This case discusses whether sales of dental gold and alloys are subject to tax under the Philippine tax code. The Supreme Court affirmed the lower court's dismissal of a dental supply company's declaratory judgment action questioning its tax liability. While the rules of court do not expressly prohibit these types of taxpayer suits, the Court found the legislative intent was still to prevent declaratory relief that could delay tax collection, so the company needed to pay first before challenging its tax obligations.
This case discusses whether sales of dental gold and alloys are subject to tax under the Philippine tax code. The Supreme Court affirmed the lower court's dismissal of a dental supply company's declaratory judgment action questioning its tax liability. While the rules of court do not expressly prohibit these types of taxpayer suits, the Court found the legislative intent was still to prevent declaratory relief that could delay tax collection, so the company needed to pay first before challenging its tax obligations.
This case discusses whether sales of dental gold and alloys are subject to tax under the Philippine tax code. The Supreme Court affirmed the lower court's dismissal of a dental supply company's declaratory judgment action questioning its tax liability. While the rules of court do not expressly prohibit these types of taxpayer suits, the Court found the legislative intent was still to prevent declaratory relief that could delay tax collection, so the company needed to pay first before challenging its tax obligations.
October 26, 1951 | J. Bautista Angelo | Declaratory relief SUMMARY: NDS filed action for declaratory relief, putting at issue whether sales of dental gold/gold alloys for dental purposes are under Article 184, National Internal Revenue Code. The SC affirmed the dismissal of this action, as petitions for declaratory relief are not proper where a taxpayer questions his liabilities for payment of any tax/duty/charge already collectible under a law implemented by BIR/BOC. DOCTRINE: See RATIO #2 FACTS 1. NDS filed an action for declaratory relief to obtain a ruling on whether sales of dental gold or gold alloys and other metals used for dental purposes come within the purview of Article 184 of the National Internal Revenue Code. 2. Collector of Internal Revenue (CIR) moved to have the case dismissed, saying that even if there were a cause of action, relief by declaratory judgment is not proper because It will not terminate the controversy. 3. The lower court agreed with CIR, holding that actions for declaratory relief do not apply to cases where a taxpayer questions his liability for the payment of any tax collectible under any law administered by the Bureau of Internal Revenue. 4. NDSposition: Rule 66 Section 1 of the Rules of Court contains no prohibition against a taxpayer filing an action for declaratory relief to questioning the legality of a tax. ISSUE: Is the action for declaratory relief proper? NO RATIO 1. The Court discussed the legislative history of the law on declaratory relief a. Original law, Act No. 3736, Sec. 1: Any person Interested under a deed, contract or other written instrument, or whose rights are affected by a statute, may bring an action in CFI to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder." b. Commonwealth Act No. 55 added this proviso which stated that declaratory relief is not available in cases where a taxpayer questions his liability for the payment of any tax, duty, or charge collectible under any law administered by the Bureau of Customs or the Bureau of Internal Revenue." c. Most recently, Rule 66, Section 1 of the Rules of Court, eliminated the proviso. 2. HOWEVER, it can be said that the proviso is still in force. Citing Chief Justice Morans commentary, the non-incorporation of the proviso (excepting taxpayer issues from the scope of declaratory relief) in Rule 66 was done to merely make its application discretionary upon the court, such that: a. Where the tax is already due and collectible, the taxpayer cannot prevent collection by a declaratory action, but he should pay the tax and sue for its recovery within the period limited by law. b. But where the tax is not yet due, there can be no valid reason why a taxpayer cannot test its validity (by declaratory relief). 3. The points above (in RATIO #2) are supported by Section 306, National Internal Revenue Code which requires that the tax should first be paid before the taxpayer can question the correctness of the tax. The underlying policy is to prevent delay in collecting taxes (upon which government depends for its very existence).
G.R. No. 213394, April 06, 2016 Spouses Emmanuel D. Pacquiao and Jinkee J. Pacquiao, Petitioners, V. The Court of Tax Appeals - First Division and The Commission of Internal Revenue, Respondents
Subject: Interpretation of Statute B.A.LL.B-Xth Sem Subject Teacher: Akhlaqul Azam Study Material of Unit-III (B) Topic: Interpretation of Taxing Statutes