G.R. No. L-11494. January 28, 1961
THE COLLECTOR OF INTERNAL REVENUE, PETITIONER VS. THE COURT OF TAX APPEALS AND HUME PIPE & ASBESTOS CO., INC., RESPONDENTS.
DIZON, J.:
domestic corporation with principal office and place of business in the
City of Manila—hereinafter referred to as the Company—filed with the
Bureau of Internal Revenue, for the fiscal year ending March 31, 1954,
an income tax return showing a net taxable income of P227,771,83,
itemized as follows:
From operations …………………………………………………. From interest …………………………………………………….. From dividends received ……………………………………….. From other sources …………………………………………….. Total gross income………………………………………………. Less: Total deductions ………………………………………… NET INCOME……………………………………………………….
On the basis of said return the petitioner, Collector of Internal
Revenue, assessed the Company the amount of P55,776.00 as income tax
due for the fiscal year ending March 31, 1954. On August 14, 1954 the
company paid the sum of P27,888.00 as first installment on account of
the assessment, and on November 11 of the same year paid a similar
amount in full payment of the second and last installment.
Almost two years thereafter, or on June 12, 1956, the company filed a
petition for the refund of the sum of P6,445.00, alleged overpayment on
its income tax for the fiscal year ending March 31, 1954. Its
contention was that pursuant to Section 24 of the National Internal
Revenue Code, as amended by Republic Act No. 1148, only 25% of the sum
of P50,692.50 it received as dividends from Eternit Corporation on
January 30, 1954—which amount was included in toto in its
income tax return mentioned heretofore—should have been declared for
purposes of income tax. On August 14, 1956 before petitioner could make
a ruling on the petition for refund, the Company filed a petition for
review with the Court of Tax Appeals praying, inter alia, that,
after due hearing, herein petitioner be ordered to refund to it the sum
of P6,445.00. On September 5 of the same year the Collector of Internal
Revenue filed his answer to said petition, alleging therein that the
income tax assessment made and already paid by the Company was in
accordance with law. He likewise alleged the affirmative defense that
the Court of Tax Appeals had no jurisdiction to entertain the petition
for review, for the reason that no decision or ruling had been, as yet,
rendered by him upon the petition for refund filed by the Company.
After a preliminary hearing in connection with said affirmative defense
was had on petition of the Collector of Internal Revenue, the Court of
Tax Appeals promulgated a resolution holding that it had jurisdiction
over the case, and ordered that the same be set for hearing on the
merits. The present petition for certiorari and prohibition with
preliminary injunction is, according to petitioner himself, an appeal
from said resolution.
While, according to Republic Act No.
1125, any party adversely affected by any ruling, order or decision of
the Court of Tax Appeals may appeal therefrom to the Supreme Court, it
must be understood that such appeal must be taken only against final
rulings, orders and decisions of said Court. Interlocutory rulings,
orders and decisions may be appealed from only after the final decision
in the case has been rendered, for otherwise, a single case could give
rise to multiple appeals, to the detriment of the administration of
justice. Therefore, as an appeal from the resolution of the Court of
Tax Appeals dated October 22, 1956, the petition under consideration
must be dismissed, it being obvious that said resolution was merely
interlocutory. As a matter of fact, it did not put an end to the case
before it, because it provided that the same be set for hearing on the
merits.
Even if we were to consider the present as an
independent action for certiorari and/or prohibition the same must be
denied for lack of merits.
Upon the facts stated heretofore,
the Company’s petition for refund was filed on June 12, 1956; the
payment of the first installment due on the assessment made by the
petitioner was effected on August 14, 1954, while that of the second
and last installment was made on November 11 of the same year. Upon the
other hand, the Company filed the petition for review in the Court of
Tax Appeals on August 14, 1956. At that time the herein petitioner had
had under consideration for more than two months the petition for
refund filed by the Company but, for unknown reasons, the same had
remained undecided. If the two-year period for the filing of an
appropriate action under the provisions of Section 306 of the National
Internal Revenue Code to recover from the Collector of Internal Revenue
any amount paid upon an erroneous or illegal assessment is to be
computed from the date when the first installment was paid, it is clear
that the Company filed the petition for review with the Court of Tax
Appeals exactly on the last day of said period of two years, viz.,
August 14, 1956. The Company, therefore, had no alternative but to file
suit, for otherwise any action it had for refund would have prescribed.
