Facts:
Doroteo Yabes of Calamaniugan Cagayan, who was for sometime an exclusive dealer of products of the International Harvester Macleod, Inc., received on or about May 1, 1962, a letter from the Commissioner of Internal Revenue dated March 27, 1962, demanding payment of the amount of P15,976.81, as commercial broker's fixed and percentage taxes plus surcharges and the sum of P2,530 as compromise penalty allegedly due from Yabes for the years 1956-1960. On May 11, 1962, DoroteoYabes, through his counsel, filed with the Commissioner's Office his letter dated May 10, 1962, protesting the assessment of commercial broker's fixed and percentage taxes plus penalties against him on the ground that his agreements with the International Harvester Macleod, Inc. were of purchase and sale, and not of agency, hence he claimed he was not able to pay such kind of taxes. DoroteoYabes died on March 13, 1963 and no estate proceedings were instituted for the settlement of his estate. Hence, an action was brought against the heir of Yabes.
Thereafter, no word was received by the petitioners or their lawyers during the interim of more than three (3) years, but on January 20, 1971, petitioners as heirs of the deceased DoroteoYabes received the summons and a copy of the complaint filed by the Commissioner on December 4, 1970 with the Court of First Instance of Cagayan which seeks to collect from the petitioners the sum of P 15,976.82, as deficiency commercial broker's fixed and percentage taxes, including surcharges and interest thereon, due from their predecessor-in-interest, DoroteoYabes, by reason of the latter's income derived from transactions as dealer of the products of the International Harvester Macleod, Inc.
Taking the complaint as the final decision of the Commissioner on the disputed assessment against the deceased taxpayer DoroteoYabes, petitioners filed on February 12, 1971, a petition for review of said disputed assessment with the Court of Tax Appeals; 18 later on the same day, February 12, 1971, petitioners filed their answer to the complaint of the Commissioner before the Court of First Instance of Cagayan; 19 and alleged therein, by way of special defense, that the Court of Tax Appeals has exclusive jurisdiction of the action and that there is another action of the same nature between the parties relating to the same assessment pending before the Court of Tax Appeals.
On the other hand, the Commissioner filed a motion to dismiss dated March 24, 1971, with the Court of Tax Appeals in CTA Case No. 2216, and subsequently filed a memorandum in support of said motion to dismiss, on the ground that the assessment against Doroteo Yabes had already become final, executory and incontestable, and the Court of Tax Appeals had no jurisdiction over the case.
Issue:
Whether or not the Court of First Instance correctly denied petitioner’s motion to dismiss
Ruling:
No. There is no reason for Us to disagree from or reverse the Court of Tax Appeals' conclusion that under the circumstances of this case, what may be considered as final decision or assessment of the Commissioner is the filing of the complaint for collection in the respondent Court of First Instance of Cagayan, the summons of which was served on petitioners on January 20, 1971, and that therefore the appeal with the Court of Tax Appeals in CTA Case No. 2216 was filed on time. 36 The respondent Court of First Instance of Cagayan can only acquire jurisdiction over this case filed against the heirs of the taxpayer if the assessment made by the Commissioner of Internal Revenue had become final and incontestable. If the contrary is established, as this Court holds it to be, considering the aforementioned conclusion of the Court of Tax Appeals on the finality and incontestability of the assessment made by the Commissioner is correct, then the Court of Tax Appeals has exclusive jurisdiction over this case. Petitioners received the summons in Civil Case No. II-7 of the respondent Court of First Instance of Cagayan on January 20, 1971, and petitioners filed their appeal with the Court of Tax Appeals in CTA Case No. 2216, on February 12, 1971, well within the thirty-day prescriptive period under Section 11 of Republic Act No. 1125. The Court of Tax Appeals has exclusive appellate jurisdiction to review on appeal any decision of the Collector of Internal Revenue in cases involving disputed assessments and other matters arising under the National Internal Revenue Code.
For want of jurisdiction over the case, the Court of First Instance of Cagayan should have dismissed the complaint filed in Civil Case No. II-7.
