GR 251306 07; (June, 2021) (Digest)
G.R. Nos. 251306-07. June 16, 2021.
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. NORKIS TRADING COMPANY, INC., RESPONDENT.
FACTS
The Commissioner of Internal Revenue (CIR) issued an assessment against Norkis Trading Company, Inc. (Norkis) for alleged deficiency income taxes for the taxable year ending June 30, 2007. Norkis filed a judicial protest before the Court of Tax Appeals (CTA). The CTA Second Division rendered a Decision cancelling the assessment, finding that the CIR failed to prove the existence of an Indemnity Agreement and receipt of an indemnity fee from Yamaha Motors Co. Ltd., and that the assessment was issued beyond the three-year prescriptive period. The CIR filed a Motion for Reconsideration and a Supplemental Motion for Reconsideration, which were denied. The CIR then filed a Motion for Reconsideration of the denial, which was pending, when it filed a Petition for Review Ad Cautelam before the CTA En Banc (docketed as CTA EB No. 1766) assailing the Main Decision and the Resolution denying its first motion. Subsequently, the CTA Division denied the CIR’s latest motion for being a prohibited second motion for reconsideration. The CIR then filed another Petition for Review before the CTA En Banc (docketed as CTA EB No. 1845) seeking to reverse the Main Decision and the subsequent Resolutions. The CTA En Banc consolidated the two petitions but later dismissed both on the ground of litis pendentia, ruling that the simultaneous petitions amounted to forum shopping.
ISSUE
Whether the CTA En Banc erred in dismissing both petitions in CTA EB No. 1766 and 1845 for violating the rule against forum shopping.
RULING
The petition is meritorious. The Supreme Court agreed that the CIR was guilty of forum shopping, as the two petitions involved the same parties, reliefs, causes of action, and subject matter (the appeal from the CTA Division’s cancellation of the assessment), such that a resolution in one would result in res judicata in the other, constituting litis pendentia. However, the Court held that only the later petition (CTA EB No. 1845) should have been dismissed, not both. The dismissal of both appeals was a harsh penalty, and the CIR should still be allowed to pursue one appeal. Thus, the Supreme Court set aside the CTA En Banc Resolutions, directed the reinstatement of CTA EB No. 1766, and affirmed the dismissal of CTA EB No. 1845.