G.R. No. 102858 - Director of Lands vs. Court of Appeals

Petitioner: Commissioner of Internal Revenue, vested with the authority to decide, approve, and grant refunds or tax credits for erroneously or illegally collected internal revenue taxes.
Respondents:

Court of Tax Appeals (CTA), which issued several resolutions in the case.
CBK Power Company Limited, a special purpose entity engaged in the design, financing, construction, testing, commissioning, operation, and management of various hydroelectric power plants and related facilities in Laguna.

CBK Power Company Limited filed two separate judicial claims for the issuance of tax credit certificates:

Docketed as CTA Case No. 8246.
Pitched for an amount of ₱17,784,968.91, representing unutilized input taxes on local purchases and importations of goods other than capital goods, local purchases of services, and payment for services rendered by non-residents (inclusive of unutilized amortized input taxes on capital goods exceeding ₱1 million) for the period January 1, 2009 to March 31, 2009.
Attributed to zero rated sales for the period, pursuant to Section 112(A) of the 1997 Tax Code.

Docketed as CTA Case No. 8302.
Filed on June 28, 2011 for an amount of ₱31,680,290.87.
Covered unutilized input taxes on similar transactions for the period April 1, 2009 to June 30, 2009, again tied to zero rated sales.

Both cases were set for pre-trial conferences, with summons issued to the petitioner to answer the claims.
Petitioner’s counsel (Atty. Christopher C. Sandico for Case No. 8246 and Atty. Leo D. Mauricio for Case No. 8302) filed respective answers; however, scheduling complications arose.
A motion for the consolidation and postponement of the cases was filed by the respondent.

The pre-trial conference for Case No. 8246 was initially set and later reset due to non-appearance issues:

Atty. Mauricio’s absence (owing to health reasons) and Atty. Sandico’s failure to appear at the December 1, 2011 pre-trial led to complications.

On December 23, 2011, the CTA issued an interlocutory Resolution declaring petitioner in default and scheduling an ex parte presentation of the respondent’s evidence for January 26, 2012.
Petitioner filed a Motion to Lift the Order of Default on January 6, 2012, explaining the administrative confusion and scheduling overlap; however, respondent did not comment on this motion.
The CTA denied the motion to lift the order of default in its Resolution dated April 19, 2012, citing Section 5 of Rule 18 of the Revised Rules of Court for failure to appear.
A motion for reconsideration was subsequently filed by petitioner and denied by the CTA on June 13, 2012.

The petitioner elevated the matter to the Supreme Court through a petition for certiorari under Rule 65, challenging the interlocutory orders of the CTA on several grounds:

The alleged excessive imposition of default when petitioner’s counsel was actively defending the case.
The argument that the default declaration and the ex parte evidence presentation were unnecessary and prejudicial.

Petitioner contended there was no clear intention on its part to defy the CTA’s orders.

Whether the petitioner’s filing of a petition for certiorari under Rule 65 is the proper remedy to challenge the interlocutory orders (default declaration and related orders) of the CTA.
Whether the CTA’s imposition of a default, based on non-appearance at pre-trial, is subject to abuse of discretion given the extenuating circumstances surrounding the scheduling conflicts.

Whether the orders issued by the CTA (declaring default and scheduling ex parte evidence) are interlocutory or final, and thus, whether they are immediately appealable.
Whether the waiver of traditional practice in allowing a petition for review with the CTA en banc applies when such orders are merely interlocutory in nature.

Whether a liberal and flexible interpretation of the rules (in accordance with Section 2, Rule 1 of the Revised Rules of the Court of Tax Appeals) is warranted, given that the ends of justice and fairness may require giving both parties an ample opportunity to present their cases.