TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B.

Aban
CABANEIRO) A2011

JUICY NOTES (PROF.

Chapter 9: COURT TAX APPEALS

Law creating the CTA
Republic Act No. 1125, JUNE 16, 1954
Why was the CTA created?
1. To have a centralized body well versed in tax matters a
regular court forming part of the judicial system which could
exclusively hear and determine tax cases.
2. To prevent delay in the disposition of tax cases in view of
the backlog of civil and criminal cases in the regular courts.
[Ursal v. Court of Appeals 101 Phil 209]
Nature of the CTA
1. It is a judicial and not an administrative body.
2. It is a court of special jurisdiction, and as such can only take
cognizance of such matters as are clearly within its
jurisdiction.
3. It is not governed strictly by the technical rules of evidence.
Organization, quorum, and disposition of cases by the CTA
The CTA is composed of a Presiding Judge and two Associate
Judges, each of whom is appointed by the President form a
list of nominees prepared by the Judicial and Bar Council.
Such appointments need no confirmation.
Any two judges of the CTA shall constitute a quorum and the
concurrence of two judges shall be necessary to promulgate
any decision thereof. [Sec. 1 and 2, RA 1125]
Cases brought before the CTA shall be decided within 30
days after the submission thereof for decision, which shall
be in writing, stating clearly and distinctly the facts and the
law on which they are based, and signed by the judges who
concurred therewith. [Sec. 12, RA 1125]. This requirement,
however, is merely directory.
Powers of the CTA
1. To administer oaths

2. To receive evidence
3. To summon witnesses by subpoena and subpoena
duces tecum
4. To punish for contempt
5. To prescribe the form of writs and other processes
6. To promulgate rules and regulations for the conduct
of its business
Jurisdiction of the CTA
CTA shall exercise exclusive appellate jurisdiction to review
by appeal the following:
1. Decisions of the Commissioner of Internal Revenue,
involving disputed assessments; refunds of internal
revenue taxes, fees or other charges; penalties
imposed in relation thereto; or other matters arising
under the NIRC or other law or part of law
administered by the BIR.
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.
3. Decision of the Sec. of Finance, on an assessment
which the Commissioner of Customs decided in favor
of the taxpayer. (Decisions of the Commissioner of
Customs which are adverse to the government, may
be raised on appeal to the Sec. of Finance, whose
decision is appealable to the CTA).
Jurisdiction over decisions of the Local Board of Assessment
Appeals is now lodged with the Central Board of Assessment
Appeals.
Necessity of decisions in order to vest the CTA with
jurisdiction

Chapter 9: COURT OF TAX APPEALS. Page 1 of 4

TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011

JUICY NOTES (PROF.

Decisions of either the Commissioner or Internal Revenue or

the Commissioner of Customs is of the essence in appeal of
cases to the CTA for it is axiomatic in taxation that mere
assessments of the Commissioner are not appealable to the
CTA. It is settled that assessments are not decisions of the
Commissioner.
In a case, the Supreme Court held that the word decision
in Sec. 7 of RA 1125 means decisions of the Commissioner
on the protest of the taxpayer against the assessments.
Definitely, the word does not signify the assessment itself.
[Commissioner v. Villa, Jan. 20, 1968]

Compromise penalties and the CTA

Compromise Penalties are amounts collected by the BIR in
lieu of CRIMINAL PROSECUTION for violations committed by
taxpayers, the payment of which is based on a compromise
agreement validly entered into between the taxpayer and
the Commissioner.
Collection of compromise penalties comes within the scope
of Sec. 7 of RA 1125 which speaks of penalties imposed in
relation thereto and that therefore follows that the CTA has
jurisdiction thereon. [US Life Insurance Co. v.
Commissioner CTA Case No. 1267 Dec. 29, 1964]
What decision is appealable?
When it constitutes the final action taken by him, or his
authorized deputies with respect to the taxpayers liability.
The appealable decision is that letter of denial where the
Commissioner not only demanded payment of the tax but
wherein he also gave the warning that in the event that the
taxpayer fails to pay the same, the Commissioner would be
constrained to enforce the collection thereof by means of
the remedies prescribed by law. [Surigao Electric Co. v.
Commissioner 85 SCRA 547]
However, the filing of a judicial action for collection, i.e.,
criminal and civil action during the pendency of an
administrative protest, constitutes a denial of the protest.
[Commissioner v. Union Shipping ]. In such a situation,

the taxpayer may file an appeal with the Court of Tax

Appeals.
Whose decisions are appealable??
Decisions of the Commissioner of Internal Revenue are by
statutory provision appealable to the CTA, but it appears
that under Rev. REg. 12-85, decisions of the Regional
Director of a revenue region of the BIR is also appealable.
There is a court ruling to the effect that the decisions of a
Regional Director may be appealable to the CTA, [Fortalez,
Jr. v. Collector, Resolution, CTA Case no. 1257, Dec.
22, 1964]
Appeals on customs cases seem to be limited only to
decisions of the Commissioner of Customs

