Topic 4 Court of Tax Appeals

 Jurisdiction of the CTA

1. Exclusive appellate jurisdiction over civil tax cases
2. Criminal cases 
 Taxpayer’s suit impugning the validity of tax measures or acts of taxing
authorities

Cases 

1. TFS Inc. , G.R. 166829, Apr 19, 2010 (CTA law) - Luague

FACTS:
TFS, a duly organized pawnshop in the Philippines received a preliminary assessment notice
(PAN) for deficiency value added tax (VAT), expanded withholding tax (EWT), and compromise
penalty for the taxable year 1998. TFS, insisted that the PAN was baseless and communicated
to the BIR to have it withdrawn. The Commission on Internal Revenue however later informed
TFS of their Final Assessment Notice (FAN). TFS contested the FAN in a proceeding before the
Court of Tax Appeals (CTA). During the trial for the contest, TFS decided to settle the EWT with
the BIR on compromise, which left the issue of VAT applying to pawnshops to which the CTA
ruled that it did apply to them saying that pawnshops are subject to VAT under Section 108(A)
of the NIRC as they are engaged in the sale of services for a fee, remuneration or
consideration. TFS then tried to appeal to the CA but it was dismissed as the CA no longer had
jurisdiction in view of the enactment of RA 9282 which vests the authority to review decisions
made by the CTA in division to the CTA en banc. The CTA en banc also dismissed the appeal
as it was filed out of time. The petitioner comes now to this court raising the following issues:

ISSUE:
1. W/N The CTA EN BANC should have given due course to the petition.
2. W/N TFS is subject to the 10% VAT.

RULING:

1. Yes, The court overlooked the procedural lapses of the petitioner in the interest of
substantial justice. The court said that though the petitioner is bound by the actions of
their counsel, a departure from this rule is warranted where such mistake or neglect
would result in serious injustice to the client. Such is the situation in this case. 

2. NO, TFS is not liable for the VAT of the year 1998. The court relied on its ruling in First
Planters Pawnshop, Inc. v. Commissioner of Internal Revenue, to wit;

Since petitioner is a non-bank financial intermediary, it is subject to 10% VAT for the
tax years 1996 to 2002; however, with the levy, assessment and collection of VAT
from non-bank financial intermediaries being specifically deferred by law, then
petitioner is not liable for VAT during these tax years. But with the full implementation
 of the VAT system on non-bank financial intermediaries starting January 1, 2003,
petitioner is liable for 10% VAT for said tax year. And beginning 2004 up to the
present, by virtue of R.A. No. 9238, petitioner is no longer liable for VAT but it is
subject to percentage tax on gross receipts from 0% to 5%, as the case may be.

The Court’s final statement:”we are constrained to disregard procedural rules because
we cannot in conscience allow the government to collect deficiency VAT from
petitioner considering that the government has no right at all to collect or to receive
the same. Besides, dismissing this case on a mere technicality would lead to the unjust
enrichment of the government at the expense of petitioner, which we cannot permit.
Technicalities should never be used as a shield to perpetrate or commit an injustice.” 

2. CIR vs FBDC, GR 167606, Aug 11/10 (appeal gone awry) - Oamilda

DOCTRINE: petitioner cannot invoke the doctrine that rules of technicality must yield to the broader
interest of substantial justice. While every litigant must be given the amplest opportunity for the
proper and just determination of his cause, free from the vconstraints of technicalities, the failure to
perfect an appeal within the reglementary period is not a mere technicality. It raises a
jurisdictional problem as it deprives the appellate court of jurisdiction over the appeal. The
failure to file the notice of appeal within the reglementary period is akin to
the failure to pay the appeal fee within the prescribed period

FACTS:

On December 7, 2001, the Court of Tax Appeals (CTA) granted the petition of FBDC and ordered the
CIR and the Revenue District Officer, Revenue District No. 44, Taguig and Pateros, BIR, to refund or
issue a Tax Credit Certificate in the total amount of P15,036,891.26 in favor of FBDC for the fourth
quarter of taxable year 1997. To which CIR opposed and appealed the CTA decision to the CA.

