Salavera v. Commissioner of Internal Revenue

FORMER SECOND (2ND) DIVISION [CA-G.R. CV NO. 104374. January 4, 2016.] ERWIN SALAVERA 1 and PORTIA GONZALES, by themselves and as Attorneys-in-Fact of the concerned Filipino employees of Asian Development Bank , petitioners-appellees , vs. COMMISSIONER OF INTERNAL REVENUE , respondent-appellant . RESOLUTION REYES-CARPIO, A. , J p : For resolution is a Motion for Reconsideration, 2 filed by the respondent-appellant Commissioner of Internal Revenue, represented by the Office of the Solicitor General (OSG), seeking the reversal of this Court's Resolution, 3 dated July 3, 2015, the pertinent portion of which reads: "This being the case, respondent-appellant Commissioner of Internal Revenue improperly elevated the instant case to this Court by ordinary appeal as the same should have been raised by petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure before the Supreme Court. WHEREFORE , in view of the foregoing, the Appeal is DISMISSED . SO ORDERED ." 4 Respondent-appellant contends that one of the issues that will be raised in the instant case involves a question of fact thus, an appeal under Rule 41 of the 1997 Rules of Civil Procedure is proper, relying on the case of Macababbad vs. Masirag . 5 The ruling therein, however, finds no application in the instant case as there are relevant facts that has this case at the other end of the spectrum. In Macababbad , the Supreme Court stated that there is a question of fact when doubt arises as to the truth or falsity of the alleged facts . The complaint in Macababbad involved a question of whether or not the extrajudicial settlement of estate was null and void, clearly a question of fact since there is conflict on the circumstances surrounding the execution of the extrajudicial settlement therein. The instant case, on the other hand, involves no such question. Both parties admitted to the fact of issuance of Revenue Memorandum Circular (RMC) No. 31-2013 on the guidelines on taxation for Filipino employees of foreign governments, embassies, diplomatic missions and international organizations situated in the country, as well as the promulgation of RMC No. 72-2013. Neither did respondent-appellant question the provisions of the ADB Charter which are contrary to her RMCs. ITAaHc To reiterate, there is a question of fact when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation . 6 Since both parties in the instant case admitted to the existence and validity of the ADB Charter as well as the issuance of the assailed RMCs by respondent-appellant, the only task for the courts is to interpret both the ADB Charter and the RMCs. The existence and relevancy of the surrounding circumstances are not in question, and neither is there doubt in the probative value of the evidence submitted. As this Court has stated in the Resolution sought to be reconsidered: "In this case, neither party assailed the statement of facts made by its opponent. It is admitted that the ADB was established through the ADB Charter and the same provided for tax exemptions of its employees. It is also uncontested that RMC No. 31-2013 was issued imposing taxes on petitioners-appellees who are employees of ADB. The main question now lies in the interpretation of the exemption provided by the ADB Charter and its applicability to petitioners-appellees. Thus, there is no review of evidence required. . . . . " 7 (Emphasis Ours). Respondent-appellant contends that the validity of RMC 31-2013 was raised as an issue, making the same a factual issue considering that plaintiffs-appellees brought up the alleged failure of respondent-appellant to observe the notice requirements for the validity of RMC 31-2013. Respondent-appellant avers that the trial court failed to address the purported factual matter. Again, it must be emphasized that respondent-appellant did not deny that it did not furnish the required notices to the agencies listed in RMC 20-86 which mandated that copies of RMC 31-2013 be given to several agencies. It only justified such failure by alleging that RMC 20-86 was superseded by the Administrative Code of 1987. In fact, respondent-appellant even admitted that the only agency it provided with copies is the UP Law Center "in compliance with the Administration Code of 1987." 8 The fact of filing with the UP Law Center or non-filing with the agencies listed in RMC 20-86 was never in doubt. Petitioners-appellees questioned the validity of RMC 31-2013 based on such admitted non-filing, necessitating the interpretation of both the Administrative Code in relation to RMC 20-86 to resolve the aforementioned issue of their tax exemption. Going back to the definition of a question of fact, there is no review of evidence required in resolving this issue. There is nothing here for the courts to do but to interpret the provisions of RMC 20-86 and the Administrative Code in order to determine the validity of RMC 31-2013. Finally, respondent-appellant relies on the well-worn justification in tax law that taxes are the lifeblood of the government in its prayer to reinstate the instant case. While taxes are the lifeblood of the government, the power to tax has its limits, in spite of all its plenitude. 9 Collection of taxes should be made in accordance with law as any arbitrariness will negate the very reason for government itself. 10 Thus, not even the Commissioner of Internal Revenue is exempt from the application of the established rules of procedure in cases pending before the courts of law. As succinctly held in Commissioner of Internal Revenue vs. Metro Star Superama, Inc. , 11 citing Commissioner of Internal Revenue vs. Algue, Inc. : 12 " But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has the right to complain and the courts will then come to his succor. For all the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate . . . that the law has not been observed." ACCORDINGLY , the Motion for Reconsideration is DENIED . SO ORDERED. Salazar-Fernando and Barza, JJ. , concur. Footnotes 1. Also referred to as Erwin Salaveria. 2. Rollo , pp. 31-40. 3. Rollo , pp. 23-29. 4. Rollo , p. 28. 5. G.R. No. 161237, January 14, 2009. 6. Republic of the Philippines vs. Carlos R. Vega, et al. , G.R. No. 177790, January 17, 2011. 7. Rollo , p. 28. 8. Rollo , p. 34. 9. Commissioner of Internal Revenue vs. Metro Star Superama, Inc. , G.R. No. 185371, December 8, 2010. 10. Commissioner of Internal Revenue vs. Metro Star Superama, Inc. , G.R. No. 185371, December 8, 2010. 11. G.R. No. 185371, December 8, 2010. 12. 241 Phil. 829 (1988).