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TAX LAW REVIEWER

SAINT LOUIS UNIVERSITY BAR OPERATIONS

COURT OF TAX APPEALS

Nature Created under Republic Act 1125, the Court of Tax Appeals is a court of special appellate jurisdiction and a part of our judicial system. The proceedings therein are judicial in nature although the Court is not bound by the technical rules of evidence. (Purakan Plantation Co. vs. Domingo L-18571, 29 Oct. 1966) It is a regular court vested with exclusive appellate jurisdiction over cases arising under the: 1. 2. 3. National Internal Revenue Code Tariff and Customs Code Assessment law

The Court of Tax Appeals has exclusive appellate jurisdiction over petitions for review filed by taxpayers questioning: 1. Decisions of the Commissioner of Internal Revenue in cases involving a. b. c. d. 2. Disputed assessment Refunds of internal revenue taxes, fees or other charges Penalties imposed in relation thereto Other matters arising under the NIRC or other laws administered by the BIR

Decisions of the Commissioner of Customs in cases involving a. b. c. d. Liability for duties, fees, or other money charges Seizure , detention or release of property affected thereby Fines, forfeitures or other penalties imposed in relation thereto Other matters arising under thye Tariff and Customs Code or other laws administered by the Bureau of Customs.

The CTA is a highly specialized body specially created for the purpose of reviewing tax cases, its findings will not be ordinarily be reviewed absent a showing of gross error or abuse on its part. These findings are binding upon the Supreme Court and in the absence of strong reasons for the court to delve on fatcs, only questions of law are open for determination. Organization of the Tax Court Composition It is composed of a Presiding Judge and two (2) Associate Judges each of whom shall be appointed by the President. (Sec. 1, R.A. 1125.) Quorum Any two judges shall constitute a quorum (Sec. 2, Ibid.) Arrival at Decisions The concurrence of two judges shall be necessary to promulgate any decisions of the Court. (Ibid) Powers The Court of Tax Appeals has, subject to the Rules of Court, the power to: a. 1. 2. 3. 4. 5. 6. 7. 8. 9. Jurisdiction: Administer oaths Receive Evidence Summon witnesses by subpoena Require the production of papers or documents by subpoena duces tecum Punish for Contempt Promulgate rules and regulations for the conduct of its business Assess damages against appellant if the appeal in the CTA is found to be frivolous or deilatory Suspend the Collection of the Tax pending appeal Render decisions on cases brought before it 3.

Decisions of the Secretary of Finance, such as in the imposition of dumping or countervailing duty and in automatic review cases where such decision of the Secretary of Finance is adverse to the taxpayer. (Appeal by an adverse party of the decision of the Sec. of Finance must be made within thirty (30) days from receipt thereof)

Applying the rule of construction known as ejusdem generis, the other matters that may come under the general clause should be of the same nature as those that have preceded them. In other words, in order that a matter may come under the general clause, it is necessary that it belong to the same kind or class therein specifically enumerated. Otherwise it should be deemed foreign or extraneous and is not included. (Ollada vs. CTA, 99 Phil 604) The following are not deemed to be included in the other matters cognizable by the CTA: Unfair competition arising from the use of simplified set of bookkeeping records as it has nothing to do with any assessment or refund of any tax, fee or penalty. (Ollada vs. CTA) Decision of the CIR relating to lease of real property taken or forfeited to the governe,ment for non-payment of internal revenue taxes involving as it does purely contractual rights and obligations. (Morales vs. Collector., C.T.A. Case No. 517, March 28, 1958) Controversy concerning the rights and obligations of the parties under a management arrastre contract entered into by the Commissioner of Customs under the authority of the Tariff and

b.

c.

Prepared by the TAX LAW SECTION Chief JOCELYN ROSARIO Assistant Chief SOCRATES PADUA Members MONDAE BUENAFE, MYLENE CANAO, MONALISA IBARRA, CESAR LACDAO, GLORIFE LICLICAN, DULCE MARTINEZ, ELILYN NATURA, DONNA MICHELLE PINLAC, CECILYNNE ANDRADE and LOUBELLE ORTIZ. All Rights Reserved by the SAINT LOUIS UNIVERSITY COLLEGE OF LAW BAR OPERATIONS 2003.

