BANCO DE ORO

vs. REPUBLIC
G.R. No. 198756, January 13, 2015

RULING:

Procedural Issues
Non-exhaustion of
administrative remedies proper

Under Section 4 of the 1997 National Internal Revenue Code, interpretative rulings are reviewable
by the Secretary of Finance.

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.

Thus, it was held that "[i]f superior administrative officers [can] grant the relief prayed for, [then]
special civil actions are generally not entertained."  The remedy within the administrative machinery
153

must be resorted to first and pursued to its appropriate conclusion before the court’s judicial power
can be sought. 154

Nonetheless, jurisprudence allows certain exceptions to the rule on exhaustion of administrative

remedies:

[The doctrine of exhaustion of administrative remedies] is a relative one and its flexibility is called
upon by the peculiarity and uniqueness of the factual and circumstantial settings of a case. Hence, it
is disregarded (1) when there is a violation of due process, (2) when the issue involved is purely a
legal question,  (3) when the administrative action is patently illegal amounting to lack or excess of
155

jurisdiction,(4) when there is estoppel on the part of the administrative agency concerned,(5) when
there is irreparable injury, (6) when the respondent is a department secretary whose acts as an alter
ego of the President bears the implied and assumed approval of the latter, (7) when to require
exhaustion of administrative remedies would be unreasonable, (8) when it would amount to a
nullification of a claim, (9) when the subject matter is a private land in land case proceedings, (10)
when the rule does not provide a plain, speedy and adequate remedy, (11) when there are
circumstances indicating the urgency of judicial intervention.

The exceptions under (2) and (11)are present in this case. The question involved is purely legal,
namely: (a) the interpretation of the 20-lender rule in the definition of the terms public and deposit
substitutes under the 1997 National Internal Revenue Code; and (b) whether the imposition of the
20% final withholding tax on the PEACe Bonds upon maturity violates the constitutional provisions
on non-impairment of contracts and due process. Judicial intervention is likewise urgent with the
impending maturity of the PEACe Bonds on October 18, 2011.

The rule on exhaustion of administrative remedies also finds no application when the exhaustion will
result in an exercise in futility.
157

In this case, an appeal to the Secretary of Finance from the questioned 2011 BIR Ruling would be a
futile exercise because it was upon the request of the Secretary of Finance that the 2011 BIR Ruling
was issued by the Bureau of Internal Revenue. It appears that the Secretary of Finance adopted the
Commissioner of Internal Revenue’s opinions as his own.  This position was in fact confirmed in the
158

letter  dated October 10, 2011 where he ordered the Bureau of Treasury to withhold the amount
159

corresponding to the 20% final withholding tax on the interest or discounts allegedly due from the
bondholders on the strength of the 2011 BIR Ruling. Doctrine on hierarchy of courts

We agree with respondents that the jurisdiction to review the rulings of the Commissioner of Internal
Revenue pertains to the Court of Tax Appeals. The questioned BIR Ruling Nos. 370-2011 and DA
378-2011 were issued in connection with the implementation of the 1997 National Internal Revenue
Code on the taxability of the interest income from zero-coupon bonds issued by the government.

Under Republic Act No. 1125 (An Act Creating the Court of Tax Appeals), as amended by Republic
Act No. 9282,  such rulings of the Commissioner of Internal Revenue are appealable to that court,
160

thus:

SEC. 7.Jurisdiction.- The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue or other laws administered by the Bureau of
Internal Revenue;

....

SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a
decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs,
the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the
Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA
within thirty (30) days after the receipt of such decision or rulingor after the expiration of the period
fixed by law for action as referred toin Section 7(a)(2) herein.

....

SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matters arising
under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government
Code shall be maintained, except as herein provided, until and unless an appeal has been
previously filed with the CTA and disposed of in accordance with the provisions of this Act.

In Commissioner of Internal Revenue v. Leal,  citing Rodriguez v. Blaquera,  this court emphasized
161 162

the jurisdiction of the Court of Tax Appeals over rulings of the Bureau of Internal Revenue, thus:

While the Court of Appeals correctly took cognizance of the petition for certiorari, however, let it be
stressed 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.. . .

....

Such revenue orders were issued pursuant to petitioner's powers under Section 245 of the Tax
Code, which states:

"SEC. 245. Authority of the Secretary of Finance to promulgate rules and regulations. — The
Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules
and regulations for the effective enforcement of the provisions of this Code.

The authority of the Secretary of Finance to determine articles similar or analogous to those subject
to a rate of sales tax under certain category enumerated in Section 163 and 165 of this Code shall
be without prejudice to the power of the Commissioner of Internal Revenue to make rulings or
opinions in connection with the implementation of the provisions of internal revenue laws, including
ruling on the classification of articles of sales and similar purposes." (Emphasis in the original)

....

The Court, in Rodriguez, etc. vs. Blaquera, etc., ruled:

"Plaintiff maintains that this is not an appeal from a ruling of the Collector of Internal Revenue, but
merely an attempt to nullify General Circular No. V-148, which does not adjudicate or settle any
controversy, and that, accordingly, this case is not within the jurisdiction of the Court of Tax Appeals.

We find no merit in this pretense. General Circular No. V-148 directs the officers charged with the
collection of taxes and license fees to adhere strictly to the interpretation given by the defendant
tothe statutory provisions abovementioned, as set forth in the Circular. The same incorporates,
therefore, a decision of the Collector of Internal Revenue (now Commissioner of Internal Revenue)
on the manner of enforcement of the said statute, the administration of which is entrusted by law to
the Bureau of Internal Revenue. As such, it comes within the purview of Republic Act No. 1125,
Section 7 of which provides that the Court of Tax Appeals ‘shall exercise exclusive appellate
jurisdiction to review by appeal . . . decisions of the Collector of Internal Revenue in . . . matters
arising under the National Internal Revenue Code or other law or part of the law administered by the
Bureau of Internal Revenue.’" 163

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." 164

In Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA) v. The Secretary,

Department of Interior and Local Government,  this court noted that the petition for prohibition was
165

filed directly before it "in disregard of the rule on hierarchy of courts. However, [this court] opt[ed] to
take primary jurisdiction over the . . . petition and decide the same on its merits in viewof the
significant constitutional issues raised by the parties dealing with the tax treatment of cooperatives
under existing laws and in the interest of speedy justice and prompt disposition of the matter." 166

Here, the nature and importance of the issues raised  to the investment and banking industry with
167

regard to a definitive declaration of whether government debt instruments are deposit substitutes
under existing laws, and the novelty thereof, constitute exceptional and compelling circumstances to
justify resort to this court in the first instance.

The tax provision on deposit substitutes affects not only the PEACe Bonds but also any other
financial instrument or product that may be issued and traded in the market. Due to the changing
positions of the Bureau of Internal Revenue on this issue, there isa need for a final ruling from this
court to stabilize the expectations in the financial market.

Finally, 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.
G.R. No. 198756

BANCO DE ORO, BANK OF COMMERCE, CHINA BANKING CORPORATION, METROPOLITAN

BANK & TRUST COMPANY, PHILIPPINE BANK OF COMMUNICATIONS, PHILIPPINE
NATIONAL BANK, PHILIPPINE VETERANS BANK, AND PLANTERS DEVELOPMENT
BANK, Petitioners
vs.
RIZAL COMMERCIAL BANKING CORPORATION AND RCBC CAPITAL CORPORATION,
Petitioners-Intervenors

x-----------------------x

CAUCUS OF DEVELOPMENT NGO NETWORKS, Petitioner-Intevenor,

vs.
REVENUE, SECRETARY OF FINANCE, DEPARTMENT OF FINANCE, THE NATIONAL
TREASURER, AND BUREAU OF TREASURY, Respondents.

