REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEA LS

QUEZON CITY

THIRD DIVISION

TESCO SERVICES, INC.,

Petitioner, CTA Case No. 8705

Members:
- versus -
BAUTISTA, Chairperson
FABON-VICTORINO, and
RINGPIS-LIBAN, JJ.

COMMISSIONER OF INTERNAL Promulgated:

REVENUE,
Respondent. JAN 1 7 2017
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DECI SION

Fa bon- Victorino, J.:

This Petition for Review 1 filed by Tesco Services, Inc. on

August 22, 2013, assails the Warrant of Distraint and/or Levy
(WDL) dated June 6, 2013, issued by respondent
Commissioner of Internal Revenue (CIR) to collect the sum of
P6, 377 ,267. 77, allegedly representing deficiency Withholding
Tax on Compensation (WTC), Expanded Withholding Tax
(EWT), and Valued-Added Tax (VAT) for taxable years 1997
to 1998 on the ground of prescription.

Petitioner Tesco Services, Inc. is a domestic corporation,

with principal office address at 1957 Espana, corner Craig
Street, Manila. 2

Respondent, on the other hand, is the Commissioner of

Internal Revenue (CIR) with the authority to decide disputed
assessments, refunds of internal revenue taxes, fees or other
charges, and penalties imposed in relation thereto or other ../
1 Docket, pp . 19-28.
2 Par. 1, The Pa rties, Petition for Rev iew, docket , p. 19.
DECISION
CTA Case No. 8705
Page 2 of 13

matters arising under the National Internal Revenue Code

(NIRC), or other laws or portions thereof administered by the
Bureau of Internal Revenue (BIR).

The Petition for Review states that on February 28, 2000,

petitioner, through its accountant, filed with respondent a
letter informing him that it had previously filed with the
Collection Services of the BIR Head Office a request for a
compromise settlement of its unpaid taxes due to its financial
reverses. Petitioner offered to pay the basic tax of
P6,377,267. 77 as full payment of its tax liabilities payable on
installment basis over a period of two years based on the
amortization schedule attached to the said letter.

Thereafter, nothing was heard from respondent until

petitioner received a letter dated April 3, 2012 stating that
per BIR records, petitioner had unpaid tax deficiencies in the
total amount of P6,377,267. 77 covering the period January
1997 to December 1998 which should be paid within fifteen
(15) days from notice lest collection shall be enforced through
summary remedy under the Tax Code.

Hence, the present case on the ground that respondent's

right to collect the alleged WTC, EWT and VAT deficiencies has
already prescribed. Petitioner prays that while the present
case is pending, the enforcement of the Warrant of Distraint
and/or Levy (WDL) be held in abeyance as it will jeopardize
its interest and cause it further financial difficulties. Petitioner
further prays that after appropriate proceedings, the assailed
WDL be set aside and declared null and void.

In his Answer3 filed on October 24, 2013, respondent

argues that contrary to petitioner's claim, his right to collect
the subject tax deficiencies from petitioner has not yet
prescribed. The delay in the collection of the deficiency taxes,
if there was any, was attributable to petitioner who filed
several requests for compromise settlement of its tax
liabilities.

3
/
Docket, pp. 60-67.
DECISION
CTA Case No. 8705
Page 3 of 13

The first request for compromise was granted by

respondent, through Revenue District Officer (RDO) Celia C.
King on April 22, 1999, allowing petitioner to pay its tax
deficiencies on installment basis. However, petitioner failed
to comply with its undertaking as stated in its own schedule
of monthly installment attached to its request. For this
reason, respondent issued a Preliminary Collection Letter on
September 3, 1999 and a Final Notice Before Seizure on
September 16, 1999.

On October 26, 1999, WDL dated September 29, 1999

was served upon petitioner but no property in its name was
found to answer for its tax liabilities per the three (3)
certifications issued by the Assessor's Office of Manila, Makati
and Quezon City.

