GR L 4183; (October, 1951) (Digest)
G.R. No. L-4183; October 26, 1951
NATIONAL DENTAL SUPPLY CO., plaintiff-appellant, vs. BIBIANO MEER, in his capacity as Collector of Internal Revenue, defendant-appellee.
FACTS
The plaintiff, National Dental Supply Co., filed an action for declaratory relief to obtain a judicial ruling on whether its sales of dental gold or gold alloys and other metals used for dental purposes fall under Article 184 of the National Internal Revenue Code, as asserted by the Collector of Internal Revenue. The defendant filed a motion to dismiss on two grounds: (1) the plaintiff had no cause of action for declaratory judgment, and (2) even if a cause of action existed, declaratory relief was improper because it would not terminate the controversy. The lower court sustained the motion under the first ground, holding that actions for declaratory relief do not apply when a taxpayer questions liability for a tax collectible by the Bureau of Internal Revenue. The plaintiff appealed this ruling.
ISSUE
Whether the plaintiff can bring an action for declaratory relief to test the legality of a tax under the circumstances.
RULING
No. The Supreme Court affirmed the lower court’s order of dismissal. The Court held that the proviso added by Commonwealth Act No. 55 to Section 1 of Act No. 3736 (the original declaratory relief law), which prohibits such actions when a taxpayer questions liability for any tax, duty, or charge collectible under laws administered by the Bureau of Customs or the Bureau of Internal Revenue, remains in force and effect. The failure to incorporate this proviso into Section 1, Rule 66 of the Rules of Court was not an implied repeal but was intended to leave its application to the court’s discretion. The proviso is substantive in nature, laying down a legislative policy to prohibit taxpayers from contesting tax collection through declaratory relief. This policy is supported by Section 306 of the National Internal Revenue Code, which requires a taxpayer to first pay the tax and then sue for its recovery, a procedure designed to prevent delays in tax collection essential for government operations. Therefore, the plaintiff is barred from filing the present action for declaratory relief.