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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B.

Aban Chapter 9: COURT TAX APPEALS


Law creating the CTA
Republic Act No. 1125, JUNE 16, 1954

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4. To punish for contempt 5. To prescribe the form of writs and other processes 6. To promulgate rules and regulations for the conduct of its business

Jurisdiction of the CTA

Why was the CTA created?


1. To have a centralized body well versed in tax matters a regular court forming part of the judicial system which could exclusively hear and determine tax cases. 2. To prevent delay in the disposition of tax cases in view of the backlog of civil and criminal cases in the regular courts. [Ursal v.

Court of Appeals 101 Phil 209]

Nature of the CTA

1. It is a judicial and not an administrative body. 2. It is a court of special jurisdiction, and as such can only take cognizance of such matters as are clearly within its jurisdiction. 3. It is not governed strictly by the technical rules of evidence. The CTA is composed of a Presiding Judge and two Associate Judges, each of whom is appointed by the President form a list of nominees prepared by the Judicial and Bar Council. Such appointments need no confirmation. Any two judges of the CTA shall constitute a quorum and the concurrence of two judges shall be necessary to promulgate any decision thereof. [Sec. 1 and 2, RA 1125] Cases brought before the CTA shall be decided within 30 days after the submission thereof for decision, which shall be in writing, stating clearly and distinctly the facts and the law on which they are based, and signed by the judges who concurred therewith. [Sec. 12, RA 1125]. This requirement, however, is merely directory. 1. To administer oaths 2. To receive evidence 3. To summon witnesses by subpoena and subpoena duces tecum

Organization, quorum, and disposition of cases by the CTA

CTA shall exercise exclusive appellate jurisdiction to review by appeal the following: 1. Decisions of the Commissioner of Internal Revenue, involving disputed assessments; refunds of internal revenue taxes, fees or other charges; penalties imposed in relation thereto; or other matters arising under the NIRC or other law or part of law administered by the BIR. 2. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected; fines, forfeitures, or other penalties imposed in relation thereto; or other matters arising under the Customs law or other law or part of law administered by the Bureau of Customs. 3. Decision of the Sec. of Finance, on an assessment which the Commissioner of Customs decided in favor of the taxpayer.

Jurisdiction over decisions of the Local Board of Assessment Appeals is now lodged with the Central Board of Assessment Appeals.

(Decisions of the Commissioner of Customs which are adverse to the government, may be raised on appeal to the Sec. of Finance, whose decision is appealable to the CTA).

Necessity of decisions in order to vest the CTA with jurisdiction

Powers of the CTA

Decisions of either the Commissioner or Internal Revenue or the Commissioner of Customs is of the essence in appeal of cases to the CTA for it is axiomatic in taxation that mere assessments of the Commissioner are not appealable to the CTA. It is settled that assessments are not decisions of the Commissioner. In a case, the Supreme Court held that the word decision in Sec. 7 of RA 1125 means decisions of the Commissioner on the protest of the taxpayer against the assessments. Definitely, the word does not signify the assessment itself. [Commissioner v. Villa, Jan. 20,

1968]

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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
Compromise penalties and the CTA
Compromise Penalties are amounts collected by the BIR in lieu of CRIMINAL PROSECUTION for violations committed by taxpayers, the payment of which is based on a compromise agreement validly entered into between the taxpayer and the Commissioner. Collection of compromise penalties comes within the scope of Sec. 7 of RA 1125 which speaks of penalties imposed in relation thereto and that therefore follows that the CTA has jurisdiction thereon. [US

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Prescription of assessment and action

The defense of prescription of assessment should be raised while the case is pending with the BIR, whereas, the defense of prescription of action may be raised for the first time, even on appeal to the CTA, but not for the first time in an appeal with the SC. Any person, association or corporation affected by a decision of the Commissioner of Internal Revenue or the Collector of Customs. If the Bureau of Internal Revenue, during the pendency of an appeal in the CTA, files a civil action in the RTC, for the collection of the tax liability, the taxpayer may file a motion in the RTC for the dismissal of the case on the ground that there is no basis for collecting the tax due where the assessment thereof is still under dispute in the CTA. An appeal to the CTA from a decision of the Commissioner shall not suspend the collection of the payment or collection of the tax liability of the taxpayer, unless a motion to the effect, shall have been presented to the CTA and granted by it on the ground that such collection jeopardizes the interest of the government and/or the taxpayer. General rule: No court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the NIRC, [Sec. 218, NIRC]. Exception: CTA may suspend or restrain the collection of the tax when, in its opinion, the collection of the tax may jeopardize the interest of the government and/or the taxpayer, [Sec. 11, RA1125]

Who may appeal to the CTA?

