Same; Same; Collector's letter of demand or assessment

appealable to Tax Court.—A letter of demand or assessment sent

by the Collector of Internal Revenue to a taxpayer contains a
determination of the tax liability of the latter and must be

161

160 SUPREME COURT REPORTS ANNOTATED

Ker & Company, Ltd. vs. Court of Tax Appeals
VOL. 4, JANUARY 31, 1962 161
No. L-12396. January 31, 1962.
Ker & Company, Ltd. vs. Court of Tax Appeals

KER & COMPANY, LTD., petitioner vs. THE COURT OF

TAX APPEALS and THE COLLECTOR OF INTERNAL considered as the "decision" appealable to the Court of Tax
REVENUE, respondents. Appeals.

Pleading and practice; Motion to dismiss allowed even during

Appeal and error; Court of Tax Appeals; Appeal from a the trial.—A motion to dismiss may be allowed after the answer is
decision of the Collector of Internal Revenue; Requirement as to filed or even after the hearing had been commenced (Bugayong v.
period within which to appeal, jurisdictional.—While the right to Ginez, L-10033, Dec. 28, 1956; 53 O.G. No. 4, p. 1050).
appeal a decision of the Collector of Internal Revenue to the Tax
Court is merely a statutory remedy, nevertheless, the APPEAL from a resolution of the Court of Tax Appeals.
requirement that it must be brought within thirty days after The facts are stated in the opinion of the Court.
receipt of the Collector's decision or ruling is jurisdictional. Jose Leido for petitioner.
Solicitor General for respondents.
Same; Same; Authority to raise question of jurisdiction motu
proprio.—The Court of Tax Appeals is a court of special PAREDES, J.:
jurisdiction and as such can only take cognizance of such matters
as are clearly within its jurisdiction. To obviate the possibility An appeal from a resolution of the Court of Tax Appeals
that its decision may be rendered void, it can, by its own sustaining a Motion to Dismiss of the Collector of Internal
initiative, raise the question of jurisdiction, although not raised Revenue, on the ground that said Court is without
by the parties. jurisdiction to take cognizance of the case.
On the basis of its income tax returns filed for the years
Same; Same; Need for compliance with the requirements of 1947, 1948, 1949 and 1950, the petitioner was assessed by
law regarding tax cases.—The right to appeal from a decision of the Collector in the respective sums of P42,342.30,
the Collector being a statutory right, the same can be invoked P18,651.87, P139.67 and P12,813.00 (Exhibits 1-9). Upon
only in accordance with the requisites provided by law (Wee Poco failure of petitioner to pay the said assessments, the
& Co. v. Posadas, 64 Phil. 648). This should be so because there is Collector sent a demand letter dated February 16, 1953,
an imperious need for the prompt collection of taxes; it being in (Exh. 10). In a letter dated May 24, 1953 (Exh. 12), counsel
the interest of the Government to know promptly those for petitioner sought the reconsideration of the demand
assessments which are acquiesced in and those disputed by the letter. A revision of the previous assessments was made by
taxpayers, such knowledge being essential in formulating the the Collector in his letter of January 5, 1954 (Exh. 13),
Government's estimate of expected revenues and expenditures. reducing the tax liabilities of petitioner for 1947 from
P42,342.30 to P27,026.28 and for 1950 from P12,813.00 to
P8,542.00; the assessments for 1948 to 1949 in the sum of
Same; Same; Same; Jurisdiction over subject-matter can not
P18,651.87 and P139.67 remained the same.
be waived; When question may be raised.—Jurisdiction over the
The letter of January 5, 1954 (Exh. 13), has remained
subject-matter cannot be waived, and may be raised at any stage
unaltered and unrevised up to this date, in spite of the
of the proceeding, even if no such defense is made in the answer
repeated requests for reconsideration by petitioner, as
(Juanillo v. De la Rama, II Off. Gaz. 304 [1943]; I Francisco Trial
evidenced by its letter dated February 12, 1954 (Exh. 14)
Technique & Practice Court, pp. 128-129).
and May 22, 1954 (Exh. 17). In fact, the Collector
reiterated the demand contained in said letter of January
5, 1954, as shown by his letters dated July 28, 1954 and after he had filed his answer to the petition below,
December 9, 1954 (Exhs. 18 and 19, respectively). The which did not contain such a defense; and
petitioner denied having received the said letter (Exh. 18), 5. Whether the Tax Court erred in not holding that
although it was mailed to petitioner in the ordinary the Collector's order to collect by warrant of
distraint and levy had been timely appealed by the
162
petitioner.

