Case Summary (G.R. No. 251830)
Key Dates and Procedural Posture
BIR issued a Preliminary Assessment Notice (PAN) on September 9, 2009, and Assessment Notices dated November 18, 2010. A Preliminary Collection Letter (PCL) was issued August 10, 2011. Respondent requested certified copies of the assessment notices on September 12, 2011, received them on September 15, 2011, and filed a Petition for Review with the CTA Division on September 16, 2011. The CTA First Division dismissed the petition for lack of jurisdiction; the CTA En Banc reversed and remanded for further proceedings. The Supreme Court reviewed the CTA En Banc decision and the CTA En Banc denial of reconsideration.
Applicable Constitution and Statutory Framework
Applicable Constitution: 1987 Philippine Constitution. Primary statutory and regulatory provisions: Section 7 of R.A. No. 1125 as amended by R.A. No. 9282 (jurisdiction of the CTA), Section 228 of R.A. No. 8424 (National Internal Revenue Code of 1997, assessment and protest procedures), and Revenue Regulations No. 12-99 (implementing rules, specifically Section 3.1.5 regarding protests of formal letters of demand and assessment notices).
Facts Material to Jurisdiction
BIR assessed respondent for deficiency income tax and VAT for taxable year 2006 (aggregate assessment exceeding P2.7 million, collection letters indicating a larger total). Respondent filed a Request for Re-evaluation/Re-investigation and Reconsideration on September 17, 2009. After receiving a PCL on August 10, 2011 that referenced issued assessment notices, respondent requested and obtained certified copies of the assessment notices on September 15, 2011, but instead of filing the administrative protest required by law, filed a Petition for Review with the CTA Division on September 16, 2011.
Issue Presented
Whether the CTA First Division had jurisdiction to entertain respondent’s Petition for Review given that respondent filed it without exhausting the administrative protest remedies required by law and prior to a decision by the CIR on the protest.
CTA First Division Ruling
The CTA First Division dismissed the Petition for Review for lack of jurisdiction, holding that the CTA acquires jurisdiction only where an assessment has been disputed administratively and a decision of the CIR on that dispute exists (or the CIR’s inaction is deemed a denial). The First Division concluded that the subject assessments had become final and that the CTA in Division was without jurisdiction.
CTA En Banc Ruling and Rationale
The CTA En Banc reversed and remanded, reasoning that respondent had not received a Notice of Final Assessment (FAN) and instead received a PCL that effectively informed it of existence of an FAN and demanded payment. The En Banc found silence in Section 228 and RR No. 12-99 regarding the procedure when the taxpayer first learns of a FAN via PCL or warrant of distraint, and deemed respondent’s immediate judicial recourse excused because the PCL’s language amounted to a demand presupposing finality and foreclosing administrative protest.
Commissioner’s Arguments on Appeal
The CIR argued that assessment notices are not appealable to the CTA; only decisions of the CIR on disputed assessments or inaction on an administrative protest are. The CIR maintained that respondent’s Petition for Review constituted an original protest improperly filed with the court instead of administratively, and thus the CTA lacked jurisdiction. The CIR also invoked the doctrine of exhaustion of administrative remedies and the statutory protest mechanism under Section 228 and RR No. 12-99.
Supreme Court’s Analysis of Jurisdiction and Exhaustion of Remedies
The Supreme Court emphasized that the CTA is a court of special jurisdiction and may only hear matters clearly within its grant of jurisdiction under Section 7 of R.A. No. 1125 as amended. The Court analyzed Section 228 and RR No. 12-99 and concluded they prescribe a clear administrative-route framework: a taxpayer must protest an assessment administratively within 30 days of receipt; if protest is denied (in whole or part) or if the CIR or authorized representative fails to act within 180 days, the taxpayer has a 30-day period to appeal the decision or the deemed denial to the CTA. The Court held that these provisions limit what is appealable to the CTA to decisions of the CIR on protested assessments or deemed denials — not the assessment notices themselves.
Application of Law to the Facts
Records showed that respondent received the certified copies of the assessment notices on September 15, 2011 but filed a Petition for Review on September 16, 2011 without filing the administrative protest within the 30-day period prescribed by law. The Court found respondent’s reliance on the PCL as constituting a denial of its earlier Request for Re-evaluation unjustified because respondent did, in fact, receive the assessment copies and did not foll
...continue readingCase Syllabus (G.R. No. 251830)
Case Caption, Citation and Nature of Case
- Supreme Court of the Philippines, Third Division; G.R. No. 221780; decision dated March 25, 2019; reported at 850 Phil. 403.
- Petition for review on certiorari under Rule 45 seeking to reverse and set aside the Court of Tax Appeals (CTA) En Banc Decision dated July 1, 2015 in CTA EB Case No. 1170 and the CTA En Banc Resolution dated December 3, 2015 which denied motion for reconsideration.
- Petitioner: Commissioner of Internal Revenue (CIR). Respondent: V.Y. Domingo Jewellers, Inc. (V.Y. Domingo).
- Opinion of the Court penned by Justice Peralta. Justices A. Reyes, Jr., Hernando, and Carandang concur. Justice Leonen on wellness leave. Designated Additional Member per Special Order No. 2624 dated November 28, 2018.
Factual Background
- V.Y. Domingo is a corporation primarily engaged in manufacturing and selling emblematic jewelry.
