DUTY FREE PHILIPPINES CORPORATION v. BUREAU OF INTERNAL REVENUE, REPRESENTED BY KIM S, JACINTO-HENARES, AND/OR NESTOR S. VALEROSO, OIC-ASSISTANT COMMISSIONER, LARGE TAXPAYERS SERVICE

REPUBLIC OF T HE PHILIPPINES COURT OF TAX APP EA LS QUEZON CITY EN BANC DUTY FREE PHILIPPINES CTA EB No. 1911 CORPORATION, (CTA CASE No . 9355) Petitioner, -versus- Present: DEL RO_SARIO, P.J., CASTANEDA, JR., BUREAU OF INTERNAL UY, REVENUE REPRESENTED BY FABON-VICTORINO, KIM S. JACINTO- HENARES, MINDARO-GRULLA, AND/OR NESTOR S. RINGPIS-LIBAN, VALEROSO, OIC-ASSISTANT MANAHAN, COMMISSIONER, LARGE BACORRO-VILLENA, and TAXPAYERS SERVICE, MODESTO- SAN PEDRO, JJ. Respondents. Promulgated: DEC 1 3 2019 x---------------------------------------------~--~:~~~~ � RESOLUTION MINDARO- GRULLA, J.: Before the Court En Bane is the Motion for Reconsideration filed by Duty Free Philippines Corporation (DFPC) 1 on August 1, 2019, seeking to set aside this Court's Decision promulgated on July 5, 2019,2 the dispositive portion of which reads: "WHEREFORE, premises considered, the Petition for Review filed by Duty Free Philippines Corporation is hereby DENIED. The assailed Decision and Resolution dated May 8, 2018 and July 26, 2018, respectively, in CTA Case No . 9355 are hereby AFFIRMED. 1 En Bane Docket, pp . 8 7 - 109 . 2 Ibid., pp. 942-973. {

Duty Free Philippines Corporation vs. Bureau of Internal Revenue Page 2 of 4 represented by Kim S. Jacinto-Henares, and/or Nestor S. Valeroso, OIC -Assistant Commissioner, Large Taxpayers Service CTA EB No. 1911 (CTA Case No. 9355) RESOLUTION SO ORDERED." In its motion, DFPC reiterates that this Court has jurisdiction over the case and the Supreme Court ruling that disputes and claims solely between the BIR and another government entity shall be administratively settled or adjudicated by the Secretary of Justice, the Solicitor General, or the Government Corporate Counsel under Presidential Decree (PD) No. 242, as enunciated in the case of Power Sector Assets and Liabilities Management Corporation vs. Commissioner of Internal Revenue (the "PSALM Case"), 3 is not applicable in this case. The CIR on the other hand filed his Comment to the Motion for Reconsideration,4 and counters that since the dispute in this case is solely between two government entities, the jurisdiction to dispose the matters raised therein is vested in the Secretary of Justice and not in this Court. After a careful consideration and evaluation of the parties' respective arguments, the Court finds that the arguments raised in DFPC's Motion for Reconsideration are mere rehash of its arguments in its Petition for Review, and have already been amply discussed, passed upon and considered by this Court in the Assailed Decision sought to be reconsidered. To reiterate, under the PSALM case, the Supreme Court En Bane categorically declared that pursuant to Sections 2 and 3 of PD No. 242, jurisdiction over tax controversies solely between government entities lies with the Secretary of Justice and not with this Court. DFPC tries to argue with the Court that the PSALM Case involves a dispute between two agencies by virtue of a Memorandum of Agreement and the collection of the CIR therein was not based on a tax assessment, thus, cannot be applied in its case. However, in the more recent case of Commissioner of Internal Revenue vs. Department of 3 G.R. No. 198146 dated August 8, 2017. 4 Supra note 1, pp. 115-121. {

Duty Free Philippines Corporation vs. Bureau of Internal Revenue Page 3 of 4 represented by Kim 5. Jacinto-Henares, and/or Nestor 5. Valeroso, OIC -Assistant Commissioner, Large Taxpayers Service CTA EB No. 1911 (CTA Case No. 9355) RESOLUTION Justice, et a!., 5 the Supreme Court explicitly declared that tax disputes solely between government entities is covered by PD No. 242 and must be settled before the Secretary of Justice and not with this Court. Clearly, there is no cogent reason to disturb the assailed Decision. WHEREFORE, premises considered, the Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED. ~~-M~ .. &~ CIELITO N. MINDARO-GRULLA Associate Justice WE CONCUR: ()'.-('~(K"~u ARIO~~~~~ Presiding Justice CJ~a-w.e�t:;- c � QY"-~o.{.. I <;2., ER~.UY llf'ANITO C. CASTANEDA', JR. Associate Justice Associate Justice FASON-VICTORINO ~. ~ _;.._� MA. BELEN M. RINGPIS-LIBAN Associate Justice {~�~-~ CATHERINE T. MANAHAN Associate Justice 5 G.R. No. 209289, July 9, 2018.

