G.R. No. L-10460; March 11, 1959
Republic of the Philippines, plaintiff-appellant, vs. Juana B. Vda. de Del Rosario, Manuel Del Rosario and Luis Del Rosario, defendants-appellees.

FACTS

The Republic of the Philippines filed an action in the Court of First Instance of Manila on August 20, 1954, against the widow and children (defendants-appellees) of the late Simplicio del Rosario. The complaint sought to collect a balance of P7,622.74 for a 1946 deficiency income tax of P14,097.54 due from the deceased. The defendants, along with children from a first marriage, inherited the estate. The complaint alleged the co-heirs had fully paid their proportional shares, but the defendants had only paid P6,286.60 and refused to pay the balance. The defendants moved to dismiss, arguing no cause of action and the statute of limitations. After denial, they answered, claiming that since all heirs received equal shares, they alone should not be liable for the total amount and prayed for dismissal or the impleading of the other heirs. The plaintiff moved to certify the case to the Court of Tax Appeals under Republic Act No. 1125 . The Court of First Instance initially denied, then reversed itself and certified the case, citing it involved a disputed assessment. The Court of Tax Appeals, on November 21, 1955, resolved it had no jurisdiction as the complaint was filed after RA 1125’s enactment and returned the case. On February 9, 1956, the Court of First Instance dismissed the case without prejudice, holding it was within the Court of Tax Appeals’ jurisdiction. The plaintiff appealed.

ISSUE

Which court has jurisdiction to hear and determine the case: the Court of First Instance or the Court of Tax Appeals?

RULING

The Supreme Court ruled that the Court of First Instance has jurisdiction. The case was filed on August 20, 1954, after Republic Act No. 1125 took effect (June 16, 1954). Section 7 of RA 1125 grants the Court of Tax Appeals exclusive appellate jurisdiction to review decisions of the Collector of Internal Revenue in cases involving disputed assessments. Section 11 provides for an appeal by persons adversely affected by such a decision within thirty days. The defendants did not appeal from the Collector’s assessment; their mere refusal to pay the balance after partial payment did not render the assessment “disputed” within the meaning of the Act. Their failure to appeal rendered the assessment final, executory, and demandable. Consequently, the action was an original action to enforce payment, not an appeal from a disputed assessment, and thus fell under the jurisdiction of the Court of First Instance. The order of dismissal was reversed, and the case was remanded to the Court of First Instance of Manila for further proceedings.