TAX 2
Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue vs. Philippine
Commissioner of Internal Revenue
G.R. No. 173425 | January 22, 2013.
 G.R. No. 161997 | October 25, 2005.
Prior payment of taxes is not necessary before a taxpayer could avail of the
8% transitional input tax credit.
FACTS:
 or wrongfully collected. Black defines the term erroneous or illegal tax as
In 1995, Fort Bonifacio Development Corporation purchased from
the national government a portion of the Fort Bonifacio reservation.
On January 1, 1996, the enactment of RA 7716 extended the coverage
of VAT to real properties held primarily for sale to customers or held
for lease in the ordinary course of trade or business. Thus, FBDC
sought to register by submitting to BIR an inventory of all its real
properties, the book value of which aggregated to about P71B.
In October 1996, FBDC started selling Global City lots to interested
buyers. For the first quarter of 1997, it paid the output VAT by making
cash payments to the BIR and credited its unutilized input tax credit
on purchases of goods an services. Realizing that its 8% transitional
input tax credit was not applied in computing its output VAT for the
first quarter of 1997, FBDC filed with the BIR a claim for the refund
of the amount erroneously paid as output VAT for the said period.
The CTA denied refund on the ground that “the benefit of transitional
input tax credit comes with the condition that business taxes should
have been paid first.” It contends that since FBDC acquired the Global
City property under a VAT-free sale transaction, it cannot avail of the
transitional input tax credit. The CTA likewise pointed out that under
RR 7-95, Implementing Section 105 of the old NIRC, the 8%
transitional input tax should be based on the value of the
improvements on land such as buildings, roads, drainage system other
similar structures, constructed on or after January 1, 1998, and not on
the book value of the real property.
ISSUE:
Whether or not prior payment of taxes is required in availing of the
transitional input tax credit.
RULING:
No. Section 105 of the old National Internal Revenue Code (NIRC)
clearly provides that for a taxpayer to avail of the 8% transitional input
tax credit, all that is required from the taxpayer is to file a beginning
inventory with the Bureau of Internal Revenue (BIR). It was never
mentioned in Section 105 that prior payment of taxes is a
requirement. Since the law (Section 105 of the NIRC) does not
provide for prior payment of taxes, to require it now would be
tantamount to judicial legislation which, to state the obvious, is not
allowed.
Clearly, limiting the value of the beginning inventory only to goods,
materials, and supplies, where prior taxes were paid, was not the
intention of the law. Otherwise, it would have specifically stated that
the beginning inventory excludes goods, materials, and supplies where
no taxes were paid.
Prior payment of taxes is not required to avail of the transitional input
tax credit because it is not a tax refund per se but a tax credit.
Logically, prior payment of taxes is not required before a taxpayer
could avail of transitional input tax credit. As we have declared in our
September 4, 2012 Decision “[t]ax credit is not synonymous to tax
refund. Tax refund is defined as the money that a taxpayer overpaid
and is thus returned by the taxing authority. Tax credit, on the other
hand, is an amount subtracted directly from one’s total tax liability. It is
any amount given to a taxpayer as a subsidy, a refund, or an incentive
to encourage investment.” Thus, unlike a tax refund, prior payment of
taxes is not a prerequisite to avail of tax credit.
1
National Bank
Section 230 (now 229) of the Tax Code, as couched, particularly its statute
of limitations component, is, in context, intended to apply to suits for the
recovery of internal revenue taxes or sums erroneously, excessively, illegally
one levied without statutory authority.
In Commissioner of Internal Revenue vs. Philippine American Insurance Co.,
244 SCRA 446 (1995), the Supreme Court ruled that an availment of a tax
credit due for reasons other than the erroneous or wrongful collection of
taxes may have a different prescriptive period.
FACTS:
In early April 1991, respondent PNB issued to the BIR a check for
P180,000,000.00 as PNB’s advance income tax payment for the bank’s
1991 operations and was remitted in response to then President
Corazon C. Aquino’s call to generate more revenues for national
development.
By the end of CY 1991, PNB’s annual income tax liability, per its 1992
annual income tax return, amounted to P144,253,229.78, which, when
compared to its claimed total credits and tax payments of
P217,552,122.38, resulted to a credit balance in its favor in the
amount of P73,298,892.60. This amount was suppose to be carried
over to cover tax liability to 1992-1996 but was never applied because
it did not incur tax liability during those years due to losses in its
operations for the said inclusive years.
In 1997 PNB wrote the BIR to request for the issuance of tax credit
certificate (TCC) for the unutilized balance of its advance payment
made in 1991 amount to P73M.
BIR denied PNB’s claim for tax credit alleging that the claim in
question has prescribed on the ground that it was filed beyond the
two (2) year prescriptive period as provided for under Sec. 229 of the
NIRC, the bank having filed such claim only in 1997, or more than two
(2) years from 1992 when the overpayment of annual income tax for
1991 was realized by the bank.
