Cases for CTA Jurisdiction
CTA reduced the deficiency income tax
Ursal vs. CA
Ursal as City Assessor of Cebu assess for taxation certain real
properties of Noel and Samson, and upon protest the Cebu Board
of Assessment Appeals reduced the assessments. Ursal took the
matter to CTA insisting on his valuation but was dismissed saying
that it was late and that the assessor had no personality to bring
the matter before it.
CTA properly denied the appeal of Ursal. First, Ursal as assessor
had no personality to resort to the CTA. The rulings of the Board of
Assessment Appeals did not "adversely affect" him or his office.
The CTA was not created to decide mere conflicts of opinion
between administrative officers or agencies. Second, Republic Act
No. 1125 creating the CTA did not grant it blanket authority to
decide any and all tax disputes. The Act necessarily limited its
authority to those matters enumerated therein. Republic Act No.
1125 is a complete law by itself and expressly enumerates the
matters which the CTA may consider which is presumably to act
only on protests of private persons adversely affected by the tax,
custom, or assessment.
CIR vs. Villa
Villa and his wife filed joint income tax returns. The BIR
determined assessments for deficiency income tax and residence
tax. Without contesting the said assessments in the BIR, he filed a
petition for review in the CTA. Initially, CTA took cognizance of the
appeal and tried the case in its merits. In this case, parties submit
voluntarily to the jurisdiction of CTA. At no stage of the
proceedings have they raised the issue of jurisdiction.
The law conferring jurisdiction on CTA is Sec. 7 of RA 1125 which
states that CTA has exclusive appellate jurisdiction Decisions of
the CIR in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties imposed
in relation thereto, or other matters arising under NIRC. The word
"decisions" has been interpreted to mean the decisions of the CIR
on the protest of the taxpayer against the assessments.
Definitely, said word does not signify the assessment itself.
Where a taxpayer questions an assessment and asks the Collector
to reconsider or cancel the same because the taxpayer believes he
is not liable, the assessment becomes a "disputed assessment"
that the Collector must decide, and the taxpayer can appeal to the
Court of Tax Appeals only upon receipt of the decision of the
Collector on the disputed assessment. Since in the instant case
the taxpayer appealed the assessment of the CIR without
previously contesting the same, the appeal was premature and
the CTA had no jurisdiction to entertain said appeal.. As such, it
can take cognizance only of such matters as are clearly within its
jurisdiction.
Philippine Refining Co. vs. CA
Petitioner was assessed by CIR to pay deficiency tax for 1985
amounting to P1.8M. Petitioner protested the assessment on
ground that it was based on erroneous allowances of bad debts
and interest expense although both are allowable deductions. CIR
denied the protest by it subsequent issuance of a warrant of
garnishment. Petitioner filed a petition for review with CTA on the
same assignment of error.
assessment to P237K.
The Court ruled that no explanation was offered by petitionerwhy
the unpaid account of several of its debtor was written of as bad
debt. The worthlessness of the debts involved are sought to be
established by the mere self-serving testimony of its financial
consultant. The contentions of PRC that nobody is in a better
position to determine when an obligation becomes a bad debt
than the creditor itself, and that its judgment should not be
substituted by that of respondent court as it is PRC which has the
facilities in ascertaining the collectibility or uncollectibility of these
debts, are presumptuous and uncalled for. The Court of Tax
Appeals is a highly specialized body specifically created for the
purpose of reviewing tax cases. Through its expertise, it is
undeniably competent to determine the issue of whether or not
the debt is deductible through the evidence presented before it.
Because of this recognized expertise, the findings of the CTA will
not ordinarily be reviewed absent a showing of gross error or
abuse on its part. The findings of fact of the CTA are binding on
this Court in the absence of strong reasons for this Court to delve
into facts.
PLDT vs. City of Davao
PLDT paid a franchise tax, which was paid “in lieu of all taxes on
this franchise or earnings thereof” pursuant to RA 7082. The
exemption from “all taxes on this franchise or earnings thereof”
was subsequently withdrawn by RA 7160 (LGC), which gave local
government units the power to tax businesses enjoying a
franchise on the basis of income received or earned by them
within their territorial jurisdiction.