In its second request for compromise settlement dated

October 27, 1999, petitioner reiterated its intention to have a
compromise settlement which respondent, through Chief of
Collection Division Eliseo ES. Trompeta, of Revenue Region
No. 7, denied on February 21, 2000, due to petitioner's failure
to comply with its undertaking in the first offer of compromise.

The same offer for compromise settlement of tax

liabilities was made by petitioner in its third letter dated
February 24, 2000 filed with the Collection Service of the BIR
- Head Office.

Subsequently, petitioner transferred to another Revenue

District Office (RDO) causing further delay because the
revenue officers assigned to its tax case had to locate
petitioner's new RDO.

The period of limitation under Section 222 of the National

Internal Revenue Code (NIRC) of 1997, as amended, was
suspended or interrupted when petitioner filed its first request
for compromise settlement followed by the service of WDL
and finding that no property was registered in its name to
answer for its tax liabilities.
/
DECISION
CTA Case No. 8705
Page 4 of 13

After the pre-trial conference, the parties filed their Joint

Stipulation of Facts and Issues4 with the following stipulations
of facts:

On December 18, 1998, petitioner, through its Senior

Vice President - Treasurer Lucie Quidato-Bantolino, wrote a
letter addressed to respondent to negotiate a compromise
settlement of its tax liabilities in the amount of P6,377 ,267. 77
on installment basis based on the attached Proposed
Installment Payment Plan. 5 In the same letter, petitioner
admitted that it failed to remit taxes for its VAT, EWT, and
WTC for taxable years 1997 and 1998. 6

In a letter dated April 22, 1999, petitioner's request for

offer of compromise and requested payment plan subject to
penalties and other increments were granted by respondent
through Revenue District Officer Celia C. King of Revenue
District Office (RDO) No. 41 - Mandaluyong City.l The
Schedule of Monthly Installment8 of petitioner for the period
starting March 25, 1999 up to August 25, 2000 was attached
to the letter. Such acceptance of the offer of compromise by
the BIR through Revenue District Officer Celia C. King was
received by petitioner through its Chief Accountant Danilo C.
Soriano also on April 22, 1999. 9

Due to financial difficulties, petitioner failed to comply

with the schedule of monthly installment plan 10 as reported in
the Memorandum dated May 28, 1999 of Revenue Officer
Marietta D. Sta. Maria. 11

Respondent then issued a Preliminary Collection Letter 12

on September 3, 1999. Thereafter, or on September 16,
1999, respondent issued a Final Notice Before Seizure 13 for

4
Docket, pp. 178-181.
5 Par. 2, Joint Stipulation of Facts and Issues (JSFI), docket, p. 178; Exhibits "R-2" and "R-2-
a," BIR Records, pp. 66-67.
6 Par. 1, JSFI, docket, p. 178.
7 Par. 3, JSFI, docket, p. 178, Exhibit "R-3", BIR Records, p. 82.
8 BIR Records, p. 81.
9 Par. 4, JSFI, docket, p. 179.
1 0 Par. 5, JSFI, docket, p. 179.
11
Exhibit "R-4", BIR Records, p. 84.
12 Exhibit "R-5", BIR Records, p. 85.
/
13
Exhibit "R-6", BIR Records, p. 86.
DECISION
CTA Case No. 8705
Page 5 of 13

the amount of P6,377,267. 77 14 for the period from January

1997 to December 1998.

On September 29, 1999, respondent issued a Warrant of

Distraint and/or Levy 15 to petitioner, which was received by
the latter on October 26, 1999. 16

On October 27, 1999, petitioner's accountant, Alba

Romeo & Co., sent a letter 17 requesting the cancellation of the
Notice of Warrant of Distraint and/or Levy by offering another
compromise settlement to respondent in view of petitioner's
inability to comply with the earlier approved compromise. 18
On February 21, 2000, respondent, through Deputy
Commissioner (Operations) RomeoS. Panganiban, denied the
offer of compromise considering petitioner's failure to comply
with the first compromise settlement. 19

