PHILIPPINE NATIONAL OIL COMPANY VS CA G.R. No. 10997 . A!

"i# $ % $00&% '&7 SCRA ($

Admin Case No. 8 )"an*is +a,ie" Sinon

)ACTS- The Petitions before this Court originated from a sworn statement submitted by private respondent Tirso B. Savellano (Savellano) to the Bureau of Internal Revenue (BIR). Through his sworn statement private respondent Savellano informed the BIR that P!B had failed to withhold the "#$ final ta% on interest earnings and&or yields from the money pla'ements of P!(C with the said ban) in violation of Presidential *e'ree (P.*.) !o. "+,". P.*. !o. "+," withdrew all ta% e%emptions of government-owned and 'ontrolled 'orporations. In a letter the BIR re.uested P!(C to settle its liability for ta%es on the interests earned by its money pla'ements with P!B and whi'h P!B did not withhold. P!(C made an offer to the BIR to settle its ta% liability and proposed a 'ompromise by paying P+" //, "0+.1+ representing ,/$ of theP,/, ,2, 344.0+ basi' ta% in a''ordan'e with the provisions of 5%e'utive (rder (5.(.) !o. 22. Then BIR Commissioner Bienvenido 6. Tan a''epted the 'ompromise. Private respondent Savellano was paid the informer7s reward in the total amount of P"2 /+, ,0".1+ representing "#$ of the ta% a'tually 'olle'ted by the BIR from P!(C and P!B. 8owever private respondent Savellano through his legal 'ounsel wrote the BIR to demand payment of the balan'e of his informer7s reward. BIR Commissioner Tan replied that private respondent Savellano was already fully paid the informer7s reward pursuant to its 'ompromise agreement with P!(C. Thus private respondent Savellano filed a Petition for Review ad cautelam with the CT6. 8e 'laimed that BIR Commissioner Tan a'ted 9with grave abuse of dis'retion and&or whimsi'al e%er'ise of :urisdi'tion; in entering into a 'ompromise agreement that resulted in 9a gross and un'ons'ionable diminution; of his reward. 8e would later amend his Petition to implead P!(C and P!B as ne'essary and indispensable parties sin'e they were parties to the 'ompromise agreement. P!(C averred among other things that (") it had no privity with private respondent Savellano< (0) the BIR Commissioner7s dis'retionary a't in entering into the 'ompromise agreement had legal basis under 5.(. !o. 22 and R=( !o. ,+-14 and R=( !o. 213< and (,) the CT6 had no :urisdi'tion to resolve the 'ase against it. ISS.E- >hether the BIR Commissioner7s de'ision to a''ept the 'ompromise was dis'retionary on his part and therefore 'annot be reviewed or interfered with by the 'ourts. HEL/- NO. ?irstly The 'ompromise agreement between P!(C and the BIR was without legal basis. *espite this la') of legal support for the e%e'ution of the said 'ompromise agreement P!B argues that the CT6 still had no :urisdi'tion to review and set aside the 'ompromise agreement. It 'ontends that the authority to 'ompromise is purely dis'retionary on the BIR Commissioner and the 'ourts 'annot interfere with his e%er'ise thereof. It is generally true that purely administrative and dis'retionary fun'tions may not be interfered with by the 'ourts< but when the e%er'ise of su'h fun'tions by the administrative offi'er is tainted by a failure to abide by the 'ommand of the law then it is in'umbent on the 'ourts to set matters right with this Court having the last say on the matter. !(T5@ It is well-settled in this :urisdi'tion that administrative authorities are vested with the power to ma)e rules and regulations be'ause it is impra'ti'able for the lawma)ers to provide general regulations for various and varying details of management. The interpretation given to a rule or regulation by those 'harged with its e%e'ution is entitled to the greatest weight by the 'ourt 'onstruing su'h rule or regulation and su'h interpretation will be followed unless it appears to be 'learly unreasonable or arbitrary.