Life Insurance Co. v. Commissioner CTA Case No. 1267 Dec. 29, 1964] What decision is appealable?

Collection case in RTC while appeal is pending in the CTA

When it constitutes the final action taken by him, or his authorized deputies with respect to the taxpayers liability. The appealable decision is that letter of denial where the Commissioner not only demanded payment of the tax but wherein he also gave the warning that in the event that the taxpayer fails to pay the same, the Commissioner would be constrained to enforce the collection thereof by means of the remedies prescribed by law.

Tax collection not suspended during appeal

[Surigao Electric Co. v. Commissioner 85 SCRA 547]

However, the filing of a judicial action for collection, i.e., criminal and civil action during the pendency of an administrative protest, constitutes a denial of the protest. [Commissioner v. Union Shipping ]. In such a situation, the taxpayer may file an appeal with the Court of Tax Appeals. Decisions of the Commissioner of Internal Revenue are by statutory provision appealable to the CTA, but it appears that under Rev. REg. 12-85, decisions of the Regional Director of a revenue region of the BIR is also appealable. There is a court ruling to the effect that the decisions of a Regional Director may be appealable to the CTA, [Fortalez, Jr. v. Collector,

Whose decisions are appealable??

No injunction to restrain tax collection


Resolution, CTA Case no. 1257, Dec. 22, 1964]

Appeals on customs cases seem to be limited only to decisions of the Commissioner of Customs

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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
Requisites for injunction
1. That the collection of the tax may jeopardize the interest of the government and/or the taxpayer. 2. That the taxpayer is willing to deposit the amount equal to the taxes assessed or to a bond amounting to not more than twice the value of the tax being assessed. 3. That the CTA may issue an injunction only in the exercise of its appellate jurisdiction. The thirty-day prescriptive period starts to run from the date the taxpayer receives the appealable decision of the Commissioner. The 30 day period is jurisdictional. The failure of the taxpayer to appeal from a decision of the Commissioner on time renders the assessment final, executory and demandable. Requests or motions filed by the taxpayer with the BIR for the reconsideration of the Commissioners decision operate to suspend the running of the 30 day prescriptive period. However, mere reiterations of previous petitions for reconsideration do not suspend the running of the prescriptive period. Pro forma motions, which do not raise new issues, will not suspend the period. None. Failure to appeal renders the assessment FINAL and EXECUTORY since the period to appeal is jurisdictional and nonextendible . Interlocutory orders of the CTA are not appealable. One motion for reconsideration may be allowed for decisions of the CTA. Pro Forma Request for Reconsideration one that is submitted only for purposes of delay and will NOT interrupt the running of the prescriptive period. Decisions of the CTA are appealed to the Court of Appeals through a verified petition for review. [Sections 1 and 5, Rule 43, Rules of Court]

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Appeals period is fifteen (15) days from receipt of the decisions or judgment. The Court of Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. No further extension shall be granted except for the most compelling reasons and in no case to exceed fifteen (15) days. [Section 4, Rule 43, Rules of Court] The ancillary jurisdiction of the CTA such as the power to issue writs of prohibition and injunction is only SUPPLEMENTARY to its appellate jurisdiction. The power to issue writs exists only in cases appealed to it. There has to be a main action first pending before it. The Solicitor General, being the chief legal officer of the government, is aptly the officer who should appeal to the CA or SC. Findings of fact of the CTA, when supported by substantial evidence, is final. Section 16 of RA 1125 provides that where an appeal is found to be

Ancillary Jurisdiction of the CTA

The thirty-day prescriptive period of appeal

When decision of the CTA is adverse to the Government

Findings of fact of CTA not reviewable

Remedy if taxpayer fails to appeal within the 30 day period

Damages in CTA proceedings

Interlocutory orders

frivolous or that proceedings have been instituted merely for delay, the CTA may assess damages against the appellant in an amount not exceeding P500 which shall be collected in the same manner as fine or other penalties authorized by law.

Other Matters:
The tax court has no advisory jurisdiction. Hence, advisory opinions such as those relating to actions for declaratory relief are outside its jurisdiction. It does NOT have criminal jurisdiction either.

Appeal from decisions of the CTA

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