THIRD DIVISION
G.R. No. 221780, March 25, 2019
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, v. V.Y. DOMINGO JEWELLERS, INC., RESPONDENT.
D E C I S I O N
PERALTA, J.:
This is petition for review on certiorari under Rule 45 seeking to reverse and set aside the Court of Tax Appeals (CTA) En Banc Decision1 dated July 1, 2015 in CTA EB Case No. 1170, which granted respondent V.Y. Domingo Jewellers, Inc.'s (V.Y. Domingo) petition for review, and ordered the remand of the case to the CTA First Division for further proceedings; and the Resolution2 dated December 3, 2015 which denied petitioner Commissioner of Internal Revenue's (CIR) motion for reconsideration.
The facts are as follows:
On September 9, 2009, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice3 (PAN) against V.Y. Domingo, a corporation primarily engaged in manufacturing and selling emblematic jewelry, assessing the latter the total amount of P2,781,844.21 representing 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 Reconsideration4 dated September 17, 2009 with the Regional Director of BIR - Revenue Region No. 6, requesting a "thorough re-evaluation and re-investigation to verify the accuracy of the computation as well as the accounts included in the Preliminary Assessment Notice."
V.Y. Domingo then received a Preliminary Collection Letter5 (PCL) dated August 10, 2011 from the Revenue District Office (RDO) No. 28 - Novaliches, informing it of the existence of Assessment Notice No. 32-06-IT-0242 and Assessment Notice No. 32-06-VT-0243, both dated November 18, 2010, for collection of its tax liabilities in the amounts of P1,798,889.80 and P1,365,727.63, respectively, for a total amount of P3,164,617.43. The PCL likewise stated:
If you want to know the details and/or settle this assessment, may we invite you to come to this office, within ten (10) days from receipt of this notice. However, if payment had already been made, please send or bring us copies of the receipts of payment together with this letter to be our basis for canceling/closing your liability/ies.On September 12, 2011, V.Y. Domingo sent a letter to the BIR Revenue District Office No. 28 in Quezon City, requesting certified true copies of Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243. Upon receipt of the requested copies of the notices on September 15, 2011, V.Y. Domingo filed on September 16, 2011 a Petition for Review7 with the CTA in Division, under Section 7(1) of RA No. 1125 and Section 4, Rule 8 of the Revised Rules of the Court of Tax Appeals (RRCTA), praying that Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243 dated November 18, 2010 and the PCL dated August 10, 2011 be declared null and void, cancelled, withdrawn, and with no force and effect, for allegedly having been issued beyond the prescriptive period for assessment and collection of internal revenue taxes.
We will highly appreciate if you can give this matter your preferential attention, otherwise we shall be constrained to enforce the collection thereof thru Administrative Summary Remedies provided for by the law, without further notice.6
Petitioner's case did not fall within the usual procedure in the issuance of an assessment as respondent failed to serve or send the FAN to petitioner. Section 228 of the NIRC of 1997, as amended, and Section 3 of Revenue Regulations No. 12-99 are silent as to the procedure to be followed in case the taxpayer did not receive the FAN but instead receives a preliminary collection letter or a warrant of distraint/levy or similar communications, informing the taxpayer of the existence of a FAN for the first time. Understandably, this would cause some confusion as to what the next step it. Hence, petitioner cannot be faulted for not filing an administrative protest before filing a petition for review before the Court in Division since it did not receive the FAN and the language of the PCL shows that the respondent is already demanding payment from petitioner presupposing that the assessment has become final.10Thus, the present petition raising the sole issue of whether the First Division of the CTA has jurisdiction to entertain V.Y. Domingo's petition for review.
SEC. 7. Jurisdiction. — The CTA shall exercise:In relation thereto, Section 228 of R.A. No. 8424 or The Tax Reform Act of 1997, as amended, implemented by Revenue Regulations No. 12-99,20 provides for the procedure to be followed in issuing tax assessments and in protesting the same. Thus:
(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:
(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws, administered by the Bureau of Internal Revenue;
(2) Inaction by the Commissioner of Internal. Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;
x x x.19
Section 228. Protesting of Assessment. — When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however, That a pre-assessment notice shall not be required in the following cases:On the other hand, Section 3.1.5 of Revenue Regulations No. 12-99,22 implementing Section 228 above, provides:(a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return; orThe taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void.