The City of Davao enacted Ordinance No. 519 which provides that
notwithstanding any exemption granted by law or other special
laws, there is hereby imposed a tax on businesses enjoying a
franchise, a rate of seventy-five percent (75%) of one percent (1%)
of the gross annual receipts for the preceding calendar year based
on the income receipts realized within the territorial jurisdiction of
Davao City. Subsequently, RA 7925 was enacted. Sec. 23 of which
provides that any advantage, favor, privilege, exemption, or
immunity granted under existing franchises, or may hereafter be
granted, shall ipso facto become part of previously granted
telecommunications franchises and shall be accorded
immediately and unconditionally to the grantees of such
franchises. PLDT claimed exemption from payment of franchise
tax on the basis of opinion of the Bureau of Local Government
Finance (BLGF)that petitioner is exempt from payment of
franchise and business taxes imposable by local government units
upon the effectivity of Republic Act No. 7925
The ruling of the BLGF has been considered in this case. But unlike
the Court of Tax Appeals, which is a special court created for the
purpose of reviewing tax cases, the BLGF was created merely to
provide consultative services and technical assistance to local
governments and the general public on local taxation and other
related matters. Thus, the rule that the "Court will not set aside
conclusions rendered by the CTA, which is, by the very nature of
its function, dedicated exclusively to the study and consideration
of tax problems and has necessarily developed an expertise on the
1
subject, unless there has been an abuse or improvident exercise of
authority" cannot apply in the case of BLGF.
Allied Banking vs. CIR
Allied Bank received from the CIR a PAN of deficiency DST in the
amount of around P12M. Allied protested and thereafter received
a Formal Letter of Demand with Assessment Notices. Allied filed
within 30 days from the receipt of the Formal Letter of Demand a
petition for review in the CTA. It was dismissed because the CTA
ratiocinated that it is neither the assessment nor the formal
demand letter itself that is appealable to the CTA. It is the decision
of the CIR on the disputed assessment that can be appealed to the
CTA. CTA says administrative is necessary first.
The case is an exception to the exhaustion of administrative
remedies, by way of estoppel from the part of BIR. It appears from
the foregoing demand letter that the CIR has already made a final
decision on the matter and that the remedy of petitioner is to
appeal the final decision within 30 days. Allied cannot be faulted
for relying on the Formal Letter of Demand since the language
used and the tenor of the demand letter indicate that it is the final
decision of the respondent on the matter.The Formal Letter of
Demand which was not administratively protested by the
petitioner can be considered a final decision of the CIR appealable
to the CTA because the words used, specifically the words "final
decision" and "appeal", taken together led petitioner to believe
that the Formal Letter of Demand with Assessment Notices was in
fact the final decision of the CIR on the letter-protest it filed and
that the available remedy was to appeal the same to the CTA.
CIR vs. Leal
CIR issued RMO 15-91 imposing 5% lending investor’s tax on
pawnshops based on their gross income and requiring all
investigating units of BIR to assess the lending investor’s tax due
them., pursuant to Sec 116 of the NIRC. Subsequently, CIR issued
RMC 43-91 subjecting the pawn ticket to DST. Affected,
respondents, owner of Josefina’s pawnshops, asked for a
reconsideration of the RMO and RMC but was denied with finality
by CIR. Thus, respondent filed with RTC a petition for prohibition
against CIR from implementing the revenue orders. CIR filed a
motion to dismiss but was denied by the RTC.
While the CA correctly took cognizance of the petition for
certiorari, however, the jurisdiction to review the rulings of the
CIR pertains to the CTA, 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 CIR’s
powers the Tax Code. 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 x x x decisions of the Collector of Internal
Revenue in x x x matters arising under the National Internal
Revenue Code or other law or part of the law administered by the
Bureau of Internal Revenue.
