G.R. No. 113459. November 18, 2002
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. JOSEFINA LEAL, RESPONDENT.
SANDOVAL-GUTIERREZ, J.:
(The National Internal Revenue Code of 1977, as amended [Tax Code for
brevity]), which provides:
“SEC. 116. Percentage
tax on dealers in securities; lending
investors. – Dealers in securities shall pay a tax equivalent to six
(6%) per centum of their gross income. Lending investors shall pay a tax
equivalent to five (5%) per cent of their gross income.” (emphasis added)
the Commissioner of Internal Revenue,
petitioner, issued Revenue Memorandum Order (RMO) No. 15-91 dated March 11,
1991,[2]
imposing 5% lending investor’s tax on pawnshops based on their gross income and
requiring all investigating units of the Bureau of Internal Revenue (BIR) to
investigate and assess the lending investor’s tax due from them. The issuance of RMO No. 15-91 was an offshoot
of petitioner’s evaluation that the nature of pawnshop business is akin to that
of “lending investors,” which term is defined in Section 157 (u) of the Tax
Code in this wise:
“(u) Lending investors include all persons who make a practice of lending money for themselves or others at interests.”
Subsequently, petitioner issued Revenue Memorandum Circular (RMC)
No. 43-91 dated May 27, 1992,[3]
subjecting the pawn ticket to the documentary stamp tax as prescribed in Title
VII of the Tax Code.
Adversely affected by those revenue orders, herein respondent
Josefina Leal, owner and operator of Josefina’s Pawnshop in San Mateo, Rizal,
asked for a reconsideration of both RMO No. 15-91 and RMC No. 43-91 but the
same was denied with finality by petitioner in its BIR Ruling No. 221-91 dated
October 30, 1991.[4]
Consequently, on March 18, 1992, respondent filed with the
Regional Trial Court (RTC), Branch 75, San Mateo, Rizal, a petition for
prohibition, docketed as Civil Case No. 849-92,[5]
seeking to prohibit petitioner from implementing the revenue orders.
Petitioner, through the Office of the Solicitor General, filed a
motion to dismiss[6]
the petition on the ground that the RTC has no jurisdiction to review the
questioned revenue orders and to enjoin their implementation. Petitioner contends that the subject revenue
orders were issued pursuant to his power “to make rulings or opinions in
connection with the implementation of the provisions of internal revenue laws.”[7]
Thus, the case falls within the exclusive appellate jurisdiction of the Court
of Tax Appeals, citing Section 7 (1) of Republic Act No. 1125.[8]
The RTC, through then Presiding Judge Andres B. Reyes, Jr.,[9]
issued an order on April 27, 1992[10]
denying the motion to dismiss, holding that the revenue orders are not assessments to implement a Tax Code provision, but are “in effect new taxes (against pawnshops) which
are not provided for under the Code,” and which only Congress is
empowered to impose.
Petitioner then filed with the Court of Appeals a petition for certiorari and prohibition under Rule 65
of the Revised Rules of Court (now 1997 Rules of Civil Procedure, as amended),
docketed as CA-G.R. SP No. 28824. Petitioner alleged that in denying the motion
to dismiss, the RTC Judge acted without or in excess of his jurisdiction, or
with grave abuse of discretion. In its Decision dated December 23, 1993, the
Court of Appeals dismissed the petition “for lack of legal basis”[11]
and ruled that “the (RTC) order denying the motion to dismiss is subject to immediate challenge before the Supreme
Court (not the Court of
Appeals), which is the sole authority to determine and resolve an
issue purely of law pursuant to Section 5, Article VIII of the 1987
Constitution.”[12]
Nonetheless, the Court of Appeals resolved the case on the merits, sustaining
the RTC ruling that the questioned revenue orders are “new additional measures
which only Congress is empowered to impose.”[13]
Hence, the instant petition for review on certiorari under Rule 45 of the Rules of Court raising the
following issues:
1. WHETHER THE COURT OF APPEALS HAS JURISDICTION
OVER A PETITION FOR CERTIORARI UNDER
RULE 65 OF THE RULES OF COURT WHERE THE AUTHORITY OF THE REGIONAL TRIAL COURT
TO REVIEW THE SUBJECT REVENUE ORDERS IS BEING QUESTIONED;2. WHETHER IT IS THE RTC OR THE COURT OF TAX
APPEALS WHICH HAS JURISDICTION OVER THE INSTANT CASE.
Anent the first issue, petitioner contends that the Court of
Appeals has “original jurisdiction to issue writs of mandamus, prohibition, certiorari,
habeas corpus and quo warranto, and auxiliary writs or
processes, whether or not in aid of its appellate jurisdiction,” pursuant to
Section 9(1) of Batas Pambansa Blg. 129. Petitioner thus claims that his petition for certiorari filed with the Court of Appeals pursuant to Rule 65 of
the Rules of Court is the proper recourse to assail the RTC order denying his
motion to dismiss.