RESOLUTION

LEONEN, J.:

This resolves separate motions for reconsideration and clarification filed by the Office of the Solicitor
General   and petitioners-intervenors Rizal Commercial Banking Corporation and RCBC Capital
1

Corporation  of our Decision dated January 13, 2015, which: (1) granted the Petition and Petitions-in-
2

Intervention and nullified Bureau of Internal Revenue (BIR) Ruling Nos. 370-2011 and DA 378-2011;
and (2) reprimanded the Bureau of Treasury for its continued retention of the amount corresponding
to the 20% final withholding tax that it withheld on October 18, 2011, and ordered it to release the
withheld amount to the bondholders.

In the notice to all Government Securities Eligible Dealers (GSEDs) entitled Public Offering of
Treasury Bonds  (Public Offering) dated October 9, 2001, the Bureau of Treasury announced that
3

"P30.0 [billion] worth of 10- year Zero[-]Coupon Bonds [would] be auctioned on October 16,
2001[.]"  It stated that "the issue being limited to 19 lenders and while taxable shall not be subject to
4

the 20% final withholding [tax]." 5

On October 12, 2001, the Bureau of Treasury released a memo on the Formula for the Zero-Coupon
Bond.   The memo stated in part that the formula, in determining the purchase price and settlement
6

amount, "is only applicable to the zeroes that are not subject to the 20% final withholding due to the
19 buyer/lender limit." 7

On October 15, 2001, one (1) day before the auction date, the Bureau of Treasury issued the
Auction Guidelines for the 10-year Zero-Coupon Treasury Bond to be Issued on October 16, 2001
(Auction Guidelines).  The Auction Guidelines reiterated that the Bonds to be auctioned are "[n]ot
8

subject to 20% withholding tax as the issue will be limited to a maximum of 19 lenders in the primary
market (pursuant to BIR Revenue Regulation No. 020 2001 )." 9

At the auction held on October 16, 2001, Rizal Commercial Banking Corporation (RCBC)
participated on behalf of Caucus of Development NGO Networks (CODE-NGO) and won the
bid.   Accordingly, on October 18, 2001, the Bureau of Treasury issued P35 billion worth of Bonds at
10

yield-tomaturity of 12.75% to RCBC for approximately P10.17 billion,   resulting in a discount of

11

approximately P24.83 billion.

Likewise, on October 16, 2001, RCBC Capital entered into an underwriting agreement  with CODE-
12

NGO, where RCBC Capital was appointed as the Issue Manager and Lead Underwriter for the
offering of the PEACe Bonds.   RCBC Capital agreed to underwrite  on a firm basis the offering,
13 14

distribution, and sale of the P3 5 billion Bonds at the price of Pll,995,513,716.51.   In Section 7(r) of
15

the underwriting agreement, CODE-NGO represented that "[a]ll income derived from the Bonds,
inclusive of premium on redemption and gains on the trading of the same, are exempt from all forms
of taxation as confirmed by [the] Bureau of Internal Revenue . . . letter rulings dated 31 May 2001
and 16 August 2001, respectively."  16

RCBC Capital sold and distributed the Government Bonds for an issue price of
Pll,995,513,716.51.   Banco de Oro, et al. purchased the PEACe Bonds on different dates. 
17 18

On October 7, 2011, barely 11 days before maturity of the PEACe Bonds, the Commissioner of
Internal Revenue issued BIR Ruling No. 370- 2011  declaring that the PEACe Bonds, being deposit
19

substitutes, were subject to 20% final withholding tax.   Under this ruling, the Secretary of Finance
20
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. 21

On October 17, 2011, replying to an urgent query from the Bureau of Treasury, the Bureau of
Internal Revenue issued BIR Ruling No. DA 378-2011  clarifying that the final withholding tax due
22

on the discount or interest earned on the PEACe Bonds should "be imposed and withheld not only
on RCBC/CODE NGO but also [on] 'all subsequent holders of the Bonds. "' 23

On October 17, 2011, petitioners filed before this Court a Petition for Certiorari, Prohibition, and/or
Mandamus (with urgent application for a temporary restraining order and/or writ of preliminary
injunction).
24

On October 18, 2011, this Court issued a temporary restraining order  "enjoining the implementation
25

of BIR Ruling No. 370-2011 against the [PEACe Bonds,] ... subject to the condition that the 20% final
withholding tax on interest income therefrom shall be withheld by the petitioner banks and placed in
escrow pending resolution of [the] petition."26

RCBC and RCBC Capital, as well as CODE-NGO separately moved for leave of court to intervene
and to admit the Petition-in-Intervention. The Motions were granted by this Court.  27

Meanwhile, on November 9, 2011, petitioners filed their Manifestation with Urgent Ex Parte Motion to
Direct Respondents to Comply with the TR0. 28

On November 15, 2011, this Court directed respondents to: "(1) show cause why they failed to
comply with the October 18, 2011 resolution; and (2) comply with the Court's resolution in order that
petitioners may place the corresponding funds in escrow pending resolution of the petition. "  29

On December 6, 2011, this Court noted respondents' compliance.  30

On November 27, 2012, petitioners filed their Manifestation with Urgent Reiterative Motion [To Direct
Respondents to Comply with the Temporary Restraining Order].  31

On December 4, 2012, this Court noted petitioners' Manifestation with Urgent Reiterative Motion and
required respondents to comment.   Respondents filed their Comment,   to which petitioners filed
32 33

their Reply.  34

On January 13, 2015, this Court promulgated the Decision  granting the Petition and the Petitions-
35

in-Intervention. Applying Section 22(Y) of the National Internal Revenue Code, we held that the
number of lenders/investors at every transaction is determinative of whether a debt instrument is a
deposit substitute subject to 20% final withholding tax. When at any transaction, funds are
simultaneously obtained from 20 or more lenders/investors, there is deemed to be a public
borrowing and the bonds at that point in time are deemed deposit substitutes. Consequently, the
seller is required to withhold the 20% final withholding tax on the imputed interest income from the
bonds. We further declared void BIR Rulings Nos. 370-2011 and DA 378-2011 for having
disregarded the 20-lender rule provided in Section 22(Y). The Decision disposed as follows:

WHEREFORE, the petition for review and petitions-in- intervention are GRANTED. BIR Ruling Nos.
370-2011 and DA 378- 2011 are NULLIFIED.

Furthermore, respondent Bureau of Treasury is REPRIMANDED for its continued retention of the

amount corresponding to the 20% final withholding tax despite this court's directive in the temporary
restraining order and in the resolution dated November 15, 2011 to deliver the amounts to the banks
to be placed in escrow pending resolution of this case.