PNB filed a petition for review with the CTA which affirmed the
commissioner’s decision.
PNB filed a petition for review with the CA arguing that the
applicability of the two (2)-year prescriptive period is not
jurisdictional and that said rule admits of certain exceptions.
ISSUE:
Whether or not PNB’s claim for tax credit is barred by prescription.
RULING:
No. No reversible error was committed by the CA in holding that,
upon basic considerations of equity and fairness, respondentÊs
request for issuance of a tax credit certificate should not be subject
to the two (2)-year limitation in Section 230 of the NIRC
SEC. 230. Recovery of tax erroneously or illegally collected.·No suit
or proceeding shall be maintained in any court for the recovery of any
national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, . . , or of any sum, alleged
to have been excessive or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the Commissioner;
but such suit or proceeding may be maintained, whether or not such
tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be begun after the
expiration of two [(2)] years from the date of payment of the tax or
TAX 2
penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even
without a written claim therefor, refund or credit any tax, where on
the face of the return upon which payment was made, such payment
appears clearly to have been erroneously paid.
In the present case, PNB’s request for issuance of a tax credit
certificate on the balance of its advance income tax payment cannot
be treated as a simple case of excess payment as to be automatically
covered by the two (2)-year limitation in Section 230, supra of the
NIRC. It’s claim for tax credit did not proceed from an overpayment
of tax erroneously or illegally collected.
Section 230 of the Tax Code, as couched, particularly its statute of
limitations component, is, in context, intended to apply to suits for the
recovery of internal revenue taxes or sums erroneously, excessively,
illegally or wrongfully collected. Black defines the term erroneous or
illegal tax as one levied without statutory authority. In the strict legal
viewpoint, therefore, PNB’s claim for tax credit did not proceed from,
or is a consequence of overpayment of tax erroneously or illegally
collected. It is beyond cavil that respondent PNB issued to the BIR the
check for P180 Million in the concept of tax payment in advance, thus
eschewing the notion that there was error or illegality in the payment.
What in effect transpired when PNB wrote its July 28, 1997 letter was
that respondent sought the application of amounts advanced to the
BIR to future annual income tax liabilities, in view of its inability to
carry-over the remaining amount of such advance payment to the four
(4) succeeding taxable years, not having incurred income tax liability
during that period.
In Commissioner vs. Phil-Am Life, the Court ruled that an availment of
a tax credit due for reasons other than the erroneous or wrongful
collection of taxes may have a different prescriptive period. Absent any
specific provision in the Tax Code or special laws, that period would
be ten (10) years under Article 1144 of the Civil Code. Significantly,
Commissioner vs. PhilAm is partly a reiteration of a previous holding
that even if the two (2)-year prescriptive period, if applicable, had
already lapsed, the same is not jurisdictional and may be suspended
for reasons of equity and other special circumstances.
The rule of long standing is that the Court will not set aside lightly
the conclusions reached by the CTA which, by the very nature of its
functions, is dedicated exclusively to the resolution of tax problems
and has, accordingly, developed an expertise on the subject, unless
there has been an abuse or improvident exercise of authority. It is
likewise settled that to a claimant rests the onus to establish the
factual basis of his or her claim for tax credit or refund. In this case,
however, petitioner does not dispute that a portion of the P180
Million PNB remitted to the BIR in 1991 as advance payment remains
unutilized for the purpose for which it was intended in the first place.
But petitioner asserts that respondent’s right to recover the same is
already time-barred. The CTA upheld the position of petitioner. The
CA ruled otherwise. We find the CAÊs position more in accord with
the facts on record and is consistent with applicable laws and
jurisprudence.
Philippine American Life and General Insurance
Company vs. Secretary of Finance
G.R. No. 210987 | November 24, 2014.
The CTA has jurisdiction over appeals from the Secretary of Finance’s
review of the CIR’s ruling as “other matters” arising under the NIRC.
FACTS:

Petitioner The Philippine American Life and General Insurance
Company (Philamlife) used to own 498,590 Class A shares in Philam
Care Health Systems, Inc. (PhilamCare), representing 49.89% of the
latter’s outstanding capital stock.
2
In 2009, petitioner offered to sell its shareholdings in PhilamCare
through competitive bidding. Thus, on September 24, 2009, petitioner’s
Class A shares were sold for USD2,190,000, or Php104,259,330 based
on the prevailing exchange rate at the time of the sale, to STI
Investments, Inc., who emerged as the highest bidder.
After the sale was completed and the necessary documentary stamp
and capital gains taxes were paid, Philamlife filed an application for a
certificate authorizing registration/tax clearance with the Bureau of
Internal Revenue (BIR) Large Taxpayers Service Division to facilitate
the transfer of the shares.
