G.R. No. L-36181. October 23, 1982
MERALCO SECURITIES CORPORATION (NOW FIRST PHILIPPINE HOLDINGS CORPORATION), PETITIONER, VS. HON. VICTORINO SAVELLANO AND ASUNCION BARON VDA. DE MANIAGO, ET AL., AS HEIRS OF THE …
TEEHANKEE, J.:
These are original actions for certiorari to set aside and
annul the writ of mandamus issued by Judge Victorino
A. Savellano of the Court of First Instance of Manila
in Civil Case No. 80830 ordering petitioner Meralco
Securities Corporation (now First Philippine Holdings Corporation) to pay, and
petitioner Commissioner of Internal Revenue to collect from the former, the
amount of P51,840, 612.00, by way of alleged deficiency corporate income tax,
plus interests and surcharges due thereon and to pay private respondents 25% of
the total amount collectible as informer’s reward.
On May 22, 1967, the late Juan G. Maniago
(substituted in these proceedings by his wife and children) submitted to
petitioner Commissioner of Internal Revenue confidential denunciation against
the Meralco Securities Corporation for tax evasion
for having paid income tax only on 25% of the dividends it received from the
Manila Electric Co. for the years 1962-1966, thereby allegedly shortchanging
the government of income tax due from 75% of the said dividends.
Petitioner Commissioner of Internal Revenue caused the investigation
of the denunciation after which he found and held that no deficiency corporate
income tax was due from the Meralco Securities
Corporation on the dividends it received from the Manila Electric Co., since
under the law then prevailing (section 24[a] of the National Internal Revenue
Code) “in the case of dividends received by a domestic or foreign resident
corporation liable to (corporate income) tax under this Chapter . . . . only
twenty-five per centum thereof shall be returnable for the purposes of the tax
imposed under this section.” The Commissioner accordingly rejected Maniago’s contention that the Meralco
from whom the dividends were received is “not a domestic corporation
liable to tax under this Chapter.” In a letter dated April 5, 1968, the Commissioner informed Maniago of his findings and ruling and therefore denied Maniago’s claim for informer’s reward on a non-existent
deficiency. This action of the Commissioner
was sustained by the Secretary of Finance in a 4th Indorsement
dated May 11, 1971.
On August 28, 1970, Maniago filed a
petition for mandamus, and subsequently an amended petition for mandamus,
in the Court of First Instance of Manila, docketed therein as Civil Case No.
80830, against the Commissioner of Internal Revenue and the Meralco
Securities Corporation to compel the Commissioner to impose the alleged
deficiency tax assessment on the Meralco Securities
Corporation and to award to him the corresponding informer’s reward under the
provisions of R.A. 2338.
On October 28, 1978, the Commissioner filed a motion to dismiss,
arguing that since in matters of issuance and non-issuance of assessments, he
is clothed under the National Internal Revenue Code and existing rules and
regulations with discretionary power in evaluating the facts of a case and
since mandamus will not lie to compel the performance of a
discretionary power, he cannot be compelled to impose the alleged tax
deficiency assessment against the Meralco Securities
Corporation. He further argued that mandamus
may not lie against him for that would be tantamount to a usurpation of
executive powers, since the Office of the Commissioner of Internal Revenue is
undeniably under the control of the executive department.
On the other hand, the Meralco
Securities Corporation filed its answer, dated January 15, 1971, interposing as
special and/or affirmative defenses that the petition states no cause of
action, that the action is premature, that mandamus will not lie to
compel the Commissioner of Internal Revenue to make an assessment and/or effect
the collection of taxes upon a taxpayer, that since no taxes have actually been
recovered and/or collected, Maniago has no right to
recover the reward prayed for, that the action of petitioner had already
prescribed and that respondent court has no jurisdiction over the subject
matter as set forth in the petition, the same being cognizable only by the
Court of Tax Appeals.
On January 10, 1973, the respondent judge rendered a decision
granting the writ prayed for and ordering the Commissioner of Internal Revenue
to assess and collect from the Meralco Securities
Corporation the sum of P51,840,612.00 as deficiency corporate income tax for
the period 1962 to 1969 plus interests and surcharges due thereon and to pay
25% thereof to Maniago as informer’s reward.
All parties filed motions for reconsideration of the decision but
the same were denied by respondent judge in his order dated April 6, 1973, with respondent judge
denying respondents’ claim for attorneys fees and for execution of the decision
pending appeal.
