Court of Tax Appeals

8/3/2019 Court of Tax Appeals

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COURT OF TAX APPEALS

Abuel, Angelica J.

Bautista, Nadjla

Tongol, Roby Renz


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REPUBLIC ACT NO. 1125

AN ACT CREATING THE COURT OF TAX APPEALS

The Court of Tax Appeals (CTA) was created on June 16, 1954, through the enactment of

Republic Act No. 1125 (R.A. 1125). Considering its limited jurisdiction then, it had only three(3) Judges, which at present is equivalent to one (1) Division.

Court; Judges; qualifications; salary; tenure. - There is hereby created a Court of Tax Appealswhich shall consist of a Presiding Judge and two Associate Judges, each of whom shall be

appointed by the President, with the consent of the Commission on Appointments. The Presiding

Judge shall be so designated in the commission issued to him by the President, and the Associate

Judges shall have precedence according to the date of their commissions. The Presiding Judgeshall receive a compensation of thirteen thousand pesos per annum and shall have the same

qualifications, rank, category and privileges as the Presiding Judge of the Court of Industrial

Relations. The Associate Judges shall each receive a compensation of twelve thousand pesos per

annum and shall have the same qualifications, rank, category and privileges as a member of theCourt of Industrial Relations. The Presiding Judge and the Associate Judges shall be appointed to

hold office during good behavior, until they reach the age of seventy, or become incapacitated todischarge the duties of their office, unless sooner removed for the same causes and in the same

manner provided by law for members of the judiciary of appellate rank.

Quorum; temporary vacancy. - Any two Judges of the Court of Tax Appeals shall constitute a

quorum, and the concurrence of two judges shall be necessary to promulgate any decisionthereof. In case of temporary vacancy, disability or disqualification, for any reason, of any of the

judges of the said Court, the President may, upon the request of the Presiding Judge, designate

any Judge of First Instance to act in his place; and such Judge of First Instance shall be duly

qualified to act as such.

Clerk of court; appointment; qualification; compensation. - The Court of Tax Appeals shall

have the Clerk of Court who shall be appointed by the President with the consent of the

Commission on Appointments. No person shall be appointed Clerk of Court unless he is dulyauthorized to practice law in the Philippines. The Clerk of Court shall exercise the same powers

and perform the same duties in regard to all matters within the court's jurisdiction, as are exercise

and performed by clerks of Court of First Instance, in so far of those powers and the performance

of those duties the clerk shall be under the direction of the said court. The Clerk of Court shallreceive a compensation of six thousand pesos per annum.

Pursuant to the provisions of Republic Act No. 1125 and other laws prior to R.A. 9282, the Courtof Tax Appeals retains exclusive appellate jurisdiction to review by appeal, the following:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties imposedin relation thereto, or other matters arising under the National Internal Revenue Code or

other law or part of law administered by the Bureau of Internal Revenue;


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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 mattersarising under the Customs Law or other law or part of law administered by the Bureau of

Customs [Rep. Act. No. 1125, (1954), Sec. 7];

3. In automatic review cases where such decisions of the Commission of Customs

favorable to the taxpayer is elevated to the Secretary of Finance (Sec. 2315, TCC); and

4. Decisions of the Secretary of Trade and Industry, in the case of non-agricultural

product, commodity or article, or the Secretary of Agriculture, in the case of agriculturalproduct, commodity or article, in connection with the imposition of the Anti-Dumping

Duty, Countervailing and Safeguard Duty [Republic Act Nos. 8751 and 8752, (1999)

Sec. 301 (a) and (p), and Republic Act 8800].


AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX

APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A

COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING

ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS

OR REPUBLIC ACT NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE

LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER

PURPOSES

With the passage of Republic Act Number 9282 (R.A. 9282) on April 23, 2004, the CTAbecame an appellate Court, equal in rank to the Court of Appeals.

Court; Justices; Qualifications; Salary; Tenure - There is hereby created a Court of Tax

Appeals (CTA) which shall be of the same level as the Court of Appeals, possessing all the

inherent powers of a Court of Justice, and shall consist of a Presiding Justice and five (5)Associate Justices. The incumbent Presiding Judge and Associate Judges shall continue in office

and bear the new titles of Presiding Justice and Associate Justices. The Presiding Justice and the

most Senior Associate Justice shall serve as chairmen of the two (2) Divisions. The additional

three (3) Justices and succeeding members of the Court shall be appointed by the President uponnomination by the Judicial and Bar Council. The Presiding Justice shall be so designated in his

appointment, and the Associate Justices shall have precedence according to the date of theirrespective appointments, or when the appointments of two (2) or more of them shall bear thesame date, according to the order in which their appointments were issued by the President. They

shall have the same qualifications, rank, category, salary, emoluments and other privileges, be

subject to the same inhibitions and disqualifications, and enjoy the same retirements and otherbenefits as those provided for under existing laws for the Presiding Justice and Associate Justices

of the Court of Appeals.