Petitioner's accountant sent another letter to respondent

on February 24, 2000, requesting again for a compromise
settlement. 20 Respondent failed to respond to the said
letter. 21

Petitioner requested the transfer of its registration from

Mandaluyong City (RDO No. 41) to Sampaloc, Manila (RDO
No. 32) 22 as shown in a Memorandum dated September 29,
2011 issued by Revenue District Officer (Mandaluyong City)
Isabel A. Paulino. 23 In a Memorandum 24 dated December 13,
2011, Revenue District Officer (Mandaluyong City) Sarah
Jeane B. Alcaraz stated that she exerted an effort to locate
petitioner and it was found out that it is no longer operating
in Mandaluyong, but is doing business operation in Manila.

14
Par. 6, JSFI, docket, p. 179.
15 Exhibit "R-7", BIR Records, p. 89.
16 Par. 7, JSFI, docket, p. 179.
17 Exhibit "R-8", BIR Records, p. 139.

1s Par. 8, JSFI, docket, p. 179.

19 Exhibit "R-9", BIR Records, p. 141.
20
Par. 10, JSFI, docket, p. 179; Exhibit "R-10-a", BIR Records, p. 143.
2 1 Par. 11, JSFI, docket, p. 179.
22 Par. 12, JSFI, docket, p. 179.
/
23 Exhibit "R-18-a", BIR Records, p. 187.
24 Exhibit "R-11", BIR Records, p. 191.
DECISION
CTA Case No. 8705
Page 6 of 13

Respondent issued another Final Notice Before Seizure 25

dated May 23, 2012, reiterating the demand to pay the
amount of P6,377,267. 77 representing deficiency withholding
tax on salaries and wages, expanded withholding tax, and
valued-added tax for the period covering taxable years 1997
to 1998.

On June 6, 2013, respondent issued another Warrant of

Distraint and/or Levy,2 6 which was received by petitioner on
July 19, 2013.

On January 14, 2015, a Pre-Trial Order27 was issued

based on the parties' admissions and stipulations.

On August 22, 2013, petitioner filed the present Petition

for Review before this Court.

On February 27, 2015, petitioner filed a Motion

reiterating therein its motion to submit the case for
resolution/decision based on the singular legal issue of
whether or not the right of the respondent to assess and
collect the taxes from petitioner has already prescribed. The
said Motion was denied during the hearing scheduled for the
initial presentation of evidence for petitioner on March 2,
2015. In the same hearing, the Court also ordered petitioner's
right to present evidence deemed waived for its failure to
appear despite notice. 28

Respondent, on the other hand, presented his evidence

in chief with Revenue Officer Alice B. Ong as his lone witness.
By way of a Judicial Affidavit 29 , Ms. Ong testified that she
came to know petitioner because its 1997-1998 internal
revenue tax docket was assigned to her for collection when
she was still with the Collection Section of
Revenue District Office No. 32. According to her, she
conducted review of petitioner's docket and found that j
petitioner failed to file returns and pay the VAT, WTC, and
25 Exhibit "R-12", BIR Records, p. 201.
26 Exhibit "R-19", BIR Records, p. 221.
27 Docket, pp. 183-189.
28
Minutes of the Hearing, docket, p. 193.
29 Exhibit R-24, docket, pp. 218-223.
DECISION
CTA case No. 8705
Page 7 of 13

EWT for taxable years 1997-1998. Through a letter dated

December 18, 1998, petitioner admitted its tax liabilities
amounting to P6,327 ,267. 77 and offered to pay in installment
according to its prepared Installment Payment Plan.
Petitioner's proposed installment plan was approved through
a letter dated April 22, 1999 by Revenue District Officer Celia
C. King, Revenue District Officer of Revenue District No. 41,
where petitioner was previously registered, which was
received by petitioner through Danilo C. Soriano also on April
22, 1999.

