failed to appeal as required by law thereby making indisputable the decision of the Commissioner of Internal Revenue. Thus, the original assessment of the taxes in question was contained in a letter sent to the Manila Port Service on June 10, 1957 which was refuted by said entity on July 17, 1957. On February 10, 1958, the Commissioner reiterated his previous assessment and demand. On July 9, 1958, the Manila Railroad Company appealed the assessment to the Secretary of Finance who in turn referred it to the Commissioner for comment. And on February 13, 1959, the Commissioner wrote the Manila Railroad Company reiterating once more his decision and demanding payment of the taxes within 10 days from receipt with the warning that if payment is not made within the aforesaid period judicial action would immediately be taken. However, neither the Manila Port Service, nor the Manila Railroad Company, took any step to appeal to the Court of Tax Appeals as required by law. It is evident that the assessment has already become final and, therefore, it can no longer be disputed in the present case.
The Manila Port Service as a subsidiary of the Manila Railroad Company, entered on February 29, 1956 into a management contract with the Bureau of Customs wherein it was granted the exclusive right or privilege to receive, handle, care for and deliver all merchandise, imported or exported, passing over the Philippine government wharves and piers in the Port of Manila, and to charge and collect the arrastrecharge. The Commissioner of Internal Revenue on June 10, 1957, sent to the respondent an assessment letter demanding payment of the amount of P138,909.93 as fixed tax for 1956 and 1957 and percentage tax on its gross receipts for the period from August 24, 1956 to February 28, 1957, plus the additional amount of P300.00 as compromise penalty allowed in extrajudicial settlement of violations of penal provisions of the National internal Revenue Code.
On July 17, 1957, the Manila Port Service wrote the Commissioner of Internal Revenue denying its liability for the taxes in question on the ground that its mother company, the Manila Railroad Company, is exempt therefrom. Noting that the Manila Port Service had no intention of paying the taxes assessed against it notwithstanding the fact that the assessment had already become final and executory, the Commissioner of Internal Revenue commenced the present action on November 22, 1960 before the Court of First Instance of Manila.After trial, the court a quo rendered decision dismissing the complaint on the ground that the assessment of the taxes which plaintiff seeks to recover is erroneous, even if such assessment had become final and executory in view of defendant's failure to appeal within the reglementary period. In due time, plaintiff has appealed.
Issue:
Whether or not the dismissal of the complaint was proper
Ruling:
No. Under Section 7 of Republic Act No. 1125, the Court of Tax Appeals is given exclusive appellate jurisdiction to review by appeal decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, or other matters arising under the National Internal Revenue Code. And pursuant to Section 11 of the same Act, any person or entity adversely affected by the decision of the Commissioner of Internal Revenue shall appeal to the same court within 30 days after the receipt thereof, and if the assessment of the Commissioner, or his decision thereon, is not appealed to the Court of Tax Appeals within the aforesaid period, such assessment becomes final, demandable and executory.
Here the assessment has already become final precisely because appellee has failed to appeal as required by law thereby making indisputable the decision of the Commissioner of Internal Revenue. Thus, the original assessment of the taxes in question was contained in a letter sent to the Manila Port Service on June 10, 1957 which was refuted by said entity on July 17, 1957. On February 10, 1958, the Commissioner reiterated his previous assessment and demand. On July 9, 1958, the Manila Railroad Company appealed the assessment to the Secretary of Finance who in turn referred it to the Commissioner for comment. And on February 13, 1959, the Commissioner wrote the Manila Railroad Company reiterating once more his decision and demanding payment of the taxes within 10 days from receipt with the warning that if payment is not made within the aforesaid period judicial action would immediately be taken. However, neither the Manila Port Service, nor the Manila Railroad Company, took any step to appeal to the Court of Tax Appeals as required by law. It is evident that the assessment has already become final and, therefore, it can no longer be disputed in the present case.
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