Months later, petitioner was informed that it needed to secure a BIR
ruling in connection with its application due to potential donor’s tax
liability. In compliance, petitioner, on January 4, 2012, requested a
ruling to confirm that the sale was not subject to donor’s tax, pointing
out, in its request, the following: that the transaction cannot attract
donor/s tax liability since there was no donative intent and, ergo, no
taxable donation, citing BIR Ruling [DA-(DT-065) 715-09] dated
November 27, 2009; that the shares were sold at their actual fair
market value and at arm’s length; that as long as the transaction
conducted is at arm’s length –– such that a bona fide business
arrangement of the dealings is done in the ordinary course of business
–– a sale for less than an adequate consideration is not subject to
donor’s tax; and that donor’s tax does not apply to sale of shares sold
in an open bidding process.
On January 4, 2012, however, respondent Commissioner on Internal
Revenue (Commissioner) denied Philamlife’s request through BIR
Ruling No. 015-12. As determined by the Commissioner, the selling
price of the shares thus sold was lower than their book value based
on the financial statements of PhilamCare as of the end of 2008. As
such, the Commissioner held, donor’s tax became imposable on the
price difference pursuant to Sec. 100 of the NIRC.
In view of the foregoing, the Commissioner ruled that the difference
between the book value and the selling price in the sales transaction
is taxable donation subject to a 30% donor’s tax under Section 99(B)
of the NIRC. Respondent Commissioner likewise held that BIR Ruling
[DA-(DT-065) 715-09], on which petitioner anchored its claim, has
already been revoked by Revenue Memorandum Circular (RMC) No.
25-2011.
The Commissioner added that Sec. 100 of NIRC is implemented by
Revenue Regulation 6-2008 (RR 6-2008), which provides:
SEC. 7. SALE, BARTER OR EXCHANGE OF SHARES OF STOCK
NOT TRADED THROUGH A LOCAL STOCK EXCHANGE…
(c.2.2) In the case of shares of stock not listed and traded in the local stock
exchanges, the book value of the shares of stock as shown in the financial
statements duly certified by an independent certified public accountant
nearest to the date of sale shall be the fair market value.
In view of the foregoing, the Commissioner ruled that the difference
between the book value and the selling price in the sales transaction
is taxable donation subject to a 30% donor’s tax under Section 99(B)
of the NIRC.
Aggrieved, petitioner requested respondent Secretary of Finance
(Secretary) to review BIR Ruling No. 015-12, but to no avail. For on
November 26, 2012, respondent Secretar y affirmed the
Commissioner’s assailed ruling in its entirety.
Not contented with the adverse results, petitioner elevated the case
to the CA via a petition for review under Rule 43.
On May 23, 2013, the CA issued the assailed Resolution dismissing the
CA Petition.
TAX 2
In disposing of the CA petition, the appellate court ratiocinated that it
is the Court of Tax Appeals (CTA), pursuant to Sec. 7(a)(1) of Republic
Act No. 1125 (RA 1125),11 as amended, which has jurisdiction over
the issues raised. The outright dismissal, so the CA held, is predicated
on the postulate that BIR Ruling No. 015-12 was issued in the
exercise of the Commissioner’s power to interpret the NIRC and
other tax laws. Consequently, requesting for its review can be
categorized as "other matters arising under the NIRC or other laws
administered by the BIR," which is under the jurisdiction of the CTA,
not the CA.
Philamlife eventually sought reconsideration but the CA, in its equally
assailed January 21, 2014 Resolution, maintained its earlier position.
Hence, the instant recourse.
ISSUE:

Where does one seek immediate recourse from the adverse ruling of
the Secretary of Finance in its exercise of its power of review under
Sec. 4?
RULING:
The CTA has jurisdiction over appeal s from the Secretary of
Finance’s review of the CIR’s ruling as “other matters” arising under
the NIRC.
A BIR ruling is the Commissioner's exercise of power under the first
paragraph of Sec. 4 of the NIRC — the power to interpret tax laws. x
x x Sec. 4 of the NIRC readily provides that the Commissioner's
power to interpret the provisions of this Code and other tax laws is
subject to review by the Secretary of Finance. x x x Admittedly, there
is no provision in law that expressly provides where exactly the ruling
of the Secretary of Finance under the adverted NIRC provision is
appealable to. However, We find that Sec. 7 (a) (1) of RA 1125, as
amended, addresses the seeming gap in the law as it vests the CTA,
albeit impliedly, with jurisdiction over the CA petition as "other
matters" arising under the NIRC or other laws administered by the
BIR. x x x Even though the provision suggests that it only covers
rulings of the Commissioner, We hold that it is, nonetheless, sufficient
enough to include appeals from the Secretary's review under Sec. 4 of
the NIRC.