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Whenever the salaries of the Presiding Justice and the Associate Justices of the Court of Appeals

are increased, such increases in salaries shall be deemed correspondingly extended to and

enjoyed by the Presiding Justice and Associate Justices of the CTA.

The Presiding Justice and Associate Justices shall hold office during good behavior, until they

reach the age of seventy (70), or become incapacitated to discharge the duties of their office,unless sooner removed for the same causes and in the same manner provided by law for

members of the judiciary of equivalent rank.

Sitting En Banc or Division; Quorum; Proceedings - The CTA may sit en banc or in two (2)

Divisions, each Division consisting of three (3) Justices.

Four (4) Justices shall constitute a quorum for sessions en banc and two (2) Justices for sessions

of a Division: Provided, That when the required quorum cannot be constituted due to anyvacancy, disqualification, inhibition, disability, or any other lawful cause, the Presiding Justice

shall designate any Justice of other Divisions of the Court to sit temporarily therein.

The affirmative votes of four (4) members of the Court en banc or two (2) members of a

Division, as the case may be, shall be necessary for the rendition of a decision or resolution.

Clerk of Court; Division Clerks of Court; Appointment; Qualification; Compensation - TheCTA shall have a Clerk of Court and three (3) Division Clerks of Court who shall be appointed

by the Supreme Court. No person shall be appointed Clerk of Court or Division Clerk of Court

unless he is duly authorized to practice law in the Philippines. The Clerk of Court and DivisionClerks of Court shall exercise the same powers and perform the same duties in regard to all

matters within the Court's jurisdiction, as are exercised and performed by the Clerk of Court and

Division Clerks of Court of the Court of Appeals, in so far as the same may be applicable or

analogous; and in the exercise of those powers and the performance of those duties they shall beunder the direction of the Court. The Clerk of Court and the Division Clerks of Court shall have

the same rank, privileges, salary, emoluments, retirement and other benefits as those provided forthe Clerk of Court and Division Clerks of Court of the Court of Appeals, respectively

Expanded Jurisdiction

Under Republic Act Number 9282, the CTA's original appellate jurisdiction was expanded to

include the following:

1. Criminal cases involving violations of the National Internal Revenue Code and

the Tariff and Customs Code;

2. Decisions of the Regional Trial Courts (RTC) in local tax cases;

3. Decisions of the Central Board of Assessment Appeals (CBAA) in cases

involving the assessment and taxation of real property; and

4. Collection of internal revenue taxes and customs duties the assessment of which

have already become final.


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AN ACT ENLARGING THE ORGANIZATIONAL STRUCTURE OF THE

COURT OF TAX APPEALS, AMENDING FOR THE PURPOSE CERTAIN

SECTIONS OF THE LAW CREATING THE COURT OF TAX APPEALS, AND

FOR OTHER PURPOSES

Republic Act Number 9503 was enacted on June 12, 2008 and took effect on July 5,

2008. This further enlarged the organizational structure of the CTA by creating a Third Division

and providing for three (3) additional Justices.

Court; Justices, Qualifications; Salary; Tenure - There is hereby created a Court of TaxAppeals (CTA) which shall be of the same level as the Court of Appeals, possessing all the

inherent powers of a Court of Justice, and shall consist of a Presiding Justice and eight (8)

Associate Justices. The incumbent Presiding Judge and Associate Judges shall continue in officeand bear the new titles of Presiding Justice and Associate Justices. The Presiding Justices and the

two (2) most Senior Associate Justices, all of whom are incumbent, shall serve as chairmen ofthe three (3) Divisions. The other three (3) incumbent Associate Justices and the three (3)additional Associate Justices shall serve as members of the Divisions. The additional three (3)

Justices as provided herein and the succeeding members of the Court shall be appointed by the

President upon nomination by the Judicial and Bar Council. The Presiding Justice shall be so

designated in his appointment, and the Associate Justices shall have precedence according to thedate of their respective appointment or when the appointments of two (2) or more of them shall

bear the same date, according to the order in which their appointments were issued by the

President. They shall have the same qualifications, rank, category, salary, emoluments and otherprivileges, be subject to the same inhibitions and disqualifications, and enjoy the same retirement

and other benefits as those provided for under existing laws for the Presiding Justice and

Associate Justices of the Court of Appeals.

Whenever the salaries of the Presiding Justice and the Associate Justices of the Court of Appealsare increased, such increases in salaries shall be deemed correspondingly extended to and

enjoyed by the Presiding Justice and Associate Justices of the CTA.