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Customs Code as it proceeds from the contract, not from the Commissioners administration of the customs laws. The Court cannot acquire motu proprio jurisdiction to review cases The Court likewise has no authority to take cognizance of appeals taken from decisions of other entities such as the Philippine Ports Authority which, by law, assumed some of the powers of the Bureau of Customs (Victorias Milling vs. PPA, 153 SCRA 317) In CIR vs. CTA G.R. No. 82618, 16 March 1989, the Court held that the CTA cannot take cognizance of petitions for review prior to a decision of the CIR, Commissioner of Customs or Sec. of Finance as the case maybe except: When in a written claim for the refund of taxes, the silence or inaction of the government may justify the filing of the CTA petition for review just before the lapse of the 2-year period of limitation prescribed in Sec. 229 of the NIRC. A notice of sale following distraint and levy would be appealable to the Court of Tax Appeals if the issue relates to the validity of such notice as whne it is not in accord with the assessment but not when the assessment itself, after it has become final, is questioned such as by prescription thereof. (Commissioner vs. Joseph 5 SCRA 895) The Court of Tax Appeals lacks jurisdiction to take cognizance of uncontested assessments of the BIR. The Tax Courts jurisdiction is over disputed assessments, and a deficiency assessment that has not yet been questioned by the taxpayer on the administrative level may not be said to be a disputed one. The petitioner should have first exhausted his administrative remedies, and it is only after his protest is denied that a petition may be entertained by the CTA. (Chia vs. Collector, G.R. No. 43810, 26 Sept. 1980) The CTA can, by its own initiative, dismiss any proceedings before it for lack of jurisdiction although the question is not raised by the parties. (Comm. Vs. Villa and CTA, L-23988, 2 Jan 1968) It has no criminal jurisdiction. When in the performance of its functions it should appear to the Court that a crime or other violation of law has been committed, it shall refer the matter to the proper office for investigation or the institution of such criminal or administrative action as the facts and circumstances of the case may warrant. (Sec. 17, R.A. 1125) A decision of the Collector of Customs forfeiting a vessel found carrying prohibited goods is appealable to the Commissioner and, thereafter, to the Tax Court. Regular courts are without jurisdiction to entertain actions thereon. ( Daud vs. Collector 68 SCRA 157) The legality of arrastre and checking charges on exports imposed by the Collector of Customs, when affirmed by the Commissioner, fall within the Tax Courts exclusive jurisdiction. (Aboitiz and Company vs. Collector 83 SCRA 265) Actions involving disputed assessments, surcharge and penalty or other matters arising under the provisions of the NIRC fall within the exclusive appellate jurisdiction of the CTA. (Republic vs. Abella 102 SCRA 743)

TAX LAW REVIEWER

SAINT LOUIS UNIVERSITY BAR OPERATIONS

The filing of a complaint for collection with the regular courts even before the commissioner has decided on the disputed assessment or protest may be considered a final decision upon which a petition for review may be brought to the CTA. (Yabes vs. Flojo 115 SCRA 279 Issues Cognizable by the Tax Court 1. 2. Issues essential for or incidental to the full and complete resolution of the case. Incidental question of ownership of property levied upon or distrained by the Commissioner in a case properly appealed to the court. (Castro vs. David 100 Phil 454) Consequential damages. (Blaquera, etc. vs. Rodriguez) Issues raised at the administrative level. (Aguinaldo Industries Corp. vs Comm. 112 SCRA 136)

3. 4.