To leave undetermined the mode of appeal from the Secretary of
Finance would be an injustice to taxpayers prejudiced by his adverse
rulings. To remedy this situation, We imply from the purpose of RA
1125 and its amendatory laws that the CTA is the proper forum with
which to institute the appeal. This is not, and should not, in any way, be
taken as a derogation of the power of the Office of President but
merely as recognition that matters calling for technical knowledge
should be handled by the agency or quasi-judicial body with
specialization over the controversy. As the specialized quasi-judicial
agency mandated to adjudicate tax, customs, and assessment cases,
there can be no other court of appellate jurisdiction that can decide
the issues raised in the CA petition, which involves the tax treatment
of the shares of stocks sold.
Petitioner essentially questions the CIR’s ruling that Petitioner’s sale
of shares is a taxable donation under Sec. 100 of the NIRC. The
validity of Sec. 100 of the NIRC, Sec. 7 (C.2.2) and RMC 25-11 is
merely questioned incidentally since it was used by the CIR as bases
for its unfavourable opinion. Clearly, the Petition involves an issue on
the taxability of the transaction rather than a direct attack on the
constitutionality of Sec. 100, Sec.7 (c.2.2.) of RR 06-08 and RMC
25-11. Thus, the instant Petition properly pertains to the CTA under
Sec. 7 of RA 9282.
As a result of the seemingly conflicting pronouncements, petitioner
submits that taxpayers are now at a quandary on what mode of appeal
should be taken, to which court or agency it should be filed, and
which case law should be followed.
3
Petitioner’s above submission is specious (erroneous).
CTA, through its power of certiorari, to rule on the validity of a
particular administrative rule or regulation so long as it is within its
appellate jurisdiction. Hence, it can now rule not only on the
propriety of an assessment or tax treatment of a certain transaction,
but also on the validity of the revenue regulation or revenue
memorandum circular on which the said assessment is based.
Guided by the doctrinal teaching in resolving the case at bar, the fact
that the CA petition not only contested the applicability of Sec. 100 of
the NIRC over the sales transaction but likewise questioned the
validity of Sec. 7(c.2.2) of RR 06-08 and RMC 25-11 does not divest
the CTA of its jurisdiction over the controversy, contrary to
petitioner’s arguments.
Commissioner of Internal Revenue vs. Leal
G.R. No. 113459 | November 18, 2002
The RMO is in reality a ruling of the Commissioner in implementing the
provisions of the Tax Code on the taxability of pawnshops. The jurisdiction to
review the rulings of the Commissioner of Internal Revenue pertains to the
Court of Tax Appeals, not to the Regional Trial Court. A ruling falls within the
purview of “other matters arising under the Tax Code”, appealable only to
the CTA.
FACTS:
Pursuant to Sec. 116 of the Tax Code which imposes percentage tax
on dealers in securities and lending investors, the Commissioner
of  Internal Revenue issued Memorandum Order (RMO) No. 15-91
imposing five percent (5%) lending investor’s tax on pawnshops
based on their gross income and requiring all investigating units of the
Bureau to investigate and assess the lending investor’s tax due from
them. The issuance of RMO No. 15-91 was an offshoot of petitioner’s
evaluation that the nature of pawnshop business is similar to that
of  lending investors. Subsequently, petitioner issued Revenue
Memorandum Circular No. 43-91, subjecting the pawn ticket to the
documentary stamp tax as prescribed in Title VII of the Tax Code.
Respondent Josefina Leal, owner and operator of Josefina’s Pawnshop
in San Mateo, Rizal, adversely affected by those revenue orders, asked
for a reconsideration of both RMO No. 15-91 and RMC No. 43-91,
filed with the RTC a petition for prohibition to implement such
revenue orders.
The CIR, through the OSG, filed a motion to dismiss the petition on
the ground that the RTC has no jurisdiction to review the questioned
revenue orders and to enjoin their implementation.
Petitioner contends that the subject revenue orders were issued
pursuant to his power “to make rulings or opinions in connection
with the implementation of the provisions of internal revenue law”
Thus, the case falls within the exclusive appellate jurisdiction of the
Court of Tax Appeals, citing Section 7 (1) of Republic Act No. 1125.
The motion to dismiss was denied, holding that the revenue orders
are not assessments to implement a Tax Code provision, but are “in
effect new taxes (against pawnshops) which are not provided for
under the Code,” and which only Congress is empowered to impose.
The Court of Appeals affirmed the order issued by the RTC.
ISSUE:
Whether or not the CTA has jurisdiction to review rulings of the CIR.
RULING:
Yes. The jurisdiction to review the rulings of the Commissioner of
Internal Revenue pertains to the Court of Tax Appeals, not to the
Regional Trial Court. While the Court of Appeals correctly took
cognizance of the petition for certiorari, however, let it be stressed
TAX 2
that the jurisdiction to review the rulings of the Commissioner of
Internal Revenue pertains to the Court of Tax Appeals, not to the
RTC.
