Commissioner of Internal Revenue v. Court of Tax Appeals

FIRST DIVISION [CA-G.R. SP No. 62847. March 30, 2001.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . THE COURT OF TAX APPEALS AND AZUCENA T. REYES , respondents . D E C I S I O N AGCAOILI , J p : This is a petition for certiorari to set aside the resolution dated November 23, 2000 of the Court of Tax Appeals (CTA) denying the motion to dismiss filed by petitioner Commissioner of Internal Revenue in CTA Case No. 6124. On June 28, 2000, private respondent Azucena T. Reyes filed with the CTA a petition for review to set aside the (a) Assessment Notice No. RO8-EA50-0283-93-98-424 and Demand Letter both dated April 22, 1998 (Annexes "A" and "B" of private respondent's petition for review) issued to the Estate of Maria C. Tancinco demanding payment of the sum of P14,912,205.47 purportedly representing the estate tax due on the transmission of the said estate, inclusive of surcharge and interest incident to delinquency; and (b) Letter dated March 20, 2000 (Annex "C", ibid .) of the Commissioner of Internal Revenue to private respondent, as representative of the heirs of the estate of Maria C. Tancinco, denying the estate's proposed compromise settlement and reiterating the demand for payment of the estate tax due in an updated amount of P18,034,382.13 on or before April 15, 2000, otherwise, the Bureau of Internal Revenue (BIR) shall be constrained to publish the notice of sale of the estate's property located at 4931 Pasay Road, Dasmarias Village, Makati City. Petitioner filed his answer to the petition for review alleging that the tax court has no jurisdiction to take cognizance of the case as the subject estate tax assessment has long become final, executory and demandable. The parties thereafter submitted a joint stipulation of facts containing a summary of admitted facts as well as the issues submitted for resolution. On October 5, 2000, petitioner filed a motion to dismiss the petition for review. He reiterated that the tax court has no jurisdiction over the case since the tax assessment has long become final, executory and demandable. Private respondent opposed the motion. On November 23, 2000, the CTA issued its resolution denying petitioner's motion to dismiss, holding as follows: "Petitioner opposed said Motion on October 11, 2000, contending that the assessment notice and letter of demand, both dated April 22, 1998, failed to state the facts and the law upon which the assessment was made, rendering the same void and therefore, could not become final, executory and demandable. Petitioner likewise questioned the validity of the sworn information-for-reward for failure of the Respondent to follow the prescribed procedure under Finance Regulation No. 1 and Revenue Memorandum Order No. 12-93. After a careful study of Respondent's motion and Petitioner's opposition thereto, this court hereby RESOLVES to DENY the instant motion, considering that if Petitioner could prove during the trial that the irregularities committed by Respondent are of such magnitude as to make the notice of assessment a nullity, then, indeed the same could not attain finality. TAcDHS WHEREFORE, in view of the foregoing, Respondent's 'Motion to Dismiss' is hereby DENIED. Accordingly, let this case be set for hearing on January 9, 2001 at 9:00 a.m. for Petitioner's presentation of evidence. SO ORDERED." ( Rollo , 16-17) Petitioner posits the following: "GROUND RELIED UPON PUBLIC RESPONDENT COURT OF TAX APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN ISSUING RESOLUTION, DATED NOVEMBER 23, 2000, DENYING THE PETITIONER'S MOTION THAT SAID COURT HAS NO MORE JURISDICTION TO TAKE COGNIZANCE OF PRIVATE RESPONDENT'S PETITION DISPUTING THE SUBJECT ESTATE TAX ASSESSMENT ON THE GROUND THAT SAID ASSESSMENT HAS LONG BECOME FINAL, EXECUTORY AND DEMANDABLE PURSUANT TO THE PROVISION OF SECTION 228 OF THE TAX CODE, AS AMENDED, AND IN ACCORDANCE WITH THE WELL-SETTLED JURISPRUDENCE ON THE MATTER." ( Rollo , 5) Petitioner argues that the subject estate tax assessment issued against the Estate of Maria C. Tancinco "has long become final, executory and demandable and, therefore, said Court of Tax Appeals has no jurisdiction to entertain the same." Articulating the point, petitioner states that the tax assessment of P14,912,205.47 was earlier the subject of a protest filed by the heirs on June 11, 1996. However, said heirs have not submitted to the BIR any supporting documents within sixty (60) days from the filing of the protest as required by Section 228 of the National Internal Revenue Code, as amended. Such failure made the tax assessment final and incontestable pursuant to the said provision of law. Moreover, on January 5, 1999, warrants of distraint and levy were issued and served upon the taxpayer, and on February 11, 1999, a notice of levy was likewise issued. Petitioner further argues that even if private respondent had submitted the supporting documents within the 60-day period, the tax assessment would still have become final and executory as private respondent failed to appeal to the CTA within thirty (30) days from the lapse of the 180-period provided for in Section 228 of the National Internal Revenue Code. The petition for review disputing the tax assessment was filed with the CTA only on June 28, 2000. Additionally, petitioner alleges that assuming that the matter that was appealable to the CTA was the letter of the BIR Commissioner dated March 20, 2000, the tax assessment had nevertheless become final as more than thirty (30) days had already elapsed from the date said letter was received by private respondent on April 7, 2000 to the date the petition for review was filed on June 28, 2000. Hence, the CTA could not anymore take cognizance of the appeal pursuant to Section 7, in relation to Section 11, of RA No. 1125. ( Rollo , 7-9) Disputing petitioner's arguments, private respondent cites the same Section 228 of the Tax Code invoked by petitioner which requires that " the taxpayer shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void ." Relatedly, she also cites