Philippine Journalists vs. CIR
Petitioner filed an annual income tax return for the year 1994 and
paid 10M in taxes. In 1995, BIR examined PJ’s books and found
deficiency taxes. In 1997, RDO invited petitioner’s representative
for an informal conference in order for petitioner to object to the
proposed assessment. Petitioner executed a Waiver of Statute of
Limitation under the NIRC. On December 1998, BIR issued the
final assessment on petitioner amounting to 111M. Petitioner
contests the assessment mainly because it was made beyond the
3 year period since the taxes became due in the end of the 1994
calendar year. On the other hand, the BIR argues that petitioner
executed a waiver of the statute of limitations, giving the BIR more
time to assess.
The first assigned error relates to the jurisdiction of the CTA over
the issues in this case. CA ruled that only decisions of the BIR
denying a request for reconsideration or reinvestigation may be
appealed to the CTA. Since the petitioner did not file a request for
reinvestigation or reconsideration within thirty (30) days, the
assessment notices became final and unappealable. The
petitioner now argue that the case was brought to the CTA
because the warrant of distraint or levy was illegally issued and
that no assessment was issued because it was based on an invalid
waiver of the statutes of limitations.
We agree with petitioner. Section 7 of Republic Act No. 1125,
provides that the CTA has jurisdiction over X X X other matters
arising under the National Internal Revenue Code or other laws or
part of law administered by the Bureau of Internal Revenue. The
appellate jurisdiction of the CTA is not limited to cases CIR on
matters relating to assessments or refunds. The second part of
the provision covers other cases that arise out of the NIRC or
related laws administered by the Bureau of Internal Revenue.
The wording of the provision is clear and simple. It gives the CTA
the jurisdiction to determine if the warrant of distraint and levy
issued by the BIR is valid and to rule if the Waiver of Statute of
Limitations was validly effected. Thus, the CTA may act on a
petition to invalidate and annul the distraint orders of the CIR or
declaring several waivers executed by the taxpayer as null and
void, thus invalidating the assessments issued by the BIR.
PNOC vs. CA
BIR requested PNOC to settle its liability for taxes on the interest
earned by its money placements with PNB and which PNB did not
withhold. PNOC wrote BIR and made an offer to compromise its
tax liability, estimated at P304M against NAPOCOR’s pending claim
for tax refund. CIR accepted the compromise.
Private respondent Savellanowas paid the informer's reward in the
total amount of P14M, representing 15% of tax collected by the
BIR from PNOC and PNB. But private respondent Savellano,
demanded from BIR the payment of the balance of his informer's
reward and sought reconsideration of CIR’s decision to
compromise the tax liability of PNOC. While the aforesaid Motion
for Reconsideration was still pending with the BIR, private
respondent Savellano filed a Petition for Review with the CTA,
alleging that CIR acted with grave abuse of discretion in entering
into a compromise agreement that resulted in "a gross and
unconscionable diminution" of his reward. Private respondent
Savellano prayed for the enforcement and collection of the total
tax assessment against taxpayer PNOC and/or withholding agent
PNB; and the payment to him by CIR of the 15% informer's
2
reward on the total tax collected.The CTA ruled that the
compromise agreement between BIR and PNB and PNOC is
without force, and ruled that Private respondent be paid the
balance of the informer’s reward.
PNB assailed the decision of CTA on ground that the BIR demand
letter should be considered as a new assessment against PNB. As
a new assessment, it gave rise to a new dispute and controversy
solely between the BIR and PNB that should be administratively
settled or adjudicated
Does CTA have jurisdiction over the case?
The demand letter did not constitute a new assessment against
PNB.The issuance by the BIR of the demand letter was merely a
development in the continuing effort of the BIR to collect the tax
assessed against PNOC and PNB way back in 1986. Thedemand
letter actually referred to the withholding tax assessment first
issued in 1986 and its eventual settlement through a compromise
agreement. In addition, the computation of the deficiency
withholding tax was based on the figures from the 1986
assessments against PNOC and PNB.
The CTA correctly retained jurisdiction over the case by virtue of
Republic Act No. 1125.Having established that the BIR demand
letter did not constitute a new assessment, then, there could be
no basis for PNB's claim that any dispute arising from the new
assessment should only be between BIR and PNB. The CTA,
however, correctly sustained its jurisdiction and continued the
proceedings; and, in effect, rejected DOJ's claim of jurisdiction to
administratively settle or adjudicate BIR's assessment against PNB.