On December 28, 2001, petitioner(CIR) filed, by registered mail, a motion 4

praying for an extension
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of fifteen (15) days from December 28, 2001, the last day for filing the petition for review, or until
January 12, 2002 within which to file the petition.

On January 21, 2002, the petitioner filed a Motion for Re-Extension of Time to File Petition for
Review praying for another extension of fifteen (15) days or until January 27, 2002. 5
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On January 29, 2002, the Court of Appeals, acting on the first motion for extension, issued a
Resolution6
dismissing the petition for non-payment of docket and other legal fees pursuant to
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Section 1 (c) Rule 50 of the 1997 Rules of Civil Procedure. Notably, it was FBDC, and not CIR, that
was designated as petitioner in the latter's Motion for Extension of Time to File Petition for Review

In its assailed January 27, 2003 Resolution, the CA denied the prayer of petitioners to admit the
amended petition for review, thus, reiterating the dismissal of the petition for review. The CA gave the
following reasons:

1) The dismissal of the petition for review and denial of the amended petition are premised on: (a)
the late filing of the original petition for review earlier filed by the petitioner CIR et al.; (b) the
absence of a motion for reconsideration of the Resolution dated January 29, 2002; 14
and (c) lack of
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authority of Atty. Alberto R. Bomediano, Jr., legal officer of the BIR Region 8, Makati City, to pursue
the case on behalf of the petitioner CIR.
2) It should be noted that the first extension to file petition for review prayed for a period of fifteen
(15) days from December 28, 2001 or until January 12, 2002. The second motion for extension
prayed for an extension of another fifteen (15) days from January 12, 2002 or until January 27, 2002.
The second motion was dated January 14, 2002. Clearly, the second motion for extension dated
January 14, 2002 was filed after the expiration of the first extension on January 12, 2002 , hence,
there was no more period to extend. There was no reason for the petitioners to assume that the
motion for re-extension of time would be granted.

3) The last day of filing of the petition for review was on January 12, 2002. The filing of the petition
for review on January 31, 2002 was definitely beyond the extension prayed for. The timeliness of the
appeal is a jurisdictional caveat.

4) When petitioners received the Resolution dated January 29, 2002, denying the motion for
extension of time to file petition, thus, dismissing the petition for review on February 4, 2002, they did
not file a motion for reconsideration. Said resolution, therefore, had already become final and
executory.

5) The proper officer that should have filed the case was the Solicitor General, citing the case of CIR
v. La Suerte Cigar and Cigarette Factory, 15
not an officer of the BIR.
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ISSUE:

whether or not the Court of Appeals correctly dismissed the original Petition for Review, and
denied admission of the Amended Petition for Review?

RULING:

YES.

it has been ruled that perfection of an appeal in the manner and within the period laid down by law
is not only mandatory but also jurisdictional. The failure to perfect an appeal as required by the
rules has the effect of defeating the right to appeal of a party and precluding the appellate court from
acquiring jurisdiction over the case. At the risk of being repetitious, We declare that the right to
appeal is not a natural right nor a part of due process. It is merely a statutory privilege, and may be
exercised only in the manner and in accordance with the provisions of the law.

Public policy and sound practice demand that judgments of courts should become final and irrevocable
at some definite time fixed by law. Such rules are necessary incidents to the proper, efficient and
orderly discharge of judicial functions. Just as a lllosing party has the privilege to file an appeal within
the prescribed period, so does the winner also have the correlative right to enjoy the fruits of his
victory. Failure to meet the requirements of an appeal deprives the appellate court of jurisdiction to
entertain any appeal. 30
Undeniably, there are exceptions to this rule. Petitioner, however, did not
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present any circumstances that would justify the relaxation of said rule.

