G.R. No. 144942 ; July 4, 2002
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. LA SUERTE CIGAR AND CIGARETTE FACTORY, respondent.

FACTS

The Supreme Court initially denied the Commissioner of Internal Revenue’s (CIR) Petition for Review on Certiorari due to procedural defects, specifically the lack of a proper verification and because the appeal was not pursued by the Office of the Solicitor General (OSG). The CIR filed a motion for reconsideration and sought clarification on an apparent conflict. The CIR argued that under Section 220 of the Tax Reform Act of 1997 (RA 8424), legal officers of the Bureau of Internal Revenue (BIR) are authorized to institute and conduct judicial actions on behalf of the government, seemingly without the OSG’s participation. This provision states that such actions “shall be conducted by legal officers of the Bureau of Internal Revenue.”
The OSG, ordered to comment, opined that Section 220 grants primary responsibility to BIR legal officers to commence actions, making deputization by the OSG unnecessary. The core legal dispute, however, pertained to the validity of a revenue regulation imposing a tax on stemmed-leaf tobacco. The CIR, believing the dismissal on procedural grounds would have significant adverse effects on government revenue, pleaded for a chance to prosecute the substantive case, asserting it had acted in good faith regarding the representation issue.

ISSUE

The primary issue is whether Section 220 of the Tax Reform Act of 1997 allows BIR legal officers to independently represent the government in appellate proceedings before the Supreme Court, thereby dispensing with the requirement for the OSG to handle such appeals.

RULING

The Supreme Court clarified that Section 220 of the Tax Reform Act pertains only to the institution and conduct of actions at the trial court level. It does not overturn the established procedure requiring the OSG to represent the government in appellate proceedings. The Court emphasized that, from a historical and statutory perspective, the OSG remains the principal law officer and legal defender of the government. Its powers and functions, as outlined in the Administrative Code, include representing the Government in the Supreme Court and the Court of Appeals.
The Court cited its ruling in Gonzales vs. Chavez, which solidified the OSG’s role as the government’s primary appellate counsel. An exception exists, as noted in Orbos vs. Civil Service Commission, when one government agency takes an adverse position against another; in such cases, the affected agency may appear through its own legal personnel. However, this exception was not applicable to the present scenario. On the procedural defects, the Court exercised leniency. It held that the lack of verification, while a requirement, is not always fatal and can be excused in meritorious cases to serve substantial justice, especially given the potential significant impact of the substantive tax issue on government revenues.
Consequently, the Court granted the CIR’s plea for a chance to prosecute the case. It directed the OSG to enter its appearance and to manifest whether it would adopt the instant petition. The Court would then act on the pending motion for reconsideration of its earlier denial.