THE Bureau of Internal Revenue (BIR) secured a victory against Citysuper Inc., which operates Landmark Trinoma, after the Supreme Court (SC) reversed the ruling issued by the Court of Tax Appeals (CTA) cancelling the P2.08-billion assessment notices for tax deficiencies that the Commissioner of Internal Revenue (CIR) issued in 2011.
In a 23-page decision penned by Associate Justice Marvic MVF Leonen, the Court’s Third Division granted the petition filed by the CIR seeking to set aside the resolution issued by the CTA on December 15, 2017.
The CTA declared that the prescriptive periods for some of the deficiency value-added taxes, withholding taxes on compensation and expanded withholding taxes had elapsed.
The CTA noted that the prescription period was not validly waived. The CTA cited Section 203 of the National Internal Revenue Code (NIRC) that said assessments for deficiency taxes should be issued within three years from the last day prescribed by law to file the tax return, or the actual date of filing of such return, which comes later.
In reversing the CTA’s decision, the High Tribunal gave credence to the argument of the CIR that the CTA had no jurisdiction over the case due to the failure of Citysuper to file a protest before the agency prior to elevating the issue before the CTA.
The CIR explained that Citysuper had admitted receiving the final letter of demand and assessment notices on April 24, 2015, which meant the company had until May 24, 2015, to file a protest.
While it allegedly filed a protest on April 29, 2015, the CIR claimed that the protest letter only had the assessment notices attached and stated that Citysuper was still compiling supporting documents.
With no protest, the Commissioner said, the assessment became final, thus, depriving the CTA of jurisdiction.
“Section 228 of the NIRC requires that administrative protests against assessments conform to the rules and regulations issued by the BIR,” the SC said in a decision released on October 27, 2021.
“Respondent’s April 29, 2015 letter did not comply with the requirements set down in Revenue Regulation (RR) 18-2013. There was no administrative protest to speak of, and no decision on a disputed assessment to assail. Thus, the [CTA] had no jurisdiction over the petition for review,” it added.
The SC noted that in its previous decision in Commissioner of Internal Revenue v. Villa, it held that the CTA’s jurisdiction was over the CIR’s decision on the protest against an assessment, and not the assessment itself.
Thus, the period to invoke judicial review must be counted from receipt of the CIR’s decision on the disputed assessment.
But, in the case of Citysuper, the SC said its protest was void for failing to comply with the requirements of RR 18-2013.
“Section 228 of the [NIRC] is clear. The administrative protest must be filed not only within the stated period, but also ‘in such form and manner as may be prescribed by implementing rules and regulations,’” the SC explained.
“When a taxpayer files a petition for review before the [CTA] without validly contesting the assessment with the [CIR], the petition is premature and the [CTA] has no jurisdiction,” the High Tribunal added.