G.R. No. 260912, August 30, 2023
The Department of Energy, Petitioner, vs. Commissioner of Internal Revenue, Respondent.

FACTS

The Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice (PAN) to the Department of Energy (DOE) on December 7, 2018, for deficiency excise taxes amounting to ₱18,378,759,473.44. Ten days later, on December 17, 2018, the BIR issued a Formal Letter of Demand/Final Assessment Notice (FLD/FAN). The DOE replied, contesting liability on the grounds that it is not an “owner, lessee, concessionaire or operator of a mining claim” under the Tax Code and that the subject condensates are exempt as liquefied natural gas. On July 17, 2019, the BIR informed the DOE that the assessment had become final due to the DOE’s failure to file a formal protest within the 30-day period. The DOE claimed it never received the FLD/FAN. Subsequently, the BIR issued Warrants of Distraint and/or Levy and Garnishment on September 19, 2019. The DOE filed a Petition for Review before the Court of Tax Appeals (CTA), which was dismissed for lack of jurisdiction, citing the doctrine from PSALM v. CIR that disputes solely between government agencies must be resolved through administrative settlement under Presidential Decree No. 242. The CTA En Banc affirmed this dismissal. The Supreme Court, in a Decision dated August 17, 2022, denied the DOE’s Petition for Review, affirming the CTA’s ruling. The DOE filed the present Motion for Reconsideration.

ISSUE

Whether the Court of Tax Appeals has jurisdiction over the tax dispute between the Department of Energy and the Bureau of Internal Revenue, or whether such intra-governmental dispute falls under the administrative settlement procedure prescribed by Presidential Decree No. 242.

RULING

The Supreme Court denied the Motion for Reconsideration. It held that the CTA correctly dismissed the petition for lack of jurisdiction. The dispute, being solely between two national government agencies (the DOE and the BIR), is governed by the special law, Presidential Decree No. 242, which prescribes administrative settlement by the Secretary of Justice or the Solicitor General. This special law prevails over the general law, Republic Act No. 1125 (the CTA Law), which grants the CTA appellate jurisdiction over tax disputes. The Court found the doctrine in PSALM v. CIR applicable by analogy, emphasizing that P.D. No. 242 is founded on practical considerations to avoid clogging court dockets and wasting government resources when the only real party is the Government itself. The Court rejected the DOE’s arguments, including its claims of due process violation and substantive defenses regarding tax liability, as these matters must first be resolved through the administrative mechanism under P.D. No. 242. The Motion failed to raise any compellingly persuasive reason to reverse the Court’s previous Decision.