162 SUPREME COURT REPORTS ANNOTATED 163

Ker & Compan y, Ltd. vs. Court of Tax Appeals

VOL. 4, JANUARY 31, 1962 163
course of business. The record shows that it had received Ker & Company, Ltd. vs. Court of Tax Appeals
all the letters of the Collector except, allegedly, said Exh.
18. Although petitioner did not know when it received the
While the right to appeal a decision of the Collector to the
communication dated December 9, 1954 (Exh. 19), it is a
Tax Court is merely a statutory remedy, nevertheless the
fact that said petitioner replied to this letter (Exh. 19), in
requirement that it must be brought within thirty days
its letter dated August 1, 1955, which was wholly denied in
after receipt of the Collector's decision, or ruling is
the Collector's letter dated January 23, 1956 (Exh. 20).
jurisdiction. "If a statutory remedy provides as a condition
Exhibit 20 was the last letter of the Collector reiterating
precedent that the action to enforce it must be commenced
the assessment of January 5, 1954. On February 9, 1956,
within a prescribed time, such requirement is jurisdictional
the Collector issued a warrant of distraint and levy against
and failure to comply therewith may be raised in a motion
the petitioner.
to dismiss" (Callahan vs. Chespeake a Ohio, 407 Supp. 323,
The petitioner filed a petition for review with
mentioned on p. 175, Moran's Rules of Court, Vol. 1, 1952
preliminary injunction on March 1, 1956. After issues were
Ed.). The right to appeal from a decision of the Secretary of
joined, the Tax Court heard the incident of preliminary
Agriculture and Natural Resources is a statutory right, but
injunction. Before the incident was resolved, however, the
it can be invoked only in accordance with the manner in
Tax Court motu proprio issued an order setting the case
which the legislature has provided for the purpose (The
again for hearing for the purpose of determining whether
Secretary of Agriculture, etc. vs. Judge CFI, G. R. No. L-
or not, the court had jurisdiction to entertain the petition
7752, May 27, 1955). The right to appeal from the decision
filed by petitioner on March 1, 1956.
of the Collector being a statutory right, the same can be
On October 3, 1956, the Collector filed his motion to
invoked only in accordance with the requisites provided by
dismiss on the ground of lack of jurisdiction, and over the
law (Wee Poco v. Posadas, 64 Phil. 648). And this should be
opposition of the petitioner, on January 5, 1957, the Tax
so because in cases involving a tax, there is an imperious
Court dismissed the petition. Petitioner's motion for
need for its prompt collection. Appealed cases decided by
reconsideration was denied on May 9, 1957.
the Tax Court shall have preference over all civil
In the instant appeal, petitioner-appellant submits the
proceeding except habeas corpus, workmen's compensation
following issues:
and election cases (sec. 18, par. 4, Rep. Act 1125), and the
1. Whether the ruling of the Collector which is appeal therefrom is directly taken to the Supreme Court
appealable was his letter of January 5, 1954 (Exh. (Ibid, par. 3). It is the interest of the Government to know
13), or his-letter of January 23, 1956 (Exh. 20). promptly those assessments which are acquiesced in and
those disputed by the tax payers. Such knowledge is
2. Whether or not the 30-day period provided by
essential in formulating the Government's estimate of
section 11 of R.A. 1125 should commence to run
expected revenues and expenditures.
only on February 1, 1956, the date on which the
Petitioner-appellant questions the right of the lower
petitioner received the respondent's letter of
court to raise the question of jurisdiction motu proprio. It
January 23, 1956 (Exh. 20).
should be recalled, however, that the Tax Court is a court
3. Whether or not the 30-day period is a jurisdictional of special jurisdiction. As such, it can only take cognizance
requirement. of such matters as are clearly within its jurisdiction. To
4. Whether respondent Collector was barred from obviate the possibility that its decision may be rendered
filing a motion to dismiss based on said section 11, void, it can, by its own initiative, raise the question of
jurisdiction, although not raised by the partles.
 164 VOL. 4, JANUARY 31, 1962 165
