CIR v. CTA
REITERATIONFacts
1. The Antecedents: The Commissioner of Internal Revenue (CIR) issued an assessment against Hotel Specialist [Tagaytay], Inc. (HSTI) for deficiency income tax, value-added tax (VAT), withholding tax on compensation (WTC), and expanded withholding tax (EWT) for taxable year 2009. 2. Procedural History: HSTI protested the assessment. CTA Special Second Division affirmed the assessment on January 18, 2019, ordering payment of PHP 27,777,586.05. CTA En Banc denied petitions for review and affirmed. HSTI and Bureau of Internal Revenue (BIR) executed Judicial Compromise Agreement for PHP 7,288,481.52, approved by CTA En Banc on April 19, 2022. OSG sought 5% of compromise amount. CTA En Banc granted in Resolutions dated October 12, 2022, and March 16, 2023, directing BIR to remit to OSG. 3. The Petition: CIR filed Petition for Certiorari under Rule 65, assailing CTA En Banc Resolutions for grave abuse of discretion in ordering remittance of 5% compromise amount to OSG, arguing OSG did not participate, no monetary award to BIR, and fee inapplicable to compromises.
Issue(s)
Whether a Rule 65 petition is the proper remedy to question the CTA En Banc's directive to remit a portion of the compromise amount to the OSG? Whether the CIR's failure to implead the OSG rendered the petition fatally defective? Whether the CTA En Banc committed grave abuse of discretion in directing the CIR to remit 5% of the compromise amount to the OSG?
Ruling
ACCORDINGLY, the Petition for Certiorari is DISMISSED. SO ORDERED.
Ratio Decidendi
On Issue 1: A petition for certiorari under Rule 65 is the wrong remedy, as certiorari proceedings are only for absence of plain, speedy, or adequate remedy. Republic Act No. 1125, as amended, and Revised Rules of the Court of Tax Appeals (RRCTA) provide for appeal by certiorari under Rule 45 against CTA En Banc rulings. The CIR's use of the full 60-day Rule 65 period exceeded the Rule 45 reglementary period, appearing as a substitute for lost appeal, as in Commissioner of Internal Revenue v. Court of Tax Appeals (Third Division). Liberal construction is unwarranted given the clear availability of Rule 45. Thus, the petition fails procedurally. On Issue 2: The CIR did not implead the OSG, the real party in interest, as the challenge targets OSG's entitlement to 5% of the compromise amount, outside the compromise terms with HSTI. The cause of action opposes OSG's compensation for services, making OSG indispensable. Failure to implead renders the petition defective, as indispensable parties are necessary for complete relief. The issue concerns remittance directive favoring OSG, not the assessment merits. Hence, the petition is fatally flawed. On Issue 3: No grave abuse of discretion exists, as arguments raise errors of judgment, not capriciousness. CTA En Banc acted within jurisdiction on OSG's motion for attorney's fees post-compromise judgment, per De Tolentino v. Hon. Escalona, allowing incidental claims. Section 11(i), Republic Act No. 9417 entitles OSG to 5% of monetary awards, including compromises, as in Kepco Philippines Corporation v. Commissioner of Internal Revenue. Deputization via MOA does not divest OSG control, per Republic v. Viaje; BIR lawyers' authority is derivative from OSG's mandate under RRCTA Rule 9, Section 10. CIR's theories on active participation and non-applicability to compromises or deficiency taxes are rejected.
Main Doctrine
The Supreme Court reiterated that challenges to CTA En Banc resolutions must be via petition for review on certiorari under Rule 45, not certiorari under Rule 65, as the latter requires absence of plain, speedy remedies. It affirmed the OSG's statutory right to 5% of compromise amounts in tax assessments under RA 9417, emphasizing that deputization of BIR lawyers derives from OSG's primary authority, preserving supervision and fee entitlement. This doctrine underscores procedural rigor in tax litigation and protects OSG's role as government's principal counsel, preventing circumvention through compromises.