TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
CABANEIRO) A2011 1
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
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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
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]
Chapter 9: COURT OF TAX APPEALS. Page 1 of 3
TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
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
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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
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]
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TAX REVIEWER: LAW OF BASIC TAXATION IN THE PHILIPPINES BY: Benjamin B. Aban
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]
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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 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.
Damages in CTA proceedings
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.
Chapter 9: COURT OF TAX APPEALS. Page 3 of 3