COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. LEONARDO S. VILLA AND THE COURT OF TAX APPEALS, RESPONDENTS.

Jurisdiction over the subject matter is fundamental for a court to
act on a given controversy.  It is
conferred by law,^[1]
not by consent of the parties.^[2]
It can be challenged at any stage of the proceedings and for lack of it, a court can dismiss a case ex mero
motu.^[3]

To inquire into the existence of jurisdiction over the subject
matter is the primary concern of a court, for thereon would depend the validity
of its entire proceedings.  In this case,
the parties submitted voluntarily to the jurisdiction of the Court of Tax
Appeals, adduced their evidence thereat. 
Thereafter, they submitted their cause for decision.  At no stage of the proceedings have they
raised the issue of jurisdiction. 
However, as aforesaid, the consent of the parties does not confer
jurisdiction over the subject matter. 
Hence, We shall proceed to inquire whether or
not the Court of Tax Appeals had jurisdiction to entertain the so-called appeal
of the taxpayer in this case.

Leonardo S. Villa, a doctor of medicine, and his wife filed joint
income tax returns for the years 1951, 1952, 1953, 1954, 1955 and 1956 on April 2, 1952, March 30, 1953, February 26, 1954, March
31, 1955, April 2, 1956
and March 23, 1957,
respectively.  Subsequently, the Bureau
of Internal Revenue determined the income of the Villa spouses by the use of
the networth method and accordingly issued on February 23, 1961 assessments for
deficiency income tax for the years 1951, 1952, 1953, 1954 and 1956 and residence
tax for 1951 to 1957.  Dr. Villa received
the assess­ments on April 7, 1961.  Without contesting the said assessments in
the Bureau of Internal Revenue, he filed on May 4, 1961 a petition for review in the
Court of Tax Appeals.

The Court of Tax Appeals took cognizance of the appeal, tried the
case on the merits and rendered the following judgment:

“IN VIEW OF THE FOREGOING CONSIDERATIONS, with the exception
of that portion regarding the additional residence taxes and surcharges for the
years 1951 to 1957 in the amount of P244.00, for which we hold petitioner
liable, the decision appealed from is hereby reversed.  The petitioner is ordered to pay to the
Commissioner of Internal Revenue or his representative the sum of P244.00, as
additional residence tax and surcharge, without pronouncement as to
costs.”

From said judgment, the Commissioner of
Internal Revenue has appealed to Us.

The law conferring jurisdiction on the Court of Tax Appeals is
found in Section 7 of Republic Act 1125, the pertinent part of which states:

“SEC. 7.  Jurisdiction.  – The Court of Tax Appeals shall exercise
exclusive appellate jurisdiction to review by appeal as herein provided ?

“(1)  Decisions of the Collector^[4]
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 word “decisions” in
paragraph 1, section 7 of Repu­blic Act 1125, quoted above, has
been interpreted to mean the decisions of the Commissioner of Internal
Revenue on the protest of the taxpayer against the assessments.  Definitely, said word does not signify the
assessment itself.  We quote what this
Court said aptly in a previous case:

“In the first place, we believe the res­pondent court erred
in holding that the assessment in question is the respondent Collector’s
decision or ruling appealable to it, and that
consequently, the period of thirty days pres­cribed by section 11 of Republic
Act No. 1125 within which petitioner should have appealed to the respondent
court must be counted from its receipt of said assessment.  Where a taxpayer questions an assessment and
asks the Collector to reconsider or cancel the same because he (the taxpayer)
believes he is not liable therefor, the assessment
becomes a ‘disputed assessment’ that the Collector must decide, and the
taxpayer can appeal to the Court of Tax Appeals only upon receipt of the
decision of the Collector on the disputed assessment, x x
x“^[5]
(Emphasis supplied)

The same interpretation finds support in Section 11 of Republic
Act 1125, which states:

“SEC. 11.  Who may appeal; effect of appeal.  – Any person, association or corporation
adversely affected by a decision or ruling of the Collector of
Internal Revenue, the Collector of Customs or any provincial or ci­ty Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty
days after the receipt of such decision or ruling.” (Emphasis
supplied)

Note that the law uses the word
“decisions”, not “assess­ments”, thus further indicating
the legislative intention to subject to judicial review the decision of
the Commissioner on the protest against an assessment but not the assessment
itself.^[6]

Since in the instant case the taxpayer appealed from the
assessment of the Commissioner of Internal Revenue without previously
contesting the same, the appeal was premature and the Court of Tax Appeals had
no jurisdiction to entertain said appeal. 
For, as stated, the jurisdiction of the Tax Court is to review by appeal
decisions of the Commissioner of Internal Revenue on disputed
assessments.  The Tax Court is a court of
special jurisdiction.  As such, it can
take cognizance only of such matters as are clearly within its jurisdiction.^[7]

WHEREFORE, the judgment appealed from is set aside for
lack of jurisdiction and the petition for review filed in the Court of Tax
Appeals is hereby ordered dismissed.  No
costs.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.

^[1]
21 Corpus Juris Secundum,
127-128.

^[2]
Molina v. De la Riva, 6 Phil. 12; Fuentebella v.
Negros Coal Co., 50 Phil. 69; Vega v. San
Carlos Milling Co., 51 Phil. 908.

^[3] US v. De la Santa, 9 Phil. 22; Vda.
e Hijos de Pedro Rojas v.
Rafferty, 37 Phil. 957.

^[4] Now Commissioner.

^[5]
St. Stephen’s Association and St. Stephen’s Chinese Girl’s School v.
Collector of Internal Revenue, 104 Phil. 314, 317; cited in Baguio
Country Club Corporation v. Collector of Internal Revenue, et al.,
L-11419, April 22, 1959 and Commissioner of Internal Revenue v. Lilia Yasay Gonzales, et al., L-19495, Nov. 24, 1966.

^[6] See
Villamin v. Court of Tax Appeals, L-11536, Oct. 31, 1960.

^[7] Ker & Co., Ltd. v. Court of Tax Appeals,
L-12396, Jan. 31, 1962.