Union Shipping Lines vs Commissoner (185 SCRA 547)

Commissioner of Internal Revenue vs Union Shipping Corporation
185 SCRA 547 [GR No. L-66160 May 21, 1990]

Facts: In a letter dated December 27, 1974 herein petitioner Commissioner of Internal Revenue assessed against Tee Fong Hong Ltd. and/or herein private respondent Union Shipping Corporation, the total sum of Php583,155.22 as deficiency income taxes due for the years 1971 and 1972. Said letter was received on January 4, 1975, and in a letter dated January 10, 1975, received by petitioner on January 13, 1975, private responded protested the assessment. Petitioner, without ruling on the protest, issued a warrant of distraint and levy, which was served on private respondent’s counsel, Clemente Celso, on November 25, 1976. In a letter dated November 27, 1976, received by petitioner on November 29, 1976, private respondent reiterated its request for reinvestigation of the assessment and for the reconsideration of the summary collection thru the warrant of distraint and levy. Petitioner again, without acting on the request for reinvestigation and reconsideration of the warrant of distraint and levy, filed a collection suit before branch XXI of the the CFI of Manila and docketed as civil case no. 120459 against private respondent. Summons in the said collection case issued to private respondent on December 28, 1978.

Issue: Whether or not issuance of writ of distraint and levy is a proof of finality of an assessment.

Held: Yes. The main thrust of their petition is that the issuance of a warrant distraint and levy is proof of the finality of an assessment because it is the most drastic action of all media of enforcing the collection of tax, and is tantamount to an outright denial of a motion for reconsideration of an assessment. Among others, petitioners contends that the warrant of distraint and levy was issued after respondent corporation filed a request for reconsideration of subject assessment, thus constituting petitioner’s final decision in the disputed assessment.

We deem it appropriate to state that the commissioner of internal revenue should always indicate to the taxpayer is clear and unequivocal language whenever his action on an assessment questioned by a taxpayer constitute his final determination on the disputed assessment as contemplated by sections 7 and 11 of RA 1125 as amended. On the basis of this statement indubitably showing that the commissioner’s communicated action is his final decision on the contested assessment, the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. Without needless difficulty, the taxpayer would be able to determine when his right to appeal to the tax court accrues. This rule of conduct would also obviate all desire and opportunity on the part of the taxpayer to continually delay the finality of the assessment — and, consequently, the collection of the amount demanded as taxes – by repeated request for recomputation and reconsideration. On the part of the commissioner, this would encourage his office to conduct a careful and thorough study of every questioned assessment and render a correct and definite decision thereon in the first instance. This would also deter the commissioner from unfairly making the taxpayer grope in the dark and speculate as to which action continues the decision appealable to the tax court of greater imports this rule of conduct would must a pressing need for fair play, regularity, and orderliness in the administrative action.

Under the circumstances, the commissioner of internal revenue, not having clearly signified his final action on the disputed assessment, legally the period to appeal has not commenced to run. Thus, it was only when private respondent received the summons on the civil suit for collection of deficiency income on December 28, 1978 that the period of appeal commenced to run.


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