GR L 15705; (April, 1961) (Digest)
G.R. No. L-15705. April 15, 1961. REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. DY CHAY, defendant-appellee.
FACTS
Defendant-appellee Dy Chay filed his 1951 income tax return, reporting a net taxable income. Following an investigation, the Bureau of Internal Revenue disallowed several claimed deductions and found undeclared income, leading to a deficiency tax assessment of P24,588.00. Dy Chay protested and requested a reinvestigation. The Collector of Internal Revenue, after reinvestigation, affirmed the assessment and demanded payment. Dy Chay neither paid the tax nor appealed the Collector’s decision to the Court of Tax Appeals.
The Republic, through the Collector, subsequently filed a collection suit in the Court of First Instance of Rizal under Section 316 of the National Internal Revenue Code. Dy Chay moved to dismiss the complaint, arguing that since the enactment of Republic Act No. 1125 creating the Court of Tax Appeals, ordinary courts had lost jurisdiction over cases involving the collection of internal revenue taxes. The trial court agreed and dismissed the case for lack of jurisdiction.
ISSUE
Did the enactment of Republic Act No. 1125 , creating the Court of Tax Appeals, divest ordinary courts of jurisdiction over judicial actions for the collection of internal revenue taxes where the taxpayer did not appeal the assessment to the said court?
RULING
No. The Supreme Court reversed the trial court’s order of dismissal. The legal logic centers on the specific appellate jurisdiction granted to the Court of Tax Appeals under Republic Act No. 1125 . Sections 7 and 11 of the Act confer upon the Court of Tax Appeals exclusive appellate jurisdiction to review decisions of the Collector of Internal Revenue. Crucially, Section 11 explicitly states that the right to appeal from such decisions is granted only to “the person, association or corporation adversely affected by the decision or ruling.” Applying the legal maxim inclusio unius est exclusio alterius (the inclusion of one is the exclusion of others), the government is not among those enumerated as having the right to appeal.
Therefore, the Court of Tax Appeals’ jurisdiction is triggered only when a taxpayer, who is adversely affected, perfects an appeal within the reglementary period. If the taxpayer, as in this case, neither pays the tax nor exercises the right to appeal to the Court of Tax Appeals, the government is not without a remedy. Its recourse, aside from administrative remedies like distraint and levy, is to file a judicial action for collection in the ordinary courts. To hold otherwise would absurdly deprive the government of its essential power to collect taxes through the courts whenever a taxpayer simply ignores an assessment, a result that is neither tenable nor reasonable. The case was remanded to the trial court for further proceedings.