The questioned RMO No. 15-91 and RMC No. 43-91 are actually
rulings or opinions of the Commissioner implementing the Tax Code
on the taxability of pawnshops.
Here, as earlier mentioned, respondent Josefina Leal, being a
pawnshop owner, is assailing the revenue orders imposing 5% lending
investor’s tax on pawnshops issued by petitioner. Clearly then, she
should have filed her petition with the Court of Tax Appeals, not the
RTC. Indeed, the Court of Appeals erred in holding that the RTC
order should have been challenged before this Court.
British American Tobacco vs. Camacho
G.R. No. 163583. | August 20, 2008.
Where what is assailed is the validity or constitutionality of a law, or a rule
or regulation issued by the administrative agency in the performance of its
quasi-legislative function, the regular courts have jurisdiction to pass upon
the same.
FACTS:
RA 8240, entitled "An Act Amending Sections 138, 139, 140, and 142
of the NIRC, as Amended and For Other Purposes", took effect on
January 1, 1997. In the same year, Congress passed RA 8424 or The
Tax Reform Act of 1997, re-codifying the NIRC. Section 142 was
renumbered as Section 145 of the NIRC.
Paragraph (c) of Section 145 provides for four tiers of tax rates based
on the net retail price per pack of cigarettes. To determine the
applicable tax rates of existing cigarette brands, a survey of the net
retail prices per pack of cigarettes was conducted.
As such, new brands of cigarettes shall be taxed according to their
current net retail price while existing or "old" brands shall be taxed
based on their net retail price as of October 1, 1996.
To implement RA 8240, the Bureau of Internal Revenue (BIR) issued
Revenue Regulations No. 1-97, which classified the existing brands of
cigarettes as those duly registered or active brands prior to January 1,
1997. New brands, or those registered after January 1, 1997, shall be
initially assessed at their suggested retail price until such time that the
appropriate survey to determine their current net retail price is
conducted.
Petitioner British American Tobacco introduced into the market Lucky
Strike Filter, Lucky Strike Lights and Lucky Strike Menthol Lights
cigarettes, with a suggested retail price of P9.90 per pack. Pursuant to
Sec. 145 (c) quoted above, the Lucky Strike brands were initially
assessed the excise tax at P8.96 per pack.
Petitioner filed before the Regional Trial Court (RTC) of Makati, a
petition for injunction with prayer for the issuance of a temporary
restraining order (TRO) and/or writ of preliminary injunction. Said
petition sought to enjoin the implementation of Section 145 of the
NIRC, Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue
Memorandum Order No. 6-2003 on the ground that they discriminate
against new brands of cigarettes, in violation of the equal protection
and uniformity provisions of the Constitution.
The trial court rendered a decision upholding the constitutionality of
Section 145 of the NIRC, Revenue Regulations Nos. 1-97, 9-2003,
22-2003 and Revenue Memorandum Order No. 6-2003. The trial
court also lifted the writ of preliminary injunction.
While petitioner's appeal was pending, RA 9334 amending Sec. 145 of
the 1997 NIRC among other took effect on January 1, 2005 which in
effect increased petitioners excise tax to P25/pack.
4
Petitioner filed a Motion to Admit attached supplement and a
supplement to the petition for review assailing the constitutionality of
RA 9334 and praying a downward classification of Lucky Strike
products at the bracket taxable at P 8.96/pack since existing brands
are still taxed based on their price as of October 1996 eventhough
they are equal or higher than petitioner's product price.   
Philip Morris Philippines Manufacturing Incorporated, Fortune Tobacco
Corp., Mighty Corp. and JT International Intervened.  
Fortune Tobacco claimed that the CTA should have the exclusive
appellate jurisdiction over the decision of the BIR in tax disputes.
ISSUE:
Whether or not CTA have jurisdiction to rule on validity of a rule or
regulation issued by an administrative agency.
RULING:
No. The jurisdiction of the Court of Tax Appeals is defined in Republic
Act No. 1125, as amended by Republic Act No. 9282. Section 7
thereof states, in pertinent part: x x x While the above statute confers
on the CTA jurisdiction to resolve tax disputes in general, this does
not include cases where the constitutionality of a law or rule is
challenged. Where what is assailed is the validity or constitutionality of
a law, or a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same.
The determination of whether a specific rule or set of rules issued by
an administrative agency contravenes the law or the constitution is
within the jurisdiction of the regular courts. Indeed, the Constitution
vests the power of judicial review or the power to declare a law,
treaty, international or executive agreement, presidential decree,
order, instruction, ordinance, or regulation in the courts, including the
regional trial courts. This is within the scope of judicial power, which
includes the authority of the courts to determine in an appropriate
action the validity of the acts of the political departments. Judicial
power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government.
