G.R. No. L-11343; January 29, 1958
CARLOS LEDESMA, JULIETA LEDESMA, VICENTE GUSTILO, JR. and AMPARO LEDESMA DE GUSTILO, petitioners, vs. COURT OF TAX APPEALS and SILVERIO BLAQUERA, Collector of Internal Revenue, respondents.
FACTS
Petitioners are the owners of Hacienda Fortuna, which they purchased on July 9, 1948. On March 22, 1950, the Collector of Internal Revenue assessed an income tax for 1949 against the Hacienda, claiming it was an unregistered general copartnership. Petitioners contended they were mere co-owners pro indiviso and not liable. The Collector overruled this contention on March 12, 1955, and denied a motion for reconsideration on December 20, 1955. On January 14, 1956, petitioners filed a petition for review with the Court of Tax Appeals (CTA Case No. 226). However, prior to this, on March 22, 1955, the Collector had already filed a civil action for collection of the same assessment in the Court of First Instance of Negros Occidental (Civil Case No. 3373). The Collector moved to dismiss the CTA petition, citing the pendency of the civil case as a bar. The CTA issued a resolution on July 31, 1956, dismissing the petition for review, reasoning that the prior acquisition of jurisdiction by the Court of First Instance deprived the CTA of the right to entertain the petition, as a judgment in the civil case would constitute res adjudicata. Petitioners filed a motion for reconsideration, which was denied. They also filed a motion in the Negros Occidental court to remand the civil case to the CTA pursuant to Section 22 of Republic Act No. 1125, which was still pending.
ISSUE
Whether the Court of Tax Appeals erred in dismissing the petition for review on the ground of the pendency of a prior civil action for collection filed by the Collector in the Court of First Instance.
RULING
The Supreme Court ruled in favor of the petitioners. It held that the Court of Tax Appeals was in duty bound to give due course to the appeal. The Court set aside the CTA’s resolution of dismissal and directed it to proceed with the determination of the petition for review. The Supreme Court interpreted Republic Act No. 1125, which created the CTA, as granting it exclusive appellate jurisdiction to review decisions of the Collector involving disputed assessments. One of the principal objectives of the law was the expeditious determination of disputed tax assessments. Allowing the Collector to enforce assessments through civil actions in Courts of First Instance would defeat this purpose, as such cases take a long time to decide, and would deprive taxpayers of their right to appeal to the CTA for a prompt resolution. The Court also noted that the appeal to the CTA does not suspend collection, so the government suffers no prejudice. Although the proper remedy for petitioners was to appeal the CTA’s resolution, the Supreme Court treated the petition for mandamus as a petition for review due to the importance of the case, involving the first interpretation of the law on court jurisdiction over disputed tax assessments.