- On September 9, 2009, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice (PAN) against V.Y. Domingo assessing deficiency income tax and value-added tax for taxable year 2006; total amount in PAN: ₱2,781,844.21 (inclusive of interest).
- V.Y. Domingo filed a Request for Re-evaluation/Re-investigation and Reconsideration dated September 17, 2009 with the BIR Regional Director - Revenue Region No. 6, seeking re-evaluation and re-investigation of the PAN computation and accounts.
- Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243, both dated November 18, 2010, were later issued; the Formal Letter of Demand (FLD) dated September 9, 2010 also appears in the record.
- On August 10, 2011, V.Y. Domingo received a Preliminary Collection Letter (PCL) from RDO No. 28 - Novaliches informing it of the existence of the two Assessment Notices and demanding payment; PCL stated that recipient may visit the office within ten days to know details or settle, or provide receipts if payment already made, and warned of enforcement through administrative summary remedies if not attended to.
- On September 12, 2011, V.Y. Domingo requested certified true copies of Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243; it received those copies on September 15, 2011.
- On September 16, 2011, V.Y. Domingo filed a Petition for Review with the CTA in Division under Section 7(1) of R.A. No. 1125 and Section 4, Rule 8 RRCTA, praying that the Assessment Notices and the PCL be declared null and void, cancelled and withdrawn for alleged issuance beyond prescriptive period for assessment and collection.
- The CIR filed a Motion to Dismiss alleging lack of jurisdiction because appealable to the CTA are decisions of the CIR on disputed assessments, not assessments or letters of demand themselves.
- CTA First Division, by Resolution dated January 29, 2014, granted CIR’s motion and dismissed V.Y. Domingo’s Petition for Review for lack of jurisdiction; motion for reconsideration was denied April 23, 2014.
- V.Y. Domingo elevated the matter to the CTA En Banc via petition for review filed May 30, 2014; CTA En Banc Decision dated July 1, 2015 granted V.Y. Domingo’s petition, reversed the CTA Division resolutions, and remanded the case to the CTA First Division for further proceedings, reasoning primarily that V.Y. Domingo did not receive the Notice of Final Assessment (FAN) and the PCL’s tenor presupposed finality and demanded payment, thereby excusing administrative protest.
- CIR’s motion for reconsideration to the CTA En Banc was denied by Resolution dated December 3, 2015.
- Supreme Court required comment from V.Y. Domingo by Resolution dated March 7, 2016; V.Y. Domingo filed Comment.
- Supreme Court decision dated March 25, 2019 grants the petition for review on certiorari, reverses and sets aside the CTA En Banc Decision and Resolution, and reinstates the CTA First Division’s January 29, 2014 and April 23, 2014 Resolutions.
Procedural Issue Presented
- Whether the CTA First Division had jurisdiction to entertain V.Y. Domingo’s Petition for Review filed September 16, 2011, given the circumstances surrounding the issuance and receipt of assessment notices, the Preliminary Collection Letter, and the alleged non-receipt of a Notice of Final Assessment.
Positions of the Parties
- CIR (Petitioner):
- Contends that assessment notices and letters of demand are not themselves appealable to the CTA; the CIR’s decision on a disputed assessment is the subject of CTA appellate jurisdiction.
- Asserts that V.Y. Domingo’s petition was effectively an original protest against the assessment, which must be addressed administratively first; CTA lacks jurisdiction over such original protests.
- Argues V.Y. Domingo received the FLD and certified copies on September 15, 2011 and nonetheless failed to file an administrative protest within 30 days, thereby violating the doctrine of exhaustion of administrative remedies.
- Urges that the PCL did not constitute a denial or decision by the CIR and that the CTA First Division correctly dismissed the petition.
- V.Y. Domingo (Respondent):
- Maintains the CTA has jurisdiction under Section 7 of R.A. No. 1125, as amended, because the CTA’s jurisdiction extends beyond appeals from decisions of the CIR in disputed assessments to "other matters arising under the National Internal Revenue" administered by BIR.
- Argues there was no "disputed assessment" because it did not receive the FAN; instead it received a PCL which, by its tenor, foreclosed filing an administrative protest and effectively signaled that the assessment was final and demandable, thus justifying immediate petition to the CTA.
- Relies on alleged denial of due process arising from non-receipt of the FAN and analogizes to Allied Banking Corporation v. CIR where a demand letter contained language indicating final decision.
Relevant Statutory and Regulatory Provisions Cited
- Section 7 of Republic Act No. 1125, as amended by R.A. No. 9282 — Jurisdiction of the Court of Tax Appeals:
- CTA exercises exclusive appellate jurisdiction to review decisions of the CIR in cases involving disputed assessments, refunds, and other matters under the National Internal Revenue laws, and inaction by the CIR where a specific period of action is provided in the Code (inaction deemed a denial).
- Section 228, National Internal Revenue Code (RA No. 8424, Tax Reform Act of 1997), as amended and implemented by Revenue Regulations No. 12-99 — Protesting of Assessment:
- Commissioner must notify taxpayer in writing of law and facts on which assessment is made; taxpayer must respond in prescribed period; assessment may be protested administratively by filing request for reconsideration or reinvestigation within 30 days from receipt of the assessment; submission of all supporting documents within 60 days; if protest denied in whole or in part or not acted upon within 180 days from submission, taxpayer may appeal to CTA within 30 d