Respondent Bureau of Treasury is hereby ORDERED to immediately release and pay to the

bondholders the amount corresponding to the 20% final withholding tax that it withheld on October
18, 2011. 36

On March 13, 2015, respondents filed by registered mail their Motion for Reconsideration and
Clarification.  37

On March 16, 2015, petitioners-intervenors RCBC and RCBC Capital moved for clarification and/or
partial reconsideration. 38

On July 6, 2015, petitioners Banco de Oro, et al. filed their

Consolidated Comment  on respondents' Motion for Reconsideration and Clarification and
39

petitioners-intervenors RCBC and RCBC Capital Corporation's Motion for Clarification and/or Partial
Reconsideration.

On October 29, 2015, petitioners Banco de Oro, et al. filed their Urgent Reiterative Motion [to Direct
Respondents to Comply with the Temporary Restraining Order]. 40

The issues raised in the motions revolve around the following:

First, the proper interpretation and application of the 20-lender rule under Section 22(Y) of the
National Internal Revenue Code, particularly in relation to issuances of government debt
instruments;

Second, whether the seller in the secondary market can be the proper withholding agent of the final
withholding tax due on the yield or interest income derived from government debt instruments
considered as deposit substitutes;

Third, assuming the PEACe Bonds are considered "deposit substitutes," whether government or the
Bureau of Internal Revenue is estopped from imposing and/or collecting the 20% final withholding
tax from the face value of these Bonds. Further:

(a) Will the imposition of the 20% final withholding tax violate the non-impairment clause of the
Constitution?

(b) Will it constitute a deprivation of property without due process of law?

Lastly, whether the respondent Bureau of Treasury is liable to pay 6% legal interest.

Before going into the substance of the motions for reconsideration, we find it necessary to clarify on
the procedural aspects of this case. This is with special emphasis on the jurisdiction of the Court of
Tax Appeals in view of the previous conflicting rulings of this Court.

Earlier, respondents questioned the propriety of petitioners' direct resort to this Court. They argued
that petitioners should have challenged first the 2011 Bureau of Internal Revenue rulings before the
Secretary of Finance, consistent with the doctrine on exhaustion of administrative remedies.

In the assailed Decision, we agreed that interpretative rulings of the Bureau of Internal Revenue are
reviewable by the Secretary of Finance under Section 4  of the National Internal Revenue Code.
41

However, we held that because of the special circumstances availing in this case-namely: the
question involved is purely legal; the urgency of judicial intervention given the impending maturity of
the PEA Ce Bonds; and the futility of an appeal to the Secretary of Finance as the latter appeared to
have adopted the challenged Bureau of Internal Revenue rulings-there was no need for petitioners
to exhaust all administrative remedies before seeking judicial relief.

We also stated that:

[T]he jurisdiction to review the rulings of the Commissioner of Internal Revenue pertains to the Court
of Tax Appeals. The questioned BIR Ruling Nos. 370-2011 and DA 378-2011 were issued in
connection with the implementation of the 1997 National Internal Revenue Code on the taxability of
the _interest income from zero-coupon bonds issued by the government.

Under Republic Act No. 1125 (An Act Creating the Court of Tax Appeals), as amended by Republic
Act No. 9282, such rulings of the Commissioner of Internal Revenue are appealable to that court,
thus:

SEC. 7. Jurisdiction. -The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or
other matters arising under the National Internal Revenue or other laws administered by the Bureau
of Internal Revenue;

....
SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a
decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs,
the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the
Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA
within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period
fixed by law for action as referred to in Section 7(a)(2) herein.

....

SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matters
arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local
Government Code shall be maintained, except as ·herein provided, until and unless an appeal has
been previously filed with the CTA and disposed of in accordance with the provisions of this Act.

In Commissioner of Internal Revenue v. Leal, citing Rodriguez v. Blaquera, this court emphasized
the jurisdiction of the Court of Tax Appeals over rulings of the Bureau of Internal Revenue, thus:

While the Court of Appeals correctly took cognizance of the petition for certiorari, however, let it be
stressed 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.

....

Such revenue orders were issued pursuant to petitioner's powers under Section 245 of the Tax
Code, which states:

"SEC. 245. Authority of the Secretary of Finance to promulgate rules and regulations. - The
Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules
and regulations for the effective enforcement of the provisions of this Code.

The authority of the Secretary of Finance to determine articles similar or analogous to those subject
to a rate of sales tax under certain category enumerated in Section 163 and 165 of this Code shall
be without prejudice to the power of the Commissioner of Internal Revenue to make rulings or
opinions in connection with the implementation of the provisions of internal revenue laws, including
ruling on the classification of articles of sales and similar purposes."

....

The Court, in Rodriguez etc. vs. Blaquera, etc., ruled:

"Plaintiff maintains that this is not an appeal from a ruling of the Collector of Internal Revenue, but
merely an attempt to nullify General Circular No. V-148, which does not adjudicate or settle any
controversy, and that, accordingly, this case is not within the jurisdiction of the Court of Tax Appeals.

We find no merit in this pretense. General Circular No. V-148 directs the officers charged with the
collection of taxes and license fees to adhere strictly to the interpretation given by the defendant to
the statutory provisions above mentioned, as set forth in the Circular. The same incorporates,
therefore, a decision of the Collector of Internal Revenue (now Commissioner of Internal Revenue)
on the manner of enforcement of the said statute, the administration of which is entrusted by law to
the Bureau of Internal Revenue. As such, it comes within the purview of Republic Act No. 1125,
Section 7 of which provides that the Court of Tax Appeals 'shall exercise exclusive appellate
jurisdiction to review by appeal . . . decisions of the Collector of Internal Revenue in . . . matters
arising under the National Internal Revenue Code or other law or part of the law administered by the
Bureau of Internal Revenue. "[['42]]

In Commissioner of Internal Revenue v. Leal,   the Commissioner issued Revenue Memorandum

43

Order (RMO) No. 15-91 imposing 5% lending investors tax on pawnshops, and Revenue
Memorandum Circular (RMC) No. 43-91 subjecting the pawn ticket to documentary stamp tax.  Leal, 44

a pawnshop owner and operator, asked for reconsideration of the revenue orders, but it was denied
by the Commissioner in BIR Ruling No. 221-91.  Thus, Leal filed before the Regional Trial Court a
45

petition for prohibition seeking to prohibit the Commissioner from implementing the revenue
orders.   This Court held that Leal should have filed her petition for prohibition before the Court of
46

Tax Appeals, not the Regional Trial Court, because "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."  This Court held that such rulings in connection with the implementation of
47
internal revenue laws are appealable to the Court of Tax Appeals under Republic Act No. 1125, as
amended. 48

Likewise, in Asia International Auctioneers, Inc. v. Hon. Parayno, Jr.,   this Court upheld the
49

jurisdiction of the Court of Tax Appeals over the Regional Trial Courts, on the issue of the validity of
revenue memorandum circulars.  It explained that "the assailed revenue regulations and revenue
50

memorandum circulars [were] actually rulings or opinions of the [Commissioner of Internal Revenue]
on the tax treatment of motor vehicles sold at public auction within the [Subic Special Economic
Zone] to implement Section 12 of [Republic Act] No. 7227." This Court further held that the
taxpayers' invocation of this Court's intervention was premature for its failure to first ask the
Commissioner of Internal Revenue for reconsideration of the assailed revenue regulations and
revenue memorandum circulars.

However, a few months after the promulgation of Asia International Auctioneers, British
American Tobacco v. Camacho  pointed out that although Section 7 of Republic Act No. 1125, as
51

amended, confers on the Court of Tax Appeals jurisdiction to resolve tax disputes in general, this
does not include cases where the constitutionality of a law or rule is challenged. Thus:

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:

....

