EGIS PROJECTS S.A., Petitioner,
- versus -
THE SECRETARY OF FINANCE
Uy, Casanova, Fa bon-Victorino, Mindaro-Grulla, Cotangco-Manalastas, and Ringpis-Lib an, JJ. and COMMISSIONER OF INTERNAL REVENUE, Respondents.
FACTS:
In its petition for review before the Court in Division petitioner alleges that it filed a Tax Treaty Relief Applications (TTRA) with Bureau of Internal Revenue - International Tax Affairs Division of the (BIR-ITAD) requesting confirmation that the dividends paid by MNTC to petitioner on July 16, 2010 are subject to a preferential tax rate of 10% under the RP-France Tax Treaty.
In reply, respondent CIR issued BIR Ruling No. ITAD 2013-11, denying petitioner's TTRA since the TTRA was filed after the occurrence of the first taxable event in violation of RMO No. 72-2010.
Petitioner appealed to respondent Secretary of Finance for the review and reversal of the BIR ITAD ruling. In its appeal, petitioner also sought the revocation of the invalid provisions of RMO No. 72-2010.
Respondent Secretary of Justice then issued its ruling affirming the ruling of the respondent CIR.
Hence, petitioner filed a petition for review before the Court in Division substantially questioning the mandatory requirement provided under RMO Nos. 72-2010 and 1-2000.
Petitioner basically argues that respondents acted beyond their constitutional authority and the corresponding RMOs or its relevant provisions are not valid for being unconstitutional. Petitioner prays that judgment be rendered as follows:
1. Reversing BIR Ruling No. ITAD 2013-11 and the DOF Ruling that affirmed the same;
2. Revoking and nullifying RMO Nos. 72-2010 and 1-2000 or its relevant provisions for being unconstitutional since the same was issued beyond the CIR's rule-making powers; and
3. Rendering judgment declaring Egis France to be entitled to the 10°/o preferential tax rate under the RP - France double tax treaty on dividends received from MNTC, regardless of the time when it filed the application for tax treaty relief.
Based on the allegations in the petition for review, petitioner is substantially questioning the validity or constitutionality of BIR Ruling No. ITAD 2013-11 (including the DOF Ruling affirming the same) and RMO Nos. 72-2010 and 1-2000, which were issued by the BIR in the exercise of its quasi-legislative function, hence, beyond the jurisdiction of this Court.
ISSUE:
Whether Court in Division err when it dismissed petitioner's petition for review on the ground of lack of jurisdiction.
RULING:
No, Court in Division did not err when it dismissed petitioner's petition for review in CTA on the ground of lack of jurisdiction.
The jurisdiction of the CTA is defined in R.A. No. 112523, as amended by R.A. No. 9282. Section 7 thereof provides in part:
"Sec.7. Jurisdiction.- The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:
(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;
(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;
XXX XXX XXX."
In interpreting the above provisions, the Supreme Court, in the case of British American Tobacco us. Camacho (British American Tobacco case), held that the CTA's jurisdiction to resolve tax disputes in general excludes the power to rule on the constitutionality or validity of a law, rule or regulation, thus:
"While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this does not include cases where the constitutionality of a law or rule is challenged. Where what is assailed is the validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review.
The CIR's power to make interpretative rules is specifically granted in the first paragraph Section 4 of 1997 NIRC which provides that the power to interpret provisions of tax laws is under the exclusive and original jurisdiction of the CIR, subject to review by the Secretary of Finance.
From the foregoing, BIR Rulings and RMOs fall under the quasi-legislative or rule-making powers of the CIR provided in the first paragraph of Section 4 of the NIRC of 1997, as amended, and not under the CIR's power to decide tax cases including "other matters" arising under tax laws provided in the second paragraph of the same section. Since decisions of the CIR rendered in the exercise of her power to decide tax cases provided in the second paragraph of Section 4 of the NIRC of 1997, as amended, are the ones that (are subject to review, on appeal, to the CTA under Section 7(a)(1) of R.A. No. 112531, as amended by R.A. No. 9282, then BIR Rulings and RMOs does not fall under "other matters" to which the CTA has jurisdiction. Moreover, the decisions of the CIR on "other matters" that this Court is authorized to review, on appeal, provided in
Section 7(a)(1) of R.A. No. 112532, as amended by R.A. No. 9282, were interpreted to include the following:
1. Determination if the warrant of distraint and levy issued by the BIR is valid;
2. Determination if the Waiver of Statute of Limitations was validly effected; and
3. Determination of whether or not the BIR's right to collect taxes had already prescribed.
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