Ms. Ong further declared that per Memorandum Report

of Revenue Officer Marietta D. Sta. Maria, petitioner failed to
comply with its proposed installment payments. Thus, a
Preliminary Collection Letter, Final Notice Before Seizure, and
Warrant of Distraint and/or Levy were issued to petitioner.
Thereafter, petitioner, through its representative Alba Romeo
& Co, made another offer of compromise payments for the
same tax liabilities in a letter dated October 27, 1999 but the
same was denied through a letter dated February 21, 2000.
Petitioner then wrote a letter requesting that the Warrant of
Distraint and/or Levy be held in abeyance pending evaluation
of its offer of compromise filed with the Collection Services of
the BIR - Head Office.

She continued that sometime in 2011, petitioner

transferred its business from Tesco Compound Sheridan St.,
Mandaluyong City to 1957 Espana St. cor. Craig St.,
Sampaloc, Manila, as borne in the Memorandum by Revenue
Officer Sarah Jeane B. Alcaraz dated December 13, 2011. She
also declared that she prepared the Final Notice Before
Seizure dated May 23, 2012, obtained certifications from
different City Governments, and Memorandum Report dated
February 13, 2013. She stated further that another Revenue
Officer - Emilia M. Nava from Collection Division, Revenue
Region No. 6 - Manila, sent a Warrant of Distraint and/or Levy
and Warrants of Garnishment to banks for the collection of
petitioner's tax liabilities.

There being no other witness to present, respondent

rested his case and formally offered his documentary /
DECISION
CTA case No. 8705
Page 8 of 13

evidence via a Formal Offer of Documentary Evidence (For the

Respondent) 30 filed on July 16, 2015.

In a Resolution 31 dated December 4, 2015, the Court

admitted respondent's Exhibits "R-1" , "R-2" I "R-2-a" I "R-2-
b"' "R-3" I R-4" I R-5" I "R-6"I "R-7"I "R-8" I "R-9"I "R-10" I "R-
10-a"' "R-11"I "R-12" I "R-13" I "R-14" I "R-15" I "R-16" I "R-
18"I "R-18-a" I "R-19" I "R-20"I "R-21" I "R-22"I "R-24"I and
"R-24-a"; but denied Exhibits "R-17" and "R-23".

On December 28, 2015, respondent filed an Offer of

Proof32 in order that Exhibits "R-17" and "R-23" would still be
attached or be made part of the record of the case pursuant
to Section 40 of Rule 132 of the Rules of Court.

On January 28, 2016, the instant case was submitted for

decision after the parties submitted their respective
memorandum. 33

THE ISSUES

The parties submitted the following issues 34 for this

Court's resolution:

1. Whether or not the right of respondent to collect the

taxes from petitioner has already prescribed;

2. Whether or not petitioner is liable to pay the amount

of Six Million Three Hundred Seventy-Seven Thousand
Two Hundred Sixty-Seven Pesos and 77/100
(P6,377,267. 77) as deficiency value-added tax,
expanded withholding tax, and withholding tax on
compensation for its failure to remit the said taxes for
taxable years 1997 to 1998; and

Docket, pp. 278-283.

I
3o
31 Docket, pp. 266-268.
32 Docket, pp. 269-271.
33
Docket, p. 311.
34 JSFI, docket, p. 180.
DECISION
CTA Case No. 8705
Page 9 of 13

3. Whether or not petitioner, based on the totality of its

conduct, is estopped to claim the defense of
prescription.

THE COURT'S RULING

The issues raised by the parties primarily centered on

whether the right of respondent to collect the taxes from
petitioner has already prescribed. And corollary to the
foregoing is whether the question on the validity of the
subject Warrant of Distraint and/or Levy falls within the
jurisdiction of this Court.