Duty Free Philippines Corporation vs. Bureau of Internal Revenue Page 4 of 4 represented by Kim S. Jacinto-Henares, and/or Nestor S. Valeroso, OIC -Assistant Commissioner, Large Taxpayers Service CTA EB No. 1911 (CTA Case No. 9355) RESOLUTION JEAN ( pinion) MARIA ROWENAIIIIIODESTO-SAN PEDRO

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS Quezon City ENBANC DUTY FREE PHILIPPINES, CTA EB NO. 1911 CORPORATION, (CTA Case No. 9355) Petitioner, Present: -versus- Del Rosario, P.J. , Castaneda, Jr., Uy, Fabon-Victorino, Mindaro-Grulla, BUREAU OF INTERNAL Ringpis-Liban , REVENUE REPRESENTED Manahan , BY KIM S. JACINTO-HENARES, Bacorro-Villena, and AND/OR NESTOR S. VALEROSO, Modesto-San Pedro, JJ. OIC-ASSISTANT COMMISSIONER, LARGE TAXPAYERS SERVICE Promulgated: DEC 1 3 2019 Respondent. )(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -~ CONCURRING OPINION DEL ROSARIO, P.J.: I concur with the ponencia in denying the Motion for Reconsideration filed by Duty Free Philippines Corporation. As elucidated in the ponencia, this Court is bereft of jurisdiction to take cognizance of the present case as it involves a dispute solely between a government-owned and controlled corporation and a government bureau , consistent with the categorical pronouncement of the Supreme Court in Power Sector Assets and Liabilities Management Corporation vs. Commissioner of Internal Revenue1("PSALM'') . 1 G.R. No. 198146, August 8, 2017 . ~

Concu"ing Opinion CTA EB No. 1911 (CTA Case No. 9355) Page 2 of8 Considering the implication of the pronouncement in PSALM to cases pending before the Court of Tax Appeals (CTA) involving intra- governmental disputes or controversies, I find it necessary to re-visit the development of jurisprudence anent the application of Presidential Decree (PD) No. 242 vis-a-vis Republic Act (RA) No. 1125, as amended. In 1981, the Supreme Court En Bane, in Development Bank of the Philippines vs. Court of Appeals,2 affirmed the findings of the Court of Appeals which ruled that the CTA had no jurisdiction to resolve the controversy between Development Bank of the Philippines, a GOCC, and the Commissioner of Customs and that the case should have been decided in accordance with the mode of settlement and adjudication set forth in PD No. 242. Anent the conflict between the provisions of PD No. 242 and RA No. 1125, the Supreme Court En Bane held: "The Court also rejects the DBP's second argument and expresses with the conclusion of the Court of Appeals- and the basic premises thereof that there is an "irreconcilable repugnancy ... between Section 7(2) of R.A. No. 1125 and P.D. No. 242," and hence, that the later enactment (P.D. No. 242), being the latest expression of the legislative will, should prevail over the earlier." In 2005, the Supreme Court En Bane promulgated Philippine National Oil Company vs. The Honorable Court of Appeals et al.3 ("PNOC'? declaring that CTA has jurisdiction to resolve controversies falling under RA No. 1125, the provision of PD No. 242 notwithstanding. It then made a categorical pronouncement that RA No. 1125 (the law creating the CTA), which is a special law, prevails over PD No. 242, viz.: "Following the rule on statutory construction involving a general and a special law previously discussed, then P.D. No. 242 should not affect Rep. Act No. 1125. Rep. Act No. 1125, specifically Section 7 thereof on the jurisdiction of the CTA, constitutes an exception to P.D. No. 242. Disputes, claims and controversies, falling under Section 7 of Rep. Act No. 1125, even though solely among government offices, agencies, and instrumentalities, including government-owned and controlled corporations, remain in the exclusive appellate jurisdiction of the CTA. Such a construction resolves the alleged inconsistency or conflict between the two statutes, and the fact that P.D. No. 242 is the more recent law is no longer significant." (Boldfacing supplied) 2 G.R. No. 86625, December 22, 1981. 3 G.R. Nos. 109976 and 112800, April26, 2005.~

