THIRD DIVISION

G.R. No. 168498             April 24, 2007

RIZAL COMMERCIAL BANKING CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

RESOLUTION

YNARES-SANTIAGO, J.:

For resolution is petitioner’s Motion for Reconsideration of our Decision 1 dated June 16, 2006
affirming the Decision of the Court of Tax Appeals En Banc dated June 7, 2005 in C.T.A. EB No. 50,
which affirmed the Resolutions of the Court of Tax Appeals Second Division dated May 3, 2004 and
November 5, 2004 in C.T.A. Case No. 6475, denying petitioner’s Petition for Relief from Judgment
and Motion for Reconsideration, respectively.

Petitioner reiterates its claim that its former counsel’s failure to file petition for review with the Court
of Tax Appeals within the period set by Section 228 of the National Internal Revenue Code of 1997
(NIRC) was excusable and raised the following issues for resolution:

A.

THE DENIAL OF PETITIONER’S PETITION FOR RELIEF FROM JUDGMENT WILL RESULT IN
THE DENIAL OF SUBSTANTIVE JUSTICE TO PETITIONER, CONTRARY TO ESTABLISHED
DECISIONS OF THIS HONORABLE COURT BECAUSE THE ASSESSMENT SOUGHT TO BE
CANCELLED HAS ALREADY PRESCRIBED – A FACT NOT DENIED BY THE RESPONDENT IN
ITS ANSWER.

B.

CONTRARY TO THIS HONORABLE COURT’S DECISION, AND FOLLOWING THE LASCONA

DECISION, AS WELL AS THE 2005 REVISED RULES OF THE COURT OF TAX APPEALS,
PETITIONER TIMELY FILED ITS PETITION FOR REVIEW BEFORE THE COURT OF TAX
APPEALS; THUS, THE COURT OF TAX APPEALS HAD JURISDICTION OVER THE CASE.

C.

CONSIDERING THAT THE SUBJECT ASSESSMENT INVOLVES AN INDUSTRY ISSUE, THAT IS,
A DEFICIENCY ASSESSMENT FOR DOCUMENTARY STAMP TAX ON SPECIAL SAVINGS
ACCOUNTS AND GROSS ONSHORE TAX, PETITIONER IN THE INTEREST OF SUBSTANTIVE
JUSTICE AND UNIFORMITY OF TAXATION, SHOULD BE ALLOWED TO FULLY LITIGATE THE
ISSUE BEFORE THE COURT OF TAX APPEALS.2

Petitioner’s motion for reconsideration is denied for lack of merit.

Other than the issue of prescription, which is raised herein for the first time, the issues presented are
a mere rehash of petitioner’s previous arguments, all of which have been considered and found
without merit in our Decision dated June 16, 2006.
Petitioner maintains that its counsel’s neglect in not filing the petition for review within the
reglementary period was excusable. It alleges that the counsel’s secretary misplaced the Resolution
hence the counsel was not aware of its issuance and that it had become final and executory.

We are not persuaded.

In our Decision, we held that:

Relief cannot be granted on the flimsy excuse that the failure to appeal was due to the neglect of
petitioner’s counsel. Otherwise, all that a losing party would do to salvage his case would be to
invoke neglect or mistake of his counsel as a ground for reversing or setting aside the adverse
judgment, thereby putting no end to litigation.

Negligence to be "excusable" must be one which ordinary diligence and prudence could not have
guarded against and by reason of which the rights of an aggrieved party have probably been
impaired. Petitioner’s former counsel’s omission could hardly be characterized as excusable, much
less unavoidable.

The Court has repeatedly admonished lawyers to adopt a system whereby they can always receive
promptly judicial notices and pleadings intended for them. Apparently, petitioner’s counsel was not
only remiss in complying with this admonition but he also failed to check periodically, as an act of
prudence and diligence, the status of the pending case before the CTA Second Division. The fact
that counsel allegedly had not renewed the employment of his secretary, thereby making the latter
no longer attentive or focused on her work, did not relieve him of his responsibilities to his client. It is
a problem personal to him which should not in any manner interfere with his professional
commitments.3

Petitioner also argues that, in the interest of substantial justice, the instant case should be re-opened
considering that it was allegedly not accorded its day in court when the Court of Tax Appeals
dismissed its petition for review for late filing. It claims that rules of procedure are intended to help
secure, not override, substantial justice.