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 determin whether or not there
has been a grave abuse of dicretion amounting to lack or execss of jurisdiction on the part of any
branch or instrumentality of the Government.

In Drilon v. Lim, it was held:

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of
Section 187, this authority being embraced in the general definition of the judicial power to determine
what are the valid and binding laws by the criterion of their conformity to the fundamental law.
Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil cases in which the
subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action
has the right to question in his defense the constitutionality of a law he is charged with violating and
of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover,
Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final
judgments and orders of lower courts in all cases in which the constitutionality or validity of any
treaty, international or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question.

The petition for injunction filed by petitioner before the RTC is a direct attack on the constitutionality
of Section 145(C) of the NIRC, as amended, and the validity of its implementing rules and
regulations. In fact, the RTC limited the resolution of the subject case to the issue of the
constitutionality of the assailed provisions. The determination of whether the assailed law and its
implementing rules and regulations contravene the Constitution is within the jurisdiction of regular
courts. 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. Petitioner, therefore, properly filed the subject case
before the RTC.   (Citations omitted)
52

British American Tobacco involved the validity of: (1) Section 145 of Republic Act No. 8424; (2)
Republic Act No. 9334, which further amended Section 145 of the National Internal Revenue Code
on January 1, 2005; (3) Revenue Regulations Nos. 1-97, 9-2003, and 22-2003; and (4) RMO No. 6-
2003. 53

A similar ruling was made in Commissioner of Customs v. Hypermix Feeds Corporation.   Central to
54

the case was Customs Memorandum Order (CMO) No. 27-2003 issued by the Commissioner of
Customs. This issuance provided for the classification of wheat for tariff purposes. In anticipation of
the implementation of the CMO, Hypermix filed a Petition for Declaratory Relief before the Regional
Trial Court. Hypermix claimed that said CMO was issued without observing the provisions of the
Revised Administrative Code; was confiscatory; and violated the equal protection clause of the 1987
Constitution.   The Commissioner of Customs moved to dismiss on the ground of lack of
55

jurisdiction.   On the issue regarding declaratory relief, this Court ruled that the petition filed by
56

Hypermix had complied with all the requisites for an action of declaratory relief to prosper. Moreover:

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. 57

We revert to the earlier rulings in Rodriguez, Leal, and Asia International Auctioneers, Inc. The Court
of Tax Appeals has exclusive jurisdiction to determine the constitutionality or validity of tax laws,
rules and regulations, and other administrative issuances of the Commissioner of Internal Revenue.

Article VIII, Section 1 of the 1987 Constitution provides the general definition of judicial power:

ARTICLE VIII
JUDICIAL DEPARTMENT

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.

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. (Emphasis supplied)

Based on this constitutional provision, this Court recognized, for the first time, in The City of Manila
v. Hon. Grecia-Cuerdo,  the Court of Tax Appeals' jurisdiction over petitions for certiorari assailing
58

interlocutory orders issued by the Regional Trial Court in a local tax case. Thus:

[W]hile 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.

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, fo1lows that the CTA,
by constitutional mandate, is vested with jurisdiction to issue writs of certiorari in these
cases.   (Emphasis in the original)
59

This Court further explained that the Court of Tax Appeals' authority to issue writs of certiorari is
inherent in the exercise of its appellate jurisdiction.

A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it
effectively, to make all orders that will preserve the subject of the action, and to give effect to the
final determination of the appeal. It carries with it the power to protect that jurisdiction and to make
the decisions of the court thereunder effective. The court, in aid of its appellate jurisdiction, has
authority to control all auxiliary and incidental matters necessary to the efficient and proper exercise
of that jurisdiction. For this purpose, it may, when necessary, prohibit or restrain the performance of
any act which might interfere with the proper exercise of its rightful jurisdiction in cases pending
before it.

Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction
should have powers which are necessary to enable it to act effectively within such jurisdiction. These
should be regarded as powers which are inherent in its jurisdiction and the court must possess them
in order to enforce its rules of practice and to suppress any abuses of its process and to defeat any
attempted thwarting of such process.
In this regard, Section 1 of RA 9282 states that the CTA shall be of the same level as the CA and
shall possess all the inherent powers of a court of justice.

Indeed, courts possess certain inherent powers which may be said to be implied from a general
grant of jurisdiction, in addition to those expressly conferred on them. These inherent powers are
such powers as are necessary for the ordinary and efficient exercise of jurisdiction; or are essential
to the existence, dignity and functions of the courts, as well as to the due administration of justice; or
are directly appropriate, convenient and suitable to the execution of their granted powers; and
include the power to maintain the court's jurisdiction and render it effective in behalf of the litigants.

Thus, this Court has held that "while a court may be expressly granted the incidental powers
necessary to effectuate its jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation,
implies the necessary and usual incidental powers essential to effectuate it, and, subject to existing
laws and constitutional provisions, every regularly constituted court has power to do all things that
are reasonably necessary for the administration of justice within the scope of its jurisdiction and for
the enforcement of its judgments and mandates." Hence, demands, matters or questions ancillary or
incidental to, or growing out of, the main action, and coming within the above principles, may be
taken cognizance of by the court and determined, since such jurisdiction is in aid of its authority over
the principal matter, even though the court may thus be called on to consider and decide matters
which, as original causes of action, would not be within its cognizance.  (Citations omitted)
60

Judicial power likewise authorizes lower courts to determine the constitutionality or validity of a law
or regulation in the first instance.  This is contemplated in the Constitution when it speaks of
61

appellate review of final judgments of inferior courts in cases where such constitutionality is in
issue.62

On, June 16, 1954, Republic Act No. 1125 created the Court of Tax Appeals not as another superior
administrative agency as was its predecessor-the former Board of Tax Appeals-but as a part of the
judicial system  with exclusive jurisdiction to act on appeals from:
63

(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other
matters arising under the National Internal Revenue Code or other law or part of law administered by
the Bureau of Internal Revenue;

(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; and

(3) Decisions of provincial or city Boards of Assessment Appeals in cases involving the assessment
and taxation of real property or other matters arising under the Assessment Law, including rules and
regulations relative thereto.

Republic Act No. 1125 transferred to the Court of Tax Appeals jurisdiction over all matters involving
assessments that were previously cognizable by the Regional Trial Courts (then courts of first
instance). 64

In 2004, Republic Act No. 9282 was enacted. It expanded the jurisdiction of the Court of Tax
Appeals and elevated its rank to the level of a collegiate court with special jurisdiction. Section 1
specifically provides that the Court of Tax Appeals is of the same level as the Court of Appeals and
possesses "all the inherent powers of a Court of Justice." 65

Section 7, as amended, grants the Court of Tax Appeals the exclusive jurisdiction to resolve all tax-
related issues:

Section 7. Jurisdiction - The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:

1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by the Bureau
of Internal Revenue;

2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by the Bureau
of Internal Revenue, where the National Internal Revenue Code provides a specific period of action,
in which case the inaction shall be deemed a denial;

3) 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;

4) 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 in relation thereto, or other matters arising under the Customs Law or other laws
administered by the Bureau of Customs;

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;

6) Decisions of the Secretary of Finance on customs cases elevated to him automatically for review
from decisions of the Commissioner of Customs which are adverse to the Government under
Section 2315 of the Tariff and Customs Code;

7) Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product,
commodity or article, and the Secretary of Agriculture in the case of agricultural product, commodity
or article, involving dumping and countervailing duties under Section 301 and 302, respectively, of
the Tariff and Customs Code, and safeguard measures under Republic Act No. 8800, where either
party may appeal the decision to impose or not to impose said duties.