Revenue Regulation No. 12-99, pertinent portion of which reads: "3.1.4 Formal Letter of Demand and Assessment Notice The formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. The letter of demand calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of demand and assessment notice shall be void." ( Ibid ., 71) According to private respondent, the foregoing requirements of law and regulation have not been complied with by the BIR, hence, the assessment is void and all proceedings related or ancillary thereto "are ineffectual, nugatory and without any legal force or binding effect." ( Ibid ., 72) The petition lacks merit. The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law against the acts of respondent. In the present case, the plain and adequate remedy of petitioner was to file a motion for reconsideration of the assailed resolution with public respondent CTA as said motion would have provided it with an opportunity to correct any factual or fancied error attributed to it by way of a re-examination of the legal and factual aspects of the case. Failure to file said motion is fatal as to render the present petition premature. (ABS-CBN Supervisors Employees Union Members v. ABS-CBN Broadcasting Corporation, 304 SCRA 489 [1999]; Purefoods Corporation v. National Labor Relations Commission, 171 SCRA 415 [1989]) "The remedy of certiorari may be invoked only when an appeal has become impossible and when there is no other more speedy and adequate remedy available, as for example a motion for new trial or a motion for reconsideration, this last step, as above stated, having already been taken by the petitioner." (Mayol v. Blanco, 61 Phil. 547 [1935]; bold type given) In any event, we are not convinced that respondent CTA had, in denying petitioner's motion to dismiss, acted with grave abuse of discretion amounting to lack of jurisdiction. Petitioner has not made out a case for certiorari. HTSIEa Section 228 of the National Internal Revenue Code, as amended, which is cited by both parties to buttress their arguments, provides in part as follows: "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: . . . xxx xxx xxx 'The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. '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 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 the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable." The CTA cannot be faulted for denying the motion to dismiss and setting the case for hearing, the reason given being that " if Petitioner could prove during the trial that the irregularities committed by Respondent are of such magnitude as to make the notice for assessment a nullity, then, indeed the same could not attain finality ." The arguments of the parties on the issue of whether or not the estate tax assessment in question has already become final and executory are so contrasting that the CTA thought it best to set the case for hearing to determine whether or not there had been compliance with the specific law and regulations on the matter. Were there any irregularities committed by the BIR in issuing the formal letter of demand and assessment notice to the estate of the deceased? This is a crucial question of fact which can only be determined after the parties are duly heard. As we see it, private respondent has put a constitutional dimension to the case by alleging that the estate was not properly informed in writing of the law and the facts on which the assessment was made and thereby implicitly suggesting that the estate was denied of its right to due process. For, indeed, if such requirement has not been duly complied with, the law itself in lucid terms says that " the assessment shall be void ." To repeat, whether or not there has been compliance with the requirements of law inevitably raises a question of fact which is not the proper subject of certiorari. Evidently, the arguments of the parties on the basis of their pleadings were found by CTA as insufficient enough to enable it to formulate an opinion as to the viability of the motion to dismiss. Hence, its resolution to set the case for hearing to find out whether or not the alleged irregularities committed by petitioner are of such magnitude as to render the notice of assessment void or a nullity. "The rule is settled that in certiorari proceedings under Rule 65 of the Rules of Court, questions of fact are not generally permitted, the inquiry being limited essentially to whether public respondent acted without or in excess of its jurisdiction or with grave abuse of discretion. . . . . Mere error of judgment cannot be a proper subject of the special civil action for certiorari. The only question involved in certiorari is jurisdiction, either want of jurisdiction or excess thereof." (Insular Bank of Asia and America v. Court of Appeals, 228 SCRA 420 [1993]) "Where the grounds relied upon in a motion to dismiss are essentially factual, the same can only be resolved on the basis of evidence to be presented during the trial." (Hahn v. Court of Appeals, 266 SCRA 537 [1997]) An order denying a motion to dismiss is interlocutory and cannot be the subject of a petition for certiorari. The remedy of the aggrieved party is to file an answer and interpose, as defense or defenses, the objection or objections raised by him in said motion to dismiss, then proceed to trial and, in case of adverse decision, to elevate the entire case by appeal in due course. (Atienza v. Court of Appeals, 232 SCRA 737 [1994]) As stated at the beginning, there has been no showing that the CTA has committed grave abuse of discretion amounting to lack of jurisdiction in issuing the questioned resolution. It is an established legal precept that a mere abuse of discretion is not sufficient to justify the issuance of the writ of certiorari. The abuse of discretion must be grave and patent and must be shown that the discretion was exercised arbitrarily or despotically. (Palma v. Q & S, Inc., 17 SCRA 97 [1966]) This has not been established in this case. WHEREFORE, the petition is DISMISSED. SO ORDERED. Garcia and Asuncion, JJ . , concur.