Petitioner’s arguments fail to persuade us.

As correctly observed by the Court of Tax Appeals in its Decision dated June 7, 2005:

If indeed there was negligence, this is obviously on the part of petitioner’s own counsel whose
prudence in handling the case fell short of that required under the circumstances. He was well aware
of the motion filed by the respondent for the Court to resolve first the issue of this Court’s jurisdiction
on July 15, 2003, that a hearing was conducted thereon on August 15, 2003 where both counsels
were present and at said hearing the motion was submitted for resolution. Petitioner’s counsel
apparently did not show enthusiasm in the case he was handling as he should have been vigilant of
the outcome of said motion and be prepared for the necessary action to take whatever the outcome
may have been. Such kind of negligence cannot support petitioner’s claim for relief from judgment.

Besides, tax assessments by tax examiners are presumed correct and made in good faith, and all
presumptions are in favor of the correctness of a tax assessment unless proven otherwise. 4 Also,
petitioner’s failure to file a petition for review with the Court of Tax Appeals within the statutory period
rendered the disputed assessment final, executory and demandable, thereby precluding it from
interposing the defenses of legality or validity of the assessment and prescription of the
Government’s right to assess.5
The Court of Tax Appeals is a court of special jurisdiction and can only take cognizance of such
matters as are clearly within its jurisdiction. Section 7 of Republic Act (R.A.) No. 9282, amending
R.A. No. 1125, otherwise known as the Law Creating the Court of Tax Appeals, provides:

Sec. 7. Jurisdiction. — The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:

(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue or other
laws administered by the Bureau of Internal Revenue;

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National
Internal Revenue Code provides a specific period of action, in which case the
inaction shall be deemed a denial;

Also, Section 3, Rule 4 and Section 3(a), Rule 8 of the Revised Rules of the Court of Tax
Appeals6 state:

RULE 4
Jurisdiction of the Court

xxxx

SECTION 3. Cases Within the Jurisdiction of the Court in Divisions. — The Court in Divisions shall
exercise:

(a) Exclusive original or appellate jurisdiction to review by appeal the following:

(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue;

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National
Internal Revenue Code or other applicable law provides a specific period for action:
Provided, that in case of disputed assessments, the inaction of the Commissioner of
Internal Revenue within the one hundred eighty day-period under Section 228 of the
National Internal Revenue Code shall be deemed a denial for purposes of allowing
the taxpayer to appeal his case to the Court and does not necessarily constitute a
formal decision of the Commissioner of Internal Revenue on the tax case; Provided,
further, that should the taxpayer opt to await the final decision of the Commissioner
of Internal Revenue on the disputed assessments beyond the one hundred eighty
day-period abovementioned, the taxpayer may appeal such final decision to the
 Court under Section 3(a), Rule 8 of these Rules; and Provided, still further, that in the
case of claims for refund of taxes erroneously or illegally collected, the taxpayer must
file a petition for review with the Court prior to the expiration of the two-year period
under Section 229 of the National Internal Revenue Code;

xxxx

RULE 8
Procedure in Civil Cases

xxxx

SECTION 3. Who May Appeal; Period to File Petition. — (a) A party adversely affected by a
decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or
claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner of
Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of
Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal to the
Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or
expiration of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed
assessments. In case of inaction of the Commissioner of Internal Revenue on claims for refund of
internal revenue taxes erroneously or illegally collected, the taxpayer must file a petition for review
within the two-year period prescribed by law from payment or collection of the taxes. (n)