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).

Section 7 of Republic Act No. 1125, as amended, is explicit that, except for local taxes, appeals from
the decisions of quasi-judicial agencies  (Commissioner of Internal Revenue, Commissioner of
66

Customs, Secretary of Finance, Central Board of Assessment Appeals, Secretary of Trade and
Industry) on tax-related problems must be brought exclusively to the Court of Tax Appeals.

In other words, within the judicial system, the law intends the Court of Tax Appeals to have exclusive
jurisdiction to resolve all tax problems. Petitions for writs of certiorari against the acts and omissions
of the said quasi-judicial agencies should, thus, be filed before the Court of Tax Appeals.  67

Republic Act No. 9282, a special and later law than Batas Pambansa Blg. 129  provides an
68

exception to the original jurisdiction of the Regional Trial Courts over actions questioning the
constitutionality or validity of tax laws or regulations. Except for local tax cases, actions directly
challenging the constitutionality or validity of a tax law or regulation or administrative issuance may
be filed directly before the Court of Tax Appeals.

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
69

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. 70

We now proceed to the substantive aspects.

G.R. No. 175723               February 4, 2014

THE CITY OF MANILA, represented by MAYOR JOSE L. ATIENZA, JR., and MS. LIBERTY M.
TOLEDO, in her capacity as the City Treasurer of Manila, Petitioners,
vs.
HON. CARIDAD H. GRECIA-CUERDO, in her capacity as Presiding Judge of the Regional Trial
Court, Branch 112, Pasay City; SM MART, INC.; SM PRIME HOLDINGS, INC.; STAR
APPLIANCES CENTER; SUPERVALUE, INC.; ACE HARDWARE PHILIPPINES, INC.; WATSON
PERSONAL CARE STORES, PHILS., INC.; JOLLIMART PHILS., CORP.; SURPLUS
MARKETING CORPORATION and SIGNATURE LINES, Respondents.

Having disposed of the procedural aspect, we now turn to the central issue in this case. The basic
question posed before this Court is whether or not the CTA has jurisdiction over a special civil action
for certiorari assailing an interlocutory order issued by the RTC in a local tax case.

This Court rules in the affirmative.

On June 16, 1954, Congress enacted Republic Act No. 1125 (RA 1125) creating the CTA and giving
to the said court jurisdiction over the following:

(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under the National Internal Revenue Code or other law or
part of law administered by the Bureau of Internal Revenue;

(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; and

(3) Decisions of provincial or City Boards of Assessment Appeals in cases involving the
assessment and taxation of real property or other matters arising under the Assessment
Law, including rules and regulations relative thereto.

On March 30, 2004, the Legislature passed into law Republic Act No. 9282 (RA 9282) amending RA
1125 by expanding the jurisdiction of the CTA, enlarging its membership and elevating its rank to the
level of a collegiate court with special jurisdiction. Pertinent portions of the amendatory act provides
thus:

Sec. 7. Jurisdiction. - The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue or other laws
administered by the Bureau of Internal Revenue;

2. Inaction by the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations
thereto, or other matters arising under the National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue, where the National Internal Revenue Code
provides a specific period of action, in which case the inaction shall be deemed a denial;

3. 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;

4. 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 in relation thereto, or other matters arising under the Customs
Law or other laws administered by the Bureau of Customs;

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;
 6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for
review from decisions of the Commissioner of Customs which are adverse to the
Government under Section 2315 of the Tariff and Customs Code;

7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product,
commodity or article, and the Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing duties under Section 301 and
302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic
Act No. 8800, where either party may appeal the decision to impose or not to impose said
duties.

b. Jurisdiction over cases involving criminal offenses as herein provided:

1. Exclusive original jurisdiction over all criminal offenses arising from violations of the
National Internal Revenue Code or Tariff and Customs Code and other laws administered by
the Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses
or felonies mentioned in this paragraph where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less than One million pesos (₱1,000,000.00)
or where there is no specified amount claimed shall be tried by the regular Courts and the
jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court to the
contrary notwithstanding, the criminal action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted
with, and jointly determined in the same proceeding by the CTA, the filing of the criminal
action being deemed to necessarily carry with it the filing of the civil action, and no right to
reserve the filing of such civil action separately from the criminal action will be recognized.

2. Exclusive appellate jurisdiction in criminal offenses:

a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.

b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.

c. Jurisdiction over tax collection cases as herein provided:

1. Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provides, however, that collection cases
where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is
less than One million pesos (₱1,000,000.00) shall be tried by the proper Municipal Trial
Court, Metropolitan Trial Court and Regional Trial Court.

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.

b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction. 19

A perusal of the above provisions would show that, while it is clearly stated that the CTA has
exclusive appellate jurisdiction over decisions, orders or resolutions of the RTCs in local tax cases
originally decided or resolved by them in the exercise of their original or appellate jurisdiction, there
is no categorical statement under RA 1125 as well as the amendatory RA 9282, which provides that
th e 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 the authority to issue writs of certiorari involves the exercise of original
jurisdiction which must be expressly conferred by the Constitution or by law and cannot be implied
from the mere existence of appellate jurisdiction.  Thus, in the cases of Pimentel v.
20

COMELEC,  Garcia v. De Jesus,  Veloria v. COMELEC,  Department of Agrarian Reform

21 22 23

Adjudication Board v. Lubrica,  and Garcia v. Sandiganbayan,  this Court has ruled against the
24 25

jurisdiction of courts or tribunals over petitions for certiorari on the ground that there is no law which
expressly gives these tribunals such power.  It must be observed, however, that with the exception
26

of Garcia v. Sandiganbayan,  these rulings pertain not to regular courts but to tribunals exercising
27

quasi-judicial powers. With respect to the Sandiganbayan, Republic Act No. 8249  now provides that
28

the special criminal court has exclusive original jurisdiction over petitions for the issuance of the writs
of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and
processes in aid of its appellate jurisdiction.

In the same manner, Section 5 (1), Article VIII of the 1987 Constitution grants power to the Supreme
Court, in the exercise of its original jurisdiction, to issue writs of certiorari, prohibition and
mandamus. With respect to the Court of Appeals, Section 9 (1) of Batas Pambansa Blg. 129 (BP
129) gives the appellate court, also in the exercise of its original jurisdiction, the power to issue,
among others, a writ of certiorari,whether or not in aid of its appellate jurisdiction. As to Regional
Trial Courts, the power to issue a writ of certiorari, in the exercise of their original jurisdiction, is
provided under Section 21 of BP 129.

The foregoing notwithstanding, 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.

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. There
is no perceivable reason why the transfer should only be considered as partial, not total.

