TL;DR

The Supreme Court affirmed the dismissal of the Commissioner of Internal Revenue’s (CIR) Petition for Relief because it was filed beyond the 60-day deadline from when the CIR learned of the adverse ruling. This case underscores the strict application of procedural rules in tax litigation. Taxpayers and the BIR must diligently monitor case timelines and adhere to prescribed periods for filing legal remedies, as failure to do so can result in the loss of legal recourse, regardless of the merits of the substantive claims.

Chasing the Clock: When Ignorance of a Deadline is No Excuse in Tax Appeals

This case revolves around the Commissioner of Internal Revenue (CIR) and Ayala Land, Inc. (ALI) in a dispute over deficiency Value-Added Tax (VAT). ALI initially contested a VAT assessment, and the Court of Tax Appeals (CTA) Second Division ruled in ALI’s favor. The CIR appealed to the CTA en banc, which also upheld the Second Division’s decision. Crucially, the CIR claimed to have not received the CTA en banc’s resolution denying their motion for reconsideration, leading to a missed deadline for further appeal. The CIR then filed a Petition for Relief under Rule 38, seeking to overturn the finality of the CTA en banc decision, arguing excusable negligence due to non-receipt of the resolution. The central legal question is whether the CIR’s petition for relief was filed within the prescribed timeframe, as mandated by the Rules of Court.

Rule 38 of the Rules of Court provides a remedy of Petition for Relief from Judgment, allowing a party to seek the setting aside of a judgment, order, or other proceeding under specific circumstances like fraud, accident, mistake, or excusable negligence. Section 3 of Rule 38 explicitly states the time limit:

Sec. 3. Time for filing petition; contents and verification. – A petition provided for in either of the preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, final order, or other proceeding to be set aside, and not more than six (6) months after such judgment or final order was entered, or such proceeding was taken; and must be accompanied with affidavits showing the fraud, accident, mistake, or excusable negligence relied upon, and the facts constituting the petitioner’s good and substantial cause of action or defense, as the case may be.

The Supreme Court emphasized the strict compliance required with these deadlines. The Court cited jurisprudence stating that a petition for relief is a “final act of liberality” and cannot undermine the principle of finality of judgments. In this case, the CIR argued that the 60-day period should commence from August 3, 2009, the date they claimed to have first learned of the denial resolution. However, the CTA records indicated receipt of the resolution by both the CIR and the Office of the Solicitor General (OSG) much earlier. Moreover, internal communications and filings by the CIR revealed that they were in fact aware of the resolution denying their motion for reconsideration as early as June 22, 2009, based on inquiries made to the CTA.

The Court meticulously dissected the timeline. Even if considering June 22, 2009, as the reckoning date of knowledge, the 60-day period would have expired on August 21, 2009 (extended to August 24, 2009, due to a non-working holiday). The CIR’s petition for relief was filed only on October 2, 2009, clearly beyond the deadline. The Court also pointed out the procedural lapse of the CIR in directly filing a Petition for Certiorari with the Supreme Court without first seeking reconsideration from the CTA en banc on the dismissal of their Petition for Relief. This motion for reconsideration is a prerequisite for a certiorari petition, intended to allow the lower court to rectify any errors. While exceptions exist, none applied in this case.

The Supreme Court found no grave abuse of discretion on the part of the CTA en banc. Grave abuse of discretion implies a capricious, whimsical, or arbitrary exercise of judgment, tantamount to lack of jurisdiction. The Court held that the CTA correctly applied the rule on the reglementary period for filing a petition for relief. The CIR’s own admissions and records contradicted their claim of belated knowledge. Furthermore, even the OSG, the CIR’s statutory counsel, had advised against the petition for relief due to its untimeliness.

This case serves as a stark reminder of the importance of procedural compliance in legal proceedings, especially in tax litigation. Both taxpayers and the Bureau of Internal Revenue must meticulously track deadlines and ensure timely filing of pleadings. Ignorance of a resolution, particularly when contradicted by official records and internal communications, is not considered excusable negligence that warrants relief under Rule 38. The principle of finality of judgments is paramount, and petitions for relief are not intended to be a substitute for a timely appeal, nor a means to circumvent procedural rules.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CIR vs. CTA and Ayala Land, Inc., G.R. No. 190680, September 13, 2012