From the foregoing, it is clear that the jurisdiction of the Court of Tax Appeals has been expanded to
include not only decisions or rulings but inaction as well of the Commissioner of Internal Revenue.
The decisions, rulings or inaction of the Commissioner are necessary in order to vest the Court of
Tax Appeals with jurisdiction to entertain the appeal, provided it is filed within 30 days after the
receipt of such decision or ruling, or within 30 days after the expiration of the 180-day period fixed by
law for the Commissioner to act on the disputed assessments. This 30-day period within which to file
an appeal is jurisdictional and failure to comply therewith would bar the appeal and deprive the Court
of Tax Appeals of its jurisdiction to entertain and determine the correctness of the assessments.
Such period is not merely directory but mandatory and it is beyond the power of the courts to extend
the same.7

In case the Commissioner failed to act on the disputed assessment within the 180-day period from
date of submission of documents, a taxpayer can either: 1) file a petition for review with the Court of
Tax Appeals within 30 days after the expiration of the 180-day period; or 2) await the final decision of
the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax
Appeals within 30 days after receipt of a copy of such decision. However, these options are mutually
exclusive, and resort to one bars the application of the other.

In the instant case, the Commissioner failed to act on the disputed assessment within 180 days from
date of submission of documents. Thus, petitioner opted to file a petition for review before the Court
of Tax Appeals. Unfortunately, the petition for review was filed out of time, i.e., it was filed more than
30 days after the lapse of the 180-day period. Consequently, it was dismissed by the Court of Tax
Appeals for late filing. Petitioner did not file a motion for reconsideration or make an appeal; hence,
the disputed assessment became final, demandable and executory.

Based on the foregoing, petitioner can not now claim that the disputed assessment is not yet final as
it remained unacted upon by the Commissioner; that it can still await the final decision of the
Commissioner and thereafter appeal the same to the Court of Tax Appeals. This legal maneuver
cannot be countenanced. After availing the first option, i.e., filing a petition for review which was
however filed out of time, petitioner can not successfully resort to the second option, i.e., awaiting
the final decision of the Commissioner and appealing the same to the Court of Tax Appeals, on the
pretext that there is yet no final decision on the disputed assessment because of the
Commissioner’s inaction.

Lastly, we note that petitioner is raising the issue of prescription for the first time in the instant motion
for reconsideration. Although the same was raised in the petition for review, it was dismissed for late
filing. No motion for reconsideration was filed hence the disputed assessment became final,
demandable and executory. Thereafter, petitioner filed with the Court of Tax Appeals a petition for
relief from judgment. However, it failed to raise the issue of prescription therein. After its petition for
relief from judgment was denied by the Court of Tax Appeals for lack of merit, petitioner filed a
petition for review before this Court without raising the issue of prescription. It is only in the instant
motion for reconsideration that petitioner raised the issue of prescription which is not allowed. The
rule is well-settled that points of law, theories, issues and arguments not adequately brought to the
attention of the lower court need not be considered by the reviewing court as they cannot be raised
for the first time on appeal,8 much more in a motion for reconsideration as in this case, because this
would be offensive to the basic rules of fair play, justice and due process. 9 This last ditch effort to
shift to a new theory and raise a new matter in the hope of a favorable result is a pernicious practice
that has consistently been rejected.

WHEREFORE, in view of the foregoing, petitioner’s motion for reconsideration is DENIED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO

Associate Justice Asscociate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION

I attest that the conclusions in the above resolution were reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, it is
hereby certified that the conclusions in the above Resolution were reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

1
 Rollo, pp. 181-188.

2
 Id. at 206-207.

3
 Id. at 185-186.

4
 Commissioner of Internal Revenue v. Hantex Trading Co., Inc., G.R. No. 136975, March
31, 2005, 454 SCRA 301, 329.

5
 Benjamin B. Aban, Law of Basic Taxation in the Philippines, Revised Edition (1997), p. 247.

6
 A.M. No. 05-11-07-CTA, took effect on December 15, 2005.

7
 Chan Kian v. Court of Tax Appeals, 105 Phil. 904, 906 (1959).

 Multi-Realty Development Corporation v. Makati Tuscany Condominium Corporation, G.R.

8

No. 146726, June 16, 2006, 491 SCRA 9, 23.

9
 Sta. Rosa Realty Development Corporation v. Amante, G.R. No. 112526, March 16, 2005,
453 SCRA 432, 478.