Confederation for Unity Et. al., vs. CIR
G.R. No. 213446 | July 3, 2018
*Tinamad ako idigest, doctrines na lang. haha
Non-exhaustion of administrative remedies.
It is an unquestioned rule in this jurisdiction that certiorari under
Rule 65 will only lie if there is no appeal, or any other plain, speedy
and adequate remedy in the ordinary course of law against the
assailed issuance of the CIR.41 The plain, speedy and adequate remedy
expressly provided by law is an appeal of the assailed RMO with the
Secretary of Finance under Section 4 of the NIRC of 1997, as
amended, to wit:
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax
Cases. – The power to interpret the provisions of this Code and other tax
laws shall be under the exclusive and original jurisdiction of the
Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties imposed in relation thereto, or other
matters arising under this Code or other laws or portions thereof
administered by the Bureau of Internal Revenue is vested in the
Commissioner, subject to the exclusive appellate jurisdiction of the Court of
Tax Appeals.
TAX 2
The CIR's exercise of its power to interpret tax laws comes in the
form of revenue issuances, which include RMOs that provide
"directives or instructions; prescribe guidelines; and outline processes,
operations, activities, workflows, methods and procedures necessary
in the implementation of stated policies, goals, objectives, plans and
programs of the Bureau in all areas of operations, except auditing.”
These revenue issuances are subject to the review of the Secretary of
Finance.
Violation of the rule on hierarchy of courts.
Moreover, petitioners violated the rule on hierarchy of courts as the
petitions should have been initially filed with the CTA, having the
exclusive appellate jurisdiction to determine the constitutionality or
validity of revenue issuances.
In The Philippine American Life and General Insurance Co. v. Secretary of
Finance, the Court held that rulings of the Secretary of Finance in its
exercise of its power of review under Section 4 of the NIRC of 1997,
as amended, are appealable to the CTA.50 The Court explained that
while there is no law which explicitly provides where rulings of the
Secretary of Finance under the adverted to NIRC provision are
appealable, Section 7(a)51 of RA No. 1125, the law creating the CTA,
is nonetheless sufficient, albeit impliedly, to include appeals from the
Secretary's review under Section 4 of the NIRC of 1997, as amended.
Moreover, echoing its pronouncements in City of Manila v. Grecia-
Cuerdo, that the CTA has the power of certiorari within its appellate
jurisdiction, the Court declared that "it is now within the power of
the CTA, through its power of certiorari, to rule on the validity of a
particular administrative rule or regulation so long as it is within its
appellate jurisdiction. Hence, it can now rule not only on the
propriety of an assessment or tax treatment of a certain transaction,
but also on the validity of the revenue regulation or revenue
memorandum circular on which the said assessment is based."
Subsequently, in Banco de Oro v. Republic, the Court, sitting En Banc,
further held that the CTA has exclusive appellate jurisdiction to
review, on certiorari, the constitutionality or validity of revenue
issuances, even without a prior issuance of an assessment.
The Court of Tax Appeals has undoubted jurisdiction to
pass upon the constitutionality or validity of a tax law or
regulation when raised by the taxpayer as a defense in
disputing or contesting an assessment or claiming a refund.
It is only in the lawful exercise of its power to pass upon all matters
brought before it, as sanctioned by Section 7 of Republic Act No.
1125, as amended.
This Court, however, declares that the Court of Tax Appeals may
likewise take cognizance of cases directly challenging the
constitutionality or validity of a tax law or regulation or administrative
issuance (revenue orders, revenue memorandum circulars, rulings).
Administrative Issuances vs. Tax Rulings
Furthermore, with respect to administrative issuances (revenue
orders, revenue memorandum circulars, or rulings), these are issued
by the Commissioner under its power to make rulings or opinions in
connection with the implementation of the provisions of internal
revenue laws. Tax rulings, on the other hand, are official positions of
the Bureau on inquiries of taxpayers who request clarification on
certain provisions of the National Internal Revenue Code, other tax
laws, or their implementing regulations. Hence, the determination of
the validity of these issuances clearly falls within the exclusive
appellate jurisdiction of the Court of Tax Appeals under Section 7(1)
of Republic Act No. 1125, as amended, subject to prior review by the
Secretary of Finance, as required under Republic Act No. 8424.
5
Asiatrust Development Bank, Inc. vs. CIR
G.R. No. 201530/ G.R. Nos. 201680-81 | April 19, 2017
In order for the Court of Tax Appeals (CTA) En Banc to take cognizance of
an appeal via a petition for review, a timely motion for reconsideration or
new trial must first be filed with the CTA Division that issued the assailed
decision or resolution. Failure to do so is a ground for the dismissal of the
appeal as the word “must” indicates that the filing of a prior motion is
mandatory, and not merely directory.
