GR L 11295; (March, 1958) (Digest)
G.R. No. L-11295; March 29, 1958
SILVERIO BLAQUERA, as Collector of Internal Revenue, petitioner, vs. Hon. JOSE S. RODRIGUEZ, in his capacity as Judge of the Court of First Instance of Cebu, and CHENG HOK, doing business under the firm name “Magallanes Bakery,” respondents.
FACTS
On May 25, 1956, respondent Cheng Hok filed a complaint in the Court of First Instance of Cebu against the Collector of Internal Revenue. He alleged that despite having fully paid the percentage tax due on his business for certain periods from 1951 to 1954, the Collector was demanding payment of P7,221.74 as deficiency percentage tax, a 25% surcharge, and a P50 compromise penalty (total P9,077.18). He prayed for a writ of injunction to restrain the collection and levy of his property, and for damages. The CFI granted a preliminary injunction upon the filing of a bond. The Collector moved to dismiss the complaint and discharge the injunction, arguing that the CFI had no jurisdiction over the subject matter, as it involved a disputed assessment under the National Internal Revenue Code, which falls within the exclusive appellate jurisdiction of the Court of Tax Appeals. The CFI, through different judges, denied the motion to dismiss and a subsequent motion for reconsideration. The Collector then filed this petition with the Supreme Court to annul the CFI’s orders and the writ of injunction.
ISSUE
Whether the Court of First Instance had jurisdiction over the respondent’s action to enjoin the collection of a disputed internal revenue tax assessment.
RULING
No. The Supreme Court granted the Collector’s petition. The action involved a disputed assessment of an internal revenue tax, surcharge, and penalty, which is a matter arising under the National Internal Revenue Code. Under Section 7 of Republic Act No. 1125 , the Court of Tax Appeals exercises exclusive appellate jurisdiction to review decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds, penalties, or other matters arising under the Code. The respondent’s claim of full payment is a defense that must be raised in the proper court, and raising it in the CFI did not vest that court with jurisdiction. The Court also held that Section 305 of the National Internal Revenue Code, which prohibits courts from granting injunctions to restrain tax collection, refers to courts other than the Court of Tax Appeals. The preliminary injunction issued by this Court was made permanent.