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Certiorari jurisdiction of the Court of Tax Appeals

IN seeking recourse to a court of law, an aggrieved party must avail of the appropriate remedy
in the proper forum. In this article, I will discuss the recent Supreme Court (SC) decisions
recognizing the jurisdiction of the Court of Tax Appeals (CTA) over special civil actions for
certiorari under Rule 65 of the Rules of Court (ROC) and issues relating thereto.

The SC first recognized the power of the CTA to issue writs of certiorari in the case of City of
Manila v. Hon. Grecia-Cuerdo, GR 175723, February 4, 2014. In the said case, the regional trial
court (RTC) issued a writ of preliminary injunction, an interlocutory order, in favor of the
taxpayer. With its motion for reconsideration denied, the city of Manila filed a special civil action
for certiorari with the Court of Appeals (CA). The CA dismissed the petition for certiorari and
ruled that since appellate jurisdiction over the taxpayers local tax refund is vested in the CTA, it
is the CTA that has jurisdiction. In resolving the issue, the SC ruled that the power of the CTA
includes the determination of whether there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases
falling within the exclusive appellate jurisdiction of the CTA. The SC opined that, for any
appellate court to effectively exercise its appellate jurisdiction, it must have the authority to
issue, among others, a writ of certiorari.

Previously, the CA would have the jurisdiction to issue the writ of certiorari against the
interlocutory order of the RTC, while the CTA would have jurisdiction over the appeal from the
decision of the RTC. Section 1, Rule 41 of the ROC provides that no appeal may be taken from
an interlocutory order of an RTC, and the SC has said that the remedy against such an
interlocutory order is a special civil action for certiorari under Rule 65 to be filed with the CA.
With the case of city of Manila, it is now clear that the proper remedy against an interlocutory
order of the RTC in a local tax case is a special civil action for certiorari under Rule 65 to be
filed with the CTA.

In Philippine American Life and General Insurance Co. (Philamlife) v. The Secretary of Finance
and Commissioner of Internal Revenue (CIR), GR 210987, November 24, 2014, the SC,
likewise, reiterated that the CTA has the power of certiorari in cases within its appellate
jurisdiction. In the said case, the taxpayer requested a ruling from the Bureau of Internal
Revenue (BIR) to confirm that its sale is not subject to donors tax. The CIR issued an adverse
ruling. Aggrieved, the taxpayer requested the SOF to review the ruling. The SOF, however,
affirmed the ruling. The taxpayer elevated the case to the CA via a petition for review under
Rule 43 of the ROC. The CA dismissed the petition and ruled that, pursuant to Section 7(a)(1) of
Republic Act (RA) 1125, as amended by RA 9282, it is the CTA that has jurisdiction. The SC
ruled that the review by the SOF of a BIR ruling is appealable to the CTA, not the CA, a doctrine
reiterated in the recent decision of Banco de Oro et al. v. Republic, GR 198756, January 13,
2015. What is important to note, however, in this case, is the ruling of the SC to the effect 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. The SC
ruled that the CTA can now rule not only on the propriety of an assessment or tax treatment of a
certain transaction, but also on the validity of the revenue regulation or revenue memorandum
circular on which the assessment is based.

The cases of Philamlife and Banco de Oro have determined the CTA as the proper forum. In
using the word appeal, it is clear that the appropriate remedy to elevate the SOFs review is
through a petition for review to be filed with the CTA. What remains unclear is whether the very
same petition for review is also the appropriate remedy if the validity of an administrative rule or
regulation is raised when it has been held that certiorari is the appropriate remedy to question
the validity of administrative issuances which are alleged to have been issued with grave abuse
of discretion amounting to lack of jurisdiction. It must be remembered that a petition for review
and a special civil action for certiorari are two distinct, mutually exclusive, and antithetical
remedies. A petition for review is a mode of appeal to correct errors of judgment committed by
the court, tribunal, or officer, while a writ of certiorari is an extraordinary remedy to correct errors
of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction.
Errors of judgment cannot be proper subjects of a special civil action for certiorari and a special
civil action of certiorari will not issue where the remedy of appeal is still available to an
aggrieved party. This uncertainty should soon be addressed so as not to leave taxpayers in a
quandary on what remedies to be taken.

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The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a
member-firm of World Tax Services (WTS) 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.