It need not be overemphasized that it is the responsibility of the counsel to check and keep track of
the period of time left to file an appeal. He cannot escape from the inflexible observance of this rule
which is jurisdictional. The rules, particularly on the statutory requirement for perfecting an appeal
within the reglementary period provided, must be strictly followed. If an appeal is not taken within the
period prescribed therefor, the judgment becomes final and the court loses all jurisdiction over the
case.

 Other issues:

As to the claim that the government would suffer loss of substantial amount if not allowed to recover
the tax refund in the amount of more thanP15M, the Court is of the view that said problem has been
caused by petitioner's own doing or undoing. While We understand its counsel's predicament of being
burdened with a heavy case load, We cannot always rule in favor of the Government. In this case,
petitioner even failed to sufficiently explain its failure to observe the Rules.

Petitioner merely pointed out that due to plain oversight, the motions for extension of time and the
petition for review that it filed were erroneously titled as "Fort Bonifacio Development Corporation v.
Commissioner of Internal Revenue" when it should have been "Commissioner of Internal Revenue v.
Fort Bonifacio Development Corporation;" that "on the assumption that it was respondent which filed
the motion, the Court of Appeals, in its Resolution dated January 29, 2002, denied the motion for
extension of time to file petition for review on the ground of failure to pay docket and other legal
fees;"w that respondent filed a manifestation stating that the case was incorrectly titled as it was not
the one who appealed the CTA decision to the C; and that in order to rectify the error, petitioner filed
an Amended Petition for Review.28cra1aw To recognize the foregoing statements would render the
mandatory rule on appeals meaningless and nugatory.

Provisions:

The then applicable rule, Rule 43 of the Rules of Court, 21

cra1aw provided: chan robles virtual law library

SECTION 1. Scope.-ThisRule shall apply to appeals from judgments or final orders of the Court of Tax
Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the
President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy
Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under
Republic Act No. 6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy
Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary
arbitrators authorized by law. (n)

xxxxxxx

SEC. 3. Where to appeal.-Anappeal under this Rule may be taken to the Court of Appeals within the
period and in the manner herein provided, whether the appeal involves questions of fact, of law, or
mixed questions of fact and law. (n)

SEC. 4. Period of appeal.-Theappeal shall be taken within fifteen (15) days from notice of the award,
judgment, final order or resolution, or from the date of its last publication, if publication is required by
law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in
accordance with the governing law of the court or agency a quo. Only one (1) motion for
reconsideration shall be allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, 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 reason and in no case to exceed fifteen (15)
days.

 
3. Smart vs Malvar GR 204429, Feb 18, 2014 - Ingan

FACTS: Petitioner Smart Communications, Inc. (Smart) is a domestic corporation

engaged in the business of providing telecommunications services to the general public
while respondent Municipality of Malvar, Batangas (Municipality) is a local government
unit created by law. The Municipality passed Ordinance No. 18, series of 2003, entitled
"An Ordinance Regulating the Establishment of Special Projects." Smart received from
the Permit and Licensing Division of the Office of the Mayor of the Municipality an
assessment letter with a schedule of payment for the total amount of ₱389,950.00 for
Smart’s construction of telecommunications tower. Due to the alleged arrears in the
payment of the assessment, the Municipality also caused the posting of a closure notice
on the telecommunications tower. Smart filed a protest, claiming lack of due process in
the issuance of the assessment and closure notice. In the same protest, Smart
challenged the validity of Ordinance No. 18 on which the assessment was based.
Municipality denied Smart’s protest. Smart filed with the Regional Trial Court of Tanauan
City, Batangas, Branch 6, an "Appeal/Petition" assailing the validity of Ordinance No. 18.
The trial court confined its resolution of the case to the validity of the assessment, and
did not rule on the legality of Ordinance No. 18. It,however, declared void the
assessment covering the period of 2001 to 2003 since the subject ordinance was
approved only on July 30,2003. On this note, it upheld the assessment beginning
October 1, 2003. Smart filed a motion for reconsideration. The trial court,however,
denied the motion. Smart subsequently filed with the Court of Tax Appeals First Division
a petition for review. For lack of merit, the petition was denied. A motion for
reconsideration was filed by Smart, but it was denied. Smart then filed a petition for
review with the Court of Tax Appeals En Banc. The petition was dismissed for lack of
jurisdiction. Hence, this petition.