Consistent with the above pronouncement, this Court has held as early as the case of J.M. Tuason
& Co., Inc. v. Jaramillo, et al.  that "if a case may be appealed to a particular court or judicial tribunal
29

or body, then said court or judicial tribunal or body has jurisdiction to issue the extraordinary writ of
certiorari, in aid of its appellate jurisdiction."  This principle was affirmed in De Jesus v. Court of
30

Appeals,  where the Court stated that "a court may issue a writ of certiorari in aid of its appellate
31

jurisdiction if said court has jurisdiction to review, by appeal or writ of error, the final orders or
decisions of the lower court."  The rulings in J.M. Tuason and De Jesus were reiterated in the more
32

recent cases of Galang, Jr. v. Geronimo  and Bulilis v. Nuez.

33 34

Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law,
jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means
necessary to carry it into effect may be employed by such court or officer.

If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies
with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA,
of jurisdiction over basically the same subject matter – precisely the split-jurisdiction situation which
is anathema to the orderly administration of justice.  The Court cannot accept that such was the
35

legislative motive, especially considering that the law expressly confers on the CTA, the tribunal with
the specialized competence over tax and tariff matters, the role of judicial review over local tax cases
without mention of any other court that may exercise such power. Thus, the Court agrees with the
ruling of the CA that since appellate jurisdiction over private respondents' complaint for tax refund is
vested in the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order
issued in the said case should, likewise, be filed with the same court. To rule otherwise would lead to
an absurd situation where one court decides an appeal in the main case while another court rules on
an incident in the very same case.

Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split
jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case
filed with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against
interlocutory orders of the RTC but giving to the CTA the jurisdiction over the appeal from the
decision of the trial court in the same case. It is more in consonance with logic and legal soundness
to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided by
the RTC carries with it the power to issue a writ of certiorari when necessary 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 co-exist 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.
36
A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it
effectively, to make all orders that will preserve the subject of the action, and to give effect to the
final determination of the appeal. It carries with it the power to protect that jurisdiction and to make
the decisions of the court thereunder effective. The court, in aid of its appellate jurisdiction, has
authority to control all auxiliary and incidental matters necessary to the efficient and proper exercise
of that jurisdiction.  For this purpose, it may, when necessary, prohibit or restrain the performance of
1âwphi1

any act which might interfere with the proper exercise of its rightful jurisdiction in cases pending
before it.
37

Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction
should have powers which are necessary to enable it to act effectively within such jurisdiction. These
should be regarded as powers which are inherent in its jurisdiction and the court must possess them
in order to enforce its rules of practice and to suppress any abuses of its process and to defeat any
attempted thwarting of such process.

In this regard, Section 1 of RA 9282 states that the CTA shall be of the same level as the CA and
shall possess all the inherent powers of a court of justice.

Indeed, courts possess certain inherent powers which may be said to be implied from a general
grant of jurisdiction, in addition to those expressly conferred on them. These inherent powers are
such powers as are necessary for the ordinary and efficient exercise of jurisdiction; or are essential
to the existence, dignity and functions of the courts, as well as to the due administration of justice; or
are directly appropriate, convenient and suitable to the execution of their granted powers; and
include the power to maintain the court's jurisdiction and render it effective in behalf of the litigants. 38

Thus, this Court has held that "while a court may be expressly granted the incidental powers
necessary to effectuate its jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation,
implies the necessary and usual incidental powers essential to effectuate it, and, subject to existing
laws and constitutional provisions, every regularly constituted court has power to do all things that
are reasonably necessary for the administration of justice within the scope of its jurisdiction and for
the enforcement of its judgments and mandates."  Hence, demands, matters or questions ancillary
39

or incidental to, or growing out of, the main action, and coming within the above principles, may be
taken cognizance of by the court and determined, since such jurisdiction is in aid of its authority over
the principal matter, even though the court may thus be called on to consider and decide matters
which, as original causes of action, would not be within its cognizance. 40

Based on the foregoing disquisitions, it can be reasonably concluded that the authority of the CTA to
take cognizance of petitions for certiorari questioning interlocutory orders issued by the RTC in a
local tax case is included in the powers granted by the Constitution as well as inherent in the
exercise of its appellate jurisdiction.

Finally, it would bear to point out that this Court is not abandoning the rule that, insofar as quasi-
judicial tribunals are concerned, the authority to issue writs of certiorari must still be expressly
conferred by the Constitution or by law and cannot be implied from the mere existence of their
appellate jurisdiction. This doctrine remains as it applies only to quasi-judicial bodies.

WHEREFORE, the petition is DENIED.

SO ORDERED.
G.R. No. 198146

POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent

I. Whether the Secretary of Justice has jurisdiction over the case.

The primary issue in this case is whether the DOJ Secretary has jurisdiction over OSJ Case No.
2007-3 which involves the resolution of whether the sale of the Pantabangan-Masiway Plant and
Magat Plant is subject to VAT.

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
22

consent or acquiescence of the parties  or by erroneous belief of the court, quasi-judicial office or
23

government agency that it exists.

However, contrary to the ruling of the Court of Appeals, we find that the 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. Under Presidential Decree No.
242  (PD 242), all disputes and claims solely between government agencies and offices,
24

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.

Section 3. Cases involving mixed questions of law and of fact or only factual issues shall be
submitted to and settled or adjudicated by:

(a) The Solicitor General, with respect to disputes or claims [or] controversies between or
among the departments, bureaus, offices and other agencies of the National Government;

(b) The Government Corporate Counsel, with respect to disputes or claims or controversies
between or among the government-owned or controlled corporations or entities being served
by the Office of the Government Corporate Counsel; and

(c) The Secretary of Justice, with respect to all other disputes or claims or controversies
which do not fall under the categories mentioned in paragraphs (a) and (b). (Emphasis
supplied)

The use of the word "shall" in a statute connotes a mandatory order or an imperative obligation.  Its 25

use rendered the provisions mandatory and not merely permissive, and unless PD 242 is declared
unconstitutional, its provisions must be followed. The use of the word "shall" means that
administrative settlement or adjudication of disputes and claims between government agencies and
offices, including government-owned or controlled corporations, is not merely permissive but
mandatory and imperative. Thus, under PD 242, it is mandatory that disputes and claims "solely"
between government agencies and offices, including government-owned or controlled corporations,
involving only questions of law, be submitted to and settled or adjudicated by the Secretary of
Justice.

The law is clear and covers "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." When the law says "all disputes, claims and
controversies solely" among government agencies, the law means all, without exception. Only those
cases already pending in court at the time of the effectivity of PD 242 are not covered by the law.

