PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO), represented by its General Manager, MELQUIADES A. ROBLES v. THE COMMISSIONER OF INTERNAL REVENUE (CIR), BUREAU OF INTERNAL REVENUE (BIR)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PHILIPPINE CHARITY CTA Case No. 11435 SWEEPSTAKES OFFICE (PCSO), represented by its General Manager, Members: MELQUIADES A. ROBLES, Petitioner, MANAHAN, Chairperson, REYES-FAJARDO, and -versus- ANGELES, JJ . THE COMMISSIONER OF INTERNAL REVENUE (CIR), BUREAU OF INTERNAL P r o m u l g a ted : REVENUE (BIR), =e Respondent. AlJGUL2Jl2 _ . x--------------- - --------- -- - - ~.--:-- -- ~ 1ft q~..-x RESOLUTION The present Petition fo r Review With Prayer f or Exemption from the Payment of Filing Fees (hereafter referred t o as the "Petition") assails the Letter dat ed December 1, 2023 of respondent which denied petitioner's request for tax credit or refund of alleged excess final withholding tax (FWT) paid on the s% Prize Fund Tax (PFT) for t axable years 2018 and 2019, in the amount of P1,408,967,911.47 and P946,938,563.22, respectively, or a tot al amount of P2,355,906,474�69. The Petition was filed by the Philippine Charity Sweepstakes Office (PCSO) which alleges to be a government instrumentality existing by virtue of Republic Act (RA) No. 1169, otherwise known as An Act Providing for Charity Sweepstakes, Horse Races, and Lotteries (h ereafter referred to as the "Ch arter"), as amended.1 Impleaded as respondent is the Commissioner of Internal Revenue (CIR) , the h ead of the Bureau of Internal Revenue (BIR), who has the power to decide disputed assessments, refunds of internal revenue taxes, fees an d other ch arges, pen alties imposed in relation thereto, or other matters arising under the National Internal Revenue 1 Petition for Review, Docket - Vol. I, p. 2 .

RESOLUTION CfA Case No. 11435 PCSO us. CIR Code (NIRC), as amended, or other laws or portions thereof administered by the BIR. The Office of the Government Corporate Counsel entered its appearance as counsel for petitioner through Entry of Appearance dated March 19, 2024, filed through registered mail on March 20, 2024, which the Court noted in a Resolution dated April 23, 2024. After careful evaluation of the allegations in the Petition, We find that the same should be dismissed for lack of jurisdiction. Section 1, Rule 9 of the Rules of Court provides: Section 1. Defenses and obj ections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied) It is a well-settled rule that a jurisdictional issue may be invoked by the Court motu proprio and may be raised at any stage of the proceedings.2 The reason is that jurisdiction is conferred by law, and the lack of it affects the very authority of the court to take cognizance of and to render judgment on the action.3 When a court has no jurisdiction over the subject matter of the action, the only power it has is to dismiss it.4 Further, jurisdiction over the subject matter is determined by the nature of the action as appearing from the averments in the complaint or other initiatory pleading.s Incidentally, Presidential Decree No. 2426 (PD 242) provides that either the Secretary of Justice, the Solicitor General, or the Government Corporate Counsel, as the case may be, shall be the proper authority to settle or adjudicate disputes, claims and controversies between or among government agencies and instrumentalities, including government-owned and controlled corporations (GOCCs). Sections 1, 2 and 3 of the said law provide: 2 Comm issioner oflntemal Revenue v. Mimnt Pag bilao Corp., G.R. No. 180434, J anuary 20, 2016. 3 Sales v. Barro, G.R. No. 171678 , December 10, 2008 . 4 Mits ubishi Motors Phils. Corp. v. Bureau of Custom s, G.R. No. 209830 , June 17, 2015. s Penta Pacific Realty Corp. v. Ley Constr uction and Development Corp ., G. R. No. 16158 9, November 24, 2014. 6 Pmceduref or Administrative Settlemen t or Adjudication of Disputes, Claims and Con troversies Between or Among Government Offices, President ial Decree No. 242, July 9, 1973.

