Case Summary (G.R. No. 199422)
Factual Background
For the first and second quarters of 2000, KEPCO Ilijan Corporation filed quarterly VAT returns and an Application for Zero Rated Sales which the Bureau of Internal Revenue approved. KEPCO subsequently claimed a refund of P449,569,448.73 representing input VAT on importation and domestic purchases of capital goods and services preparatory to its production and sales of electricity to the National Power Corporation. The Commissioner of Internal Revenue did not act on the refund claim or issue a tax credit certificate.
CTA Proceedings and Judgment
Because the BIR did not act, KEPCO Ilijan Corporation filed a Petition for Review with the CTA First Division on March 21, 2002 and an amended petition on September 12, 2003. After trial, the CTA First Division found in favor of the respondent and, by Decision dated September 11, 2009, ordered refund of P443,447,184.50 as unutilized input VAT attributable to capital goods purchases, after certain deductions for non-capital items and unsubstantiated claims. No motion for reconsideration was filed and Entry of Judgment was issued on October 10, 2009, rendering the decision final and executory. The CTA issued a Writ of Execution on February 16, 2010 to effect the refund.
Petition for Annulment Before the CTA En Banc
The Commissioner learned of the CTA First Division decision and the writ of execution only in March 2011, and on April 11, 2011 filed with the CTA En Banc a petition styled as one for annulment of judgment under Rule 47, Rules of Court, seeking nullification of the First Division Decision, the Entry of Judgment, and the Writ of Execution, and praying that the First Division be directed to reopen the case to allow the Commissioner to submit memoranda and substantive defenses.
Respondent's Opposition and CTA En Banc Rulings
KEPCO Ilijan Corporation opposed the petition for annulment and moved to deny it due course, arguing among other things that the CTA En Banc lacked jurisdiction to entertain annulment of judgments because neither the Rules of Court, RA No. 9282, nor the Revised Rules of the CTA expressly provided for a collegial court to annul the final judgment of one of its own divisions. The CTA En Banc issued a Resolution dated July 27, 2011 dismissing the petition and denied the Commissioner's motion for reconsideration in its Resolution dated November 15, 2011.
Nature of Annulment of Judgment and Jurisdictional Analysis
The Supreme Court first observed that annulment of judgment under Rule 47, Rules of Court is an original equitable remedy available only for extrinsic fraud or lack of jurisdiction, and ordinarily presupposes a superior court's power to annul a final judgment of an inferior court. The Court noted that the law and rules are silent on whether a collegial court may annul a final judgment of one of its divisions, and explained that divisions of a collegial court are not separate courts but constituent parts of the same court under Art. VIII, Sec. 4(1) and B.P. Blg. 129. The Court therefore held that it would be contrary to the institutional structure and the finality principle to permit a court sitting en banc to annul a final judgment of one of its divisions under the same species of original action contemplated by Rule 47.
Availability of Certiorari as the Proper Remedy
The Court explained that the Commissioner's petition, though styled as annulment under Rule 47, raised allegations of gross and palpable negligence by the Commissioner's counsel, amounting to deprivation of due process and alleging that the CTA First Division acted without jurisdiction by entertaining the respondent's petition. The Court determined that the proper remedy for such claims was a petition for certiorari under Rule 65, Rules of Court, because certiorari addresses actions by a tribunal that are without or in excess of jurisdiction or amount to grave abuse of discretion and is an original remedy available when no plain, speedy, and adequate remedy exists. The Court further stated that certiorari must be filed in a higher tribunal and, given the CTA's status under RA No. 9282 and RA No. 1125, the appropriate forum for the Commissioner's certiorari would have been the Supreme Court, not the CTA En Banc.
Precedents and Doctrinal Support
In support of its view, the Court referenced established authorities recognizing that annulment of judgment is an original equitable remedy for superior courts to annul subordinate courts' judgments and that certiorari is the extraordinary remedy when a tribunal acts without jurisdiction or with grave abuse of discretion. The Court cited precedents holding that when a party is deprived of due process or denied his day in court, relief by certiorari is proper, and that direct resort to the Supreme Court by certiorari is justified in such exceptional circumstances.
Assessment of Petitioner's Conduct and Laches
The Court found that the petition below was procedurally infirm because the Commissioner failed to avail himself of certiorari and instead filed an improper annulment petition with t
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Case Syllabus (G.R. No. 199422)
Parties and Posture
- COMMISSIONER OF INTERNAL REVENUE filed a petition for review on certiorari under Rule 45 seeking reversal of the Court of Tax Appeals En Banc Resolutions dated July 27, 2011 and November 15, 2011.
- KEPCO ILIJAN CORPORATION was the respondent and had earlier obtained a favorable decision and writ of execution from the Court of Tax Appeals First Division.
- The Supreme Court rendered the decision in this matter through an opinion penned by Peralta, J., with listed concurring and nonparticipating justices.
Key Factual Allegations
- KEPCO ILIJAN CORPORATION filed Quarterly VAT returns for the first and second quarters of 2000 and an Application for Zero Rated Sales for calendar year 2000 which the BIR approved.
- KEPCO ILIJAN CORPORATION filed a claim for refund in the amount of P449,569,448.73 representing input tax from imports and domestic purchases of capital goods and services for the first and second quarters of 2000.
- The Bureau of Internal Revenue did not act on the refund claim or issue a tax credit certificate, prompting KEPCO ILIJAN CORPORATION to file a Petition for Review with the CTA.
Procedural History
- The Court of Tax Appeals First Division rendered a decision on September 11, 2009 awarding KEPCO ILIJAN CORPORATION a refund of P443,447,184.50 after certain deductions and findings.
- No motion for reconsideration was filed, and the decision became final and executory with an Entry of Judgment issued on October 10, 2009.
- A Writ of Execution was issued on February 16, 2010 directing refund to KEPCO ILIJAN CORPORATION.
- COMMISSIONER OF INTERNAL REVENUE filed a petition for annulment of judgment with the CTA En Banc on April 11, 2011, which the CTA En Banc dismissed on July 27, 2011 and denied reconsideration on November 15, 2011.
- COMMISSIONER OF INTERNAL REVENUE then filed the present petition for review on certiorari before the Supreme Court.
Issues Presented
- Whether the CTA En Banc had jurisdiction to entertain a petition for annulment of judgment seeking to void a final decision of one of its own divisions.
- Whether the alleged gross negligence of the petitioner's counsel constituted extrinsic fraud warranting annulment of judgment under Rule 47.
- Whether the CTA First Division lacked jurisdiction over the original refund petition.
- Whether petitioner was barred by laches from challenging the CTA First Division's jurisdiction.
Contentions of Parties
- COMMISSIONER OF INTERNAL REVENUE contended that the CTA En Banc had jurisdiction to annul its division's judgment and that counsel's gross negligence amounted to extrinsic fraud depriving the government of due process.
- KEPCO ILIJAN CORPORATION moved to deny due course to the petition for annulment on the ground that the CTA En Banc lacked jurisdiction and that annulme