Concurring Opinion CTA EB No. 1911 (CTA Case No. 9355) Page 3 of8 In PNOC, the Supreme Court went on to clarify that even if PO No. 242 is made to prevail over RA No. 1125, its provisions may not be applied as the dispute involved is not solely an intra-governmental controversy. The pertinent pronouncement of the Supreme Court En Bane reads: "Even if, for the sake of argument, that P.O. No. 242 should prevail over Rep. Act No. 1125, the present dispute would still not be covered by P.O. No. 242. Section 1 of P.O. No. 242 explicitly provides that only disputes, claims and controversies, solely between or among departments, bureaus, offices, agencies, and instrumentalities of the National Government, including constitutional offices or agencies, as well as government-owned and controlled corporations, shall be administratively settled or adjudicated. While the BIR is obviously a government bureau, and both PNOC and PNB are government-owned and controlled corporations, respondent Savellano is a private citizen. His standing in the controversy could not be lightly brushed aside. It was private respondent Savellano who gave the BIR the information that resulted in the investigation of PNOC and PNB; who requested the BIR Commissioner to reconsider the compromise agreement in question; and who initiated CTA Case No. 4249 by filing a Petition for Review." (Boldfacing supplied) In 2016, the First Division of the Supreme Court, in Commissioner of Internal Revenue vs. Secretary of Justice and Philippine Amusement and Gaming Corporation4 ("PAGCOR'?, reiterated and applied the doctrine laid down in PNOC as it held that the Secretary of Justice is bereft of jurisdiction in reviewing the disputed tax assessments issued by the CIR against the Philippine Amusement and Gaming Corporation (PAGCOR). Under Section 4 (3) of Article VIII of the 1987 Constitution, the doctrine enunciated by the Supreme Court En Bane in PNOC could only be modified or reversed by a subsequent decision of the Supreme Court En Bane. 5 4 G.R. No. 177387, November 9, 2016. 5 "ARTICLE VIII JUDICIAL DEPARTMENT XXX XXX XXX (3) Cases or matters heard by a division shall be decided or resolved with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon, and in no case, without the concurrence of at least three of such Members. When the required number is not obtained, the case shall be decided en bane: Provided, that no doctrine or principle of law laid down by the court in a decision rendered en bane or in division may be modified or reversed except by the court sitting en bane." (Boldfacing supplied)~

Concurring Opinion CTA EB No. 1911 (CTA Case No. 9355) Page 4 ofB As PNOC - - the case cited in the Dissenting Opinion of Honorable Associate Justice Maria Rowena Modesto-San Pedro - - has been overturned by the Supreme Court En Bane in PSALM, this Court is left with no recourse but to apply PSALM in the present case. In PSALM, the Supreme Court En Bane is categorical in declaring that the resolution of ALL disputes solely between departments, bureaus, offices, agencies and instrumentalities of the National Government shall be administratively settled or adjudicated by the Secretary of Justice. The pertinent portions of the Supreme Court's disquisition read: "Xxx, contrary to the ruling of the Court of Appeals, we find that the OOJ 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 General, or the Government Corporate Counsel, depending on the issues and government agencies involved. XXX XXX XXX Xxx. 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 PO 242 are not covered by the law. The purpose of PO 242 is to provide for a speedy and efficient administrative 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. XXX XXX XXX. PO 242 is only applicable to disputes, claims, and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, t1J including government-owned or controlled corporations, and where no private party is involved. In other words, PD 242 will only

Concurring Opinion CTA EB No. 1911 (CTA Case No. 9355) Page 5 ofB apply when all the parties involved are purely government offices and government-owned or controlled corporations. XXX XXX XXX Xxx since this case is a dispute solely between PSALM and NPC, both government-owned and controlled corporations, and the BIR, a National Government office, PD 242 clearly applies and the Secretary of Justice has jurisdiction over this case. 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. XXX XXX XXX Furthermore, it should be noted that the 1997 NIRC is a general law governing the imposition of national internal revenue taxes, fees, and charges. On the other hand, PO 242 is a special law that applies only to disputes involving solely government offices, agencies, or instrumentalities. XXX XXX XXX Thus, even if the 1997 NIRC, a general statute, is a later act, PO 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 intra-governmental disputes." (Underscoring supplied) The Supreme Court En Bane also distinguished PSALM from PNOC by emphasizing that the dispute in PSALM is solely between a bureau and two {2) GOCCs while the controversy in PNOC involves a private citizen, viz.: "This case is different from the case of Philippine National Oil Company v. Court of Appeals, (PNOC v. CA) which involves not only the BIR (a government bureau) and the PNOC and PNB (both government owned or controlled corporations), but also respondent Tirso Savellano, a private citizen. Clearly, PD 242 is not applicable to the case of PNOC v. CA. Even the ponencia in PNOC v. CA stated that the dispute in that case is not covered by PD 242 xxx." In rendering PSALM, the Supreme Court En Bane was mindful of its earlier pronouncement in PNOC that the CTA has jurisdiction over intra-governmental disputes, the provisions of PD No. 242 notwithstanding. Yet, the Supreme Court En Bane, after reviewing (II) its ruling in PNOC, found sufficient basis to modify the doctrine laid down therein and plainly stated in PSALM that jurisdiction

