NATIONAL DENTAL SUPPLY CO. v.

MEER (in his capacity as CIR)

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).