RESOLUTION CTA Case No. 11435 PCSO us. CIR Page 3 of7 SECTION 1. Provisions of law to the contrary notwithstanding, all disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, including government-owned or controlled corporations but excluding constitutional offices or agencies, arising from the interpretation and application of statutes, contracts or agreements, shall henceforth be administratively settled or adjudicated as provided hereinafter: Provided, That this shall not apply to cases already pending in court at the time of the effectivity of this decree. SECTION 2. In all cases involving only questions of law, the same shall be submitted to and settled or adjudicated by the Secretary of Justice, as Attorney General and ex-officio legal adviser of all government-owned or controlled corporations and entities, in consonance with Section 83 of the Revised Administrative Code. His ruling or determination of the question in each case shall be conclusive and binding upon all the parties concerned. cdtai SECTION 3. Cases involving mixed questions of law and of fact or only factual issues shall be submitted to and settled or adjudicated by: (a) The Solicitor General, with respect to disputes of claims or controversies between or among the departments, bureaus, offices and other agencies of the National Government; (b) The Government Corporate Counsel, with respect to disputes or claims or controversies between or among the government-owned or controlled corporations or entities being served by the Office of the Government Corporate Counsel; and (c) The Secretary of Justice, with respect to all other disputes or claims or controversies which do not fall under the categories mentioned in paragraphs (a) and (b). (Emphasis supplied) The foregoing provisions are now embodied in Sections 66 to 68 of Chapter 14, Book IV of Executive Order No. 292 (EO 292), otherwise known as the Administrative Code of 1987, to wit: CHAPTER 14- Controversies among Government offices and Corporations Section 66. How Settled.- All disputes, claims and controversies, solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, including government-owned or cont roll ed corporations, such as those arising from the interpretation and application of statutes, contracts or agreements, shall be administratively settled or

RESOLUTION CTA Case No. 11435 PCSO vs. CIR Page 4 of7 adjudicated in the manner provided in this Chapter. This Chapter shall, however, not apply to disputes involving the Congress, the Supreme Court, the Constitutional Commissions, and local governments. Section 67. Disputes Involving Questions of Law. - All cases involving only questions of law shall be submitted to and settled or adjudicated by the Secretary of Justice as Attorney-General of the National Government and as ex officio legal adviser of all government-owned or controlled corporations. His ruling or decision thereon shall be conclusive and binding on all the parties concerned. Section 68. Disputes Involving Questions of Fact and Law. -Cases involving mixed questions of law and of fact or only factual issues shall be submitted to and settled or adjudicated by: (1) The Solicitor General, if the dispute, claim or controversy involves only departments, bureaus, offices and other agencies of the National Government as well as government-owned or controlled corporations or entities of whom he is the principal law officer or general counsel; and (2) The Secretary of Justice, in all other cases not falling under paragraph (1). In Power Sector Assets and Liabilities Management Corp. (PSALM) v. Commissioner of Internal Revenue,? the Supreme Court En Bane held that disputes, claims, and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, including GOCCs, where no private party is involved, shall be governed by PD 242, and not the NIRC. The relevant ruling of the said case provides: However, contrary to the ruling of the Court of Appeals, we find that the DOJ is vested by law with jurisdiction over this case. This case involves a dispute between PSALM and NPC, which are both wholly government-owned corporations, and the BIR, a government office, over the imposition of VAT on the sale of the two power plants. There is no question that original jurisdiction is with the CIR, who issues the preliminary and the final tax assessments. However, if the government entity disputes the tax assessment, the dispute is already between the BIR (represented by the CIR) and another government entity, in this case, the petitioner PSALM. Under Presidential Decree No. 242 (PD 242), all disputes and claims solely between government agencies and offices, including government-owned or controlled corporations, shall be administratively settled or adjudicated by the Secretary of Justice, the Solicitor 7 G. R. No. 198146, August 8 , 2017.

RESOLUTION CTA Case No. 11435 PCSO vs. CIR Page 5 of7 General, or the Government Corporate Counsel, depending on the issues and government agencies involved. As regards cases involving only questions oflaw, it is the Secretary of Justice who has jurisdiction. XXX XXX XXX The use of the word "shall" means that administrative settlement or adjudi cation of disputes and claims between government agencies and offices, including government-owned or controlled corporations, is not merely permissive but mandatory and imperative. Thus, under PD 242, it is mandatory that disputes and claims "solely" between government agencies and offices, including government-owned or controlled corporations, involving only questions of law, be submitted to and settled or adjudicated by the Secretary of Justice. The law is clear and covers "all disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, including constitutional offices or agencies arising from the interpretation and application of statutes, contracts o r agreements." When the law says "all disputes, claims and controversies solely" among government agencies, the law means all, without exception. Only those cases already pending in court at the time of the effectivity of PD 24 2 are not covered by the law. The purpose of PD 242 is to provide for a speedy and efficient administrat ive settlement or adjudication of disputes between government offices or agencies under the Executive branch, as well as to filter cases to lessen the clogged dockets of the courts. xxxxxxxxx It is only proper that intra-governmental disputes be settled administratively since the opposing government offices, agencies and instrumentalities are all under the President's executive control and supervision. xxxxxxxxx To harmonize Section 4 of the 1997 NIRC with PD 242, the following interpretation should be adopted: (1) As regards private entities a nd the BIR, the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the NIRC or other laws administered by the BIR is vested in the CIR subject to the exclusive appellate j urisdiction of the CTA, in accordance with Section 4 of the NIRC; and (2) Where the disputing parties are all public entities (covers disputes

