Finality of final decision on disputed assessment
Finality of final decision on disputed assessment by Mark Julius Estur
“Of all our natural resources, the first one to be
exhausted may be the taxpayer”- Anonymous
The said adage reminds every taxpayer to be mindful of its
rights and remedies relative to the protection of its interests against tax
assessments from the government - both substantially and procedurally.
The rule that jurisdiction is conferred by law is
settled. The Court of Tax Appeals is a
court of special jurisdiction and as such it can take cognizance only of such
matters as are clearly within its jurisdiction. Its jurisdiction may only be invoked in the
particular instances enumerated in Section 7 of Republic Act No. 1125 as
amended by Section 7 of Republic Act No. 9282.
Supreme Court emphasized that the requirement to file a Petition for Review
with the Court of Tax Appeals within 30 days is jurisdictional and failure to
comply therewith would bar the appeal and deprive the said Court of its
jurisdiction to entertain and determine the correctness of the assessment. According to a 2008 decision, such period is
not merely directory but mandatory and it is beyond the power of the courts to
extend the same.
Pertinent to this discussion is Section 3.1.5 of
Revenue Regulations No. 12-99, implementing Section 228 of the NIRC, as amended
which provides that 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.
the case of Fishwealth Canning Corporation vs. Commissioner of Internal Revenue
(G.R. No. 179343, January 21, 2010) decided by the Supreme Court, it was held
that a motion for reconsideration of the denial of the administrative protest
does not toll the 30-day period to appeal to the CTA. This is in consonance with the principle on
the exhaustion of administrative remedies.
The doctrine ensures an orderly procedure which favors a preliminary
sifting process, particularly with respect to matters peculiarly within the
competence of the administrative agency, avoidance of interference with
functions of the administrative agency by withholding judicial action until the
administrative process had run its course, and prevention of attempts to swamp
the courts by a resort to them in the first instance.
a recent proposed regulation issued relative to the Rules of Procedures on
Exhaustion of Administrative Remedies on Protested Cases, it was stated that a
tribunal shall be created composed of three hearing officers, to wit: the
Chief-Appellate Division as Chairman, Assistant Chief-Appellate Division as
Vice-Chairman and the Action Attorney to whom the case under consideration was
assigned as a member.
Section 2 of the proposed regulation, cases within the Tribunal’s jurisdiction
include motions for reconsideration filed by taxpayers on the denial of their
protest by the duly authorized representative of the Commissioner of Internal
Revenue through a FDDA.
the most recent case enunciated by the CTA, a motion for reconsideration of the
denial of the administrative protest did not toll the 30-day period to appeal
to the CTA because the motion was filed with the Assistant Commissioner of Internal Revenue (ACIR). Had it been filed with the CIR, the period to
appeal to the CTA would then be reckoned from the date of receipt of the
decision on the denial of the Motion for Reconsideration.
the said case, petitioner received the Final Decision on Disputed
Assessment (FDDA) on June 10, 2002,
thus, it had until July 10, 2002 to file a petition for review with the CTA in
instead of appealing to the Court In Division the FDDA dated May 13, 2002
denying petitioner’s protest, within the 30-day period from the date of
receipt, records show that on July 9, 2002, petitioner filed a Request for
Reconsideration/Reinvestigation of the FDDA with ACIR-Large Taxpayer’s
to Section 3.1.5 of Revenue Regulation 12-99 implementing Section 228 of the
NIRC, as amended, a final decision of the Commissioner’s duly authorized
representative shall be considered as final, when a protest (request for
reconsideration of the FDDA of the Commissioner’s authorized representative) is
filed before the Commissioner, and not with the same authorized representative
of the Commissioner.
in the present case, petitioner filed a Request for Reconsideration of the
Final Decision on Disputed Assessment dated May 13, 2002 with the ACIR Large
Taxpayer’s Service and not with the Commissioner, said Final Decision on
Disputed Assessment is considered as the final decision which is appealable to
request for reconsideration did not toll the running of the 30-day period to
appeal the Final Decision on Disputed Assessment dated May 13, 2002 to the CTA
in Division, pursuant to Revenue Regulations 12-99.
that the petitioner filed a petition for review with the former first division
of the CTA on August 9, 2002 or thirty (30) days beyond the 30-day reglementary
period to appeal to the CTA, the FDDA dated May 13, 2001 had become final,
executor and demandable.
the other hand, under the proposed revenue regulation on Exhaustion of
Administrative Remedies the timely filing of the motion for reconsideration
before the Office of the Commissioner of Internal Revenue stays the execution
of the FDDA of the duly authorized representative of the Commissioner. The Office of the duly authorized
representative of the Commissioner loses jurisdiction over the case.
if during the pendency of the motion for reconsideration, the taxpayer appeals
the FDDA to the CTA, the motion for reconsideration is deemed abandoned by the
on the aforesaid jurisprudence and proposed regulation, it appears that a
decision on the motion for reconsideration of the FDDA may be appealable to the
CTA as long as it has been filed with the proper authorities, that is, the
Commissioner of Internal Revenue or his duly authorized representative and
within the 30-day reglementary period.
Otherwise, the counting of the 30-day prescriptive period shall commence
from receipt of the FDDA.
This article is not intended to be a substitute for professional advice. For comments and inquiries, you may e-mail the author at Mark.Estur@ph.gt.com. For other tax concerns, please check out our other tax services.