Ker & Company, Ltd. vs. Court of Tax Appeals
164 SUPREME COURT REPORTS ANNOTATED
Ker & Company, Ltd. vs. Court of Tax Appeals letter of January 5, 1954, remained unaltered and
unmodified. As the Court a quo has correctly commented—
Section 11 of Republic Act No. 1125 partly provides:— "Under the facts stated above, we find that the decision of
respondent which is appealable to this Court under Sections 7
"SEC. 11. Who may appeal; effect of appeal.—Any person,
and 11 of Republic Act No. 1125 is the one contained in his letter
association or corporation adversely affected by a decision or
of January 5, 1954, the same having remained unaltered and
ruling of the Collector of Internal Revenue, the Collector of
unmodified up to the date the appeal was filed (See Angel Saraos
Customs or any provincial or city Board of Assessment Appeals
v. CIR, CT A Case No, 229, March 5, 1956; Merced Drug Store v.
may file an appeal in the Court of Tax Appeals within thirty days
CIR, CTA Case No. 180, May 21, 1956. x x x.
after the receipt of such decision or ruling, x x x."
Moreover, since a letter of demand or assessment was sent by
It is argued that the decision or ruling of the Collector the Collector of Internal Revenue to a taxpayer contains a
which should be appealed to the Tax Court is the former's determination of the tax liability of the latter, such letter or
letter dated January 23, 1956 (Exh. 20) and not the letter assessment must be considered as the 'decision' appealable to this
dated January 5, 1954 (Exh. 13), and that the 30period Court. The Supreme Court appears to recognize the same view
provided in section 11, commenced to run only on February when it held that the 'assessment made by the Collector of
1, 1956, the date on which the petitioner-appellant received Internal Revenue is the substantive and dispositive part of his
the Collector's letter dated January 23, 1956. This decision' (Ventanilla v. BTA, G.R. No. L-7384, prom. Dec. 19,
contention is without merit. The Collector's letter dated 1955). Under circumstances comparable with our law, the United
January 23, 1956, partly reads as follows: States Supreme Court in the case of Gull v. U.S. (1935, 295 U.S.
247; 79 L. ed., 1941) sustained the same theory that the
"With reference to your letter dated August 1, 1955, concerning assessment is the action of an administrative agency equivalent
the deficiency income tax liabilities of Ker & Co., Ltd., Manila, for to a decision and is therefore given the force of a judgment".
1947, 1948, 1949 and 1950, I regret to have to inform you that,
notwithstanding your allegations therein, this Office still finds no This being the case, it logically follows that the decision
justification to alter, reverse or modify the assessments issued which was appealed was that of January 5, 1954 and that
against your client for said years. the 30-day period should have started from the receipt of
As elucidated in our letter to you of January 5 1954, the the said letter on January 25, 1954 (Exh. 14). No appeal
alleged home-leave liabilities which your client claimed as having been taken from this decision, the same became
deduction were disallowed as such because the same were not final, conclusive and executory (Roxas v. Sayoc, G. R. No.
actually incurred but were mere reserve accounts for contingent L-8502, Nov. 29, 1956).
purposes. No evidence were presented by you showing that the Petitioner contends that the Collector waived the
said expenses were actually incurred in the years of their defense based on said section 11, when he failed to file a
deductions or in the subsequent years, x x x". motion to dismiss within the reglementary period and did
not set it up as a defense in the answer filed by him. Suffice
It is thus noted that the allegation in the above quoted it to state, however, that a motion to dismiss may be
letter is simply a reiteration of the previous demand as allowed after the answer is filed or even after the hearing
contained in the Collector's letter of January 5, 1954 (Exh. had been commenced (Bugayong v. Ginez, G. R. No. L-
13). Again the Collector sent to the petitioner-appellant the 10033, Dec. 28, 1956; 53 O.G. No. 4, p. 1050). Moreover, the
demand letter dated July 28, 1954 (Exh. 18), which merely present case involves jurisdiction over subject-matter,
