RCBC v. CIR G.R. No.

168498 1 of 4

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 168498 June 16, 2006
RIZAL COMMERCIAL BANKING CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review under Rule 45 of the Rules of Court assailing the Decision 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, 2004 and November 5, 2004 in C.T.A. Case No. 6475 denying petitioners Petition for
Relief from Judgment and the Motion for Reconsideration thereof, respectively.
The undisputed facts are as follows:
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
Onshore Tax in the amount of P53,998,428.29 and Documentary Stamp Tax for its Special Savings Placements in
the amount of P46,717,952.76, for the taxable year 1997.
On July 20, 2001, petitioner filed a protest letter/request for reconsideration/reinvestigation pursuant to Section 228
of the National Internal Revenue Code of 1997 (NIRC).
As the protest was not acted upon by the respondent, petitioner filed on April 30, 2002 a petition for review with
the CTA for the cancellation of the assessments which was docketed as C.T.A. Case No. 6475.
On July 15, 2003, respondent filed a motion to resolve first the issue of CTAs jurisdiction, which was granted by
the CTA in a Resolution dated September 10, 2003. The petition for review was dismissed because it was filed
beyond the 30-day period following the lapse of 180 days from petitioners submission of documents in support of
its protest, as provided under Section 228 of the NIRC and Section 11 of R.A. No. 1125, otherwise known as the
Law Creating the Court of Tax Appeals.
Petitioner did not file a motion for reconsideration or an appeal to the CTA En Banc from the dismissal of its
petition for review. Consequently, the September 10, 2003 Resolution became final and executory on October 1,
2003 and Entry of Judgment was made on December 1, 2003. Thereafter, respondent sent a Demand Letter to
petitioner for the payment of the deficiency tax assessments.
On February 20, 2004, petitioner filed a Petition for Relief from Judgment on the ground of excusable negligence
of its counsels secretary who allegedly misfiled and lost the September 10, 2003 Resolution. The CTA Second
Division set the case for hearing on April 2, 2004 during which petitioners counsel was present. Respondent filed
an Opposition while petitioner submitted its Manifestation and Counter-Motion.
On May 3, 2004, the CTA Second Division rendered a Resolution denying petitioners Petition for Relief from
Judgment.lawph!l.net
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Petitioners motion for reconsideration was denied in a Resolution dated November 5, 2004, hence it filed a
petition for review with the CTA En Banc, docketed as C.T.A. EB No. 50, which affirmed the assailed Resolutions
of the CTA Second Division in a Decision dated June 7, 2005.
Hence, this petition for review based on the following grounds:
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, IN CLEAR VIOLATION OF PETITIONERS BASIC RIGHT TO DUE
PROCESS.
II.
CONSIDERING THAT THE SUBJECT ASSESSMENT, INSOFAR AS IT INVOLVES ALLEGED
DEFICIENCY 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 DETERMINED BASED ON ITS MERITS, RATHER THAN ON A MERE
TECHNICALITY.
Relief from judgment under Rule 38 of the Rules of Court is a legal remedy that is allowed only in exceptional
cases whereby a party seeks to set aside a judgment rendered against him by a court whenever he was unjustly
deprived of a hearing or was prevented from taking an appeal, in either case, because of fraud, accident, mistake or
excusable neglect.
Petitioner argues that it was denied due process when it was not given the opportunity to be heard to prove that its
failure to file a motion for reconsideration or appeal from the dismissal of its petition for review was due to the
failure of its employee to forward the copy of the September 10, 2003 Resolution which constitutes excusable
negligence.
Petitioners argument lacks merit.
It is basic that as long as a party is given the opportunity to defend his interests in due course, he would have no
reason to complain, for it is this opportunity to be heard that makes up the essence of due process. In Batongbakal
v. Zafra, the Court held that:
There is no question that the "essence of due process is a hearing before conviction and before an impartial and
disinterested tribunal" but due process as a constitutional precept does not, always and in all situations, require a
trial-type proceeding. The essence of due process is to be found in the reasonable opportunity to be heard and
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. (Emphasis
supplied)
As correctly pointed by the Office of the Solicitor General (OSG), the CTA Second Division set the case for
hearing on April 2, 2004 after the filing by the petitioner of its petition for relief from judgment. Petitioners
counsel was present on the scheduled hearing and in fact orally argued its petition.
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Moreover, after the CTA Second Division dismissed the petition for relief from judgment in a Resolution dated
May 3, 2004, petitioner filed a motion for reconsideration and the court further required both parties to file their
respective memorandum. Indeed, petitioner was not denied its day in court considering the opportunities given to
argue its claim.
Relief cannot be granted on the flimsy excuse that the failure to appeal was due to the neglect of petitioners
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. Petitioners former counsels
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, petitioners 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.
In exceptional cases, when the mistake of counsel is so palpable that it amounts to gross negligence, this Court
affords a party a second opportunity to vindicate his right. But this opportunity is unavailing in the case at bar,
especially since petitioner had squandered the various opportunities available to it at the different stages of this
case. Public interest demands an end to every litigation and a belated effort to reopen a case that has already
attained finality will serve no purpose other than to delay the administration of justice.
Since petitioners ground for relief is not well-taken, it follows that the assailed judgment stands.lavvphil.e+
Assuming ex gratia argumenti that the negligence of petitioners counsel is excusable, still the petition must fail.
As aptly observed by the OSG, even if the petition for relief from judgment would be granted, petitioner will not
fare any better if the case were to be returned to the CTA Second Division since its action for the cancellation of its
assessments had already prescribed.
Petitioner protested the assessments pursuant to Section 228 of the NIRC, which provides:
SEC. 228. Protesting of Assessment.- x x x.
xxxx
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond
to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue
an assessment based on his findings.
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 documents shall have
been submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from
submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the
RCBC v. CIR G.R. No. 168498 4 of 4

Court of Tax Appeals within (30) days from receipt of the said decision, or from the lapse of the one hundred
eighty (180)-day period; otherwise the decision shall become final, executory and demandable. (Emphasis
supplied)
The CTA Second Division held:
Following the periods provided for in the aforementioned laws, from July 20, 2001, that is, the date of petitioners
filing of protest, it had until September 18, 2001 to submit relevant documents and from September 18, 2001, the
Commissioner had until March 17, 2002 to issue his decision. As admitted by petitioner, the protest remained
unacted by the Commissioner of Internal Revenue. Therefore, it had until April 16, 2002 within which to elevate
the case to this court. Thus, when petitioner filed its Petition for Review on April 30, 2002, the same is outside the
thirty (30) period.
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 correctness of the
assessment.
In Ker & Company, Ltd. v. Court of Tax Appeals, the Court held that while the right to appeal a decision of the
Commissioner to the Court of Tax Appeals is merely a statutory remedy, nevertheless the requirement that it must
be brought within 30 days is jurisdictional. If a statutory remedy provides as a condition precedent that the action
to enforce it must be commenced within a prescribed time, such requirement is jurisdictional and failure to comply
therewith may be raised in a motion to dismiss.
In fine, the failure to comply with the 30-day statutory period would bar the appeal and deprive the Court of Tax
Appeals of its jurisdiction to entertain and determine the correctness of the assessment.
WHEREFORE, in view of the foregoing, the Decision of the Court of Tax Appeals En Banc dated June 7, 2005 in
C.T.A. EB No. 50 affirming 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 petitioners Petition for Relief from Judgment and Motion for
Reconsideration, respectively, is AFFIRMED.
SO ORDERED.
Panganiban, C.J., (Chairperson), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.