CIR vs. Secretary of Justice

Metropolitan Cebu Water District (respondent) received a Preliminary Assessment Notice from the Bureau of Internal Revenue (BIR) for alleged tax deficiencies for the year 2000 in the total amount of P70,660,389.00, representing alleged deficiency income, franchise and value added taxes with surcharge and interest, as well as compromise penalties.

MCWD filed a formal protest with the Regional Director, BIR Revenue Region No. 13. The CIR however failed to act on the protest within 180 days from submission of the supporting documents. Thus, MCWD filed a Petition for Review before the Court of Tax Appeals (CTA). The CIR however opposed the said petition on the ground that the Secretary of Justice (SOJ) has jurisdiction over the dispute considering that respondent is a government-owned or controlled corporation (GOCC). As such, the CTA dismissed the petition.

Respondent then filed a Petition for Arbitration before the SOJ. In a complete turnaround, the CIR claimed that the SOJ has no jurisdiction over the case since the issue in dispute is the validity of the tax assessment against respondent.

SOJ ruled in favor of MCWD, CIR file petition for Certiorari to CA but was denied, Hence the Appeal


    1. Whether the Secretary of Justice has jurisdiction over tax disputes between the government and government-owned and controlled corporations
    2. Whether CIR exhausted all administrative remedies


  1. Yes, DOJ is vested by law with jurisdiction over this case. Under Presidential Decree No. 242 (PD 242), all disputes and claims solely between government agencies and offices, including government-owned or controlled corporations, shall be administratively settled or adjudicated by the Secretary of Justice, the Solicitor General, or the Government Corporate Counsel, depending on the issues and government agencies involved. Since this case is a dispute between the CIR and MCWD, a local water district, which is a GOCC pursuant to P.D. No. 198, also known as the Provincial Water Utilities Act of 1973, clearly, the SOJ has jurisdiction to decide over the case.
  2. No, under the doctrine of exhaustion of administrative remedies, it is mandated that where a remedy before an administrative body is provided by statute, relief must be sought by exhausting this remedy prior to bringing an action in court in order to give the administrative body every opportunity to decide a matter that comes within its jurisdiction. PD 242 (now Chapter 14, Book IV of Executive Order No. 292), provides that only after the President has decided the dispute between government offices and agencies can the losing party resort to the courts, if it so desires. Otherwise, a resort to the courts would be premature for failure to exhaust administrative remedies.

Here, there is a plain, speedy and adequate remedy in the ordinary course of law which is available to the CIR, which is an appeal to the OP. The CIR, however, failed to avail the same through its own fault.

credit to: Arianne Dimaano


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