RESOLUTION CTA Case No. 11435 PCSO vs. CIR Page 6 of7 between the BIR and other government entities), the case shall be governed by PD 242. XXX XXX XXX Thus, even if the 1997 NIRC, a general statute, is a later act, PD 242, which is a special law, will still prevail and is treated as an exception to the terms of the 1997 NIRC with regard solely to intragovernmental disputes... Necessarily, such disputes must be resolved under PD 242 and not under the NIRC, precisely because PD 242 specifically mandates the settlement of such disputes in accordance with PD 242. (Emphasis supplied and citations omitted) In the more recent case of Th e Department ofEnergy (DOE) v. Court ofTax Appeals,athe Supreme Court held that the ruling in the PSALM case is not limited to disputes arising from contracts or the same scenario which brought about the action, but was instructive for future scenarios, viz.: A reading of PSALM v. CIR clearly demonstrates that the decision was not merely hinged on the existence ofthe MOA among the government agencies concerned, but moreso on the very fact that there is a dispute among two government-owned or -controlled corporations, PSALM and the NPC, on the one hand, and a national government office, the BIR, on the other. XXX XXX XXX Through PSALM v. CIR, the Court harmonized conflicting laws, provided guidelines for when disputes ought to be referred to administrative settlement, and clarified the appropriate arbiter based on the nature of the issues. Thus, the decision was not limited to the same scenario which brought about the action, but was to be instructive for future scenarios conforming with the parameters drawn by the Court. To hold that PSALM v . CIR is applicable only to disputes, claims, or controversies, arising out ofcontracts or agreements among government agencies, to the exclusion of the other sources of disputes enumerated in Section 1 ofP.D. No. 242, is to adopt a dangerously narrow interpretation. (Emphasis supplied and citations omitted) Applying the foregoing statutory and jurisprudential precepts, when, based on the allegations in the Petition, the Court finds the subject matter of the case to be a dispute between or among government agencies and offices, including GOCCs, the Court may 8 G.R. No. 2609 12, August 17, 2022.

RESOLUTIO N CTA Case No. 11435 PCSO us. CIR Page 7 of7 dismiss the case outright for lack of jurisdiction, considering that the proper authority to take cognizance of the matter is the Secretary of Justice, the Solicitor General, or the Government Corporate Counsel, depending on the issues involved, pursuant to PD 242. In the Petition, both parties are found to be government entities. Petitioner alleges that it is a government instrumentality9 and the principal government agency mandated under its Charter to raise and provide funds for the government's health programs, medical assistance and services as well as charities of national character, through the conduct of lotteries and similar activities.10 Meanwhile, respondent is alleged to be the CIR, head of the BIR, which is also a government office. Given the foregoing, whether petitioner is a government instrumentality as it claims to be or a GOCC, it is clear that the Petition involves a purely intra- governmental dispute. Accordingly, the Court has no jurisdiction over the present case, pursuant to the pronouncement of the Supreme Court En Bane in the PSALM case which remains binding in determining the proper forum to resolve disputes and claims solely between and among the departments, bureaus, offices, agencies, and instrumentalities of the National Government, including GOCCs. WHEREFORE, premises considered, the instant Petition for Review is DISMISSED for lack ofjurisdiction. SO ORDERED. ~� ,., ~444,(...""'"'_ CATHERINE T. MANAHAN Associate Justice (On Leave) MARIAN IVY F. REYES-FAJARDO Associate Justice HENRY ~~GELES Associate Justice 9 Petition for Review, Docket - Vol. I, p. 2. 10 Petition for Review, Docket - Vol. I, p. 3