ISSUES: 

1. Whether the fees imposed under Ordinance No. 18 are in fact taxes?
2. Whether the trial court resolved a local tax case in order to fall within the ambit of
the CTA’s appellate jurisdiction?

RULING: 
1. As clearly stated in its whereas clauses, the primary purpose of Ordinance No.
18 is to regulate the "placing, stringing, attaching, installing, repair and
construction of all gas mains, electric, telegraph and telephone wires, conduits,
meters and other apparatus" listed therein, which included Smart’s
telecommunications tower. Clearly, the purpose of the assailed Ordinance is to
regulate the enumerated activities particularly related to the construction and
maintenance of various structures. The fees in Ordinance No. 18 are not
impositions on the building or structure itself; rather, they are impositions on the
activity subject of government regulation, such as the installation and
construction of the structures. Since the main purpose of Ordinance No. 18 is to
regulate certain construction activities of the identified special projects, which
included "cell sites" or telecommunications towers, the fees imposed in
Ordinance No. 18 are primarily regulatory in nature, and not primarily revenue-
raising. While the fees may contribute to the revenues of the Municipality, this
 effect is merely incidental. Thus, the fees imposed in Ordinance No. 18 are
not taxes. the designation given by the municipal authorities does not decide
whether the imposition is properly a license tax or a license fee. The determining
factors are the purpose and effect of the imposition as may be apparent from the
provisions of the ordinance. the designation given by the municipal authorities
does not decide whether the imposition is properly a license tax or a license fee.
The determining factors are the purpose and effect of the imposition as may be
apparent from the provisions of the ordinance. Contrary to Smart’s contention,
Ordinance No. 18 expressly provides for the standards which Smart must satisfy
prior to the issuance of the specified permits, clearly indicating that the fees are
regulatory in nature.

2. No. This question, in turn, depends ultimately on whether the fees imposed under
Ordinance No. 18 are in fact taxes. Considering that the fees in Ordinance No.
18 are not in the nature of local taxes, and Smart is questioning the
constitutionality of the ordinance, the CTA correctly dismissed the petition for lack
of jurisdiction. Jurisdiction is conferred by law. Republic Act No. 1125, as
amended by Republic Act No. 9282, created the Court of Tax Appeals. Section 7,
paragraph (a), sub-paragraph (3)15 of the law vests the CTA with the exclusive
appellate jurisdiction over "decisions, orders or resolutions of the Regional Trial
Courts in local tax cases originally decided or resolved by them in the exercise of
their original or appellate jurisdiction." CTA correctly refused to take cognizance
of this case since it challenges the constitutionality of Ordinance No. 18, which is
outside the province of the CTA.

4. PPA vs DAVAO GR 190324, JUNE 6, 2018 - Sabaysabay

FACTS:
PPA received a letter from the City Assessor of Davao for the assessment and collection
of real property taxes against its administered properties. It appealed the assessment to
the Local Board of Assessment Appeals. The Local Board of Assessment Appeals
dismissed the PPA’s appeal for having been filed out of time, and for its lack of
jurisdiction on the latter’s tax exemption. The PPA appealed before the Central Board of
Assessment Appeals, but this appeal was denied. Thus, it filed an appeal with the CTA.

PPA claimed that it did not receive any warrant of levy for the 3 properties which were
sold to respondents, or any notice that they were going to be auctioned. It was informed
that it had 1 year from the date of registration of the sale within which to redeem the
properties by paying the taxes, penalties, and incidental expenses, plus interest at the
rate of 2% per month on the purchase price.