The purpose of PD 242 is to provide for a speedy and efficient administrative settlement or
adjudication of disputes between government offices or agencies under the Executive
branch, as well as to filter cases to lessen the clogged dockets of the courts. As explained by
the Court in Philippine Veterans Investment Development Corp. (PHIVIDEC) v. Judge Velez: 26

Contrary to the opinion of the lower court, P.D. No. 242 is not unconstitutional. It does not diminish
the jurisdiction of [the] courts but only prescribes an administrative procedure for the settlement of
certain types of disputes between or among departments, bureaus, offices, agencies, and
instrumentalities of the National Government, including government-owned or controlled
corporations, so that they need not always repair to the courts for the settlement of controversies
arising from the interpretation and application of statutes, contracts or agreements. The procedure is
not much different, and no less desirable, than the arbitration procedures provided in Republic Act
No. 876 (Arbitration Law) and in Section 26, R.A. 6715 (The Labor Code). It is an alternative to, or a
substitute for, traditional litigation in court with the added advantage of avoiding the delays,
vexations and expense of court proceedings. Or, as P.D. No. 242 itself explains, its purpose is "the
elimination of needless clogging of court dockets to prevent the waste of time and energies not only
of the government lawyers but also of the courts, and eliminates expenses incurred in the filing and
prosecution of judicial actions."
27

PD 242 is only applicable to disputes, claims, and controversies solely between or among the

departments, bureaus, offices, agencies and instrumentalities of the National Government, including
government-owned or controlled corporations, and where no private party is involved. In other
words, PD 242 will only apply when all the parties involved are purely government offices and
government-owned or controlled corporations.  Since this case is a dispute between PSALM
28

arid NPC, both government owned and controlled corporations, and the BIR, a National Government
office, PD 242 clearly applies and the Secretary of Justice has jurisdiction over this case. In fact, the
MOA executed by the BIR, NPC, and PSALM explicitly provides that "[a] ruling from the Department
of Justice (DOJ) that is favorable to NPC/PSALM shall be tantamount to the filing of an application
for refund (in cash)/tax credit certificate (TCC), at the option of NPC/PSALM."  Such provision
29

indicates that the BIR and petitioner PSALM and the NPC acknowledged that the Secretary of
Justice indeed has jurisdiction to resolve their dispute.

This case is different from the case of Philippine National Oil Company v. Court of Appeals,  (PNOC
30

v. CA) which involves not only the BIR (a government bureau) and the PNOC and PNB (both
government-owned or controlled corporations), but also respondent Tirso Savellano, a private
citizen. Clearly, PD 242 is not applicable to the case of PNOCv.CA. Even the ponencia in PNOC v.
CA stated that the dispute in that case is not covered by PD 242, thus:

Even if, for the sake of argument, that P.D. No. 242 should prevail over Rep. Act No. 1125, the
present dispute would still not be covered by P.D. No. 242. Section 1 of P.D. No. 242 explicitly
provides that only disputes, claims and controversies solely between or among departments,
bureaus, offices, agencies, and instrumentalities of the National Government, including constitutional
offices or agencies, as well as government-owned and controlled corporations, shall be
administratively settled or adjudicated. While the BIR is obviously a government bureau, and
both PNOC and PNB are government-owned and controlled corporations, respondent
Savellano is a private. citizen. His standing in the controversy could not be lightly brushed aside. It
was private respondent Savellano who gave the BIR the information that resulted in the investigation
of PNOC and PNB; who requested the BIR Commissioner to reconsider the compromise agreement
in question; and who initiated the CTA Case No. 4249 by filing a Petition for Review.  (Emphasis
31

supplied)

In contrast, since this case is a dispute solely between PSALM and NPC, both government-owned
and controlled corporations, and the BIR, a National Government office, PD 242 clearly applies and
the Secretary of Justice has jurisdiction over this case.

It is only proper that intra-governmental disputes be settled administratively since the opposing

government offices, agencies and instrumentalities are all under the President's executive
control and supervision. Section 17, Article VII of the Constitution states unequivocally that: "The
President shall have control of all the executive departments, bureaus and offices. He shall
ensure that the laws be faithfully executed." In Carpio v. Executive Secretary,  the Court expounded
32

on the President's control over all the executive departments, bureaus and offices, thus:

This presidential power of control over the executive branch of government extends over all
executive officers from Cabinet Secretary to the lowliest clerk and has been held by us, in the
landmark case of Mondano vs. Silvosa, to mean "the power of [the President] to alter or modify or
nullify or set aside what a subordinate officer had done in the performance of his duties and to
substitute the judgment of the former with that of the latter." It is said to be at the very "heart of the
meaning of Chief Executive."

Equally well accepted, as a corollary rule to the control powers of the President, is the "Doctrine of
Qualified Political Agency." As the President cannot be expected to exercise his control powers all at
the same time and in person, he will have to delegate some of them to his Cabinet members.

Under this doctrine, which recognizes the establishment of a single executive, "all executive and
administrative organizations are adjuncts of the Executive Department, the heads of the various
executive departments are assistants and agents of the Chief Executive, and, except in cases where
the Chief Executive is required by the Constitution or law to act in person on the exigencies of the
situation demand that he act personally, the multifarious executive and administrative functions of
the Chief Executive are performed by and through the executive departments, and the acts of the
Secretaries of such departments, performed and promulgated in the regular course of business, are,
unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief
Executive."

Thus, and in short, "the President's power of control is directly exercised by him over the members
of the Cabinet who, in turn, and by his authority, control the bureaus and other offices under their
respective jurisdictions in the executive department. " 33

This power of control vested by the Constitution in the President cannot be diminished by law. As
held in Rufino v. Endriga,  Congress cannot by law deprive the President of his power of control,
34

thus:

The Legislature cannot validly enact a law· that puts a government office in the Executive branch
outside the control of the President in the guise of insulating that office from politics or making it
independent. If the office is part of the Executive branch, it must remain subject to the control
of the President. Otherwise, the Legislature can deprive the President of his constitutional
power of control over "all the executive x x x offices." If the Legislature can do this with the
Executive branch, then the Legislature can also deal a similar blow to the Judicial branch by
enacting a law putting decisions of certain lower courts beyond the review power of the
Supreme Court. This will destroy the system of checks and balances finely structured in the 1987
Constitution among the Executive, Legislative, and Judicial branches.  (Emphasis supplied)
35

Clearly, the President's constitutional power of control over all the executive departments, bureaus
and offices cannot be curtailed or diminished by law. "Since the Constitution has given the President
the power of control, with all its awesome implications, it is the Constitution alone which can curtail
such power."  This. constitutional power of control of the President cannot be diminished by
36

the CTA. Thus, if two executive offices or agencies cannot agree, it is only proper and logical
that the President, as the sole Executive who under the Constitution has control over both
offices or agencies in dispute, should resolve the dispute instead of the courts. The judiciary
should not intrude in this executive function of determining which is correct between the
opposing government offices or agencies, which are both under the sole control of the
President. Under his constitutional power of control, the President decides the dispute
between the two executive offices. The judiciary cannot substitute its decision over that of
the President. Only after the President has decided or settled the dispute can the courts' jurisdiction
be invoked. Until such time, the judiciary should not interfere since the issue is not yet ripe for
judicial adjudication. Otherwise, the judiciary would infringe on the President's exercise of his
constitutional power of control over all the executive departments, bureaus, and offices.