In his Petition before the CTA, private respondent Savellano
requested a review of the decisions of CIR to enter into a
compromise agreement with PNOC and to reject his claim for
additional informer's reward. Thus, he submitted questions of
law involving interpretation of EO 44 which authorized the BIR
Commissioner to compromise delinquent accounts and Sec 316
of NIRC which granted to the informer a reward equivalent to
15% of the actual amount recovered or collected by the
BIR. These should undoubtedly be considered as matters arising
from the NIRC and other laws being administered by the BIR,
thus, appealable to the CTA under Section 7(1) of Rep. Act No.
1125.
PNB, however, insists on the jurisdiction of the DOJ over its appeal
of the deficiency withholding tax assessment by virtue of P.D. No.
242. However, it is an established rule of statutory construction
that between a general law and a special law, the special law
prevails. P.D. No. 242 is a general law that deals with
administrative settlement or adjudication of disputes, claims and
controversies between or among government offices, agencies
and instrumentalities, including government-owned or controlled
corporations. On the other hand, Rep. Act No. 1125 is a special
law dealing with a specific subject matter – the creation of the
CTA, which shall exercise exclusive appellate jurisdiction over the
tax disputes and controversies enumerated therein.
CIR vs. Hambrecht & Quist
Respondent informed BIR of its change of business address.
Respondent received a letter from BIR demanding payment of
alleged deficiency income and expanded withholding taxes for
year 1989 which resulted from disallowance of certain items of
expense. Respondent protested against the alleged deficiency tax
assessment. 8 years later, respondent was informed that its
protest was denied on ground that that was filed beyond the 30
day reglamentary period. Respondent filed a petition for review
with CTA which held that the assessment was already final and
unappelable but CIR failed to collect within the prescriptive
period. Petition assails the jurisdiction of CTA on ground that after
the lapse of the 30 day period to protest, respondent may no
longer dispute the correctness of the assessment and its appeal to
the CTA should be dismissed.
The appellate jurisdiction of the CTA is not limited to cases which
involve decisions of the CIR on matters relating to assessments or
refunds. The second part of the provision covers other cases that
arise out of the National Internal Revenue Code (NIRC) or related
laws administered by the Bureau of Internal Revenue (BIR).In the
case at bar, the issue at hand is whether or not the BIR’s right to
collect taxes had already prescribed and that is a subject matter
falling under Section 223(c) of the 1986 NIRC. Thus, from the
foregoing, the issue of prescription of the BIR’s right to collect
taxes may be considered as covered by the term "other matters"
over which the CTA has appellate jurisdiction. This runs counter
to petitioner’s theory that the latter is qualified by the status of
the former, i.e., an "other matter" must not be a final and
unappealable tax assessment or, alternatively, must be a disputed
assessment.The validity of the assessment itself is a separate and
distinct issue from the issue of whether the right of the CIR to
collect the validly assessed tax has prescribed. This issue of
prescription, being a matter provided for by the NIRC, is well
within the jurisdiction of the CTA to decide.
RCBS vs. CIR
Petitioner filed a petition for review with CTA for failure of the CIR
to act on its disputed tax assessment. CTA denied the petition
because it was not filed within the reglamentary period. RCBC
maintained that its former counsel’s failure to file petition for
review with the CTA within the reglamentary period was
excusable.
If the protest is denied in whole or in part, or is not acted upon
within one hundred eighty (180) days from submission of
documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within (30) days
from receipt of the said decision, or from the lapse of the one
hundred eighty (180)-day period; otherwise the decision shall
become final, executory and demandable. (If a statutory remedy
provides as a condition precedent that the action to enforce it
must be commenced within a prescribed time, such requirement
is jurisdictional and failure to comply therewith may be raised in a
motion to dismiss. In fine, the failure to comply with the 30-day
statutory period would bar the appeal and deprive the Court of
Tax Appeals of its jurisdiction to entertain and determine the
correctness of the assessment.
3
Philippine British Assurance vs. Republic of the Philippines
Petitioner issues customs bonds to its clients in favor of the BOC,
which secure the release of imported goods from BOC without
prior payment of corresponding customs duties. Petitioner and its
client bind themselves to pay the BOC the value of the bonds.
