G. R. No. L-17008. October 31, 1962
ALLISON J. GIBBS AND ESTHER K. GIBBS, PETITIONERS, VS. COMMISSIONER OF INTERNAL REVENUE AND COURT OF TAX APPEALS, RESPONDENTS.
BARRERA, J.:
K. Gibs from the resolution of the Court of Tax Appeals of March 17,
1960, dismissing their petition for review in C.T.A. Case No. 585.
The background and the facts of the case, briefly stated, are as follows:
For the year 1950, petitioners were assessed deficiency income tax
in the amount of P12,284.00 as a result of the disallowance of a
claimed deductible loss of P23,563.78 representing petitioners’ cost of
certain Japanese sequestered mortgages, on the ground that said
mortgages were held by this Court on December 21, 1950 in G. R. No.
L-1494 to have been validly liquidated and cancelled by the Japanese
Military Administration.
The difficiency tax was paid under protest by the petitioners’ on October 3, 1956 and its refund was requested on the same date.
On October 26, 1956, the Commissioner of Internal Revenue denied
petitioners’ protest as well as the requested refund. Petitioners
received this denial on November 14, 1956.
More than ten (10) months later, or on September 17, 1957,
petitioners filed a Petition for Review and Refund in CTA Case No. 418
praying for the refund of the said sum of P12,284.00.
On December 2, 1957, the Court of Tax Appeals dismissed the petition
on the ground that the appeal to the Court of Tax Appeals was made long
after the 30-day period prescribed in R. A. 1125 for the purpose, had
expired. An appeal from this ruling was taken to the Supreme Court and
on February 29, 1960, we affirmed the same (See G. R. No. L-13453).
During the pendency of the appeal in the Supreme Court, the following took place:
(1) The 1952, 1953, 1954, 1955 and 1956 income tax
returns of petitioners were examined and as a result, deficiency income
tax assessments were made on June 3, 1958. (Exh. WW, BIR rec., Vol. 1,
p. 189)(2) On September 16, 1958, petitioners addressed
their letter (Exh. FFF, BIR. Rec., Vol. II, p. 94), to the Commissioner
of Internal Revenue, calling attention that the Commissioner’s action
recognizing that the recovery of P23,418 as war claims and received in
1956 was exempt from income tax pursuant to R. A. No. 227 enacted June
5, 1948, and approving their claim of bad debt or loss in 1951 similar
to that of 1950, was inconsistent with the denial for refund of the
amount of P12,284.00 subject of the case then pending appeal in the
Supreme Court. In view thereof, petitioners again requested for the
reconsideration of the ruling denying the refund of the said sum of
P12,284.00.(3) Not having received any reply nor
acknowledgment of receipt of this communication, petitioners filed, on
October 2, 1958, with the Court of Tax Appeals the present C.T.A. Case
No. 585, seeking the review and refund or credit of the same sum of
P12.284.00 involved in C.T.A. Case No. 418 already decided adversely by
the Court of Appeals on December 2, 1957.(4) On October 17,
1958, the Commissioner of Internal Revenue filed a motion to dismiss on
the ground that a prior action (C.T.A. Case No. 418 then on appeal) was
pending between the same parties for the same cause.
Then on February 29, 1960 came our decision in the first case
appealed to us affirming that of the Court of Tax Appeals. Thereupon,
on March 17, 1960, the Court of Tax Appeals entered its resolution in
the second case dismissing the petition to review holding in effect
that our decision in the first case involving the same parties and the
same cause of action, is decisive on the second case.
It is from this resolution that the present appeal has been taken,
petitioners contending in substance that while the parties involved are
the same and the subject matter in both cases is the same amount of
P12,284.00 paid under protest on October 3, 1956, still the issues are
different in that the first case concerned the refund of the amount of
P12,284.00 while in the second case what is demanded is to credit the
same amount and deduct the same from the deficiencies found owing by
the petitioners during the years 1952, 1953, 1954, 1955 and 1956. It is
further claimed that the basis of the second case is not the
disallowance of the deduction on account of war losses contained in the
respondent Commissioner’s decision of October 26, 1956, but his alleged
subsequent action of allowing a deduction in the 1951 income tax
assessment based on a similar claim of bad debt or losses and the
exemption from tax under R.A. No. 227 of war damage payment received by
petitioners reported in their 1956 income tax return.
The distinction sought to be made between the claim for refund made
in Case No. 418 and the demand for credit in Case No. 585 is too
hair-splitting, to say the least. The purpose and the consequence are
the same; whether in the form of a refund or as a credit to be applied
to subsequent tax liability, if granted, the result is in effect the
return to petitioners of the amount of P2,284.00.
The argument that the causes of action are different in that the
first case was based on the disallowance in the 1950 income tax
assessment of the deduction due to war losses and in the second it is
predicated on facts occurring subsequently, that is, the allowance of a
similar deduction in the 1951 income tax assessment and the exemption
from income tax of the receipt in 1956 of war damage payment, is
unconvincing. In both cases the issue is whether the alleged loss in
1950 was deductible or not. If it was deductible under the law, then
the amount of P12,284.00 paid under protest should be refunded or
returned or credited, as later demanded by the petitioners; if it was
not deductible, then the claim of petitioners in both cases Nos. 418
and 585 should fail. The alleged factual bases of the second case, if
true, alleges but additional grounds invoked in support of
petitioners’ contention in the first case, which do not constitute new
or different cause of action. Both cases are predicated on one and the
same cause of action; the alleged arbitrary and illegal disallowance of
the deduction claimed in the 1950 income tax assessments. In fact, the
letter of September 16, 1958, basis of the second case filed on October
2, 1958, ends with a request for the reconsideration of the former
ruling (of October 26, 1956 which gave rise to the first case) denying
the claim for refund of the P12,284.00. And, too, the basis and purpose
of the second case is to have the court “Declare excessive, void and
illegal, respondent’s assessment of the deficiency income tax in the
sum of P12,284.00” (for the year 1950).
The arguments advanced in this appeal are the same arguments made in
the first case already finally decided by this Court. We therefore
conclude that whatever difference there may be between the two cases,
it is only in form and not in substance. And it is a rule of procedure
that a fact or question which was actually or directly in issue in a
former suit and was judicially passed upon and determined, is
conclusively settled by the judgment therein so far as concerns the
parties to that action and their privies, and cannot be again litigated
in any future action upon either the same or different cause of action.
[1]
“A party cannot, by varying the form of action or
adopting a different method of presenting his case, escape the
operation of the principle that one and the same cause of action shall
not be twice litigated between the same parties or their privies”
(Penalosa vs. Tuason, 22 Phil. 321; Tejador vs. Palet, 61 Phil. 494, 502-503).“It
is the settled policy of the law to forbid a matter once adjudicated to
be again drawn in issue while the former adjudication remains in force”
(Melger et al. vs. Delgado et al, 54 Phil. 668, 681 quoting Freeman on Judgments, Vol. 2, 5th ed., p. 782).
Wherefore, the resolution appealed from is hereby affirmed, with costs against the petitioner-appellants. So ordered.
Bengzcn, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur.
[1] 34 C.J.S., pp. 866-869.