CIR v. Domingo Jewellers (Case Digest. G.R. No. 221780)

CASE DIGEST: [ G.R. No. 221780, March 25, 2019 ] COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. V.Y. DOMINGO JEWELLERS, INC., RESPONDENT. PERALTA, J.:

Court of Tax Appeals (CTA) En Banc Decision
V.Y. Domingo Jewellers, Inc.'s (V.Y. Domingo)
Commissioner of Internal Revenue's (CIR)

FACTS: The BIR issued a PAN against V.Y. Domingo at P2,781,844.21 for deficiency income tax and value-added tax, inclusive of interest, for the taxable year 2006.

V.Y. Domingo filed a Request for Re-evaluation/Re-investigation and Reconsideration dated September 17, 2009 with the Regional Director of BIR - Revenue Region No. 6.

V.Y. Domingo then received a Preliminary Collection Letter (PCL) dated August 10, 2011 from the RDO No. 28 - Novaliches, at P3,164,617.43.

On September 12, 2011, V.Y. Domingo sent a letter to the BIR RDO in Quezon City, requesting certified true copies of the assessment notices. Upon receipt thereof on September 16, 2011, it filed a Petition for Review with the CTA in Division, to have the PCL and the assessment notices declared null for allegedly having been issued beyond the prescriptive period for assessment and collection of internal revenue taxes.

During trial, the CIR moved to dismiss for lack of jurisdiction. She argued that under Republic Act (R.A.) No. 1125, it is neither the assessment nor the formal letter of demand that is appealable to the CTA but the decision of the CIR on a disputed assessment, arguing there was still no such decision.

The CTA First Division granted the CIR's motion and dismissed. It held that it was without jurisdiction to entertain the petition, as the rule is that for the CTA to acquire jurisdiction, as assessment must first be disputed by the taxpayer and either ruled upon by the CIR to warrant a decision, or denied by the CIR through inaction.

The CIR argues that assessment notices are not appealable to the CTA as the power to decide disputed assessments is vested in the CIR, subject only to the exclusive appellate jurisdiction of the CTA.

ISSUES: Does the CIR have jurisdiction over V.Y. Domingo's petition for review? In other words, does its receipt of the PCL entitle the taxpayer to go to the CTA?

HELD: The Supreme Court ruled for CIR. No, the CTA has no jurisdiction. No, receipt of the PCL does not grant the CTA jurisdiction.According to Section 7 of R.A. No. 1125, as amended by R.A. No. 9282, a protesting taxpayer like V.Y. Domingo has only three options to dispute an assessment:

  1. If the protest is wholly or partially denied by the CIR or his authorized representative, then the taxpayer may appeal to the CTA within 30 days from receipt of the whole or partial denial of the protest;
  2. If the protest is wholly or partially denied by the CIR's authorized representative, then the taxpayer may appeal to the CIR within 30 days from receipt of the whole or partial denial of the protest; or
  3. If the CIR or his authorized representative failed to act upon the protest within 180 days from submission of the required supporting documents, then the taxpayer may appeal to the CTA within 30 days from the lapse of the 180-day period.

Here, records show that on August 11, 2011, V.Y. Domingo received the PCL issued by petitioner CIR. However, instead of filing an administrative protest against the assessment notice within thirty (30) days from its receipt of the Assessment Notices on September 15, 2011, V.Y. Domingo elected to file its petition for review before the CTA First Division on September 16, 2011.

The word "decisions" in the aforementioned provision of R.A. No. 9282 means the decisions of the CIR on the protest of the taxpayer against the assessments. It does not signify the assessment itself. Where a taxpayer questions an assessment and asks the Collector to reconsider or cancel the same because he (the taxpayer) believes he is not liable therefor, the assessment becomes a "disputed assessment" that the Collector must decide, and the taxpayer can appeal to the CTA only upon receipt of the decision of the Collector on the disputed assessment.

Evidently, V.Y. Domingo's immediate recourse to the CTA First Division was in violation of the doctrine of exhaustion of administrative remedies.

Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention of the court, he or she should have availed himself or herself of all the means of administrative processes afforded him or her.

The records of the case show that V.Y. Domingo did receive the certified true copies of the Assessment Notices it requested on September 15, 2011, the day before it filed its petition for review before the CTA First Division. V.Y. Domingo cannot now assert that its recourse to the court was based on its non-receipt of the Assessment Notices that it requested.

Likewise, Allied Banking Corporation v. CIR does not apply here because that decision was grounded on the language used and the tenor of the demand letter, which indicate that it was the final decision of the CIR on the matter.

ADDITIONAL READINGS:

[1] CIR V. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., 146 Phil. 139, 152 (2014).

[2] Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the Code through Payment of a Suggested Compromise Penalty. September 6, 1999.

[3] Philippine Amusement and Gaming Corp. v. Bureau of Internal Revenue, et al., 119 Phil. 547, 558 (2016).

[4] Allied Banking Corporation v. Commissioner of Internal Revenue, 625 Phil. 530, 538 (2010).

[5] Lascona Land Co., Inc. v. Commissioner of Internal Revenue, 683 Phil. 430, 440 (2012).

[6] Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings, Inc., 645 Phil. 324, 331 (2010).

[7] CIR v. Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 & 201418-19, October 3 2018.

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