Case Summary (G.R. No. 258947)
Key Dates
October 30, 2012 – Letter of Authority issued to QLDI
November 28, 2014 – Preliminary Assessment Notice (PAN) served
December 11, 2014 – Formal Assessment Notice/Formal Letter of Demand (FAN/FLD) mailed
March 3, 2015 – QLDI received Final Decision on Disputed Assessment (FDDA)
March 30, 2015 – QLDI requested reconsideration; denied February 4, 2020
June 30, 2020 – QLDI filed Petition for Review before CTA Division
June 7, 2021 – CTA Division Resolution canceling assessment for prescription
December 11, 2021 – CTA Division Resolution denying reconsideration and enjoining collection
March 29, 2022 – Supreme Court decision
Applicable Law
1987 Philippine Constitution (post-1990 decision);
National Internal Revenue Code of 1997 (NIRC), Sections 203 and 222;
Republic Act No. 1125, as amended by RA 9282 (CTA creation and appellate jurisdiction);
Rule 65, Rules of Court (certiorari and prohibition)
Factual Background
QLDI was audited for TY 2010. The BIR issued LOA on October 30, 2012, served PAN on November 28, 2014, and mailed FAN/FLD with detailed discrepancies on December 11, 2014. QLDI did not file a protest within 30 days. The CIR thereafter issued FDDA on disputed assessment, which QLDI received on March 3, 2015. A request for reconsideration was denied in February 2020, prompting the CIR to demand payment.
Proceedings Before the CTA Division
QLDI appealed the CIR’s February 4, 2020 Decision via Petition for Review. It moved for early resolution on prescription, asserting the CIR’s collection right expired five years from the FAN mailing (i.e., December 12, 2019). The CTA Division submitted the issue for resolution and, on June 7, 2021, held the CIR’s right to collect had lapsed, canceled the TY 2010 assessment, and granted QLDI’s motion. A reconsideration motion by the CIR was denied on December 11, 2021, and the CTA Division enjoined the CIR from collecting the taxes pending further order, upon QLDI’s posting of surety bond.
Issue
Whether the CIR’s right to collect the assessed deficiency taxes for TY 2010 had prescribed, and whether the CIR’s direct petition for certiorari and prohibition was the proper remedy.
Remedy Impropriety
The Supreme Court held that the CIR erred by invoking Rule 65 directly before the High Court. The June 7 and December 11, 2021 Resolutions were final and appealable to the CTA En Banc. An appeal, not certiorari or prohibition, was the correct remedy. A petition for certiorari lies only when there is no plain, speedy, and adequate remedy in the ordinary course of law.
Jurisdiction of the CTA
Section 7(a)(1) of RA 1125, as amended, grants the CTA exclusive appellate jurisdiction over disputed assessments, refunds, penalties, “or other matters” under the NIRC. The issue of prescription of the CIR’s right to collect taxes constitutes an “other matter” within CTA jurisdiction and is therefore properly before it.
Prescriptive Period for Collection
Section 203 of the NIRC provides a three-year limitation for both assessment and collection of taxes after the filing deadline. Under Section 222, when an assessment is validly issued within that three-year window, the CIR has an additional three years to collect; a five-year period applies only where a return is false or fraudulent or not filed. Because the FAN/FLD was mailed December 11, 2014, and the assessment was timely made, the c
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Facts of the Case
- On October 30, 2012, the Bureau of Internal Revenue issued LOA SN: eLA2010000021857/LOA-065-2012-00000060 covering QLDI’s 2010 tax year; receipt was on November 12, 2012.
- The Commissioner of Internal Revenue (CIR) served a Preliminary Assessment Notice (PAN) with Details of Discrepancies on QLDI on November 28, 2014; QLDI replied on December 15, 2014.
- On December 11, 2014, the CIR issued a Formal Assessment Notice/Formal Letter of Demand (FAN/FLD) with Details of Discrepancies; QLDI failed to file a protest within the 30-day period.
- In the absence of a protest, the CIR released a Final Decision on Disputed Assessment (FDDA) dated February 11, 2015; QLDI received it on March 3, 2015.
- QLDI’s request for reconsideration dated March 30, 2015 was denied by the CIR in a Decision dated February 4, 2020, resulting in an order to pay deficiency taxes and compromise penalty for TY 2010.
Petition for Review Before the CTA Second Division
- On June 30, 2020, QLDI filed a Petition for Review with the CTA Second Division, assailing the February 4, 2020 CIR Decision and raising prescription as a ground for relief.
- On March 5, 2021, QLDI moved for early resolution of the prescription issue and to defer pre-trial, arguing that the CIR’s right to collect expired on December 12, 2019 (five years from FAN/FLD mailing).
- The CIR’s counsel manifested on February 1, 2021 that it would submit the prescription issue for resolution and present evidence in the main case.
CTA Second Division Resolutions
- In the June 7, 2021 Resolution, the CTA Division granted QLDI’s motion, held that the CIR’s five-year collection period lapsed on December 12, 2019, and cancelled the deficiency assessment in CTA Case No. 10291.
- The CIR’s Motion for Reconsideration was denied in the December 11, 2021 Resolution; the CTA Division enjoined the CIR from collecting the deficiency taxes by distraint, levy, or other means, pending further orders, upon approval of QLDI’s surety bond.
- Both Resolutions declared the CIR’s collection letters issued in 2020 to be ba