G.R. No. 199422 , June 21, 2016
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. KEPCO ILIJAN CORPORATION, Respondent.

FACTS

KEPCO Ilijan Corporation filed a claim for refund of unutilized input VAT for the first and second quarters of 2000. The Commissioner of Internal Revenue did not act on the claim, prompting KEPCO to file a Petition for Review before the Court of Tax Appeals (CTA) First Division. The CTA First Division rendered a Decision granting the refund. The CIR failed to file a required memorandum and did not file a motion for reconsideration, allowing the decision to become final and executory. A Writ of Execution was subsequently issued.
The CIR later filed a Petition for Annulment of Judgment with the CTA En Banc, alleging extrinsic fraud due to her counsel’s gross negligence in failing to file the memorandum and assailing the CTA First Division’s jurisdiction over the original refund claim. The CTA En Banc dismissed the petition, ruling it had no jurisdiction to entertain an annulment of judgment. The CIR elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

The primary issue is whether the CTA En Banc has jurisdiction to entertain a petition for annulment of judgment of a CTA Division.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CTA En Banc’s dismissal. The Court held that the CTA En Banc does not have jurisdiction over an original action for annulment of judgment. Jurisdiction is conferred solely by law. The governing statutes for the CTA, Republic Act No. 1125 (as amended) and Republic Act No. 9282 , do not provide the CTA En Banc with original jurisdiction over such petitions. Its jurisdiction is primarily appellate, reviewing decisions or resolutions of its Divisions. An annulment of judgment is an original, independent action, not an appeal. Since the law does not vest this original jurisdiction in the CTA En Banc, it correctly dismissed the petition for lack of jurisdiction.
The Court further clarified that the alleged gross negligence of counsel does not constitute extrinsic fraud warranting annulment. Extrinsic fraud refers to deceitful conduct outside the trial that prevents a party from presenting their case. Mere negligence of counsel, even if gross, is not equivalent to extrinsic fraud. The CIR’s proper remedy against the CTA First Division’s final decision was a timely appeal or a petition for relief from judgment, not an annulment. The CIR’s failure to avail of these remedies bars the extraordinary recourse of annulment. The Court also found no merit in the jurisdictional challenge to the original refund claim, as the CTA clearly has exclusive appellate jurisdiction over such tax refund cases.