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OCEANIC WIRELESS NETWORK v. CIR

FACTS:

Oceanic Wireless Network, Inc. received deficiency tax assessments totaling P8,644,998.71 from the Bureau of Internal Revenue (BIR) for the taxable year 1984. Petitioner protested against the tax assessments and requested a reconsideration or cancellation. The Chief of the BIR Accounts Receivable and Billing Division denied petitioner's request for reinvestigation and instructed them to pay the total amount within ten days. Failure to comply would result in the issuance of a warrant of distraint and levy. Petitioner did not pay the tax assessments, and warrants of distraint and/or levy and garnishment were served on them.

Petitioner filed a Petition for Review with the Court of Tax Appeals to contest the issuance of the warrants. However, the Court of Tax Appeals dismissed the petition for lack of jurisdiction, citing that it was filed beyond the 30-day period from the time petitioner received the demand letter from the BIR. The Court of Appeals affirmed this decision.

Petitioner then filed a Petition for Review on Certiorari with the Supreme Court, challenging the decision of the Court of Appeals. One of the main issues raised in the petition is whether a demand letter for tax deficiency assessments issued and signed by a subordinate officer on behalf of the Commissioner of Internal Revenue is considered final and executory, and therefore subject to appeal to the Court of Tax Appeals.

ISSUES:

  1. Whether or not the demand letter constitutes the final determination of the disputed assessment

  2. Whether or not the demand letter, issued and signed by the Chief of the Accounts Receivable and Billing Division instead of the BIR Commissioner, attained finality

  3. Whether the issuance of the demand letter by the Chief of the Accounts Receivable and Billing Division is a valid exercise of delegated authority.

  4. Whether the taxpayer failed to avail of its right to bring the matter before the Court of Tax Appeals within the reglementary period.

RULING:

  1. The Court held that the demand letter constitutes the final determination of the disputed assessment. It was clear and unequivocal in indicating that it is the final action taken by the Bureau of Internal Revenue on the taxpayer's request for reconsideration. The letter stated that failure to pay would result in the issuance of a warrant of distraint and levy, and it also denied the request for reconsideration for lack of supporting documents. The letter's demand and denial of the request for reconsideration signify its finality.

  2. The Court held that despite being issued and signed by the Chief of the Accounts Receivable and Billing Division instead of the BIR Commissioner, the demand letter still attained finality. The Commissioner of Internal Revenue can delegate his powers to Division Chiefs or officials of higher rank. Although the Commissioner cannot delegate certain powers enumerated in the National Internal Revenue Code (NIRC), the authority to issue a demand letter is not one of those powers. Therefore, the demand letter issued by the Chief of the Accounts Receivable and Billing Division is valid and final.

  3. The issuance of the demand letter by the Chief of the Accounts Receivable and Billing Division is not a valid exercise of delegated authority. The authority to make tax assessments may be delegated to subordinate officers, but the act of issuing the demand letter does not fall under any of the exceptions that have been mentioned as non-delegable.

  4. The taxpayer failed to avail of its right to bring the matter before the Court of Tax Appeals within the reglementary period. A request for reconsideration must be made within thirty (30) days from the taxpayer's receipt of the tax deficiency assessment. The decision of the Bureau of Internal Revenue became final, unappealable, and demandable when the taxpayer failed to file an appeal within the reglementary period.

PRINCIPLES:

  • The Commissioner of Internal Revenue should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment.

  • The demand letter received by the taxpayer, which includes a clear indication of finality, is considered a rejection of the request for reconsideration and marks the commencement of the period to appeal to the tax court.

  • The Commissioner of Internal Revenue can delegate powers to Division Chiefs or officials of higher rank, except for certain powers enumerated in the NIRC. The power to issue a demand letter is not one of those powers that cannot be delegated.

  • The authority to make tax assessments may be delegated to subordinate officers.

  • A request for reconsideration of a tax deficiency assessment must be made within thirty (30) days from the taxpayer's receipt of the assessment.

  • A final, executory, and demandable tax assessment cannot be contested if the taxpayer failed to file an appeal within the reglementary period.

  • The Court of Tax Appeals acquires jurisdiction over a case when an assessment has been disputed by the taxpayer and ruled upon by the Commissioner of Internal Revenue.