Phinma Property Holdings Corp. v. Court of Tax Appeals

FOURTH DIVISION [CA-G.R. SP No. 38666. October 25, 1996.] (C.T.A. Case No. 5155) PHINMA PROPERTY HOLDINGS CORPORATION , petitioner , vs . COURT OF TAX APPEALS and LIWAYWAY VINZONS-CHATO, in her capacity as the Commissioner of Internal Revenue , respondents . D E C I S I O N PARAS , J p : This is a "PETITION FOR REVIEW" of the Resolution dated September 27, 1995 of respondent Court of Tax Appeals in C.T.A. Case No. 5155, entitled "Phinma Property Holdings Corporation vs. Liwayway Vinzons-Chato, in her capacity as the Commissioner of Internal Revenue," denying petitioner's motion for reconsideration of respondent Court's Resolution dated July 7, 1995 dismissing the said case for lack of jurisdiction. On September 1, 1994, the petitioner corporation received a letter dated August 24, 1994 from the Bureau of Internal Revenue (BIR for short) demanding the payment of its liability for deficiency income tax for the sale of two lots and townhouse units, as well as 25% surcharge on the late payment of documentary stamp tax for the fiscal year ending on October 31, 1990 in the amount of P18,963,242.57. Attached to the said letter is a "Transcript of Assessment" itemizing the said tax liability with the further explanation that the "Taxpayer was not able to submit the required documents per our letter dated June 17, 1993, thus; this assessment." (Rollo, p. 32). After its receipt of the aforesaid collection letter, the petitioner on September 9, 1994 obtained from the BIR photocopies of the "Assessment Notices" dated November 9, 1993, FAN 2-90-93 and FAN 7-90-93, respectively, representing the income tax and documentary stamp tax covered by the collection letter of August 24, 1994. On September 30, 1994, the petitioner filed before the respondent Tax Court a petition for review praying that ". . . the alleged assessments for deficiency income tax and documentary stamp tax for the fiscal year ended October 31, 1990 be set aside as having been barred by prescription, and in the alternative, if the said assessments are found not to have been barred by prescription, petitioner's right to protest the assessments be recognized and the assessments nonetheless be set aside for want of legal and factual basis." On December 15, 1994, the respondent Commissioner filed a motion to dismiss the petition on the ground that the respondent court has no jurisdiction to entertain the appeal there being no "disputed assessment" involved in the case. The petitioner opposed the motion to dismiss. On July 7, 1995, the respondent court granted the motion to dismiss. Aforesaid CTA Case No. 5155 was dismissed for lack of jurisdiction. The petitioner's motion for reconsideration of the July 7, 1995 resolution was denied by the respondent court in its September 27, 1995 Resolution. In the instant petition before this Court, the petitioner prays that the "Resolutions dated July 7, 1995 and September 27, 1995 of respondent Court of Tax Appeals be set aside and the petition filed before it be deemed reinstituted, or in the alternative, if the instant petition is sufficient, for the Honorable Court to issue a decision in favor of petitioner nullifying the assessments in question for having been issued or made beyond the period of limitation for assessment." Principal contentions of the petitioner are that the respondent court has jurisdiction over the instant case and that prescribed or lapsed assessment need not be disputed. According to the petitioner (1) considering that paragraph 1 of Section 7 of RA 1125 vests upon the respondent CTA exclusive jurisdiction over the following: "(a) Decision of the Commissioner of Internal Revenue in cases involving disputed assessments; (b) Decision of the Commissioner of Internal Revenue involving refunds of internal revenue taxes, fees or other charges; (c) Decision of the Commissioner of Internal Revenue involving penalties imposed in relation to internal revenue taxes, fees or other charges; and (d) Decision of the Commissioner of Internal Revenue, involving other matters arising under the Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue." The petition for review it filed with the respondent court principally alleging that the assessments are already barred by prescription, falls under above paragraph (d) which involves decision of the respondent Commissioner on other matters; (2) if, as erroneously interpreted by the respondent court, the assessment must first be disputed before it can have jurisdiction on "other matters" arising from the Tax Code, there will be no more occasion for the respondent court to exercise jurisdiction with respect thereto as in all likelihood, its jurisdiction will be invoked based on disputed assessment, which falls under above par. (a); (3) the respondent court violated the clear provision of Rule 8, Section 2 of the Revised Rules of Court, to wit: "Sec. 2. Alternative causes of action or defenses, claim or defenses . A party may set forth two or more statements of a claim or defense alternatively or hypothetically either in one cause of action or defense or in separate causes of action or defenses. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements." when it treated the alternative causes of action pleaded in the petition conjunctively and not disjunctively. The petitioner's main cause of action is the setting aside of the assessment on the ground that it (assessment) was made beyond the period allowed by law for assessment and the alternative cause of action is the recognition of the petitioner's right to protest the assessment in the event that the assessment is found not to have prescribed or found to have been timely made. As clearly provided in aforesaid Section 7 of RA 1125, the exclusive appellate jurisdiction of the respondent CTA is over decision of the respondent Commissioner in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue. This jurisdiction of the respondent CTA was stressed by the Supreme Court in the Case of Commissioner of Internal Revenue vs. Ayala Securities Corporation (70 SCRA 204). In line with the principle of "ejusdem generis", the term "other matters" in regard to the respondent court's jurisdiction could be those cases which do not necessarily involve disputed assessments or refunds of internal revenue taxes, fees or other charges, penalties in relation thereto or those related to customs protest or forfeiture cases but controversies which are still within the scope of the functions of the BIR and Customs (p. 229, Basic Taxation in the Philippines, Benjamin Aban, 1994). (Underlining supplied.) At any rate, following the petitioner's stand that his questioning of the assessments on the ground of prescription involves "other matters" mentioned in Section 7 of RA 1125, the fact cannot be ignored that the petitioner did not question before the respondent Commissioner the said letter of collection or the notices of assessment on the ground of prescription. Thus, when the petitioner received on September 1, 1994 the demand letter dated August 24, 1994 or when he obtained copies of the Assessment Notices on September 9, 1994, he should have filed a protest against them with the respondent Commissioner (on the ground of prescription) and waited for a ruling or decision thereon by the latter before filing a petition for review with the respondent court. The respondent court acquires jurisdiction only when the respondent Commissioner renders a decision on the protest lodged in her office and it is this decision which is challenged in a petition for review before the respondent court. This has been explained by the Supreme Court as follows: ". . . 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 Court of Tax Appeals only upon receipt of the decision of the collector on the disputed assessment, . . ." (cited in the case of Commissioner of Internal Revenue vs. Villa, 22 SCRA 3). xxx xxx xxx Since in the instant case the taxpayer appealed from the assessment of the Commissioner of Internal Revenue without previously contesting the same, the appeal was previously contesting the same, the appeal was premature and the Court of Tax Appeals had no jurisdiction to entertain said appeal. For, as stated, the jurisdiction of the Tax Court is to review by appeal decision of the Commissioner of Internal Revenue on disputed assessments. The Tax Court is a court of special jurisdiction. As such, it can take cognizance only, of such matters as are clearly within its jurisdiction. xxx xxx xxx (Commissioner of Internal Revenue vs. Villa, supra.) For failure of the petitioner to protest against the letter of collection and/or assessment notices (on the ground of prescription) there was therefore no decision of the respondent Commissioner that could be the subject of appeal before the respondent CTA. Concluding, the dismissal by the respondent court the petition for review was in order. WHEREFORE, THE INSTANT PETITION IS DISMISSED FOR LACK OF MERIT. SO ORDERED. Austria-Martinez and Salas , JJ ., concur.