PPA filed a petition for certiorari with the CA, arguing that the City of Davao’s taxation of
its properties and their subsequent auction and sale to satisfy the alleged tax liabilities
were without or in excess of its jurisdiction and contrary to law. It argued that it had no
other speedy and adequate remedy except to file a petition for certiorari with the Court of
Appeals.

While the petition was pending with the CA, the CTA promulgated a decision, granting
the PPA’s appeal, ordering that its properties and buildings in the site are EXEMPT from
real estate tax imposed by Davao City, and voiding all the real estate tax assessments
issued by Davao City on such properties.

Thereafter, the CA dismissed the petition, and held that the CTA had exclusive
jurisdiction to determine the matter and said that the Philippine Ports Authority “should
have applied for the issuance of writ of injunction or prohibition before the Court of Tax
Appeals.” It further found the petition dismissible on the ground that the PPA committed
forum shopping, as the petition raised the same facts and issues as in its appeal before
the Court of Tax Appeals. Hence, CA upheld the authority of Davao City in taxing,
auctioning, and selling PPA’s properties to satisfy the latter’s real property tax liabilities.

Thus, PPA filed a petition for review under Rule 45 before the SC, assailing CA’s
decision.

ISSUE : WON the CA had jurisdiction to issue the injunctive relief prayed for by
petitioner Philippine Ports Authority

RULING: NO.  Petitioner has failed to cite any law supporting its contention. Jurisdiction
is conferred by law, reference must be made to the law when determining which court
has jurisdiction over a case, in relation to its factual and procedural antecedents. Section
7, paragraph (a)(5) of RA No. 1125, as amended by RA No. 9282, provides that the
Court of Tax Appeals has exclusive appellate jurisdiction over (5) Decisions of the
Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over
cases involving the assessment and taxation of real property originally decided by the
provincial or city board of assessment appeals.

Urgency does not remove the Central Board of Assessment Appeals decision from the
exclusive appellate jurisdiction of the Court of Tax Appeals. This is particularly true
since, as properly recognized by the Court of Appeals, petitioner could have, and should
have, applied for injunctive relief with the Court of Tax Appeals, which has the power to
issue the preliminary injunction prayed for.

The Court of Tax Appeals had jurisdiction over the petitioner's appeal to resolve the
question of whether or not it was liable for real property tax. To recall, the real property
tax liability was the very reason for the acts which petitioner wanted to have enjoined. It
was, thus, the Court of Tax Appeals, and not the Court of Appeals, that had the power to
preserve the subject of the appeal, to give effect to its final determination, and, when
necessary, to control auxiliary and incidental matters and to prohibit or restrain acts
which might interfere with its exercise of jurisdiction over petitioner's appeal. Thus,
respondents' acts carried out pursuant to the imposition of the real property tax were
also within the jurisdiction of the Court of Tax Appeals.

ISSUE: Whether or not the petition before the Court of Appeals was properly dismissed
for forum shopping.
 RULING: YES. The rule against forum shopping is violated when a party institutes
more than one action based on the same cause to increase its chances of obtaining a
favorable outcome. Thus, when a party institutes a case while another case is pending,
where there is an identity of parties and an identity of rights asserted and relief prayed
for such that judgment in one case amounts to res judicata in the other, it is guilty of
forum shopping.

PPA attempts to differentiate the petition filed with the Court of Appeals from the
appeal filed with the Court of Tax Appeals. It argues that the right asserted before the
Court of Appeals is its right to peacefully possess its ports, free from the threat
of losing the properties due to tax liabilities, whereas the right asserted before the
Court of Tax Appeals is its right to be exempt from real property tax, as a
government instrumentality. PPA further argues that the reliefs sought from the two
(2) tribunals were not the same—it sought a final relief from payment of real property
taxes on its ports from the Court of Tax Appeals; on the other hand, it sought a
temporary and immediate relief from respondents’ acts from the Court of Appeals,
while the issue of taxability was still pending with the Court of Tax Appeals.

