Commissioner of Internal Revenue v. Secretary of Justice
REITERATIONFacts
The Antecedents: The Metropolitan Cebu Water District (MCWD) received a Preliminary Assessment Notice from the Bureau of Internal Revenue (BIR) for alleged tax deficiencies for the year 2000, totaling P70,660,389.00, encompassing income tax, franchise tax, value-added tax, surcharges, interest, and compromise penalties. MCWD filed a formal protest with the BIR's Regional Director. Procedural History: Following the BIR's failure to act on MCWD's protest within 180 days, MCWD filed a Petition for Review with the Court of Tax Appeals (CTA). The Commissioner of Internal Revenue (CIR) opposed this, arguing that the Secretary of Justice (SOJ) had jurisdiction due to MCWD being a government-owned or controlled corporation (GOCC), leading the CTA to dismiss the petition. MCWD then filed a Petition for Arbitration with the SOJ. However, the CIR reversed its stance, claiming the SOJ lacked jurisdiction as the dispute involved the validity of a tax assessment. The SOJ rendered a decision declaring MCWD exempt from income tax, liable for franchise tax, exempt from value-added tax, and not liable for surcharges, interest, or penalties. The CIR's motion for reconsideration was denied. Subsequently, the CIR filed a Petition for Certiorari with the Court of Appeals (CA), alleging grave abuse of discretion by the SOJ. The CA dismissed this petition, and its resolution denying reconsideration was also affirmed. The Petition: The Commissioner of Internal Revenue filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's decision. The CIR argued that the SOJ lacked jurisdiction to decide the Petition for Arbitration filed by MCWD, as the core issue was the validity of the tax assessment issued by the BIR. The CIR contended that the SOJ committed grave abuse of discretion by assuming jurisdiction over the case.
Issue(s)
Whether the Secretary of Justice committed grave abuse of discretion amounting to lack or excess of jurisdiction in taking cognizance of the Petition for Arbitration filed by the Metropolitan Cebu Water District (MCWD). Whether the CIR is barred from questioning the jurisdiction of the Secretary of Justice after initially invoking it. Whether the CIR failed to exhaust administrative remedies by not appealing the decision of the Secretary of Justice to the Office of the President.
Ruling
The petition is denied. The Decision dated January 23, 2013, and Resolution dated August 29, 2013, of the Court of Appeals in CA-G.R. SP No. 117577 are affirmed.
Ratio Decidendi
On the jurisdiction of the Secretary of Justice: The Court held that the CA correctly ruled that the SOJ did not commit grave abuse of discretion. Presidential Decree No. 242 (now Chapter 14, Book IV of the Administrative Code of 1987) vests jurisdiction over disputes solely between government agencies and GOCCs, involving questions of law, in the Secretary of Justice. The dispute between the CIR and MCWD, a GOCC, concerning tax assessments, falls within this purview. The Court reiterated the ruling in Power Sector Assets and Liabilities Management Corporation v. Commissioner of Internal Revenue, emphasizing that PD 242 mandates the administrative settlement or adjudication of such disputes by the SOJ. The purpose of PD 242 is to provide a speedy and efficient administrative settlement and to lessen the clogged dockets of the courts. The use of the word "shall" in the law makes this provision mandatory. On the CIR's change of stance regarding jurisdiction: The Court found the CIR's turnaround in claiming the SOJ had no jurisdiction, after initially invoking it, to be impermissible. The principle that a party cannot invoke jurisdiction at one time and reject it at another to suit its convenience was applied. Jurisdiction is conferred by law and cannot depend on the whims of a party. Once acquired, jurisdiction continues until the case is finally terminated. Therefore, the SOJ, having acquired jurisdiction, continued to exercise it until the case's termination. On the failure to exhaust administrative remedies: The Court ruled that the CIR failed to exhaust administrative remedies. Section 70 of Chapter 14, Book IV of the Administrative Code of 1987 provides that decisions of the SOJ, where the amount of the claim exceeds one million pesos, must be appealed to the Office of the President (OP). Since the claim here was P70,660,389.00, the CIR should have appealed to the OP instead of filing a petition for certiorari with the CA. The doctrine of exhaustion of administrative remedies mandates that relief must be sought by exhausting administrative remedies before bringing an action in court. Failure to do so renders the action premature and lacking in cause of action, warranting dismissal. The availability of an appeal to the OP constituted a plain, speedy, and adequate remedy in the ordinary course of law, making the resort to certiorari improper.
Main Doctrine
The Secretary of Justice has jurisdiction over disputes between government agencies and government-owned or controlled corporations (GOCCs) involving questions of law, as provided under Presidential Decree No. 242 and Chapter 14, Book IV of the Administrative Code of 1987. Failure to exhaust available administrative remedies, such as appealing to the Office of the President when the claim exceeds one million pesos, renders a petition for certiorari premature.