Petitioner’s contention is meritorious. The Court of Appeals erred in holding that it has no jurisdiction
over petitioner’s special civil action for certiorari under Rule 65 of the Rules. While
this Court exercises original jurisdiction to issue the extraordinary writ of certiorari (as well as the writs of
prohibition, mandamus, quo warranto, and
habeas corpus),[14]
such power is not exclusive to this
Court but is concurrent with the
Court of Appeals[15]
and the Regional Trial Courts.[16] We
reiterate our pronouncement on this issue in Morales vs. Court of Appeals:[17]
“Under Section 9 (1) of B.P. Blg. 129, the Court of Appeals has concurrent
original jurisdiction with the Supreme
Court pursuant to Section 5 (1) of Article VIII of the Constitution and
Section 17 (1) of the Judiciary Act of 1948, and with the Regional Trial Court pursuant to Section 21 (1) of B.P. Blg. 129 to
issue writs of certiorari, mandamus, prohibition,
habeas corpus, and quo warranto. These are original actions, not modes of appeals.“Since what the petitioner filed in CA-G.R. SP No. 40670 was a special civil action for certiorari under Rule 65, the original jurisdiction of the Court of Appeals thereon is beyond doubt.
“This error of the Court of Appeals was due to its misapplication
of Section 5 (2) (c) of Article VIII of the Constitution and of that portion of
Section 17 of the Judiciary Act of 1948 vesting upon the Supreme Court
exclusive jurisdiction to review, revise, reverse, modify, or affirm on certiorari as the law or rules of court
may provide, final judgments and
decrees of inferior courts in all cases in which the jurisdiction of any
inferior court is in issue. It forgot
that this constitutional and statutory provisions pertain to the appellate – not original – jurisdiction
of the Supreme Court, as correctly maintained by the petitioner. An appellate
jurisdiction refers to a process
which is but a continuation of the original suit, not a commencement of a new
action, such as that of a special
civil action for certiorari. The general rule is that a denial of a motion to dismiss or to quash in
criminal cases is interlocutory and
cannot be the subject of an appeal or of a special civil action for certiorari. Nevertheless, this Court has
allowed a special civil action for certiorari
where a lower court has acted without or in excess of jurisdiction or with
grave abuse of discretion in denying a motion to dismiss or to quash. The
petitioner believed that the RTC below did so; hence, the special civil action
for certiorari before the Court of
Appeals appeared to be the proper remedy.” (italics added)
Such concurrence of original jurisdiction among the Regional
Trial Court, the Court of Appeals and this Court, however, does not mean that
the party seeking any of the extraordinary writs has the absolute freedom to
file his petition in the court of his choice. The hierarchy of courts in
our judicial system determines the appropriate forum for these petitions. Thus, petitions for the issuance of the said
writs against the first level (inferior) courts must be filed with the Regional
Trial Court and those against the latter, with the Court of Appeals. A direct invocation of this Court’s original
jurisdiction to issue these writs should be allowed only where there are
special and important reasons therefor, specifically and sufficiently set forth
in the petition. This is the
established policy to prevent inordinate demands upon the Court’s time and
attention, which are better devoted to matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court’s docket.[18]
Thus, it was proper for petitioner to institute the special civil action for certiorari with the Court of Appeals
assailing the RTC order denying his motion to dismiss based on lack of
jurisdiction.
While the Court of Appeals correctly took cognizance of the
petition for certiorari, however, let
it be stressed that the jurisdiction to review the rulings of the Commissioner
of Internal Revenue pertains to the Court of Tax Appeals, not to the RTC.
The questioned RMO No. 15-91 and RMC No. 43-91 are actually
rulings or opinions of the Commissioner implementing the Tax Code on the
taxability of pawnshops. This is clear
from petitioner’s RMO No. 15-91, pertinent portion of which reads:
“A restudy of P.D. 114 (the Pawnshop Regulation Act) shows that the
principal activity of pawnshops is lending money at interest and incidentally
accepting a ‘pawn’ of personal property delivered by the pawner to the pawnee
as security for the loan (Sec. 3, ibid.). Clearly, this makes pawnshop business akin to lending investor’s
business activity which is broad enough to encompass the business of lending
money at interest by any person whether natural or juridical. Such being the case, pawnshops shall be
subject to the 5% lending investor’s tax based on their gross income pursuant
to Section 116 of the Tax Code, as amended.”[19]
Such revenue orders were issued pursuant to petitioner’s powers
under Section 245 of the Tax Code, which states:
“SEC. 245. Authority of the Secretary of Finance to
promulgate rules and regulations. – The Secretary of Finance, upon
recommendation of the Commissioner, shall promulgate all needful rules and
regulations for the effective enforcement of the provisions of this Code.“The authority of the Secretary of Finance to determine