5. PSALM GR 198146 Aug 8, 2017 - Tee

Facts: Through the EPIRA Law, PSALM was created to facilitate the sale and privatization of the National
Power Corporation. Two power plants was sold by PSALM. The BIR assessed the petitioner with VAT for
the said sale. Petitioner then paid the assessed tax in protest and raised the issue with the DOJ. The DOJ
rendered its judgement in favor of the Petitioner. The respondent appealed to the CA who reversed
DOJ’s resolution. Petitioner then appealed to the SC, hence this case.
Issue: Whether the Secretary of Justice has jurisdiction over the case.

Ruling: Yes. We agree with the Court of Appeals that jurisdiction over the subject matter is
vested by the Constitution or by law, and not by the parties to an action. Jurisdiction cannot
be conferred by consent or acquiescence of the parties 23 or by erroneous belief of the court,
quasi-judicial office or government agency that it exists.
However, contrary to the ruling of the Court of Appeals, we find that the There is no
question that original jurisdiction is with the CIR, who issues the preliminary and the final tax
assessments. However, if the government entity disputes the tax assessment, the dispute is
already between the BIR (represented by the CIR) and another government entity, in this
case, the petitioner PSALM.
Under Presidential Decree No. 242 24 (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. As regards cases involving only questions of law, it is the Secretary of
Justice who has jurisdiction. Sections 1, 2, and 3 of PD 242 read:

Section 1. Provisions of law to the contrary notwithstanding, all disputes, claims

and controversies solely between or among the departments, bureaus, offices,
 agencies and instrumentalities of the National Government, including
constitutional offices or agencies, arising from the interpretation and application
of statutes, contracts or agreements, shall henceforth be administratively settled
or adjudicated as provided hereinafter: Provided, That, this shall not apply to
cases already pending in court at the time of the effectivity of this decree.
Section 2. In all cases involving only questions of law, the same shall be
submitted to and settled or adjudicated by the Secretary of Justice, as Attorney
General and ex officio adviser of all government owned or controlled
corporations and entities, in consonance with Section 83 of the Revised
Administrative Code. His ruling or determination of the question in each case
shall be conclusive and binding upon all the parties concerned.

 
Issue: Whether the sale of the power plants is subject to VAT?
Held:
No, The phrase ‘in the course of trade or business’ means the regular conduct or pursuit of a commercial
or an economic activity, including transactions incidental thereto, by any person regardless of whether
or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the
disposition of its net income and whether or not it sells exclusively to members or their guests), or
government entity. The sale of the power plants is not “in the course of trade or business” as
contemplated under Section 105 of the NIRC, and thus, not subject to VAT.
The sale of the power plants is not in pursuit of a commercial or economic activity but a governmental
function mandated by law to privatize NPC generation assets. PSALM was created primarily to liquidate
all NPC financial obligations and stranded contract costs in an optimal manner. The purpose and
objective of PSALM are explicitly stated in Section 50 of the EPIRA law.
PSALM is limited to selling only NPC assets and IPP contracts of NPC. The sale of NPC assets by PSALM is
not “in the course of trade or business” but purely for the specific purpose of privatizing NPC assets in
order to liquidate all NPC financial obligations. PSALM is tasked to sell and privatize the NPC assets
within the term of its existence.

ISSUE: Whether the Secretary of Justice has the exclusive appellate jurisdiction over
the case and not the CTA?

RULING: YES. The exclusive appellate jurisdiction of the CTA as regards the CIR's
decisions on matters involving disputed assessments, refunds in internal revenue
taxes, fees or other charges, penalties imposed in relation thereto, or other matters
arising under NIRC, is in conflict with PD 242. Under 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. The Court finds that
DOJ is vested by law with jurisdiction over this case. This case involves a dispute
between PSALM and NPC, which are both wholly government owned corporations,
and the BIR, a government office, over the imposition of VAT on the sale of the two
power plants. There is no question that original jurisdiction is with the CIR, who
issues the preliminary and the final tax assessments. However, if the government
entity disputes the tax assessment, the dispute is already between the BIR
(represented by the CIR) and another government entity, in this case, the petitioner
PSALM.