Doroteo Yabes of Calamaniugan Cagayan, who was for sometime an exclusive dealer of products of the International Harvester Macleod, Inc., received on or about May 1, 1962, a letter from the Commissioner of Internal Revenue dated March 27, 1962, demanding payment of the amount of P15,976.81, as commercial broker's fixed and percentage taxes plus surcharges and the sum of P2,530 as compromise penalty allegedly due from Yabes for the years 1956-1960. On May 11, 1962, DoroteoYabes, through his counsel, filed with the Commissioner's Office his letter dated May 10, 1962, protesting the assessment of commercial broker's fixed and percentage taxes plus penalties against him on the ground that his agreements with the International Harvester Macleod, Inc. were of purchase and sale, and not of agency, hence he claimed he was not able to pay such kind of taxes. DoroteoYabes died on March 13, 1963 and no estate proceedings were instituted for the settlement of his estate. Hence, an action was brought against the heir of Yabes.
Thereafter, no word was received by the petitioners or their lawyers during the interim of more than three (3) years, but on January 20, 1971, petitioners as heirs of the deceased DoroteoYabes received the summons and a copy of the complaint filed by the Commissioner on December 4, 1970 with the Court of First Instance of Cagayan which seeks to collect from the petitioners the sum of P 15,976.82, as deficiency commercial broker's fixed and percentage taxes, including surcharges and interest thereon, due from their predecessor-in-interest, DoroteoYabes, by reason of the latter's income derived from transactions as dealer of the products of the International Harvester Macleod, Inc.
Taking the complaint as the final decision of the Commissioner on the disputed assessment against the deceased taxpayer DoroteoYabes, petitioners filed on February 12, 1971, a petition for review of said disputed assessment with the Court of Tax Appeals; 18 later on the same day, February 12, 1971, petitioners filed their answer to the complaint of the Commissioner before the Court of First Instance of Cagayan; 19 and alleged therein, by way of special defense, that the Court of Tax Appeals has exclusive jurisdiction of the action and that there is another action of the same nature between the parties relating to the same assessment pending before the Court of Tax Appeals.
On the other hand, the Commissioner filed a motion to dismiss dated March 24, 1971, with the Court of Tax Appeals in CTA Case No. 2216, and subsequently filed a memorandum in support of said motion to dismiss, on the ground that the assessment against Doroteo Yabes had already become final, executory and incontestable, and the Court of Tax Appeals had no jurisdiction over the case.
Issue:
Whether or not the Court of First Instance correctly denied petitioner’s motion to dismiss
Ruling:
No. There is no reason for Us to disagree from or reverse the Court of Tax Appeals' conclusion that under the circumstances of this case, what may be considered as final decision or assessment of the Commissioner is the filing of the complaint for collection in the respondent Court of First Instance of Cagayan, the summons of which was served on petitioners on January 20, 1971, and that therefore the appeal with the Court of Tax Appeals in CTA Case No. 2216 was filed on time. 36 The respondent Court of First Instance of Cagayan can only acquire jurisdiction over this case filed against the heirs of the taxpayer if the assessment made by the Commissioner of Internal Revenue had become final and incontestable. If the contrary is established, as this Court holds it to be, considering the aforementioned conclusion of the Court of Tax Appeals on the finality and incontestability of the assessment made by the Commissioner is correct, then the Court of Tax Appeals has exclusive jurisdiction over this case. Petitioners received the summons in Civil Case No. II-7 of the respondent Court of First Instance of Cagayan on January 20, 1971, and petitioners filed their appeal with the Court of Tax Appeals in CTA Case No. 2216, on February 12, 1971, well within the thirty-day prescriptive period under Section 11 of Republic Act No. 1125. The Court of Tax Appeals has exclusive appellate jurisdiction to review on appeal any decision of the Collector of Internal Revenue in cases involving disputed assessments and other matters arising under the National Internal Revenue Code.
For want of jurisdiction over the case, the Court of First Instance of Cagayan should have dismissed the complaint filed in Civil Case No. II-7.
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