The Presiding Justice and Associate Justices shall hold office during good behavior, until they

reach the age of seventy (70), or become incapacitated to discharge the duties of their office,unless sooner removed for the same causes and in the same manner provided by law for

members of the judiciary of equivalent rank."

Sitting En Banc or Division; Quorum; Proceedings - The CTA may sit en banc or in three (3)Divisions, each Division consisting of three (3) Justices.

Five (5) Justices shall constitute a quorum for sessions en banc and two (2) Justices for sessions

of a Division. Provided, that when the required quorum cannot be constituted due to any

vacancy, disqualification, inhibition, disability, or any other lawful cause, the Presiding Justiceshall designate any Justice of other Divisions of the Court to sit temporarily therein.


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The affirmative votes of five (5) members of the Court en banc shall be necessary to reverse a

decision of a Division but a simple majority of the Justices present necessary to promulgate a

resolution or decision in all other cases or two (2) members of a Division, as the case may be,shall be necessary for the rendition of a decision or resolution in the Division Level.

SALIENT FEATURES OF CTA

The CTA is a judicial (not merely an administrative body

It is a court of special jurisdiction and as such can only take cognizance of such matters

as are clearly within its jurisdiction

It is not strictly governed by the technical rules of evidence

It should be noted that in one case, the CTA was referred to as a quasi-judicial

agency

VISION

A specialized tax court that is impartial, competent, transparent, and worthy of public

trust and confidence, ensuring faithful compliance with tax laws.

MISSION

To achieve its vision, the Court is guided by the following principles:

1. Fair and speedy collection of taxes by the Government;

2. Adequate judicial remedies to taxpayers against unreasonable/unjust taxassessments and refund of excessive/erroneous taxes collected;

3. Proper interpretation of tax statutes;

4. Adherence to the independence of the judiciary; and

5. Utmost deference for public trust and confidence in the judiciary.


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O R G A N I Z A T I O N A L S T R U C T U R E

The organizational set-up of the CTA is made up of the Office of the Presiding Justice, Offices

of the Associate Justices, Office of the Clerks of Court, the Legal and Technical Services Office,and the Office of Administrative and Finance Services.

The Presiding Justice is the Head of the Court. He has the same salary grade and enjoys the same

privileges as that of the Presiding Justice of the Court of Appeals. He exercises managerial and

administrative supervision over all the heads of offices and oversees the Court's operations.

Assisting the Presiding Justice in his adjudicative and administrative functions are eight (8)

Associate Justices, who have the same salary grade and enjoy the same privileges as those of theAssociate Justices of the Court of Appeals.


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O f f i c e o f t h e C l e r k o f C o u r t ( O C C )

The Office of the Clerk of Court is composed of an Executive Clerk of Court IV (Clerk of Court)

and an Executive Clerk of Court III (Assistant Clerk of Court).

Assistant Clerk of Court

Further, there are three (3) Division Clerks of Court. The Clerk of Court who is under the directsupervision of the Presiding Justice assists the Justices in the holding of their En Banc sessionsor hearings, and performs primarily adjudicative support functions with some non-adjudicative

or administrative functions. The Division Clerks of Court are under the direct supervision of the

Justices/Chairperson of their respective division. They assist their Justices in the hearing of cases

in the Division level. Thus, they perform primarily adjudicative support functions with somenon-adjudicative or administrative functions.


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O f f i c e o f L e g a l a n d T e c h n i c a l S e r v i c e s ( O L T S )


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Atty. Rene D. Natividad

Chief of Office, OLTS

The Office of the Legal and Technical Services, with Atty. Rene D. Natividad as Chief of Office,reviews and evaluates memoranda and reports on researches of the members of the staff on

multifarious legal questions referred to them by the Justices before they are finally submitted to

the same Justices for their consideration.

Marites B. Namoc

Librarian III

Ma. Imelda C. Samonte

Chief, Tax Specialist Division

Atty. Leizl L. Calimaran-Soriano

Court Attorney V

I n t e r n a l A u d i t S e r v i c e ( I A S )


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Soledad R. HoCJSO, IAS

M a n a g e m e n t I n f o r m a t i o n S y s t e m s D i v i s i o n ( M I S D )

Vicente G. ClementeSJSO, MISD

O f f i c e o f A d m i n i s t r a t i v e a n d F i n a n c e S e r v i c e s ( O A F S )

Elsie R. Tiauzon-Forteza

Chief of Office, OAFS

The Office of Administrative and Finance Services (OAFS), headed by Director Elsie R.

Tiauzon-Forteza, oversees the Human Resource Division, Budget Division, AccountingDivision, Cash Division, Property & Supply Division, General Services Division, the Medical &

Security Units and implements the Civil Service Rules and Regulations.

The Internal Audit Service (IAS) is directly under the Office of the

Presiding Justice. The IAS performs primarily internal control functions in

accordance with government auditing rules and regulations.