Republic, represented by BOC, filed a complaint against petition
for collection of money with damages before RTC alleging that
petition had outstanding unliquidated customs bonds with BOC
which was granted. CA dismissed the appeal filed by petitioner on
ground that it has no jurisdiction over the appeal and the same
lies with CTA because the case is a tax collection case.
Although the original obligation of petitioner arose from non-
payment of taxes, the complaint against petitioner is predicated
upon the bond executed by them. Thus, respondent’s right
originally arising from law has become a right based upon a
written contract, the bond being a contract between Respondent
and Petitioner.
RA 9282 amended Section 7 of RA 1125 and provided that the
CTA shall have Exclusive appellate jurisdiction to review by
appeal 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. In the case
at bar, the original complaint filed with the trial court was in the
nature of a collection case. An action to collect on a bond used to
secure the payment of taxes is not a tax collection case, but
rather a simple case for enforcement of a contractual liability.
Verily, the instant case is not a tax collection case; hence,
appellate jurisdiction over the petition properly lies with the CA
and not the Court of Tax Appeals.
Commissioner of Customs vs. CA
The vessel M/V Star Ace coming from Singapore with cargo
entered the Port of San Fernando, La Union for repairs, with an
appraised value of P200M. The BOC became suspicious that the
vessel’s purpose was really to smuggle its cargo into the country,
seizure proceedings were instituted and subsequently, Warrants
of Seizure and Detention were issued for the vessel and its cargo
Respondent Urbino claimed a preferred maritime lien under a
Salvage Agreement. Thus, to protect his claim, Urbino filed a
Motion to Dismiss and a Motion to Lift Warrant of Seizure and
Detention. In addition, he filed a case for Prohibition, Mandamus
and Damages before the RTC to restrain the District Collector of
Customs from interfering with his salvage operation. The RTC
dismissed the case for lack of jurisdiction because of the pending
seizure and detention cases. Case was elevated to CA. Petitioner
assails the jurisdiction of the CA.
Going back to the seizure and detention proceedings, the decision
of the District Collector of Customs was to forfeit the vessel and
cargo in favor of the Government. This decision was affirmed by
the Commissioner of Customs. Three appeals were then filed with
the Court of Tax Appeals (CTA) by different parties, excluding
Urbino, who claimed an interest in the vessel and cargo.
The Court rules in favor of the Commissioner of Customs. First,
decision of the RTC, in so far as it relates to the vessel M/V "Star
Ace," is void as jurisdiction was never acquired over the vessel
since it failed to acquire either actual or constructive possession
over it. On the other hand, the BOC acquired jurisdiction over
the res ahead and to the exclusion of the RTC. The forfeiture
proceedings conducted by the BOC are in the nature of
proceedings in rem and jurisdiction was obtained from the
moment the vessel entered the SFLU port. The forfeiture
proceedings were instituted and the vessel was seized even before
the filing of the RTC.
As regards the jurisdiction of the CTA, allegations of ownership
neither divest the Collector of Customs of such jurisdiction nor
confer upon the trial court jurisdiction over the case. Ownership
of goods or the legality of its acquisition can be raised as defenses
in a seizure proceeding. The actions of the Collectors of Customs
are appealable to the Commissioner of Customs, whose decision,
in turn, is subject to the exclusive appellate jurisdiction of the
CTA. Clearly, issues of ownership over goods in the custody of
custom officials are within the power of the CTA to determine.
CIR vs. Manila Mining Corp.
Respondent is registered with BIR as a VAT registered enterprise.
In 1991, its gold sales to BSP amounted to P200M. it filed its VAT
returns. However, relying on a letter from BIR Deputy
Commissioner that gold sold to BSP is considered an export sale
and therefore zero-rated, it filed an application for tax refund. As
CIR filed to act o the application within 60 days from filing, it filed
a Petition for Review against the CIR before the CTA seeking the
issuance of a tax credit certificate covering its input VAT payments
for taxable year of 1991. CIR however assails the veracity of the
amounts in respondent’s VAT returns and application. CTA denied
respondent’s claim for refund for failure to prove that it paid the
amounts as such as no sales invoice, receipts or other documents
were presented. It pronounced that a mere listing of VAT invoices
and receipts, without being offered and actually verified by the
CTA cannot prove the truthfulness of the contents of the invoices.
