Blaquera v. Rodriguez
REITERATIONFacts
The Antecedents: Respondent Cheng Hok, operating as Magallanes Bakery, was assessed by the Collector of Internal Revenue for a deficiency in percentage tax from 1951 to 1954, amounting to P7,221.74, plus a 25% surcharge and a compromise penalty, totaling P9,077.18. Cheng Hok contended that he had fully paid the taxes due for the periods in question and refused to pay the demanded sum. Procedural History: Cheng Hok filed a complaint in the Court of First Instance of Cebu, seeking a writ of injunction to prevent the collection of the disputed tax assessment and damages. The Court of First Instance granted a preliminary injunction upon the posting of a bond. The Collector of Internal Revenue moved to dismiss the complaint, arguing that the Court of First Instance lacked jurisdiction over disputed tax assessments and that no court other than the Court of Tax Appeals could issue an injunction against the collection of internal revenue taxes. The Court of First Instance denied the motion to dismiss and a subsequent motion for reconsideration. The Petition: The Collector of Internal Revenue filed a petition for certiorari and prohibition with the Supreme Court, seeking to annul the orders of the Court of First Instance that granted the preliminary injunction, denied the motion to dismiss, and denied the motion for reconsideration. The petitioner argued that the case fell under the exclusive appellate jurisdiction of the Court of Tax Appeals, as defined by Republic Act No. 1125, and that the Court of First Instance was statutorily prohibited from issuing injunctions to restrain the collection of internal revenue taxes under Section 305 of the National Internal Revenue Code.
Issue(s)
Whether the Court of First Instance has jurisdiction over a case involving a disputed assessment of internal revenue tax, surcharge, and penalty. Whether a Court of First Instance can issue a writ of injunction to restrain the collection of national internal revenue taxes.
Ruling
The petition is granted. The writ of preliminary injunction issued by the Court of First Instance is made permanent, and the orders denying the motion to dismiss and motion for reconsideration are annulled. Costs are against the respondent taxpayer.
Ratio Decidendi
On the jurisdiction of the Court of First Instance over disputed assessments: The Supreme Court held that the action, involving a disputed assessment of an internal revenue tax, surcharge, and penalty, falls within the exclusive appellate jurisdiction of the Court of Tax Appeals (CTA) as provided by Section 7 of Republic Act No. 1125. The claim that the respondent taxpayer had paid the tax fully and timely is a matter of defense that must be raised before the proper court, which is the CTA. The Court emphasized that averring such a defense in another court does not vest jurisdiction in that court. The Court further clarified that the claim for damages against the petitioner does not alter the essential nature of the case as one involving a disputed tax assessment. On the authority of the Court of First Instance to issue an injunction to restrain tax collection: The Supreme Court ruled that Section 305 of the National Internal Revenue Code explicitly prohibits any court from granting an injunction to restrain the collection of any national internal revenue tax, fee, or charge imposed by the Code. This prohibition applies to courts other than the Court of Tax Appeals. The Court also noted that Section 11 of Republic Act No. 1125, which pertains to the suspension of tax collection, refers specifically to the Court of Tax Appeals, not to Courts of First Instance. Therefore, the CFI acted without jurisdiction in issuing the writ of preliminary injunction.
Main Doctrine
Courts of First Instance lack jurisdiction over disputed assessments of internal revenue taxes, surcharges, and penalties, as exclusive appellate jurisdiction is vested in the Court of Tax Appeals. Furthermore, no court other than the Court of Tax Appeals may issue an injunction to restrain the collection of national internal revenue taxes.