Hence, the Commissioner filed a separate petition with this
Court, docketed as G. R. No. L-36748 praying that the decision of respondent
judge dated January 10, 1973 and his order dated April 6, 1973 be reconsidered
for respondent judge has no jurisdiction over the subject matter of the case
and that the issuance or non-issuance of a deficiency assessment is a
prerogative of the Commissioner of Internal Revenue not reviewable
by mandamus.
The Meralco Securities Corporation (now
First Philippine Holdings Corporation) likewise appealed the same decision of
respondent judge in G.R. No. L-36181 and in the Court’s resolution dated June 13, 1973, the two cases were
ordered consolidated.
We grant the petitions.
Respondent judge has no jurisdiction to take cognizance of the
case because the subject matter thereof clearly falls within the scope of cases
now exclusively within the jurisdiction of the Court of Tax Appeals. Section 7 of Republic Act No. 1125, enacted
June 16, 1954, granted to the Court of Tax Appeals exclusive appellate
jurisdiction to review by appeal, among others, decisions of the
Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties imposed in
relation thereto, or other matters arising under the National Internal Revenue
Code or other law or part of law administered by the Bureau of Internal
Revenue. The law transferred to the
Court of Tax Appeals jurisdiction over all cases involving said assessments
previously cognizable by courts of first instance, and even those already
pending in said courts.[1]
The question of whether or not to impose a deficiency tax assessment on Meralco Securities Corporation undoubtedly comes within the
purview of the words “disputed assessments” or of “other matters
arising under the National Internal Revenue Code . . . . ” In the case of Blaquera vs. Rodriguez, et al.,[2]
this Court ruled that “the determination of the correctness or
incorrectness of a tax assessment to which the taxpayer is not
agreeable, falls within the jurisdiction of the Court of Tax Appeals and not of
the Court of First Instance, for under the provisions of Section 7 of Republic
Act No. 1125, the Court of Tax Appeals has exclusive appellate
jurisdiction to review, on appeal, any decision of the Collector of Internal
Revenue in cases involving disputed assessments and other matters arising
under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue.”
Thus, even assuming arguendo that the
right granted the taxpayers affected to question and appeal disputed
assessments, under section 7 of Republic Act No. 1125, may be availed of by
strangers or informers like the late Maniago, the
most that he could have done was to appeal to the Court of Tax Appeals the
ruling of petitioner Commissioner of Internal Revenue within thirty (30) days
from receipt thereof pursuant to section 11 of Republic Act No. 1125.[3]
He failed to take such an appeal to the tax court. The ruling is clearly final and no longer
subject to review by the courts.[4]
It is furthermore a well-recognized rule that mandamus
only lies to enforce the performance of a ministerial act or duty[5]
and not to control the performance of a discretionary power.[6]
Purely administrative and discretionary functions may not be interfered with by
the courts.[7]
Discretion, as thus intended, means the power or right conferred upon the
office by law of acting officially under certain circumstances according to the
dictates of his own judgment and conscience and not controlled by the judgment
or conscience of others.[8] Mandamus
may not be resorted to so as to interfere with the manner in which the
discretion shall be exercised or to influence or coerce a particular
determination.[9]
In an analogous case, where a petitioner sought to compel the
Rehabilitation Finance Corporation to accept payment of the balance of his
indebtedness with his backpay certificates, the Court
ruled that “mandamus does not compel the Rehabilitation Finance
Corporation to accept backpay certificates in payment
of outstanding loans. Although there is
no provision expressly authorizing such acceptance, nor is there one
prohibiting it, yet the duty imposed by the Backpay
Law upon said corporation as to the acceptance or discount of backpay certificates is neither clear nor ministerial, but
discretionary merely, and such special civil action does not issue to control
the exercise of discretion of a public officer.”[10]
Likewise, we have held that courts have no power to order the Commissioner of
Customs to confiscate goods imported in violation of the Import Control Law,
R.A. 426, as said forfeiture is subject to the discretion of the said official,[11]
nor may courts control the determination of whether or not an applicant for a
visa has a non-immigrant status or whether his entry into this country would be
contrary to public safety for it is not a simple ministerial function but an
exercise of discretion.[12]
Moreover, since the office of the Commissioner of Internal
Revenue is charged with the administration of revenue laws, which is the
primary responsibility of the executive branch of the government, mandamus
may not lie against the Commissioner to compel him to impose a tax assessment
not found by him to be due or proper for that would be tantamount to a
usurpation of executive functions. As we
held in the case of Commissioner of Immigration vs. Arca[13]
anent this principle, “the administration of immigration laws is the
primary responsibility of the executive branch of the government. Extensions of stay of aliens are
discretionary on the part of immigration authorities, and neither a petition
for mandamus nor one for certiorari can compel the Commissioner
of Immigration to extend the stay of an alien whose period to stay has expired.