(b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable articles has not been paid; or
(e) When an article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice.
If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations.
Within sixty (60) days from filing of the protest, all relevant, supporting documents shall have been submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of one hundred eighty (180)-day period; otherwise, the decision shall become final., executory and demandable.21
3.1.5. Disputed Assessment. — The taxpayer or his duly authorized representative may protest administratively against the aforesaid formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof. . .It is clear from the said provisions of the law that a protesting taxpayer like V.Y. Domingo has only three options to dispute an assessment:
x x x x
If the taxpayer fails to file a valid protest against the formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof, the assessment shall become final, executory and demandable.
If the protest is denied, in whole or in part, by the Commissioner, the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from the date of receipt of the said decision, otherwise, the assessment shall become final, executory and demandable.
In general, if the protest is denied, in whole or in part, by the Commissioner or his duly authorized representative, the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from date of receipt of the said decision, otherwise, the assessment shall become final executory and demandable: Provided, however, that if the taxpayer elevates his protest to the Commissioner within thirty (30.) days from date of receipt of the final decision of the Commissioner's duly authorized representative, the latter's decision shall not be considered final, executory and demandable, in which case, the protest shall be decided by the Commissioner.
If the Commissioner or his duly authorized representative fails to act on the taxpayer's protest within one hundred eighty (180) days from date of submission, by the taxpayer, of the required documents in support of his protest, the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from the lapse of the said 180-day period, otherwise the assessment shall become final, executory and demandable. (Emphasis ours)
It is requested that the above deficiency tax be paid immediately upon receipt hereof, inclusive of penalties incident to delinquency. This is our final decision based on investigation. If you disagree, you may appeal the final decision within thirty (30) days from receipt hereof, otherwise said deficiency tax assessment shall become final, executory and demandable.34The ruling of this Court in the said case 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. The words used, specifically the words "final decision" and "appeal," taken together led therein petitioner to believe that the Formal Letter of Demand with Assessment Notices was, in fact, the final decision of the CIR on the letter-protest it filed and that the available remedy was to appeal the same to the CTA.35
| Very truly yours, |
(SGD) WILFREDO V. LAPITAN | |
Division Clerk of Court |
Endnotes:
* Designated Additional Member per Special Order No. 2624 dated November 28, 2018.
1 Penned by Associate Justice Amelia R. Cotangco-Manalastas, with Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Caesar A. Casanova, Esperanza R. Fabon-Victorino, and Ma. Belen M. Ringpis-Liban concurring, with Presiding Justice Roman G. Del Rosario, and Associate Justices Erlinda P. Uy, and Cielito N. Mindaro-Grulla dissenting; rollo, pp. 37-51.
2Id. at 56-62.
3Rollo, pp. 63-64.
4Id. at 66.
5Id. at 68.
6Id.
7Id. at 69-89.
8Id. at 92-99.
9 Penned by Associate Justice Erlinda P. Uy, with Associate Justices Roman G. Del Rosario an Cielito N. Mindaro-Grulla concurring, id. at 105-115.
10Id. at 49.
11Id. at 23.
12Id. at 24-25.
13Id. at 116.
14Id. at 117-149.
15Id. at 122.
16Id. at 124-125.
17Id. at 125-126.
18CIR V. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., 146 Phil. 139, 152 (2014).
19 Emphasis supplied.
20 Dated September 6, 1999.
21 Emphasis ours.
22Implementing 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.
23Philippine Amusement and Gaming Corp. v. Bureau of Internal Revenue, et al., 119 Phil. 547, 558 (2016).
24Allied Banking Corporation v. Commissioner of Internal Revenue, 625 Phil. 530, 538 (2010).
25Lascona Land Co., Inc. v. Commissioner of Internal Revenue, 683 Phil. 430, 440 (2012).
26Id.
27Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings, Inc., 645 Phil. 324, 331 (2010).
28CIR v. Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 & 201418-19, October 3 2018.
29Id.
30Rollo, p. 125.
31Id. at 124.
32Supra note 24, at 541 -542.
33Allied Banking Corporation v. CIR, supra note 24.
34Id. at 535.
35Id. at 544.
36Rollo, p. 54.