Concurring Opinion CTA EB No. 1911 (CTA Case No. 9355) Page 6 ofB over intra-governmental disputes shall be governed by PO No. 242. Jurisdiction is vested by law. Since the Supreme Court has reconciled and interpreted the provisions of PO No. 242 and RA No. 1125, as amended, and declared in PSALM, in no uncertain terms, that all controversies involving government offices, bureaus, agencies and instrumentalities, including GOCCs fall within the initial jurisdiction of the Department of Justice (DOJ) - - such interpretation must be respected by all courts. I am not unaware that in the following cases, the Supreme Court apparently recognized the CTA's jurisdiction in acting on the cases despite the fact that the controversies therein involved government-owned and controlled corporations and the Bureau of Internal Revenue: (i) Philippine Amusement and Gaming Corporation vs. Commissioner of Internal Revenue I Commissioner of Internal Revenue vs. Philippine Amusement and Gaming Corporation, 6 where the Supreme Court remanded the case to the CTA for the determination of the final amount to be paid by PAGCOR; (ii) Bases Conversion and Development Authority vs. Commissioner of Internal Revenue, 7 where the Supreme Court remanded the case to the CTA for further proceedings regarding Bases Conversion and Development Authority's claim for refund of Creditable Withholding Tax; and, (iii) Power Sector Assets and Liabilities Management Corporation vs. Commissioner of Internal Revenue, 8 where the Supreme Court granted PSALM's petition and reversed and set aside the decision of the CTA which found PSALM liable to pay deficiency value-added tax for the taxable year 2008, inclusive of the deficiency interest and delinquency interest. A careful perusal of the facts involved in the aforementioned cases, however, would reveal that they cannot be relied upon as precedent regarding the matter of administrative settlement. Truth to tell, there was no adjudication therein anent the issue on the jurisdiction of the CTA on intra-governmental disputes or controversies nor to the development of jurisprudence anent the application of PO No. 242 vis-a-vis RA No. 1125, as amended. In Commissioner of Internal Revenue vs. San Roque Power Corporation I Taganito Mining Corporation vs. Commissioner of 6 G.R. No. 210689 and G.R. Nos. 210704 & 210725, November 22, 2017. 7 G.R. No. 205925, June 20, 2018. 8 G.R. No. 226556, July 3, 2019.~

Concurring Opinion CTA EB No. 1911 (CTA Case No. 9355) Page 7 of8 Internal Revenue I Phi/ex Mining Corporation vs. Commissioner of Internal Revenue, 9 the Supreme Court was categorical in holding that an issue which was not passed upon has no value as precedent. Said the Supreme Court: "Any issue, whether raised or not by the parties, but not passed upon by the Court, does not have any value as precedent. As this Court has explained as early as 1926: It is contended, however, that the question before us was answered and resolved against the contention of the appellant in the case of Bautista vs. Fajardo (38 Phil. 624). In that case no question was raised nor was it even suggested that said section 216 did not apply to a public officer. That question was not discussed nor referred to by any of the parties interested in that case. It has been frequently decided that the fact that a statute has been accepted as valid, and invoked and applied for many years in cases where its validity was not raised or passed on, does not prevent a court from later passing on its validity, where that question is squarely and properly raised and presented. Where a question passes the Court sub silentio, the case in which the question was so passed is not binding on the Court (McGirr vs. Hamilton and Abreu, 30 Phil. 563), nor should it be considered as a precedent. (U.S. vs. Noriega and Tobias, 31 Phil. 310; Chicote vs. Acasio, 31 Phil. 401; U.S. vs. More, 3 Cranch [U.S.] 159, 172; U.S. vs. Sanges, 144 U.S. 310, 319; Cross vs. Burke, 146 U.S. 82.) For the reasons given in the case of McGi" vs. Hamilton and Abreu, supra, the decision in the case of Bautista vs. Fajardo, supra, can have no binding force in the interpretation of the question presented here. (Emphasis supplied)" PSALM remains the jurisprudence that categorically settled the jurisdiction of the DOJ on intra-governmental disputes or controversies. Unless and until modified by the Supreme Court En Bane, the interpretation of PO No. 242 in PSALM should be applied in determining the proper forum with jurisdiction to resolve disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government. Indeed, the Supreme Court, by tradition and in our system of judicial administration, has the last word on what the law is; it is the final arbiter of any justiciable controversy. There is only one Supreme Court from whose decisions all other courts should take their bearings. 10 Any pronouncement made by the Supreme Court in its judicial decisions becomes the law of the land. 11 Adherence to the 9 G.R. Nos. 187485, 196113, 197156, February 12,2013. �1 Commissioner of lntemal Revenue vs. Michel J. Lhuillier Pawnshop, Inc., G.R. No. 150947, July 15, 2003. 11 Article 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines., Civil Code of the Philippines.~

