Case Summary (G.R. No. 242570)
Petitioner
Commissioner of Internal Revenue, represented by the Bureau of Internal Revenue (BIR), which assessed deficiency income tax and value-added tax against V.Y. Domingo Jewellers, Inc., and moved to dismiss the taxpayer’s petition for review for lack of CTA jurisdiction.
Respondent
V.Y. Domingo Jewellers, Inc., which received a Preliminary Assessment Notice (PAN) on September 9, 2009 and later Assessment Notices Nos. 32-06-IT-0242 and 32-06-VT-0243 dated November 18, 2010, followed by a PCL on August 10, 2011. The company sought to annul those notices for alleged prescription and denial of due process.
Key Dates
– September 9, 2009: BIR issued PAN for taxable year 2006.
– November 18, 2010: Issuance of Assessment Notices Nos. 32-06-IT-0242 and 32-06-VT-0243.
– August 10, 2011: Revenue District Office No. 28 issued PCL.
– September 15, 2011: V.Y. Domingo received certified copies of the Assessment Notices.
– September 16, 2011: V.Y. Domingo filed Petition for Review with CTA in Division.
– January 29 & April 23, 2014: CTA First Division dismissed petition and denied reconsideration.
– July 1, 2015: CTA En Banc reversed and remanded.
– December 3, 2015: CTA En Banc denied CIR’s motion for reconsideration.
– March 25, 2019: Supreme Court rendered decision.
Applicable Law
1987 Philippine Constitution; Republic Act No. 1125 as amended by RA 9282 (Court of Tax Appeals), Section 228 of the National Internal Revenue Code (NIRC) of 1997 as amended by RA 8424, and Revenue Regulations No. 12-99 governing assessment notices, protests, and jurisdictional requirements before the CTA.
Factual Background
On September 9, 2009, the BIR issued a PAN against V.Y. Domingo for deficiency income tax and VAT totaling ₱2,781,844.21. The taxpayer requested re-evaluation and reinvestigation. Two formal assessment notices followed on November 18, 2010, and a PCL was sent on August 10, 2011, demanding payment within ten days and warning of administrative summary remedies.
Procedural Posture before the CTA Division
After receiving certified copies of the assessment notices on September 15, 2011, the taxpayer filed a Petition for Review with the CTA First Division on September 16, 2011, seeking to annul the notices and the PCL as void for having been issued beyond the prescriptive period and without due process.
CTA First Division Ruling
In a January 29, 2014 resolution, the CTA First Division granted the CIR’s motion to dismiss for lack of jurisdiction. It held that no “decision” of the CIR on a disputed assessment was appealed; rather, the assessments themselves had become final. The division emphasized the taxpayer’s failure to file an administrative protest.
CTA En Banc Ruling
On July 1, 2015, the CTA En Banc reversed the First Division, concluding that the taxpayer did not receive a Formal Assessment Notice (FAN) and was justified in treating the PCL as a denial of protest. It remanded for further proceedings to allow the CIR to present evidence.
Issues on Jurisdiction and Exhaustion of Remedies
The Supreme Court framed the sole issue as whether the CTA First Division had jurisdiction over the taxpayer’s petition for review absent a prior administrative ruling on a disputed assessment. The CIR argued that assessments are not directly appealable and that the taxpayer had failed to exhaust prescribed administrative remedies.
Legal Framework for Tax Assessment and Protest
Section 228 of the NIRC and Revenue Regulations No. 12-99 require:
- Issuance of an assessment and FAN.
- Filing of a protest (reconsideration or reinvestigation) within 30 days of receipt.
- Submission of supporting documents within 60 days.
- Appeal to the CTA within 30 days from denial or lapse of a 180-day period for inaction by the CIR or authorized representative.
Analysis on Exhaustion of Administrative Remedies
The Court stressed that the CTA, as a court of special jurisdiction, may only entertain appeals from decisions on disputed assessments. The taxpayer neither protested the assessment notices within 30 days of receiving them on September 15, 2011, nor awaited a CIR decision or inaction. Its immediate petition was premature and violated the exhaustion doctrine, which affords the CIR the opportunity to re-
...continue readingCase Syllabus (G.R. No. 242570)
Facts
- On September 9, 2009, the Bureau of Internal Revenue issued a Preliminary Assessment Notice (PAN) against V.Y. Domingo Jewellers, Inc. for deficiency income tax and VAT for 2006, totaling ₱2,781,844.21 inclusive of interest.
- V.Y. Domingo filed a Request for Re-evaluation/Re-investigation and Reconsideration on September 17, 2009, seeking verification of computation and accounts in the PAN.
- On August 10, 2011, the Revenue District Office No. 28 issued a Preliminary Collection Letter (PCL) advising V.Y. Domingo of two Assessment Notices (No. 32-06-IT-0242 and No. 32-06-VT-0243, both dated November 18, 2010) totaling ₱3,164,617.43 and demanding payment or proof of prior payment within ten days.
- V.Y. Domingo requested and received certified true copies of the Assessment Notices on September 15, 2011.
- On September 16, 2011, V.Y. Domingo filed a Petition for Review with the Court of Tax Appeals (CTA) Division under Section 7(1) of RA No. 1125 and Section 4, Rule 8 of the RRCTA, praying that the Assessment Notices and the PCL be declared null and void for having been issued beyond the prescriptive period.
Procedural History
- The Commissioner of Internal Revenue (CIR) filed a Motion to Dismiss before the CTA Division, contending that the CTA lacked jurisdiction because no decision of the CIR on a disputed assessment had been appealed.
- On January 29, 2014, the CTA First Division granted the motion and dismissed V.Y. Domingo’s Petition for Review for lack of jurisdiction, ruling that assessments, not decisions, had been appealed and thus had become final.
- V.Y. Domingo’s motion for reconsideration was denied on April 23, 2014, leading to its petition for review before the CTA En Banc on May 30, 2014.
- The CTA En Banc, in its July 1, 2015 Decision, reversed the CTA Division’s dismissal and remanded the case for further proceedings, finding that V.Y. Domingo did not receive a Formal Assessment Notice (FAN) and thus had no administrative protest to exhaust.
- The CIR’s motion for reconsideration of the En Banc Decision was denied on December 3, 2015.
- The CIR then filed a petition for review on certiorari under Rule 45 before