For a judicial claim for refund to prosper, respondent must not
only prove that it is a VAT registered entity and that it filed its
claims within the prescriptive period, but also must
substantiate the input VAT paid by purchase invoices or official
receipts which respondent failed to do.
Section 8 of Republic Act 1125 provides that the CTA shall be a
court of record and as such it is required to conduct a formal
trial (trial de novo) where the parties must present their
evidence accordingly if they desire the Court to take such
evidence into consideration. As cases filed before it are
litigated de novo, party litigants should prove every minute aspect
of their cases. No evidentiary value can be given the purchase
invoices or receipts submitted to the BIR as the rules on
documentary evidence require that these documents must be
formally offered before the CTA. Hence, it is necessary for the
Petitioner to show proof that it had indeed paid the said input
taxes during the year 1991. In the case at bar, Petitioner failed to
discharge this duty. It did not adduce in evidence the sales
invoice, receipts or other documents showing the input value
added tax on the purchase of goods and services. Thus, the
argument of respondent that the certification of an independent
CPA attesting to the correctness of the contents thereof is
insufficient as what is required is CTA Circular No. 10-97, requires
that the photocopies of invoices, receipts and other documents
covering said accounts or payments must be pre-marked by the
party and submitted to this Court.
4

While the CTA is not governed strictly by technical rules of
evidence, as rules of procedure are not ends in themselves but are
primarily intended as tools in the administration of justice, the
presentation of the purchase receipts and/or invoices is not mere
procedural technicality which may be disregarded considering that
it is the only means by which the CTA may ascertain and verify the
truth of respondent’s claims.
City of Manila vs. Coca-Cola Bottlers
Prior to Feb 25, 2000, Respondent Coke had been paying City of
Manila local business tax under Sec 14 of Tax Ordinance 7794 (Tax
on manufacturers and assemblers), being exempted from
payment of tax under Sec 21 (Tax on Businesses subject to Excise,
VAT or percentage Tax). It was later amended, making respondent
liable to pay local business tax both under Sec 14 and Sec 21. City
of Manila assessed respondents of P18.6M tax deficiency which
Coke protested contending double taxation. Petitioner did not
respond to the protest. Thus, respondent filed with RTC an action
for cancellation of the assessment against respondent for business
taxes. Petition was granted in compliance with an earlier decision
declaring the amendments null and void.
Petitioner filed with CTA 2 Motions for Extension of Time to File
Petition for Review, praying for a 15-day extension and an
additional 10-day extension within which to file their petition.
Upon filing their Petition for Review, the same was dismissed by
CTA First Division for being filed out of time. CTA en banc affirmed.
The period to appeal the decision or ruling of the RTC to the
CTA via a Petition for Review is specifically governed by Section 11
of Republic Act No. 9282 and Section 3(a), Rule 8 of the Revised
Rules of the CTA. The afore-quoted provisions provide that to
appeal an adverse decision or ruling of the RTC to the CTA, the
taxpayer must file a Petition for Review with the CTA within 30
days from receipt of said adverse decision or ruling of the
RTC. However, Section 11 of Republic Act No. 9282 does state
that the Petition for Review shall be filed with the CTA following
the procedure analogous to Rule 42 of the Revised Rules of Civil
Procedure. Section 1, Rule 42[16] of the Revised Rules of Civil
Procedure provides that the Petition for Review of an adverse
judgment or final order of the RTC must be filed with the Court of
Appeals within: (1) the original 15-day period from receipt of the
judgment or final order to be appealed; (2) an extended period of
15 days from the lapse of the original period; and (3) only for the
most compelling reasons, another extended period not to
exceed 15 days from the lapse of the first extended period.
Following by analogy Section 1, Rule 42 of the Revised Rules of
Civil Procedure, the 30-day original period for filing a Petition for
Review with the CTA under Section 11 of Republic Act No. 9282,
as implemented by Section 3(a), Rule 8 of the Revised Rules of
the CTA, may be extended for a period of 15 days. No further
extension shall be allowed thereafter, except only for the most
compelling reasons, in which case the extended period shall not
exceed 15 days.