FACTS:
Asiatrust Development Bank, Inc. (Asiatrust), on separate dates in
February 2000, received from the Commissioner of Internal Revenue
(CIR) three Formal Letters of Demand (FLD) with Assessment
Notices for deficiency internal revenue taxes in the amounts of
P131,909,161.85, P83,012,265.78, and ₱l44,012,918.42 for fiscal years
ending June 30, 1996, 1997, and 1998, respectively.
Asiatrust timely protested the assessment notices. Due to the
inaction of the CIR on the protest, Asiatrust filed before the CTA a
Petition for Review praying for the cancellation of the tax assessments
for deficiency taxes and also claimed that it availed of the Tax Amnesty
Law.
The CTA Division partially affirmed the CIR’s decision, but declared
void some tax assessments for having been issued beyond the three -
year prescriptive period.
CIR filed a Motion for Partial Reconsideration of the assessments
assailing the CTA Division's finding of prescription. The CTA Division
amended its decision.
Unsatisfied, both parties appealed to CTA En Banc. The CTA En Banc
denied the CIR' s appeal for failure to file a prior motion for
reconsideration of the Amended Decision.
The CIR contends that the CTA En Banc erred in dismissing his
appeal for failing to file a motion for reconsideration on the Amended
Decision as a perusal of the Amended Decision shows that it is a
mere resolution, modifying the original Decision.
ISSUE:
Whether or not the CTA En Banc erred in the denial of the CIR' s
appeal for failure to file a prior motion for reconsideration of the
Amended Decision.
RULING:
NO.. Section 1, Rule 8 of the Revised Rules provide that an appeal to
the CTA En Banc must be preceded by the filing of a timely motion
for reconsideration or new trial with the CTA Division.
In order for the CTA En Banc to take cognizance of an appeal via a
petition for review, a timely motion for reconsideration or new trial
must first be filed with the CTA Division that issued the assailed
decision or resolution. Failure to do so is a ground for the dismissal of
the appeal as the word “must” indicates that the filing of a prior
motion is mandatory, and not merely directory. The same is true in
the case of an amended decision. Section 3, Rule 14 of the same rules
defines an amended decision as “[a]ny action modifying or reversing a
decision of the Court En Banc or in Division.” As explained in CE
Luzon Geothermal Power Company, Inc. v. Commissioner of Internal
Revenue, 768 SCRA 269 (2015), an amended decision is a different
decision, and thus, is a proper subject of a motion for reconsideration.
In this case, the CIR’s failure to move for a reconsideration of the
Amended Decision of the CTA Division is a ground for the dismissal
of its Petition for Review before the CTA En Banc. Thus, the CTA En
Banc did not err in denying the CIR’s appeal on procedural grounds.
TAX 2
The City Of Manila v. Hon. Grecia-Cuerdo
G.R. No. 175723 | February 4, 2014
Although there is no categorical statement under RA 1125 as well as the
amendatory RA 9282, which provides that the CTA has jurisdiction over
petitions for certiorari assailing interlocutory orders issued by the RTC in
local tax cases filed before it, the prevailing doctrine is that a court may
issue a writ of certiorari in aid of its appellate jurisdiction if said court has
jurisdiction to review, by appeal or writ of error, the final orders or decisions
of the lower court.
FACTS:
Petitioner City of Manila, through its treasurer, petitioner Liberty
Toledo, assessed taxes for the taxable period from January to
December 2002 against the private respondents.In addition to the
taxes purportedly due from private respondents pursuant to Section
14, 15, 16, 17 of the  Revised Revenue Code of Manila (RRCM), said
assessment covered the local business taxes. private respondents
were constrained to pay the P 19,316,458.77 assessment under
protest.
On January 24, 2004, private respondents filed before the RTC of
Pasay City the complaint denominated as one for “Refund or
Recovery of Illegally and/or Erroneously–Collected Local Business Tax,
Prohibition with Prayer to Issue TRO and Writ of Preliminary
Injunction.
The RTC granted private respondents’ application for a writ of
preliminary injunction.
Petitioners filed a Motion for Reconsideration but the RTC denied.
Petitioners then filed a special civil action for certiorari with the CA
but the CA dismissed petitioners’ petition for certiorari holding that
it has no jurisdiction over the said petition. The CA ruled that since
appellate jurisdiction over private respondents’ complaint for tax
refund, which was filed with the RTC, is vested in the Court of Tax
Appeals (CTA), pursuant to its expanded jurisdiction under Republic
A c t N o. 9 2 8 2 ( R A 9 2 8 2 ) , i t f o l l o w s t h a t a p e t i t i o n
for certiorari seeking nullification of an interlocutory order issued in
the said case should, likewise, be filed with the CTA.
Petitioners filed a Motion for Reconsideration, but the CA denied it in
its Resolution. Hence, this petition.
