G.R. No. 260912, August 17, 2022
The Department of Energy, Petitioner, vs. Court of Tax Appeals, Respondent.

FACTS

The Department of Energy (DOE) filed a Petition for Review before the Court of Tax Appeals (CTA) assailing a tax assessment or ruling from the Bureau of Internal Revenue. The CTA dismissed the case for lack of jurisdiction. The CTA ruled that under Presidential Decree No. 242, disputes solely between government agencies, including tax disputes, must be administratively settled and not brought directly to court. The DOE elevated the matter to the Supreme Court, arguing the CTA has exclusive appellate jurisdiction over tax cases.
The ponencia, applying the doctrine from *Power Sector Assets and Liabilities Management Corporation (PSALM) v. Commissioner of Internal Revenue*, affirmed the CTA’s dismissal. It held that PD No. 242 mandates administrative settlement for all disputes, including tax controversies, between government entities, and this jurisdiction is not limited to contractual disputes. The majority found no exception in the law that would allow the CTA to take cognizance of such inter-agency tax disputes.

ISSUE

Whether the Court of Tax Appeals has jurisdiction over a tax dispute exclusively between two national government agencies.

RULING

No. The Supreme Court, through the ponencia, ruled that the CTA correctly dismissed the case for lack of jurisdiction. The legal logic is anchored on a strict application of PD No. 242, which prescribes administrative settlement for “all disputes, claims and controversies solely between or among” government agencies. The Court, in the PSALM case, explicitly held that this coverage includes tax disputes. There is no textual distinction in the decree between disputes arising from contracts and those arising from tax laws; the language is comprehensive.
The ruling clarifies that the doctrine in Philippine National Oil Co. (PNOC) v. Court of Appeals, which suggested that Republic Act No. 1125 (the CTA law) created an exception to PD No. 242 for tax cases, has been abandoned. The Court in PSALM established that PD No. 242, as the later and more specific expression of legislative policy for inter-governmental disputes, governs. The policy is to prevent the government from litigating against itself in court, conserving judicial resources and promoting a unified government position. Therefore, the proper recourse for the DOE is to initiate the administrative process under PD No. 242, culminating in a possible appeal to the Office of the President, whose decision would have the force of a final court judgment. The dissent, while agreeing with the PSALM doctrine’s application, advocated for a future re-examination to revert to the PNOC doctrine, but the majority’s interpretation stands as the controlling precedent.