On the authority of this Court to rule on the validity of a

WDL issued by respondent, Section 7(a)(1) of RA 1125, as
amended, is instructive, viz.,:

Section 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
Code or other laws administered by the
Bureau of Internal Revenue; xxx
(Emphasis supplied)

The case Philippine Journalist, Inc. vs. Commissioner of

Internal Revenue35 (Philippine Journalist), provided a clearer
lens on the matter as the Supreme Court in no uncertain
terms ruled that the CTA has jurisdiction to resolve
controversies involving the validity of the issuance of a WDL
as it is among the "other matters" arising under the National
Internal Revenue Code (NIRC) of 1997, as amended, thus: ~

35 G.R. No. 162852, December 16, 2004.

DECISION
CTA Case No. 8705
Page 10 of 13

The appellate jurisdiction of the CTA is

not limited to cases which involve decisions
of the Commissioner of Internal Revenue on
matters relating to assessments or refunds.
The second part of the provision covers
other cases that arise out of the NIRC
or related laws administered by the
Bureau of Internal Revenue. The
wording of the provision is clear and
simple. It gives the CTA the jurisdiction
to determine if the warrant of distraint
and levy issued by the BIR is valid and
to rule if the Waiver of Statute of Limitations
was validly effected. (Emphasis supplied)

Evidently, this Court has jurisdiction to pass upon the

validity of a WDL, on condition that the corresponding petition
for review impugning such WDL be filed within the period
provided under Section 11 of the Republic Act No. 1125, as
amended, which reads as follows:

Section 11. Who may appeal;

effect of appeal. - Any person association
or corporation adversely affected by a
decision or ruling of the Collector of Internal
Revenue, the Collector of Customs or any
provincial or city Board of Assessment
Appeals may file an appeal in the Court of
Tax Appeals within thirty (30) days after
the receipt of such decision or ruling or
after the expiration of the period fixed by
law for action as referred to in Section
7(a)(2) herein xxx (Emphasis supplied)

Corollarily, Section 3 (a) of Rule 8 of the Revised Rules

of the Court of Tax Appeals provides:

Sec. 3. Who may appeal; period to

file petition. -

(a)
decision,
A party adversely affected by a
ruling or the inaction of the
J
DECISION
CTA Case No. 8705
Page 11 of 13

Commissioner of Internal Revenue on

disputed assessments or claims for refund of
internal revenue taxes, or by a decision or
ruling of the Commissioners 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 xxx
(Emphasis supplied)

Note that the 30-day period to appeal before the CTA is

reckoned from petitioner's receipt of the challenged WDL on
July 19, 2013. Thus, counting 30 days from July 19, 2013,
petitioner had until August 19, 2013 36 to file the instant
Petition for Review. Clearly, the instant Petition for Review
was filed beyond the 30-day reglementary period on August
22, 2013 thereby depriving the Court of jurisdiction to
determine the same.

Basic is the rule that the perfection of an appeal in the

manner and within the period laid down by law is not only
mandatory but also jurisdictional. The failure to perfect an
appeal as required by the rules has the effect of defeating the
right to appeal of a party and precluding the appellate court
from acquiring jurisdiction over the case. At the risk of being
repetitious, the Court declares that the right to appeal is not
a natural right nor a part of due process. It is merely a

/
36
August 18, 2013 fell on a Sunday.
DECISION
CTA Case No. 8705
Page 12 of 13

statutory privilege, and may be exercised only in the manner

and in accordance with the provisions of the law. 37

WHEREFORE, the instant case filed by Tesco Services,

Inc. on August 22, 2013, is hereby DISMISSED, on
jurisdictional ground.

SO ORDERED.

...

We concur:

......_...
~4
~BAUTISTA
QAA.
LOVELL MA. BELEN M. RINGPIS-LIBAN
Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were

reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.

LOVELL t!.
Assoc~:te
BAUTISTA
Justice
Chairperson

37
Commissioner on Internal Revenue v. Fort Bonifacio Development Corporation, G.R. No.
167606, August 11, 2010.
DECISION
CTA Case No. 8705
Page 13 of 13

CERTIFICATION

Pursuant to Section 13 of Article VIII of the Constitution

and the Division Chairperson's Attestation, 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 Court's Division.

ROMAN G. DEL ROSARIO

Presiding Justice