ISSUE:
 that the CIR gravely abused her discretion in the exercise of her rule
Whether or not the CTA have jurisdiction over a special civil action
for certiorari assailing an interlocutory order issued by the RTC in a
local tax case
RULING:
Yes. Although there is no categorical statement under RA 1125 as well
as the amendatory RA 9282, which provides that the CTA has
jurisdiction over petitions for certiorari assailing interlocutory orders
issued by the RTC in local tax cases filed before it, the prevailing
doctrine is that a court may issue a writ of certiorari in aid of its
appellate jurisdiction if said court has jurisdiction to review, by appeal
or writ of error, the final orders or decisions of the lower court.
While there is no express grant of such power, with respect to the
CTA, Section 1, Article VIII of the 1987 Constitution provides,
nonetheless, that judicial power shall be vested in one Supreme Court
and in such lower courts as may be established by law and that judicial
power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government.
6
On the strength of the above constitutional provisions, it can be fairly
interpreted that the power of the CTA includes that of determining
whether or not there has been grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of the RTC in issuing an
interlocutory order in cases falling within the exclusive appellate
jurisdiction of the tax court. It, thus, follows that the CTA, by
constitutional mandate, is vested with jurisdiction to issue writs of
certiorari in these cases.
Indeed, in order for any appellate court to effectively exercise its
appellate jurisdiction, it must have the authority to issue, among
others, a writ of certiorari. In transferring exclusive jurisdiction over
appealed tax cases to the CTA, it can reasonably be assumed that the
law intended to transfer also such power as is deemed necessary, if
not indispensable, in aid of such appellate jurisdiction.
The supervisory power or jurisdiction of the CTA to issue a writ of
certiorari in aid of its appellate jurisdiction should coexist with, and be
a complement to, its appellate jurisdiction to review, by appeal, the
final orders and decisions of the RTC, in order to have complete
supervision over the acts of the latter.
Banco de Oro vs. Republic
G.R. No. 198756 | January 13, 2015
A BIR ruling (and other issuances by the CIR) may come under the first
paragraph of Sec. 4, hence, subject to review by the Secretary of Finance.
Judicial review over such ruling, just like in the second paragraph, belongs to
the CTA.
FACTS:
This case involves the proper tax treatment of a discount or interest
income arising from the P35 bullion worth of 10-year zero-coupon
treasury bonds issued by the Bureau of Treasury.
The Commissioner of Internal Revenue issued BIR Ruling No.
370-2011 (2011 BIR Ruling), declaring that the PEACe Bonds being
deposits substitutes are subject to the 20% final withholding tax.
Pursuant to this ruling, the Secretary of Finance directed the Bureau
of Treasury to withhold a 20% final tax from the face value of the
PEACe Bonds upon their payment at maturity on October 18, 2011.
Petitioners contend that the retroactive application of the 2011 BIR
Ruling without prior notice to them as in violation of their property
rights, right to due process, as well as Sec 246 of the 1997 NIRC. And
making power.
Respondents argue that the petitioner’s direct resort to this court to
challenge the 2011 BIR Ruling violates the doctrines of exhaustion of
administrative remedies and hierarchy of courts, resulting in a lack of
cause of action that justifies the dismissal of the petition.
ISSUE:
Whether or not the doctrine of hierarchy of courts was violated by
the BIR.
RULING:
Yes. The jurisdiction to review the rulings of the CIR pertains to the
CTA. The questioned BIR Rulings were issued in connection with the
implementation of the NIRC. Under Sec. 7 of RA No. 1125 as
amended by RA No. 9282, the CTA shall exercise exclusive appellate
jurisdiction to review by appeal on the Decisions of the CIR in cases
involving disputed assessments, refunds of internal revenue taxes, fees
or other charges, penalties in relation thereto or other matters arising
under the NIRC or other laws administered by the BIR . Section 11 is
likewise worded as follows: Any party adversely affected by a decision,
ruling or inaction of the CIR, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and Industry or the
TAX 2 7
Secretary of Agriculture or the Central Board of Assessment Appeals
or the Regional Trial Courts may file an appeal with the CTA within
30 days after the receipt of such decision or ruling.

The Court agreed with the respondents that the jurisdiction to

review the rulings of the Commissioner of Internal Revenue pertains
to the Court of Tax Appeals. In exceptional cases, however, this court
entertained direct recourse to it when "dictated by public welfare and
the advancement of public policy, or demanded by the broader
interest of justice, or the orders complained of were found to be
patent nullities, or the appeal was considered as clearly an
inappropriate remedy."

Non-compliance with the rules on exhaustion of administrative

remedies and hierarchy of courts had been rendered moot by this
court's issuance of the temporary restraining order enjoining the
implementation of the 2011 BIR Ruling. The temporary restraining
order effectively recognized the urgency and necessity of direct resort
to this court.