Prescription of assessment and action

The defense of prescription of assessment should be raised
while the case is pending with the BIR, whereas, the defense
of prescription of action may be raised for the first time,
even on appeal to the CTA, but not for the first time in an
appeal with the SC.
Who may appeal to the CTA?
Any person, association or corporation affected by a
decision of the Commissioner of Internal Revenue or the
Collector of Customs.
Collection case in RTC while appeal is pending in the CTA
If the Bureau of Internal Revenue, during the pendency of an
appeal in the CTA, files a civil action in the RTC, for the
collection of the tax liability, the taxpayer may file a motion
in the RTC for the dismissal of the case on the ground that
there is no basis for collecting the tax due where the
assessment thereof is still under dispute in the CTA.
Tax collection not suspended during appeal

Chapter 9: COURT OF TAX APPEALS. Page 2 of 4

TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011

JUICY NOTES (PROF.

An appeal to the CTA from a decision of the Commissioner

shall not suspend the collection of the payment or collection
of the tax liability of the taxpayer, unless a motion to the
effect, shall have been presented to the CTA and granted by
it on the ground that such collection jeopardizes the interest
of the government and/or the taxpayer.

No injunction to restrain tax collection

General rule: No court shall have the authority to grant an
injunction to restrain the collection of any national internal
revenue tax, fee or charge imposed by the NIRC, [Sec. 218,
NIRC].
Exception: CTA may suspend or restrain the collection of the
tax when, in its opinion, the collection of the tax may
jeopardize the interest of the government and/or the
taxpayer, [Sec. 11, RA1125]

Requisites for injunction

1. That the collection of the tax may jeopardize the interest of
the government and/or the taxpayer.
2. That the taxpayer is willing to deposit the amount equal to
the taxes assessed or to a bond amounting to not more than
twice the value of the tax being assessed.
3. That the CTA may issue an injunction only in the exercise of
its appellate jurisdiction.
The thirty-day prescriptive period of appeal
The thirty-day prescriptive period starts to run from the date
the taxpayer receives the appealable decision of the
Commissioner.
The 30 day period is jurisdictional. The failure of the
taxpayer to appeal from a decision of the Commissioner on

time renders the assessment final, executory and

demandable.
Requests or motions filed by the taxpayer with the BIR for
the reconsideration of the Commissioners decision operate
to suspend the running of the 30 day prescriptive period.
However, mere reiterations of previous petitions for
reconsideration do not suspend the running of the
prescriptive period. Pro forma motions, which do not raise
new issues, will not suspend the period.

Remedy if taxpayer fails to appeal within the 30 day period

None. Failure to appeal renders the assessment FINAL and
EXECUTORY since the period to appeal is jurisdictional and
non-extendible .
Interlocutory orders
Interlocutory orders of the CTA are not appealable.
Appeal from decisions of the CTA
One motion for reconsideration may be allowed for decisions
of the CTA.
Pro Forma Request for Reconsideration one that is
submitted only for purposes of delay and will NOT interrupt
the running of the prescriptive period.
Decisions of the CTA are appealed to the Court of Appeals
through a verified petition for review. [Sections 1 and 5,
Rule 43, Rules of Court]
Appeals period is fifteen (15) days from receipt of the
decisions or judgment. The Court of Appeals may grant an
additional period of fifteen (15) days only within which to file
the petition for review.
No further extension shall be
granted except for the most compelling reasons and in no
case to exceed fifteen (15) days. [Section 4, Rule 43, Rules
of Court]
Ancillary Jurisdiction of the CTA
The ancillary jurisdiction of the CTA such as the power to
issue writs of prohibition and injunction is only

Chapter 9: COURT OF TAX APPEALS. Page 3 of 4

TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011

JUICY NOTES (PROF.

SUPPLEMENTARY to its appellate jurisdiction. The power to

issue writs exists only in cases appealed to it. There has to
be a main action first pending before it.
When decision of the CTA is adverse to the Government
The Solicitor General, being the chief legal officer of the
government, is aptly the officer who should appeal to the CA
or SC.
Findings of fact of CTA not reviewable
Findings of fact of the CTA, when supported by substantial
evidence, is final.

Section 16 of RA 1125 provides that where an appeal is

found to be frivolous or that proceedings have been
instituted merely for delay, the CTA may assess damages
against the appellant in an amount not exceeding P500
which shall be collected in the same manner as fine or other
penalties authorized by law.

Other Matters:
The tax court has no advisory jurisdiction. Hence, advisory opinions
such as those relating to actions for declaratory relief are outside
its jurisdiction. It does NOT have criminal jurisdiction either.

Damages in CTA proceedings

Chapter 9: COURT OF TAX APPEALS. Page 4 of 4