G.R. No. 207843 . February 14, 2018.
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. COURT OF TAX APPEALS AND PETRON CORPORATION, RESPONDENT.

FACTS

The Commissioner of Internal Revenue (CIR) issued a letter interpreting Section 148(e) of the National Internal Revenue Code, opining that alkylate is subject to excise tax. In implementation, the Commissioner of Customs issued a memorandum, leading the Collector of Customs to assess excise tax on Petron’s alkylate importations. Petron filed a petition for review directly with the Court of Tax Appeals (CTA), contesting the CIR’s interpretation and the resulting tax imposition. The CTA initially dismissed but later gave due course to the petition, holding it had jurisdiction over the interpretative question and that the threat of immediate collection justified bypassing administrative remedies.
The CIR elevated the case via certiorari, arguing the CTA lacked jurisdiction over interpretative rulings and that the assessment appeal was premature absent a final decision from the Commissioner of Customs. In a July 15, 2015 Decision, the Supreme Court sided with the CIR, ordering the dismissal of Petron’s CTA petition for lack of jurisdiction and prematurity. Petron filed a motion for reconsideration.

ISSUE

Whether the Supreme Court’s July 15, 2015 Decision, dismissing Petron’s CTA petition, should be reconsidered.

RULING

The Supreme Court granted the motion for reconsideration, reversing its prior Decision. The Court clarified the jurisdictional issue by reconciling conflicting precedents. It abandoned the restrictive view in British American Tobacco v. Camacho, which held the CTA could not rule on the validity of revenue regulations or issuances. Instead, it affirmed the broader interpretation established in Banco De Oro v. Republic, which held that the CTA’s exclusive appellate jurisdiction over “other matters arising under” the Tax Code inherently includes the power to rule on the validity of any administrative rule or issuance that is the subject of an appeal. Consequently, the CTA has jurisdiction to resolve the validity of the CIR’s interpretative ruling on alkylate.
Regarding prematurity, the Court noted supervening events that mooted the issue. During the pendency of the case, Petron had paid the assessed taxes under protest, filed an administrative claim for refund with the BIR, and subsequently filed a Supplemental Petition for Review with the CTA for tax refund/credit. This judicial claim for refund, over which the CTA unquestionably has jurisdiction under Section 7(a)(1) of Republic Act No. 1125 , placed the entire controversy—including the underlying validity of the CIR’s interpretation—properly before the CTA. Thus, the petition for review was declared within the CTA’s jurisdiction, and the CTA was directed to resolve the case with dispatch.