In this case, the CTA First Division erred in finding that petitioners
failed to file their Petition for Review in CTA within the
reglementary period.
Commission of Customs vs. Gelmart Industries
Respondent is engaged in the manufacturing of embroidery and
apparel products for export. Subsequently, it received
consignment of various imported textile materials from its
supplier to be manufactured into finished products for subsequent
exportation. Petitioner issued a Memorandum requiring the 100%
examination of all shipments consigned to respondent on its
release from the piers. Thereafter petitioner conducted an ocular
inspection of the warehouse Bonded Manufacturing Warehouse
of petitioner, during which it was discovered that it was operating
the Bra and Lace Division as well as the Auxiliary Division and no
other lines of products.
Subsequently, respondent received from one of its principals for
the imported articles from Hong Kong of its intention to cancel the
order and instructed respondent to return the shipment of raw
materials back to it. Respondent, thus requested petitioner for
authority to effect the reshipment. However, BOC issued seizure
orders for alleged violation of the Tariff and Customs Code on
ground that respondent misdeclared their shipments. Respondent
filed a Memorandum of Appeal with Commissioner of Customs
which affirmed the forfeiture orders issued by the Collector of
Customs. However, CTA reversed the decree of forfeiture issued by
petitioner and ordered the release of respondent’s importation.
Petitioner is denied for being procedurally infirm.
Petitioner’s failure to file a motion for reconsideration of the
assailed decision of the CTA First Division, or at least a petition for
review with the CTA en banc, invoking the latter’s exclusive
appellate jurisdiction to review decisions of the CTA divisions,
rendered the assailed decision final and executory. Necessarily, all
the arguments professed by petitioner on the validity of the
seizure, detention and ultimate forfeiture of the subject
shipments have been foreclosed
Petitioner had indeed committed procedural missteps on his way
to this Court. First, it failed to file a Motion for Reconsideration or
New Trial before the CTA Division within 15 days from receipt of
the decision before going to the CTA en banc. Second, Sec 11 of
RA 9282 provides that a party adversely affected by a resolution of
a CTA Division may on a motion for reconsideration or new trial
file a petition for review with the CTA en banc.” In turn, “A party
adversely affected by a decision or ruling of the CTA en banc may
file with the SC a verified petition for review on certiorari pursuant
to Rule 45 of the 1997 Rules of Civil Procedure” as ordained under
Sec. 12 of R.A. No. 9282. This petitioner failed to comply with.
Third. Sec. 2, Rule 4 of the Revised Rules of the Court of Tax
Appeals reiterates the exclusive appellate jurisdiction of the
CTA en banc relative to the review of decisions or resolutions on
motion for reconsideration or new trial of the court’s two (2)
divisions in cases arising from administrative agencies such as the
Bureau of Customs. [13] Hence, the Court is without jurisdiction to
review decisions rendered by a division of the CTA, exclusive
appellate jurisdiction over which is vested in the CTA en banc.
TFS Inc. vs. CIR
5
Petitioner received a PAN for deficiency VAT and expanded
withholding tax. Insisting that there was no basis for the issuance
of PAN, petitioner requested the BIT to withdraw and seta side the
assessments. CIR however informed petitioner that a FAN was
issued on 25 January 2002 and that petitioner had until 22
February 2002 to file a protest letter. On 20 Feb, petitioner
protested the FAN. There being no action taken by the CIR,
petitioner filed a Petition for Review with CTA which upheld the
assessment issued against petitioner amounting to P11M. Its MR
was also denied by CTA. Petitioner filed before CA a Motion for
Extension of Time to File Petition for Review which was also
dismissed for lack of jurisdiction in view of RA 9282. Realizing its
error, petitioner filed with CTA en banc a petitioner a Petition for
Review which was dismissed for being filed out of time.