Such discretionary power vested in the proper executive official,
in the absence of arbitrariness or grave abuse so as to go beyond the statutory
authority, is not subject to the contrary judgment or control of others. “‘Discretion’, when applied to public
functionaries, means a power or right conferred upon them by law of acting
officially, under certain circumstances, uncontrolled by the judgment or
consciences of others. A purely
ministerial act or duty in contradiction to a discretional act is one which an
officer or tribunal performs in a given state of facts, in a prescribed manner,
in obedience to the mandate of a legal authority, without regard to or the
exercise of his own judgment upon the propriety or impropriety of the act
done. If the law imposes a duty upon a
public officer and gives him the right to decide how or when the duty shall be
performed, such duty is discretionary and not ministerial. The duty is ministerial only when the
discharge of the same requires neither the exercise of official discretion or
judgment.”[14]
Thus, after the Commissioner who is specifically charged by law
with the task of enforcing and implementing the tax laws and the collection of
taxes has after a mature and thorough study rendered his decision or ruling
that no tax is due or collectible, and his decision is sustained by the
Secretary, now Minister of Finance (whose act is that of the President unless
reprobated), such decision or ruling is a valid exercise of discretion in the
performance of official duty and cannot be controlled much less reversed by mandamus. A contrary view, whereby any stranger or
informer would be allowed to usurp and control the official functions of the
Commissioner of Internal Revenue would create disorder and confusion, if not
chaos and total disruption of the operations of the government.
Considering then that respondent judge may not order by mandamus
the Commissioner to issue the assessment against Meralco
Securities Corporation when no such assessment has been found to be due, no
deficiency taxes may therefore be assessed and collected against the said
corporation. Since no taxes are to be
collected, no informer’s reward is due to private respondents as the informer’s
heirs. Informer’s reward is contingent
upon the payment and collection of unpaid or deficiency taxes. An informer is entitled by way of reward only
to a percentage of the taxes actually assessed and collected. Since no assessment, much less any
collection, has been made in the instant case, respondent judge’s writ for the
Commissioner to pay respondents 25% informer’s reward is gross error and
without factual nor legal basis.
WHEREFORE, the petitions are hereby granted and the
questioned decision of respondent judge dated January 10, 1973 and order dated April 6, 1973 are hereby reversed and set
aside. With costs against private
respondents.
Melencio-Herrera, Plana,
Vasquez, and Relova,
JJ., concur.
Gutierrez, Jr., J., no part.
[1] Ledesma vs. Court of Tax Appeals, 102 Phil. 931.
[2]
103 Phil. 511.
[3]
Sec. 11. Who may appeal: effect of appeal. – Any person, association or corporation
adversely affected by a decision or ruling of the Commissioner of Internal
Revenue, the Collector of Customs or among provincial or city Board of
Assessment appeals may file an appeal in the Court of Tax Appeals within
thirty (30) days after the receipt of such decision or ruling.
[4]
Republic of the Philippines
vs. Juana vda. del Rosario, et al., 105 Phil.
277; Republic of the Philippines vs. Benito M. Lopez, 117 Phil. 575;
Republic of the Philippines vs. Manila Port Service; 12 Phil. 384;
Republic of the Philippines vs. Lim Tian Teng Sons & Co., Inc., 16 SCRA 584.
[5] Province
of Pangasinan
vs. Reparations Commission, 80 SCRA 376.
[6] Caltex Filipino Managers & Supervisors Association vs.
CIR, 23 SCRA 492.
[7] Coloso vs. Board of Accountancy, 92 Phil. 938.
[8] 34 Am. Jur. 855.
[9]
34 Am. Jur. 856-858; see also Diokno
vs. Rehabilitation Finance Corporation, 91 Phil. 608; Caltex Filipino Managers & Supervisors Association vs.
CIR, 23 SCRA 492; Sy Ha vs. Galang, 7 SCRA 797; Astudillo vs.
Board of Directors of PHHC, 73 SCRA 15; Aprueba vs.
Ganzon, 18 SCRA 8.
[10] Diokno vs. RFC, 91 SCRA 608.
[11]
Marcelo Steel Corp. vs. Import Control Board, 87 Phil. 374.
[12] Sy Ha vs. Galang, 7 SCRA
797.
[13]
Commissioner of Immigration vs. Arca, 22 SCRA
805.
[14]
Samson vs. Barrios, 63 Phil. 198; Lemi vs.
Valencia, 26
SCRA 203.