GR 175097; (February, 2010) (Digest)
G.R. No. 175097 January 11, 2010
ALLIED BANKING CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.
FACTS
On April 30, 2004, the BIR issued a Preliminary Assessment Notice (PAN) to Allied Banking Corporation for deficiency taxes for 2001. Petitioner received the PAN on May 18, 2004, and filed a protest on May 27, 2004. On July 16, 2004, the BIR issued a Formal Letter of Demand with Assessment Notices, which stated: “It is requested that the above deficiency tax be paid immediately upon receipt hereof, inclusive of penalties incident to delinquency. This is our final decision based on investigation. If you disagree, you may appeal the final decision within thirty (30) days from receipt hereof, otherwise said deficiency tax assessment shall become final, executory and demandable.” Petitioner received this letter on August 30, 2004. Instead of filing an administrative protest against this Formal Letter of Demand, petitioner filed a Petition for Review directly with the Court of Tax Appeals (CTA) on September 29, 2004. The CTA First Division granted the Commissioner’s Motion to Dismiss, ruling that petitioner failed to file an administrative protest, thus the assessment did not become a disputed assessment appealable to the CTA. The CTA En Banc affirmed the dismissal.
ISSUE
Whether the Formal Letter of Demand dated July 16, 2004, can be construed as a final decision of the Commissioner of Internal Revenue appealable to the CTA under Republic Act No. 9282.
RULING
Yes. The petition is meritorious. While Section 228 of the National Internal Revenue Code requires a taxpayer to file an administrative protest against a formal letter of demand to dispute an assessment, the instant case is an exception to the rule on exhaustion of administrative remedies due to estoppel on the part of the administrative agency. The Formal Letter of Demand explicitly stated, “This is our final decision based on investigation. If you disagree, you may appeal the final decision within thirty (30) days from receipt hereof.” This language clearly and unequivocally indicated to the taxpayer that the communication was a final decision appealable to the CTA. By stating it was a “final decision” and specifying the appeal period to the court, the Commissioner is estopped from claiming later that the taxpayer should have filed an administrative protest first. The taxpayer was led to believe that only a judicial appeal was the proper recourse. Therefore, the dismissal by the CTA was reversed.