articles similar or analogous to those subject to a rate of sales tax under
certain category enumerated in Section 163 and 165 of this Code shall be
without prejudice to the power of the Commissioner of Internal
Revenue to make rulings or opinions in connection with the implementation of
the provisions of internal revenue laws, including ruling on the classification
of articles of sales and similar purposes.” (emphasis added)
Under Republic Act No. 1125 (An Act Creating the Court of Tax
Appeals [CTA for brevity]), as amended, such rulings of the Commissioner of
Internal Revenue are appealable to that court, thus:
“SEC. 7. Jurisdiction. – The Court of Tax Appeals
shall exercise exclusive appellate
jurisdiction to review by appeal, as
herein provided –(1) 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 laws
or part of law administered by the Bureau of Internal Revenue;x x x x x x x x x.” (emphasis added)
“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,
or the Commissioner 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.x x x x x x x x x.” (emphasis added)
“SEC. 18. x x x. – No
judicial proceedings against the Government involving matters arising under the
National Internal Revenue Code, the Customs Law or the Assessment Law shall be maintained, except as herein
provided, until and unless an appeal has been previously filed with the Court
of Tax Appeals and disposed of in accordance with the provisions of this Act.x x x x x x x x x.” (emphasis added)
This Court, in Rodriguez, etc. vs. Blaquera, etc.,[20]
ruled:
“Plaintiff maintains that this is not an appeal from a ruling
of the Collector of Internal Revenue, but merely an attempt to nullify General
Circular No. V-148, which does not adjudicate or settle any controversy, and
that, accordingly, this case is not within the jurisdiction of the Court of Tax
Appeals.“We find no merit in this pretense. General Circular No. V-148 directs
the officers charged with the collection of taxes and license fees to adhere
strictly to the interpretation given by the defendant to the statutory
provisions abovementioned, as set forth in the Circular. The same incorporates, therefore, a decision
of the Collector of Internal Revenue (now Commissioner of Internal Revenue) on
the manner of enforcement of the said statute, the administration of which is
entrusted by law to the Bureau of Internal Revenue. As
such, it comes within the purview of Republic
Act No. 1125, Section 7 of which
provides that the Court of Tax
Appeals ‘shall exercise exclusive appellate jurisdiction to review by appeal x
x x decisions of the Collector of Internal Revenue in x x x matters arising
under the National Internal Revenue Code or other law or part of the law
administered by the Bureau of Internal Revenue.’ x x x.” (italics added)
In the same vein, we held in Meralco Securities Corporation
vs. Savellano,[21]
thus:
“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. The question of whether of 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, etc. vs. Rodriguez, etc. (103
Phil. 511 [1958]), 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.’”
Here, as earlier mentioned, respondent Josefina Leal, being a
pawnshop owner, is assailing the revenue orders imposing 5% lending investor’s
tax on pawnshops issued by petitioner. Clearly then, she should have filed her petition with the Court of Tax
Appeals, not the RTC. Indeed, the Court
of Appeals erred in holding that the RTC order should have been challenged
before this Court.
WHEREFORE, the
petition is GRANTED. Accordingly: (1) the assailed
Decision dated December 23, 1993 of the Court of Appeals in CA-G.R. SP No.
28824 is SET ASIDE; (2) the
Order dated April 27, 1992 and the Writ of Preliminary Injunction dated May 21,
1992 both issued by the RTC, Branch 75, San Mateo, Rizal in Civil Case No.
849-92, are declared NULL and VOID for
having been issued without jurisdiction; and (3) Civil Case No. 849-92 is
ordered DISMISSED.
SO ORDERED.
Puno (Chairman), Panganiban, Corona, and Carpio-Morales, JJ., concur.
[1]
A Decree which consolidated and codified all the internal revenue laws of the
Philippines into a single tax code known as the National Internal Revenue Code
of 1977.
[2]
Annex “B” of Petition for Certiorari, Rollo,
at 51-52.
[3]
Annex “C,” id., at 53-54.
[4]
Motion to Dismiss, Rollo, at 71.
[5]
Annex “D,” supra, at 55-68.
[6]
Annex “E,” id., at 69-82.
[7]
Section 245, National Internal Revenue Code of 1977.
[8]
Enacted on June 16, 1954, Section 7 provides: “Sec. 7. Jurisdiction. – The Court of Tax Appeals shall exercise exclusive
appellate jurisdiction to review by appeal, x x x – (1) 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; x x x.” (emphasis added).
[9]
Now Associate Justice of the Court of
Appeals.
[10]
Annex “F,” supra, at 83.
[11]
Rollo, at 50.
[12]
Id., at 48.
[13]
Id., at 49.
[14]
Section 5 (1), Article VIII of the 1987 Constitution.
[15]
Section 9 (1) of the Judiciary Reorganization Act of 1980 (Batas Pambansa Blg. 129).
[16]
Section 21 (1), id.; Section 4, Rule
65, 1997 Rules of Civil Procedure, as amended; Fortich vs. Corona, 289 SCRA 624, 644-645 (1998).
[17]
283 SCRA 211, 222 (1997).
[18]
Fortich vs. Corona, supra (footnote 17), at 645-646, citing People vs.
Cuaresma, supra (footnote 17), at
424.
[19] Rollo, at 52.
[20]
109 Phil. 598, 601-602 (1960).
[21]
117 SCRA 804, 809-810 (1982).