We find completely applicable to the present situation what the Court
of Tax Appeals itself said in Manila Electric Co. vs. Collector of, Internal Revenue (C.T.A. Case No. 83, Resolution of March 30, 1955) as follows:
“Before
the passage of Republic Act No. 1125, the remedy provided by section
306 that the taxpayer should pay the tax first before he can sue the
Collector of Internal Revenue was exclusive, and no other remedy could
be substituted for it (Sarasola vs. Trinidad, 40 Phil., 257). With the
approval of said Republic Act No. 1125, a new remedy was given to the
taxpayer, in addition to that already provided for by section 306, in
the sense that he can question the assessment of the Collector of
Internal Revenue before paying the tax by appealing to the Court of Tax
Appeals within thirty days from receipt thereof. However, in case he
should pay the tax first and later on bring an action for its refund,
section 306 still applies and the taxpayer must comply with the
requirements therein provided. Having filed his request for refund and
the Collector of Internal Revenue having had ample time to study it,
the taxpayer should, within the statutory period of two years proceed
with his suit without waiting for the Collector’s decision. However,
should the Collector, within the statutory period of two years, deny
the claim, the taxpayer is given thirty days from receipt of the
decision within which to file his appeal under section 11 of Republic
Act No. 1125. In order to confer jurisdiction upon the court, it is
necessary, however, that in all cases the suit must be brought within
the statutory period of two years and the requirements provided for in
section 306 must have been duly complied with.”
Similar pronouncements were made by the same Court in Paracale-Gamaus Co. vs. Blaquera (C. T. A. No. 211, Resolution of August 22, 1956) as follows:
“*
* * The latter (Collector of Internal Revenue), for one reason or
another, as had happened in the present ease as in the Kiener case,
failed to reply to the claim for refund within two (2) years from the
date of payment. Under the circumstances, as was held in the Kiener
case, the taxpayer ‘having filed his claim and the Collector of
Internal Revenue having had ample time to study it, the claimant may,
indeed should within the statutory period of two years proceed with his
suit without waiting for the Collector’s decision.’ In other words, in
fairness to the taxpayer so as not to deprive him of his day in court
and the prompt adjudication of his case, he is left by necessity to
presume and conclude before the expiration of the two-year prescriptive
period, that his claim for refund has been denied by the Collector of
Internal Revenue if no action was taken thereon by the latter during
the said period. The taxpayer need not wait indefinitely for a decision
or ruling which may or may not be forthcoming and which he has no legal
right to expect. As the Supreme Court said in the Kiener case, ‘Nowhere
and in no wise does the law imply that the Collector of Internal
Revenue must act upon the claim, or that the taxpayer should not go to
court before he is notified of the Collector’s action’. The taxpayer
may, indeed should, proceed without waiting for the decision of the
Collector of Internal Revenue, to file his petition for review before
this Court on or within a reasonable time before the expiry date of the
statutory period of two years prescribed in section 306 of the National
Internal Revenue Code.“It might be argued that without the
reply of the Collector of Internal Revenue denying the taxpayer’s claim
for refund, there would be actually no decision, order or ruling that
this Court may pass upon in review under sections 7 and 11 of Republic
Act No. 1125. Indeed, that would be the case if we were to interpret
the two last cited provisions of Republic Act No. 1125 in their strict
literal sense. However, we realize that by following such an
unreasonable interpretation, the taxpayer would be left at the mercy of
the Collector of Internal Revenue, without any positive and expedient
relief from the courts.“It is disheartening enough to a
taxpayer to keep him waiting for an indefinite period of time for a
ruling or decision of the Collector of Internal Revenue on his claim
for refund. It would make matters more exasperating for the taxpayer if
we were to close the doors of the courts of justice for such a relief
until after the Collector of Internal Revenue would have, at his
personal convenience, given the go signal. In effect, that could be the
ultimate result, if we were to interpret sections 7 and 11 of Republic
Act No. 1125 strictly and literally by requiring the taxpayer in all
instances to produce in black and white the ruling, decision or order
of the Collector of Internal Revenue denying his claim for refund
before assuming jurisdiction over his petition for review filed with
this Court.”
Wherefore, the present
petition is deemed without merits and the same is hereby dismissed
without pronouncement as to costs.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Gutierrez David, and Paredes, JJ., concur.
Reyes, J. B. L., J., concurring;
I fully concur on the strength of the rulings of this Court in Gibbs vs. Collector of Internal Revenue, 107 Phil., 232; 60 Off. Gaz., 185, and Johnston Lumber Co. vs. Court of Tax Appeals, 101 Phil., 151; 53 Off. Gaz. [16] 5225.
Barrera, J., concurs.