GR L 5701; (June, 1953) (Digest)
G.R. No. L-5701 June 23, 1953
UNIVERSITY OF SANTO TOMAS, petitioner, vs. THE BOARD OF TAX APPEALS, respondent.
FACTS
The petitioner, University of Santo Tomas, a private non-stock educational corporation, was assessed by the Collector of Internal Revenue the sum of P574,811.41 as income tax on its net income for the fiscal years 1946 to 1950. The petitioner paid part of the amount under protest and executed a real estate mortgage to secure the balance. After its request for reconsideration, the Secretary of Finance directed the petitioner to file a petition for review with the Board of Tax Appeals under Executive Order No. 401-A. The petitioner complied but simultaneously filed a motion questioning the Board’s jurisdiction, arguing that Executive Order No. 401-A, issued by the President pursuant to Republic Act No. 422 , is invalid for depriving courts of first instance of their jurisdiction over tax recovery cases under Section 306 of the National Internal Revenue Code. The Board denied the motion and assumed jurisdiction, prompting the petitioner to file this petition for certiorari and prohibition.
ISSUE
Whether Executive Order No. 401-A is invalid for depriving the courts of first instance of their jurisdiction to take cognizance of cases involving the recovery of taxes.
RULING
Yes, Executive Order No. 401-A is null and void insofar as it interferes with the jurisdiction of the courts of first instance. The Supreme Court held that the Executive Order, specifically Sections 8 and 20, gave the Board of Tax Appeals exclusive jurisdiction over appeals from the Collector of Internal Revenue and prohibited judicial proceedings unless first filed with and disposed of by the Board. This effectively deprived courts of first instance of the jurisdiction granted to them by Section 306 of the National Internal Revenue Code to hear suits for the recovery of taxes. The power delegated to the President by Republic Act No. 422 was limited to reorganizing executive departments, bureaus, and instrumentalities to promote simplicity, economy, and efficiency. It did not extend to amending substantive law or altering the jurisdiction of courts, which is a power exclusively vested in Congress under the Constitution. Therefore, Part IV of the Executive Order, concerning court review of Board decisions, is invalid. The petition was granted, and the Board of Tax Appeals was enjoined from hearing the case.