6. SMI-ED vs CIR. GR 175410. Nov 12, 2014 - Atienza

In an action for the refund of taxes allegedly erroneously paid, the Court of Tax Appeals may
determine whether there are taxes that should have been paid in lieu of the taxes paid.
Determining the proper category of tax that should have been paid is not an assessment. It
is incidental to determining whether there should be a refund.

Facts:
CTA 2nd division denied SMI-ED claim for tax refund. They found that SMI-Ed Philippines’
administrative claim for refund and the petition for review with the Court of Tax Appeals were
filed within the two-year prescriptive period. However, fiscal incentives given to PEZA-
registered enterprises may be availed only by PEZA-registered enterprises that had already
commenced operations. Since SMI-Ed Philippines had not commenced operations, it was
not entitled to the incentives of either the income tax holiday or the 5% preferential tax rate.
Payment of the 5% preferential tax amounting to ₱44,677,500.00 was erroneous. After
finding that SMI-Ed Philippines sold properties that were capital assets, the Court of Tax
Appeals Second Division subjected the sale of SMIEd Philippines’ assets to 6% capital
gains tax. It was found liable for capital gains tax amounting to ₱53,613,000.00.
Therefore, SMIEd Philippines must still pay the balance of ₱8,935,500.00 as deficiency
tax,"which respondent should perhaps look into."

SMI-ED filed a petition for review before the CTA en banc arguing that the CTA 2nd division
erroneously assessed the 6% capital gains tax on the sale of SMI-Ed Philippines’ equipment,
machineries, and buildings. They also argued that the Court of Tax Appeals Second
Division cannot make an assessment at the first instance. Even if the Court of Tax
Appeals Second Division has such power, the period to make an assessment had
already prescribed.

CTA en banc dismissed their petition and affirmed the CTA 2nd division’s decision and
resolution.

Hence, this petition. Petitioner argues that the Court of Tax Appeals has no jurisdiction to
make an assessment since its jurisdiction, with respect to the decisions of respondent, is
merely appellate. Moreover, the power to make assessment had already prescribed under
Section 203 of the National Internal Revenue Code of 1997 since the return for the
erroneous payment was filed on September 13, 2000. This is more than three (3) years from
the last day prescribed by law for the filing of the return.

Issue:
WON CTA en banc grievously erred and acted beyond its jurisdiction when it assessed for
deficiency tax in the first instance

Ruling:
No. 
1. The Court of Tax Appeals may acquire jurisdiction over cases even if they do not
involve BIR assessments or decisions. In this case, the Court of Tax Appeals’
jurisdiction was acquired because petitioner brought the case on appeal before the
 Court of Tax Appeals after the BIR had failed to act on petitioner’s claim for refund of
erroneously paid taxes. The Court of Tax Appeals did not acquire jurisdiction as a
result of a disputed assessment of a BIR decision. 
2. Court of Tax Appeals has no assessment powers. However, in this case, the CTA
was not making an assessment in stating that petitioner’s transactions are subject to
capital gains tax. It was merely determining the proper category of tax that petitioner
should have paid, in view of its claim that it erroneously imposed upon itself and paid
the 5% final tax imposed upon PEZA-registered enterprises.

The question of tax deficiency is distinct and unrelated to the question of petitioner’s entitlement to
refund. Tax deficiencies should be subject to assessment procedures and the rules of prescription.
The court cannot be expected to perform the BIR’s duties whenever it fails to do so either through
neglect or oversight. Neither can court processes be used as a tool to circumvent laws protecting the
rights of taxpayers.

Note: CTA DECISION IS SET ASIDE.

This petition was meritorious.

