THIS article is meant to supplement my previous article entitled “Certiorari Jurisdiction of the Court of Tax Appeals.” In the said article, I discussed the recent Supreme Court (SC) decisions recognizing the jurisdiction of the Court of Tax Appeals (CTA), through its power of certiorari, to rule on the validity of a particular administrative rule or regulation. In this article, I will discuss in greater detail whether it is now the CTA, not the regular courts, which has jurisdiction over the validity of the issuances of the Bureau of Internal Revenue (BIR).
In the cases of Rodriguez v. Blaquera, G.R. L-13941, September 30, 1960; CIR v. Leal, G.R. 113459, November 18, 2002; and Asia International Auctioneers v. Parayno, G.R. 163445, December 18, 2007, the SC has consistently held that it is the CTA that has jurisdiction to review the rulings of the BIR. In these cases, the SC has said that the revenue issuances in question were actually rulings or opinions of the BIR implementing the Tax Code and such are appealable to the CTA, and not the regular courts.
And then came British American Tobacco v. Camacho, G.R. 163583, August 20, 2008. In the said case, a petition for injunction was filed before the Regional Trial Court (RTC) directly attacking the constitutionality of a Tax Code provision and the validity of its implementing rules and regulations. It was argued that the same should have been brought before the CTA. In resolving this issue, the SC ruled that the jurisdiction of the CTA does not include cases where the constitutionality of a law or rule is challenged. The determination of the constitutionality of a law or a rule or regulation issued by an administrative agency is within the jurisdiction of the regular courts, and not the CTA. Following this case, it has then been consistently argued that if the constitutionality or validity of a rule or regulation is interposed as an issue in questioning a revenue issuance, it is the regular courts that have jurisdiction, and not the CTA.
However, winds of change are forming in the recent decisions of the SC. In the case of City of Manila v. Hon. Grecia-Cuerdo, G.R. 175723, February 4, 2014, the SC has finally recognized the power of the CTA to issue writs of certiorari to effectively exercise its appellate jurisdiction. And in the later case of Philippine American Life and General Insurance Company (Philamlife) v. The Secretary of Finance and BIR, G.R. 210987, November 24, 2014, the SC ruled that the review of the rulings of the BIR is appealable to the CTA, and more important, the SC has unequivocally said that it is now within the power of the CTA, through its power of certiorari, to rule on the validity of a particular administrative rule or regulation so long as it is within its appellate jurisdiction. And in Banco de Oro et al. v. Republic, G.R. 198756, January 13, 2015 (the PEACE Bond case), the most recent in this line of cases, the SC has again explicitly said that the jurisdiction to review the rulings of the BIR pertains to the CTA, not the regular courts.
With these recent decisions of the SC, clearly, jurisdiction over the validity of revenue issuances now rests with the CTA. As the ponencia in Philamlife stresses, exercise by two judicial bodies, the Court of Appeals and the CTA, of jurisdiction over basically the same subject matter is precisely the split-jurisdiction situation which is anathema to the orderly administration of justice. As the jurisprudence stands, the CTA, through its power of certiorari, may now rule on the validity of a rule or regulation so long as it is within its appellate jurisdiction. And as affirmed by the SC in the recent PEACE Bond case, revenue issuances are decisions of the BIR in matters arising under the Tax Code and other laws administered by the BIR and, as such, are within the appellate jurisdiction of the CTA pursuant to Section 7(a)(1) of Republic Act (RA) 1125 (An Act creating the CTA), as amended by RA 9282. All told, it now appears that adverse revenue issuances should be brought before the CTA and the CTA is not bereft of jurisdiction even if the constitutionality or validity of the rule or regulation is at issue.
These pronouncements of the SC, would inevitably lead to many big and looming questions. The biggest question is: what happens to those cases currently pending before the regular courts which were filed before the change in paradigm?
How about temporary restraining orders issued by the regular courts restraining the BIR to enforce revenue issuances? After all, it is a fundamental aphorism in remedial law that a court’s jurisdiction over the subject matter can always be raised at any time.
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The author is a junior associate of Du-Baladad and Associates Law Offices, a member-firm of World Tax Services Alliance.
The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at pierremartin.reyes@bdblaw.com.ph or call 403-2001 local 311.
2 comments
sorry, I am confused, ain’t it not that decisions/ nondecisions of the BIR should be raised to the CTA?
Yes, you are correct in stating that decisions or inactions of the BIR are appealable to the CTA. What the article, however, is discussing is which court has jurisdiction if the constitutionality or validity of the rule or regulation is raised. Prior to the recent cases of Philamlife and BDO, the jurisdiction would lie with the regular courts. With the recent decisions, however, it is clear that CTA may now rule on the question of validity directly as revenue issuances are now considered as “decisions of the CIR.”