Concurring Opinion CTA EB No. 1911 (CTA Case No. 9355) Page BofB principle of stare decisis et non quieta movere is mandated for all lower courts, and as such this Court should follow suit and apply the doctrine laid down in PSALM. All told, I CONCUR with the ponencia. Presiding Justice

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY En Bane DUTY FREE PHILIPPINES CTA E B NO. 1911 CORPORATION, (CTA Case No. 9355) Pet itio ner , Present: DEL ROSARIO, P.J ., CAST ANEDA, JR., -versus- UY, F A B O N-VI CT O R I NO , MINDARO-GR ULLA, RINGPIS-LIBAN, BUREAU OF INTERNAL RE VENUE MANAHAN, REPRESENTED BY KIM S. BACORRO-VILLENA, and J ACINTO-HENARES, AND/OR MODESTO-SAN PEDRO, JJ NESTOR S. VALEROSO, OIC- ASSIST ANT COMMISSIONER, Promulgated: LARGE TAXPAYERS SERVICE, Respondent. DEC 13~9 X --------------------------------------------------------------------------------------=<'�d---.--,----?--d~-,-p-:-~---.- X DISSE N TI N G OPI N I MODESTO-SAN PEDRO, J.: I respectfully dissent from the Decision penned by honorable Associate Justice Cielito N. Mindaro-G rull a, deny ing the instant Motion for Reconsideration for lack of jurisdiction pursuant to Presidential Decree No. 242 ("PD 242 '') , and the cases of Power Sector Assets and Liabilities Management Corporation v. Commissioner of Internal Revenue (" PSA LM Case'')' and Commissioner ofInternal Revenue v. Department ofJustice, et al.2 Simi lar to my position in previous cases invo lv ing the same issue of whether thi s Court has jurisdi ction over disputes and c la ims solely between the Bureau of Interna l Revenue ("BIR" ) and another government entity, it is my humble opinion that th e Court of Tax Appeals (" CTA" ) has j urisdiction over the present case, by virtue of the 1997 National Internal Revenue Code, and Republic Act No. {"RA '') 1125, as amended by RA 9282, which prov ide G. R. No. 1981 46, 8 A ugust 20 17. G.R. No. 209289, 9 Ju ly 20 18.

DISSENTING OPINION CTA EBNO. 1911 (CTA Case No. 9355) Page 2 of2 for the exclusive appellate jurisdiction of the CTA over decisions or inactions by the Commissioner oflnternal Revenue involving internal revenue taxes. In matters involving tax disputes, PD 242, which is merely a general law that deals with the administrative settlement of disputes solely between or among government entities, must give way to RA 9282, a specialized law enacted to precisely deal with tax issues and controversies.3 It is only logical that the CTA should have exclusive jurisdiction to decide on these matters4 since it already developed the necessary expertise on the subject of taxation as it is a specialized court dedicated exclusively to the study and resolution of tax problems. 5 Further, the Supreme Court already declared that not all controversies solely between or among government entities fall under the provisions of PD 242. Following the ejusdem generis rule on statutory construction, disputes that are subject to administrative settlement under PD 242 "must relate to the interpretation and application of statutes, contracts or agreements, or any other cases of similar nature."6 Considering that tax disputes and controversies are neither similar nor analogous to the given enumeration, settlement of tax issues between the BIR and another government entity is not covered by PD 242. Premises considered, I therefore vote to grant the instant Motion for Reconsideration and reverse the Decision dated 5 July 2019. Respectfully submitted. MARIA Justice PNOCv. CA, et. a/., G.R. No. 109976,26 Apri\2005. See Dissenting Opinion ofJustice Mariano del Castillo, PSALM Case. Macario Lim Gaw, Jr. v. CIR, G.R. No. 222837,23 July 2018. 6 Orion Water District, et. a/. v. GSIS, G.R. No. 195382, 15 June 2016.