Furthermore, under the doctrine of exhaustion of administrative remedies, it is mandated that

where a remedy before an administrative body is provided by statute, relief must be sought
by exhausting this remedy prior to bringing an action in court in order to give the
administrative body every opportunity to decide a matter that comes within its jurisdiction.  A 37

litigant cannot go to court without first pursuing his administrative remedies; otherwise, his action is
premature and his case is not ripe for judicial determination.  PD 242 (now Chapter 14, Book IV of
38

Executive Order No. 292), provides for such administrative remedy. Thus, only after the President
has decided the dispute between government offices and agencies can the losing party resort to the
courts, if it so desires. Otherwise, a resort to the courts would be premature for failure to exhaust
administrative remedies. Non-observance of the doctrine of exhaustion of administrative remedies
would result in lack of cause of action,  which is one of the grounds for the dismissal of a complaint.
39
The rationale of the doctrine of exhaustion. of administrative remedies was aptly explained by the
Court in Universal Robina Corp. (Corn Division) v. Laguna Lake Development Authority: 40

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The
thrust of the rule is that courts must allow administrative agencies to carry out their functions and
discharge their responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier
resolution of the controversies. Comity and convenience also impel courts of justice to shy away
from a dispute until the system of administrative redress has been completed. 41

In requiring parties to exhaust administrative remedies before pursuing action in a court, the doctrine
prevents overworked courts from considering issues when remedies are available through
administrative channels.  Furthermore, the doctrine endorses a more economical and less formal
42

means of resolving disputes,  and promotes efficiency since disputes and claims are generally
43

resolved more quickly and economically through administrative proceedings rather than through
court litigations.
44

The Court of Appeals ruled that under the 1997 NIRC, the dispute between the parties is within the
authority of the CIR to resolve. Section 4 of the 1997 NIRC reads:

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 in 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. (Emphasis supplied)

The first paragraph of Section 4 of the 1997 NIRC provides that the power of the CIR to interpret the
NIRC provisions and other tax laws is subject to review by the Secretary of Finance, who is the
alter ego of the President. Thus, the constitutional power of control of the President over all the
executive departments, bureaus, and offices  is still preserved. The President's power of control,
45

which cannot be limited or withdrawn by Congress, means the power of the President to alter,
modify, nullify, or set aside the judgment or action of a subordinate in the performance of his duties. 46

The second paragraph of Section 4 of the 1997 NIRC, providing for 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.

To harmonize Section 4 of the 1997 NIRC with PD 242, the following interpretation should be
adopted: (1) As regards private entities and the BIR, the power to decide 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 is vested in the CIR subject to
the exclusive appellate jurisdiction of the CTA, in accordance with Section 4 of the NIRC; and (2)
Where the disputing parties are all public entities (covers disputes between the BIR and other
government entities), the case shall be governed by PD 242.

Furthermore, it should be noted that the 1997 NIRC is a general law governing the imposition of
national internal revenue taxes, fees, and charges.  On the other hand, PD 242 is a special law
47

that applies only to disputes involving solely government offices, agencies, or

instrumentalities. The difference between a special law and a general law was clarified in Vinzons-
Chato v. Fortune Tobacco Corporation: 48

A general statute is one which embraces a class of subjects or places and does not omit any subject
or place naturally belonging to such class. A special statute, as the term is generally understood, is
one which relates to particular persons or things of a class or to a particular portion or section of the
state only.

A general law and a special law on the same subject are statutes in pari materia and should,
accordingly, be read together and harmonized, if possible, with a view to giving effect to both. The
rule is that where there are two acts, one of which is special and particular and the other general
which, if standing alone, would include the same matter and thus conflict with the special act, the
special law must prevail since it evinces the legislative intent more clearly than that of a general
statute and must not be taken as intended to affect the more particular and specific provisions of the
earlier act, unless it is absolutely necessary so to construe it in order to give its words any meaning
at all.

The circumstance that the special law is passed before or after the general act does not change the
principle. Where the special law is later, it will be regarded as an exception to, or a qualification of,
the prior general act; and where the general act is later, the special statute will be construed as
remaining an exception to its terms, unless repealed expressly or by necessary implication. 49

Thus, even if the 1997 NIRC, a general statute, is a later act, PD 242, which is a special law,
will still prevail and is treated as an exception to the terms of the 1997 NIRC with regard
solely to intragovernmental disputes. PD 242 is a special law while the 1997 NIRC is a general
law, insofar as disputes solely between or among government agencies are concerned. Necessarily,
such disputes must be resolved under PD 242 and not under the NIRC, precisely because PD 242
specifically mandates the settlement of such disputes in accordance with PD 242. PD 242 is a valid
law prescribing the procedure for administrative settlement or adjudication of disputes among
government offices, agencies, and instrumentalities under the executive control and supervision of
the President.50

Even the BIR, through its authorized representative, then OIC-Commissioner of Internal Revenue
Lilian B. Hefti, acknowledged in the MOA executed by the BIR, NPC, and PSALM, that the Secretary
of Justice has jurisdiction to resolve its dispute with petitioner PSALM and the NPC. This is clear
from the provision in the MOA which states:

H) Any resolution in favor of NPC/PSALM by any appropriate court or body shall be immediately
executory without necessity of notice or demand from NPC/PSALM. A ruling from the Department
of Justice (DOJ) that is favorable to NPC/PSALM shall be tantamount to the filing of an
application for refund (in cash)/tax credit certificate (TCC), at the option of NPC/PSALM. BIR
undertakes to immediately process and approve the application, and release the tax
refund/TCC within fifteen (15) working days from issuance of the DOJ ruling that is favorable
to NPC/PSALM. (Emphasis supplied)

PD 242 is now embodied in Chapter 14, Book IV of Executive Order No. 292 (EO 292), otherwise
known as the Administrative Code of 1987, which took effect on 24 November 1989.51 The pertinent
provisions read:

Chapter 14- Controversies Among Government

Offices and Corporations

SEC. 66. How Settled. - All disputes, claims and controversies, solely between or among the
departments, bureaus, offices, agencies and instrumentalities of the National Government, including
government-owned or controlled corporations, such as those arising from the interpretation and
application of statutes, contracts or agreements, shall be administratively settled or adjudicated in
the manner provided in this Chapter. This Chapter shall, however, not apply to disputes involving the
Congress, the Supreme Court, the Constitutional Commissions, and local governments.

SEC. 67. Disputes Involving Questions of Law. - All cases involving only questions of law shall be
submitted to and settled or adjudicated by the Secretary of Justice as Attorney-General of the
National Government and as ex officio legal adviser of all government-owned or controlled
corporations. His ruling or decision thereon shall be conclusive and binding on all the parties
concerned.

SEC. 68. Disputes Involving Questions of Fact and Law. - Cases involving mixed questions of law
and of fact or only factual issues shall be submitted to and settled or adjudicated by:

(1) The Solicitor General, if the dispute, claim or controversy involves only departments,
bureaus, offices and other agencies of the National Government as well as government-
owned or controlled corporations or entities of whom he is the principal law officer or general
counsel; and

(2) The Secretary of Justice, in all other cases not falling under paragraph (1).

SEC. 69. Arbitration. - The determination of factual issues may be referred to an arbitration panel
composed of one representative each of the parties involved and presided over by a representative
of the Secretary of Justice or the Solicitor General, as the case may be.

SEC. 70. Appeals. - The decision of the Secretary of Justice as well as that of the Solicitor General,
when approved by the Secretary of Justice, shall be final and binding upon the parties involved.
Appeals may, however, be taken to the President where the amount of the claim or the value of the
property exceeds one million pesos. The decision of the President shall be final.

SEC. 71. Rules and Regulations. - The Secretary of Justice shall promulgate the rules and
regulations necessary to carry out the provisions of this Chapter.

Since the amount involved in this case is more than one million pesos, the DOJ Secretary's decision
may be appealed to the Office of the President in accordance with Section 70, Chapter 14, Book IV
of EO 292 and Section 552 of PD 242. If the appeal to the Office of the President is denied, the
aggrieved party can still appeal to the Court of Appeals under Section 1, Rule 43 of the 1997 Rules
of Civil Procedure.  However, in order not to further delay the disposition of this case, the Court
53

resolves to decide the substantive issue raised in the petition.

54