The MISD, under the supervision of the Office of the Senior Associate

Justice, Hon. Juanito C. Castaeda, Jr., operationalize computerization

projects/concerns in the Court.


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SAMPLES OF CTA-DECIDED CASES

1. GMA Network, Inc. v. Engr. Enrique F. Barroga, CTA EB No. 647, October 25, 2011

Facts: Pursuant to Section 206 of Local Government code (LGC) of 1991 and light of the pronouncement

interpreting the phrase exclusive of this franchise in Bayantel and Digitel cases, GMA Network served


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a letter with the Assessor, requesting for the exclusion, cancellation or dropping from the roll of

assessments its properties which are being actually directly and exclusively used in its TV relay

transmission in Cotabato City, in pursuit of its franchise for the operation of its TV broadcasting station.

The Court held that tax exemptions are never presumed, the burden is on the claimant to establish clearly

his right to the exemption and cannot be made out of inference or implications but must be laid beyondreasonable doubt. If such is the case, the grant of tax exemption under the Bayantel and Digitel cases

cannot be claimed by GMA as already being vested to it, since it is still dependent upon a contingency ofproving its entitlement thereto, and failing to do so would mean the denial of the claim.

Basis: There is no vested right in a tax exemption, more so when the latest expression of legislative intent

renders its continuance doubtful.

2. Kepco Philippines Corporation v. Commissioner of Internal Revenue 8437-02[-0p- 0,7 8CTA EB No.

698, October 25, 2011

Facts: Taxpayers administrative claim for refund of its unutilized input VAT for the four (4) quarters of

2004 was timely filed on October 28, 2005. Applying subsections (A) and (D) of Section 112 of the 1997

Tax Code, as amended, CIR has one hundred twenty (120) days or until February 25, 2006 to act on theapplication. After the lapse of the 120-day period, taxpayer may appeal the unacted administrative claim

within thirty (30) days therefrom or until March 27, 2006. Notwithstanding the timely filing of the

administrative claim, the judicial claim was filed only on April 25, 2006, twenty-nine (29) after the lapse

of the prescribed period. Thus due to the late filing of the Petition for Review, the court has no

jurisdiction to act on the said judicial claim.

Basis: Petition for review filed with the CTA beyond 30 days from the end of 180 days is considered filed

out of time.

3. Panay Power Corporation v. Commissioner of Internal Revenue, CTA EB Case No. 666, October 24,

2011)

Facts: The taxpayer claim that it is entitled for refund or issuance of Tax credit certificate since it is a

power generation company duly registered with and authorized by the Energy regulatory Commission

(ERC), its sales of electricity qualify for VAT zero-rating pursuant to Section 4 (x) in relation to Section

(6) of Republic Act No. 9136 (Electric Power Industry reform Act of 2001) and its Rules and Regulations

to Implement such law. The court held that in order to qualify for VAT zero-rating under R.A. No. 9136,

the taxpayer must be able to establish that (1) it is a power generation company and (2) it derived sales

from power generation services.

Basis: In order to qualify for VAT zero-rating under R.A. No. 9136, the taxpayer must be able to establish

that (1) it is a power generation company and (2) it derived sales from power generation services.

4. Commissioner of Internal Revenue v. Shinryo Co., Inc., CTA Case No. 7572, October 25, 2011)

Facts: In this case, although the exchange transaction pertained to the shares of stock of Shinryo

Philippines, it was never a party to the exchange transaction between Shinryo Japan and Dr. Cangco.

Neither did the exchange transaction benefit or the ownership of the shares of stock redound to Shinryo

Philippines. Moreover, a corporation has a separate personality distinct from its stockholders and from


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other corporations to which it may be connected. This feature flows from the legal theory that a corporate

entity is separate and distinct from its stockholders. This means that the tax liabilities due if any by

Shinryo Japan and Dr. Cangco have nothing to do with Shinryo Philippines. Shinryo Philippines is not

bound by the terms of the exchange transaction between Shinryo Japan and Dr. Cangco; thus, it should

not be liable for CGT and donors tax erroneously imposed by CIR.

Basis: A company is not liable for capital gains tax and donors tax on the exchange of shares of stockbetween its stockholders.

5. Nippon Express (Philippines) Corporation vs. Commissioner of Internal Revenue, CTA Case No. 6967,August 10, 2011

Facts: The taxpayer submitted in evidence the SEC Certificates of Non-Registration to prove that its

clients are not registered corporations in the Philippines. The Court ruled that this is not sufficient since

the same does not prove that the same clients are non-residents doing business outside the Philippines.

Thus, the sales to said clients cannot qualify for VAT zero-rating.

Basis: In a claim for refund of input tax, taxpayer must prove that its non-resident client is doing businessoutside the Philippines.

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