G.R. No. 234614 , June 14, 2023
Oceanagold (Philippines), Inc. vs. Commissioner of Internal Revenue

FACTS

Oceanagold (Philippines), Inc. (petitioner) is a mining company operating under a Financial or Technical Assistance Agreement. On February 13, 2007, the Commissioner of Internal Revenue (respondent) issued BIR Ruling No. 10-2007, confirming petitioner’s tax exemption for excise taxes on minerals during a recovery period. Later, on September 3, 2012, the BIR issued a Mission Order authorizing the search of petitioner’s premises for excisable articles. In December 2012, the BIR detained petitioner’s mineral ores via an apprehension slip, and petitioner lodged a protest. In February 2013, while transporting copper concentrates, the BIR seized and detained portions of the shipment. On February 12, 2013, respondent denied petitioner’s letter-protest and subsequently issued Revenue Memorandum Circular No. 17-2013, which revoked BIR Ruling No. 10-2007. Further seizures occurred in February and March 2013. Petitioner paid excise taxes under protest and filed a Petition for Review before the Court of Tax Appeals (CTA) assailing the seizures, the tax collection, and the validity of Revenue Memorandum Circular No. 17-2013. The CTA Second Division initially granted a suspension order but later denied the petition for lack of jurisdiction, ruling that the validity of the revenue memorandum circular was a matter for regular courts and that the seizure issue depended on the circular’s validity. The CTA En Banc affirmed, adding that petitioner failed to exhaust administrative remedies by not first challenging the circular before the Secretary of Finance. Petitioner appealed to the Supreme Court.

ISSUE

Whether or not the CTA En Banc erred in affirming that petitioner’s case was properly denied for lack of jurisdiction.

RULING

The Petition is partly meritorious. The Supreme Court clarified that the CTA has jurisdiction to rule on the validity of a tax law or regulation, whether raised directly or as a defense, as established in Banco De Oro. However, this authority is exercised through the CTA’s appellate jurisdiction, which requires the exhaustion of administrative remedies. Petitioner failed to exhaust these remedies because it did not seek a review of Revenue Memorandum Circular No. 17-2013 by the Secretary of Finance as required under Section 4 of the National Internal Revenue Code. The Court found no applicable exceptions to the exhaustion doctrine in this case. Consequently, the CTA correctly declined jurisdiction over the challenge to the circular’s validity. However, the Court noted that the CTA retains jurisdiction over the specific issues of the legality of the apprehension, seizure, and detention of the copper concentrates, as these constitute “other matters” appealable to the CTA under its jurisdiction. The case was remanded to the CTA for further proceedings on these specific issues.