Defense of prescription of the assessment should be raised while the case is still pending with the BIR whereas the defense of prescription of action could be raised for the first time with the CTA. A Supreme Court resolution on a motion for reconsideration of Procter and Gamble case 204 SCRA 377 held that the government is precluded from raising an issue for the first time on appeal to the Supreme Court. Period for CTA Decisions Cases brought before the court shall be decided within thirty (30) days after the submission thereof for decision. (Sec. 13, R.A. No. 1125). This provision is merely directory, hence, decisions signed after the lapse of said period are valid ( Liddel vs. Collector 2 SCRA 632)

Weight of CTA Factual Findings The decisions of the CTA are appealable but the Tax Courts findings of facts are entitled to the highest respect. (Raymundo vs. de Joya 101 SCRA 495) CTA Without Jurisdiction on Final and Executory Assessments The ordinary courts, not the CTA, can entertain BIR money claims based on assessments that have become final and executory. (Republic vs. Abella 102 SCRA 743) Appeals from the CTA In a resolution of the Supreme court in Development Bank of the Philippines vs. CTA, 180 SCRA 609, the court held that appeals from the CTA can now only be taken by way of notice of appeal cum petition for review with the Court of Appeals.

Prepared by the TAX LAW SECTION Chief JOCELYN ROSARIO Assistant Chief SOCRATES PADUA Members MONDAE BUENAFE, MYLENE CANAO, MONALISA IBARRA, CESAR LACDAO, GLORIFE LICLICAN, DULCE MARTINEZ, ELILYN NATURA, DONNA MICHELLE PINLAC, CECILYNNE ANDRADE and LOUBELLE ORTIZ. All Rights Reserved by the SAINT LOUIS UNIVERSITY COLLEGE OF LAW BAR OPERATIONS 2003.

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Who May Appeal 1. Any person, association, or corporation adversely affected by a decision or ruling of the Commissioner of Internal Revenue or the Commissioner of Customs. (par. 1, Sec. 11, R.A. 1125) Any party aggrieved by the decision of the Secretary of Finance in dumping cases, and those involving the assessment of duties, where a decision of the Commissioner of Customs adverse to the government has been elevated to the Sec. of Finance for review. The right to appeal under Sec. 11 of R.A. No. 1125 is impliedly denied to the government or any of its agencies, instrumentalities or officials. (Coll. Of Customs vs. C.T.A. 102 Phil 244.) When a situation arises where the taxpayer neither pays the tax assessed against him nor contests its validity before the CTA, the only remedy left for the government is to enforce the collection by judicial action in the ordinary courts of justice. (Republic vs. Dy Chay, L-15705, April 15, 1961)

TAX LAW REVIEWER

SAINT LOUIS UNIVERSITY BAR OPERATIONS

Effect of Failure to Appeal to the CTA Failure of the taxpayer to appeal to the CTA within the reglamentary period makes a tax assessment final, executory and demandable. (Dayrit vs. Cruz 165 SCRA 571) The 30-day period of appeal to the CTA is non-extendible. A tax payer may not delay indefinitely a tax assessment by reiterating his original defenses over and over again, without substantial variation. (Filipinas Investment Corp. vs Comm., L23501, 16 May 1967.)

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3.

Effect of Appeal to the CTA 1. The appeal taken to the Court of Tax Appeals from the decision of the commissioner of Internal Revenue or Commissioner of Customs does not suspend payment, levy or distraint, and/or sale of any property of the taxpayer for the satisfaction of his liability. (par. 2, Sec 11, R.A. No. 1125) It does not preclude the Commissioner of Internal Revenue from making a reassessment by increasing or decreasing a previous assessment (Coll. Vs. Batangas trans Co. 102 Phil 822) for a contrary rule would enable a taxpayer to feign an appeal to hide a connivance with unscrupulous officials for a low assessment. The taxpayer is not prejudiced considering that the CTA is authorized to scrutinize the legal and factual bases of the new assessment. The government may not file a counterclaim for an amount not included in the original assessment which has been appealed by the taxpayer. (Comm. Vs. Guerrero, L-19074 & L12089, Jan. 31, 1967.