Petitioner admits that it failed to timely file its Petition for Review
with the proper court (CTA). However, it attributes the procedural
lapse to the inadvertence or honest oversight of its counsel, who
believed that at the time the petition, was filed, the CA still had
jurisdiction since the rules and regulations to implement the
newly enacted RA 9282 had not yet been issued and the
membership of the CTA En Banc was not complete.
Jurisdiction to review decisions or resolutions issued by the
Divisions of the CTA is no longer with the CA but with the CTA En
Banc. A party adversely affected by a resolution of a Division of
the CTA on a motion for reconsideration or new trial, may file a
petition for review with the CTA en banc. However, as in all cases,
there are exceptions to the strict application of the rules for
perfecting an appeal such as when the late filing of the notices of
appeal were filed, the new rules applicable therein had just been
recently issued. In the instant case, RA 9282 took effect on April
23, 2004, while petitioner filed its Petition for Review on Certiorari
with the CA on August 24, 2004, or four months after the
effectivity of the law. By then, petitioner’s counsel should have
been aware of and familiar with the changes introduced by RA
9282. Thus, we find petitioner’s argument on the newness of RA
9282 a bit of a stretch.
Petitioner likewise cannot validly claim that its erroneous filing of
the petition with the CA was justified by the absence of the CTA
rules and regulations and the incomplete membership of the CTA
En Banc as these did not defer the effectivity and implementation
of RA 9282. In fact, under Section 2 of RA 9282, the presence of
four justices already constitutes a quorum for En Banc sessions
and the affirmative votes of four members of the CTA En Banc are
sufficient to render judgment. Thus, to us, the petitioner’s excuse
of "inadvertence or honest oversight of counsel" deserves scant
consideration. However, we will overlook this procedural lapse in
the interest of substantial justice. Although a client is bound by
the acts of his counsel, including the latter’s mistakes and
negligence, a departure from this rule is warranted where such
mistake or neglect would result in serious injustice to the
client.29 Procedural rules may thus be relaxed for persuasive
reasons to relieve a litigant of an injustice not commensurate with
his failure to comply with the prescribed procedure. Such is the
situation in this case.
Commissioner of Customs vs. Marina Sales
Respondent was appointed by Co-Ro Food of Denmark, maker of
Sunquick Juice, to be its manufacturing arm in the Philippines. As
such, respondent imports raw materials. In the past, BOC assessed
the said type of importation with a 1% import duty rate and paid
duties in accordance thereof. Subsequently, respondent’s
importation arrived at Manila International Port and paid the
duties. However, BOC examiners contested the tariff classification
if the said importation and recommended to the Collector of
Customs to reclassify respondent’s importation (covering
composite concentrates for simple dilution with water to make
beverages) with a corresponding 7% import duty rate. To release
the importation, respondent paid the reclassified rate.
Respondent appealed before petitioner challenging the
reclassification. Not being granted, respondent filed a petition for
review before the CTA, CTA Second Division ruled in favor of
respondent. Petitioner disagreed and elevated the case to the CTA
en banc via a petition for review which dismissed the case on
ground that petition failed to file before the Second Division the
required MR before elevating the case to it.
The Court agrees with the CTA En Banc that the Commissioner
failed to comply with the mandatory provisions of Rule 8, Section
1 of the Revised Rules of the Court of Tax Appeals 31 requiring that
"the petition for review of a decision or resolution of the Court in
Division must be preceded by the filing of a timely motion for
reconsideration or new trial with the Division." The word "must"
clearly indicates the mandatory -- not merely directory -- nature of
a requirement. Before the CTA En Banc could take cognizance of
the petition for review concerning a case falling under its
exclusive appellate jurisdiction, the litigant must sufficiently
show that it sought prior reconsideration or moved for a new
trial with the concerned CTA division. Procedural rules are not to
be trifled with or be excused simply because their non-
compliance may have resulted in prejudicing a party’s
substantive rights.33 Rules are meant to be followed. They may be
relaxed only for very exigent and persuasive reasons to relieve a
litigant of an injustice not commensurate to his careless non-
observance of the prescribed rules.
At any rate, even if the Court accords liberality, the position of the
Commissioner has no merit. After examining the records of the
case, the Court is of the view that the import duty rate of 1%, as
determined by the CTA Second Division, is correct.