Rizal Commercial Banking Corp. v. Commissioner of Internal Revenue
REITERATIONFacts
The Antecedents: This case concerns tax liabilities assessed against Rizal Commercial Banking Corporation (RCBC) by the Commissioner of Internal Revenue (CIR). The assessments were 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, both for the taxable year 1997. RCBC received a Formal Letter of Demand for these liabilities on July 5, 2001. Procedural History: Following the demand, RCBC filed a protest letter on July 20, 2001. As the CIR did not act on the protest, RCBC filed a petition for review with the Court of Tax Appeals (CTA) on April 30, 2002. The CTA dismissed this petition on September 10, 2003, finding it was filed beyond the 30-day period after the lapse of 180 days from the submission of supporting documents, as stipulated by Section 228 of the National Internal Revenue Code and Section 11 of R.A. No. 1125. This resolution became final and executory. Subsequently, RCBC filed a Petition for Relief from Judgment, alleging excusable negligence by its counsel's secretary. The CTA Second Division denied this petition on May 3, 2004, and denied the subsequent motion for reconsideration on November 5, 2004. The CTA En Banc affirmed these denials on June 7, 2005. The Petition: RCBC seeks review of the CTA En Banc's decision via a petition for review under Rule 45 of the Rules of Court. The petition argues that the CTA gravely erred in denying the Petition for Relief from Judgment without affording RCBC an opportunity to present evidence of excusable negligence, thereby violating due process. Additionally, RCBC contends that the issue of deficiency documentary stamp taxes affects the entire banking industry and should be litigated on its merits rather than dismissed on a technicality. The petition also implicitly challenges the CTA's jurisdiction to dismiss the case based on the procedural technicality of the filing period.
Issue(s)
Whether the CTA and CTA En Banc gravely erred in denying petitioner’s Petition for Relief without affording it an opportunity to adduce evidence to establish its alleged excusable negligence, in violation of due process. Whether the subject assessment, particularly for deficiency Documentary Stamp Taxes on Special Savings Accounts, should be litigated on its merits rather than dismissed on a technicality, considering it affects the entire banking industry.
Ruling
The Supreme Court affirmed the Decision of the Court of Tax Appeals En Banc, upholding the denial of RCBC's Petition for Relief from Judgment. The Court found that RCBC was not denied due process and that the alleged negligence of counsel's secretary did not constitute excusable negligence. Furthermore, even if the petition for relief were granted, the underlying assessment would still be unassailable due to prescription.
Ratio Decidendi
On the issue of denial of due process and opportunity to be heard, and excusable negligence: The Court held that due process does not always require a trial-type proceeding; the essence lies in a reasonable opportunity to be heard, which can be through pleadings or oral arguments. The CTA Second Division had set a hearing for the Petition for Relief, and RCBC's counsel was present and argued its petition. Subsequently, RCBC filed a motion for reconsideration, and the court required both parties to file their respective memoranda. These opportunities satisfied the requirements of procedural due process, and RCBC was not denied its day in court. The Court found the excuse of negligence by the counsel's secretary to be flimsy and not excusable. It reiterated that relief cannot be granted on the mere excuse of counsel's neglect, as this would lead to endless litigation. Excusable negligence must be one that ordinary diligence could not have guarded against. The Court admonished lawyers to adopt a system for receiving notices and pleadings promptly and noted that the counsel failed to periodically check the status of the case. The personal problems of the counsel's secretary did not relieve the counsel of his professional responsibilities. On the issue of litigating on the merits versus technicality: The Court noted that even assuming ex gratia argumenti that the negligence was excusable, the petition would still fail. This is because the underlying action for the cancellation of assessments had already prescribed. The Court explained that RCBC protested the assessments, and under Section 228 of the NIRC, if the protest is not acted upon within 180 days from submission of documents, the taxpayer must appeal to the CTA within 30 days from the lapse of the 180-day period. RCBC filed its petition for review beyond this period, rendering the assessment final, executory, and demandable. Therefore, RCBC was precluded from disputing the correctness of the assessment.
Main Doctrine
A Petition for Relief from Judgment based on excusable negligence of counsel's secretary is unavailing when the client has been afforded ample opportunity to be heard and has failed to avail of procedural remedies, especially when the underlying assessment has already become final and executory due to failure to appeal within the statutory period.