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Period of Appeal; Commencement The appeal shall be taken within fifteen (15) days from notice of the award, judgment or final order or resolution or from the date of its publication, if the publication is required by law for its effectivity, or the denial of the petitioners motion for new trial or reconsideration by filing a petition for review with the CA, whether the appeal involves questions of fact, or of law, or mixed questions of fact and law. The Court of Appeals may give due course to the petition when it shows prima facie ground to reverse or modify the appealed order or decision. An appeal shall not stay the order or decision unless the CA directs otherwise upon such terms and conditions it may deem just. The appeal shall be deemed submitted for decision upon the filing of an answer unless the court sets the case for oral argument or requires the parties to submit memoranda. (Supreme Court Circular No. 191, 27 February 1991) When a reconsideration is filed after the issuance of a warrant of distraint and levy and the same is not acted upon, the period of appeal should start only after the commissioner acts on the request for reconsideration. (Commissioner vs. Algue 158 SCRA 9) The CIR must categorically state that his action is final on a disputed assessment; otherwise the period to appeal will not commence to run. (Advertising Associates vs. CA 133 SCRA 769) The Appeal period, however, shall begin to run from the receipt of summons in a civil action for collection filed by the commissioner. The effect of an appeal to the Tax Court is to divest the ordinary court of its jurisdiction over the case that may have been filed by the government. (San Juan vs. Vasquez 3 SCRA 92)

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Injunctions for the Collection of Taxes The Tax Court is given authority to suspend tax collection when in its view, such collection would work for the serious prejudice of either the taxpayer or government. (Sec 11, R.A. No. 1125). This remedy available only when there is a pending appeal over which the CTA has jurisdiction. (Comm. Vs. Alikpala 36 SCRA 208) The CTA may suspend the collection of internal revenue and customs duties in cases when the following requisites are present: a. In the opinion of the court, the collection pending appeal may jeopardize the interest of the government and/or the taxpayer (par.2, Sec. 11, R.A. No. 1125.) The taxpayer is willing to deposit the amount claimed or file a surety bond for not more than double the amount of the tax with the Court when required.

b.

Prepared by the TAX LAW SECTION Chief JOCELYN ROSARIO Assistant Chief SOCRATES PADUA Members MONDAE BUENAFE, MYLENE CANAO, MONALISA IBARRA, CESAR LACDAO, GLORIFE LICLICAN, DULCE MARTINEZ, ELILYN NATURA, DONNA MICHELLE PINLAC, CECILYNNE ANDRADE and LOUBELLE ORTIZ. All Rights Reserved by the SAINT LOUIS UNIVERSITY COLLEGE OF LAW BAR OPERATIONS 2003.

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c. The taxpayer shows that the appeal is not frivolous not for the purpose of merely to delay the collection of the tax.

TAX LAW REVIEWER

SAINT LOUIS UNIVERSITY BAR OPERATIONS

The CTA may require a bond, such requirement is dispensed with when the collection of tax has already prescribed. (Collector vs. Zulueta 100 Phil 872) Sec. 305 (Now 218) of the NIRC providing that no court has authority to grant a writ of injunction to restrain the collection of any internal revenue tax, fee, or charge imposed by the code refers to courts other than the CTA. (Blaquera, etc. vs. Rodriguez 103 Phil 267) The Tax Court is not authorized to issue writs of injunctions or prohibition independently of and apart from an appealed case. (Coll. Vs. Yuseco, L-12518, 28 Oct 1961) An appeal to the CTA does not automatically suspend the collection of taxes except when so enjoined by the tax court at any stage of the proceedings and when circumstances so warrant. (Sec. 11, R.A. 1125)

Prepared by the TAX LAW SECTION Chief JOCELYN ROSARIO Assistant Chief SOCRATES PADUA Members MONDAE BUENAFE, MYLENE CANAO, MONALISA IBARRA, CESAR LACDAO, GLORIFE LICLICAN, DULCE MARTINEZ, ELILYN NATURA, DONNA MICHELLE PINLAC, CECILYNNE ANDRADE and LOUBELLE ORTIZ. All Rights Reserved by the SAINT LOUIS UNIVERSITY COLLEGE OF LAW BAR OPERATIONS 2003.