The BIR, however, did not initiate any assessment for deficiency capital gains tax.78 Since more
than a decade have lapsed from the filing of petitioner's return, the BIR can no longer assess
petitioner for deficiency capital gains taxes, if petitioner is later found to have capital gains tax
liabilities in excess of the amount claimed for refund.

The Court of Tax Appeals should not be expected to perform the BIR's duties of assessing and
collecting taxes whenever the BIR, through neglect or oversight, fails to do so within the prescriptive
period allowed by law.

7. Mitsubishi vs BoC. GR209830  June 17, 2015 - Buenaobra

FACTS:This case arose from a collection suit based on unpaid taxes and customs
duties filed against Mitsubishi.
BOC alleged that Mitsubishi was able to secure tax credit certificates (TCCs) from
various companies and made several importations and utilized said TCCs for the
payment of various customs duties and taxes. Believing that the TCCs were authentic,
BOC allowed Mitsubishi to use the same for the settlement of such customs duties and
taxes. But a post-audit investigation of the Department of Finance revealed that the
TCCs were fraudulently acquired and thus, BOC deemed that Mitsubishi never settled its
taxes and customs duties pertaining to the said importations. BOC then demanded
Mitsubishi to pay its unsettled tax and customs duties, but to no avail.

After BOC’s presentation of evidence, Mitsubishi filed a Demurrer to Plaintiff’s Evidence.

RTC granted the Demurrer. BOC appealed to CA.

CA admitted that it had no jurisdiction to take cognizance of respondent’s appeal. CA

then referred the case to the Court of Tax Appeals(CTA).

Mitsubishi then filed a motion and argued that since the CA does not have jurisdiction
 over respondent’s appeal, it cannot perform any action on it except to order its dismissal.
The said motion was, however, denied by the CA.

ISSUE: WON the CA correctly referred the records of the collection case to the CTA for
proper disposition of the appeal taken by BOC

RULING: NO. CA erred when it referred the records of the collection case to the CTA for
proper disposition of the appeal.

The law provides in

Sec 7 of (RA) 1125, as amended by RA 9282
Sec. 7. Jurisdiction. – The CTA shall exercise:
xxxx
c. Jurisdiction over tax collection cases as herein provided:
xxxx
2. Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in
tax collection cases originally decided by them in their respective territorial jurisdiction.
xxxx
Similarly, Section 3, Rule 4 of the Revised Rules of the Court of Tax Appeals, as amended, 38

states:
Sec. 3. Cases within the jurisdiction of the Court in Divisions. – The Court in Divisions shall
exercise:
8. x x x x
c. Exclusive jurisdiction over tax collections cases, to wit:
Verily, the foregoing provisions explicitly provide that the CTA has exclusive appellate
jurisdiction over tax collection cases originally decided by the RTC.
In the instant case, the CA has no jurisdiction over BOC’s appeal; hence, it cannot perform any
action on the same except to order its dismissal pursuant to the Rules of Court. Therefore, the
act of the CA in referring respondent’s wrongful appeal before it to the CTA under the guise of
furthering the interests of substantial justice is erroneous.
Because of BOC’s use of a wrong mode of appeal via notice of appeal stating that it was
elevating the case to the CA – instead of appealing by way of a petition for review to the CTA –
the Court is constrained to deem the RTC's dismissal of respondent's collection case against
petitioner final and executory. It is settled that the perfection of an appeal in the manner and
within the period set by law is not only mandatory, but jurisdictional as well, and that failure to
perfect an appeal within the period fixed by law renders the judgment appealed from final and
executory.
(Since didto man sila ni appeal sa CA, na dismiss na nuon ang collection case kay dapat sa
CTA man unta sila mu appeal by way of petition kay ang CTA may nay exclusive jurisdiction
atong collection case. Mao tong walay lain pwde mahimo ang CA aside sa i-dismiss ang
collection case in accordance sa Sec 2 Rule 50 ROC)