SECURITIES TRANSFER SERVICES, INC., vs. COMMISSIONER OF INTERNAL REVENUE (Tax 2)

SECURITIES TRANSFER SERVICES, INC., 

Petitioner, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent.

CTA EB No. 1633 

(CTA CASE No. 8961)

FACTS:

On May 14, 2010, a Letter of Authority of even date was issued authorizing the conduct of tax audit for taxable year 2009 against STSI. 

STSI executed series of Waivers of Defense of Prescription on the following dates: June 21, 2012, July 11, 2012, January 3, 2013, July 19, 2013, September 13, 2013, December 20, 2013 and March 14, 2014.

On June 18, 2014, STSI received a copy of a 

Preliminary Assessment Notice dated June 16, 2014 ("PAN"), issued by the CIR stating that after investigation, STSI has been found liable for deficiency income tax, value-added tax (VAT), withholding tax on compensation (WC), expanded withholding tax (EWT), improperly accumulated earnings tax (IAET), and documentary stamp tax (DST) for the year 2009.

STSI sent a Reply dated July 02, 2014. On July 15, 2014, it received a copy of a Formal Letter of Demand (FLD) dated July 17, 2014 issued by the CIR against STSI for assessments on its deficiency taxes inclusive of interest and penalties amounting to P5Mplus.

On August 12, 2014, STSI filed a protest of even date assailing the foregoing deficiency assessments as indicated in the said FLD. 

On December 2, 2014, STSI was furnished with CIR's Final Decision on Disputed Assessment (FDDA) declaring that it is still liable to pay the deficiency tax assessments 

pertaining to income tax, VAT, WC, EWT, and DST. 

On December 18, 2014, STSI paid WC in some amount and thus, the total deficiency taxes disputed is only P3Mplus representing the remaining disputed deficiency assessments on income tax, VAT, EWT and DST. 

On December 23, 2014, STSI filed a Petition for Review before this Court's Division. On July 20, 2015, STSI filed an Omnibus Motion with the Second Division of this Court praying for an early resolution of the issue of prescription prior to conducting a full-blown trial on the merits of the case, which was granted by the said Division. 

The Second Division issued the assailed Resolution, partially granting STSI's Omnibus Motion on the issue of prescription and ruled that the CIR's right to assess STSI for deficiency VAT for the first quarter of 2009 and deficiency EWT for the months of January to May of 2009 had already prescribed.

On February 8, 2017, STSI filed its Motion for Partial Reconsideration (Re: Resolution dated January 16, 2017). On April 4, 2017, the Second Division issued a Resolution, which denied STSI's Motion for Partial Reconsideration (Re: Decision dated January 16, 2017). Hence, this appeal was 

filed via Petition for Review to this Court En Banc. In its Petition for Review, STSI prays this Court to grant the remaining portion of the Omnibus Motion it filed before the Second Division and finding that the CIR's right to assess all the alleged deficiency taxes in the FLD and FDDA had prescribed and to subsequently declare that the FLD and FDDA are void.

ISSUE:

Whether the petition for review filed before the Court En Banc is proper.

RULING:

NO. Petition for Review readily reveals that it was prematurely filed before the Court En Banc. The assailed resolutions of the Court in Division do not finally dispose the case, as it is an interlocutory order and it still leaves something to be done. 

Section 1, Rule 41 of the Revised Rules of Court, which applies suppletorily to proceedings before the Court of Tax Appeals, expressly provides that no appeal may be taken from an interlocutory order.

Interlocutory is defined as: provisional; interim; temporary; not final. 

The only decision or order which is appealable to the Court En Banc is that which has resolved the case with finality, and in effect terminates or finally disposes of a case, as it leaves nothing to be done by the court as the case has finally been decided on the merits.

In the case at bar, the Court takes judicial notice that the docket in CTA Case No. 8961 is still with the Court's Second Division and still at the trial stage for STSI's presentation of evidence on the remaining tax deficiency assessment. Clearly, the case is still pending and has neither been terminated nor disposed. 

The reason for disallowing an appeal from an interlocutory order is to avoid multiplicity of appeals in a single action, which necessarily suspends the hearing and decision on the merits of the action during the pendency of the appeals. 

Evidently, the proper procedure that STSI should have taken in this case was to await the final termination of the proceedings before the Court in Division, prior to the filing of the instant petition for review,

Therefore, Petition for Review is hereby DISMISSED for being premature, without prejudice to the right to appeal the assailed Resolutions of the Court in Division upon disposition of the entire case on the merits.