reiterated the demand dated January 5, 1954. Although which can not be waived, and which can be raised at any
petitioner denied having received said letter, yet it is stage of the proceeding, even if no such defense is made in
significant to mention that when it was presented to the the answer (Juanillo v. De la Rama, II Off. Gaz. 304 [1943];
lower court as Exhibit 18 for the Collector, the petitioner I Francisco Trial Technique and Practice Court pp. 128-
had not objected to it. This is the first time they attack its 129).
receipt. It is finally to be observed that the ruling of the
166
Collector contained in his
165
166 SUPREME COURT REPORTS ANNOTATED order to collect (by warrant of distraint and levy) is
Ker & Company, Ltd. vs. Court of Tax Appeals concerned, it has the power to hear and determine the
legality thereof, because the appeal from said order had
been timely made to said court by petitioner-appellant.
Petitioner-appellant also claims that inasmuch as the
This argument is unmeritorious once it is considered, as we
disputed assessment was made prior to the creation and
do, that what has been appealed in this case is the decision
actual organization of the Tax Court (The Court of Tax
of the Tax Court dated January 5, 1957, in which decision,
Appeals was established upon the enactment of R.A. No.
the incident regarding the legality or illegality of the
1125, although the act took effect only on July 21, 1954
Collector's issuance of the warrant of distraint and levy
with the appointment of two judges and the Court
had not at all been brought out or ventilated.
Personnel and with the adoption by it in the interim of the
IN VIEW HEREOF, the resolution appealed from being
Rules and Regulations of the defunct Board of Tax Appeals
in, accordance with law, hereby is affirmed en toto, with
[See Sta. Clara Lumber Co. v. Coll. of Int. Rev. CTA Case
costs against the petitioner-appellant.
No. 91, Res. dated Sept. 20, 1955]), there was, legally
speaking, no 30-day period to compute or determine in Padilla, Bautista Angelo, Labrador, Concepcion,
relation to the appeals from the decisions of the Collector. Reyes, J.B.L., Dizon and De Leon, JJ., concur.
However, in admitting that the disputed assessment was Barrera, J., concurs in the result.
issued prior to the organization of the Tax Court, the Bengzon, C.J., took no part.
petitioner-appellant, if it really wanted to protect itself,
should have paid the taxes due and then filed a suit for Resolution affirmed.
their refund under section 306 of the Tax Code with the
proper Court of First Instance. The petitioner-appellant Note.—The perfection of appeal within the
failed to take this step. With the actual organization of the reglementary period is also a jurisdictional and mandatory
Tax Court on July 21, 1954, the petitioner-appellant could requirement in ordinary civil actions (Bello & Ferrer v.
have filed a petition for review with the said court within Fernando, L-16970, Jan. 30, 1962 and the notes
30 days after July 21, 1954 (Sta. Clara Lumber Co. vs. thereunder). See also annotation on "Perfection of Appeal
Court of Int. Rev., supra; Ipekdian Merchandising Co. Inc. Within ThirtyDay Period" in 16 SCRA 145.
vs. C.I. Revenue, CTA Case No. 107). In these two CTA
cases, the petitioner-taxpayer appealed the decisions of the _____________
Collector to the defunct Board of Tax Appeals which found
for the respondentappellee. Later, they appealed to this
Court which dismissed their cases without prejudice. When
they brought these cases to the Tax Court, the latter
dismissed them for having been filed outside the 30-day
period after July 21, 1954. In the case at bar, after receipt
© Copyright 2023 Central Book Supply, Inc. All rights reserved.
of the Collector's demand letter dated January 5, 1954,
petitioner not only did not pay the taxes due and sue for
their refund but also failed to file its petition for review
within 30 days after July 21, 1954. A taxpayer should
display more alertness in the protection of his rights
(Koppel [Phil.], Inc. vs. Coll. Int. Rev., G .R. No. L-10550,
Sept. 19, 1961).
Petitioner-appellant argues that the Tax Court acted
erroneously in not holding that insofar as the Collector's

167

VOL. 4, JANUARY 31, 1962 167

Ventura vs. Baysa