Court Opinion

ID: 8538466
Source: CourtListenerOpinion
Date Created: 2022-11-23 11:09:02.824024+00
Date Added: 2024-06-11T16:52:09.664588
License: Public Domain

Mr. Justice Santana Becerra,
with whom Mr. Chief Justice Negrón Fernández, Mr. Justice Belaval, and Mr. Justice Hernández Matos concur, concurring in the result.
San Juan, Puerto Rico, November 30,1965
I concur in that the judgment dismissing the complaint should be affirmed, but for legal .reasons other than those stated by the Court.
*824On January 12, 1950, the then Treasurer of Puerto Rico notified to the Succession of Carmen Massari Cintron, of which appellant Josefina Capó Sánchez de Lube formed part as legatee and heir, a deficiency of $21,394.85 in decedent’s income tax for 1946. The deficiency was based on the gain from the sale of a capital asset which the Treasurer allotted to Carmen Massari Cintron.
The final notice having been given, the Succession did not contest the tax before the Tax Court pursuant to § 57 (a) of the Income Tax Act of 1924, as amended.
According to § 57(b), the Treasurer proceeded on April 14, 1950, to assess and levy the tax in the amount of $21,569.50, with interest thereon.
The tax having already been assessed and levied, the Succession could have paid the same and apply for refund, pursuant to the provisions of § 2(6) of Act No. 235 of May 10, 1949 (Sess. Laws, p. 732) and of § 2 of Act No. 328 of May 13, 1949 (Sess. Laws, p. 996). The Succession did not do so either.
It is unquestionable that either under the procedure of § 57(a) of the Income Tax Act or under the procedure of refund, the Succession and the petitioner herein could have challenged the deficiency tax determined by the Treasurer, with all the findings of fact and conclusions of law, including an attack on the basis used by that officer to determine the existence of a capital gain.
At this point, without the tax being contested or paid, on June 16, 1953, the Commonwealth of Puerto Rico, represented by the Governor, filed an ordinary action in the San Juan Part of the Superior Court against appellant and the rest of the Succession of Carmen Massari, civil case No. 10, for collection of the tax levied.
As a result of that complaint, and in order to secure the effectiveness of the judgment, an attachment was levied on the amount of $1,986.94 belonging to the Succession and *825on a life annuity corresponding to appellant. In its answer to civil case No. 10, the Succession raised as special defenses (1) the nullity of the procedures respecting the notice of the deficiency, and (2) challenged the latter on the merits, alleging that the Treasurer had arbitrarily determined a minimum basic value far below its market value in 1913, and because since the value of the property was $70,000 and the sale had been carried out for $61,500, instead of a gain there was a loss of $8,500, the value of $36,661.96 assigned by the Treasurer being unacceptable.
Civil action No. 10 was decided on the merits on the basis of the facts stipulated and the evidence heard at the trial. The court passed upon all the questions raised and in litigation, including the nullity of the notice procedure and the attack on the merits of the deficiency, and concluded that no evidence had been presented to prove that the determination of the net income should be set aside. It rendered judgment on March 18, 1955, sustaining the tax assessment and levy. No appeal was taken from this judgment and the same became final and unappealable.
On October 16, 1958, appellant sued the Secretary of the Treasury, civil case No. 58-5697, for refund of the income tax, which is the action object of the present appeal. She alleged that on June 9, 1955, the collector demanded payment of the tax involved, and that on August 16 she paid the sum of $20 for credit against the receipt, and that on the same date she applied to the Secretary of the Treasury for refund of those $20 as well as of any other sums credited against the tax which may have been collected up to that date or which may be collected. An administrative hearing having been held, the Secretary of the Treasury denied the request for refund on the ground that the claim had already been decided by the court and therefore constituted res judicata.
*826In this action No. 58-5697 the parties- stipulated that appellant’s share of Carmen Massari’s deficiency was 66.405 percent; that at the time of filing the complaint the sum of $8,206.94 had been paid, without including the tax withheld from appellant’s salary in the University which had not been remitted to the Secretary of the Treasury, nor $2,700 which had been deposited with the clerk of the Superior Court. On August 22, 1960, the trial court rendered judgment on the merits and stated as follows:
"4. Defendant’s answer raises the special defenses of res judicata and lack of jurisdiction of the court. The first is based on the fact that the controversies posed by the complaint, as clarified by the stipulation on the day of the trial, were definitively settled between the parties by virtue of the judgment rendered in case No. 10. The second is based on the fact that plaintiff cannot litigate the legality of the deficiency challenged by paying only a portion thereof and applying for its refund.
“5. The case having been set on the merits, the same was submitted on a stipulation of facts.- From that stipulation it appears that defendant has not collected from plaintiff other taxes than those strictly determined in the judgment rendered in civil case No. 10, supra. It also appears from that stipulation that the payments made by plaintiff amount to $10,906.64 and not to $17,583.88, as alleged. At the trial defendant offered in evidence the complete record of civil case No. 10, supra for the purpose of raising the question of res judicata on the merits.
“In view of the foregoing, the court reaches the following conclusions:
“1. The developments following the judgment rendered in said case No. 10 having been eliminated by the said stipulation, it is clear that what plaintiff seeks, to litigate now is the legality of the deficiency which was already adjudicated by the said judgment consented to by plaintiff. .The situation is one of res judicata which precludes plaintiff from raising, and the court from resolving, the same questions already adjudicated by the said judgment. This would be sufficient to dismiss the action.”
' According to the above pronouncement, the trial court should be sustained, and on this point I differ from the *827Court. The Secretary of the Treasury disallowed the refund administratively on the ground of res judicata, and the same approach was given before the trial court and now before this Court.
It is nonetheless a fact that the tax deficiency was judicially sustained in the judgment in civil action No. 10. Now, because the tax litigation is governed by provisions of special laws, the judicial adjudication in this case created a situation which went much farther than the doctrine of res judicata usually does in ordinary litigation. The reasons I have for reaching this conclusion are the following:
Act No. 232 of May 10, 1949, 13 L.P.R.A. § 261 (1962 ed.), provides that when any taxpayer believes “that he has paid or that there has been collected from him, unlawfully or unduly, or in excess of the amount due, a tax of any kind,” he may apply to the Secretary of the Treasury for the reimbursement of such tax, subject to certain requirements provided by that Act. Act No. 235 of May 10, 1949, 13 L.P.R.A. § 282 (1962 ed.), established a uniform procedure to appeal to the Tax Court (now Superior Court), and provides in § 2(6) with respect to tax refund that appeal may be taken to that court “from a decision of the Secretary of the Treasury denying the reimbursement of any tax,” by filing a' complaint in that court in the manner therein provided.
In addition to the foregoing, § 2 of Act No. 328 of May 13, 1949, which created the Tax Court, vested that court with jurisdiction to take cognizance of claims for taxes “collected by unlawful procedure or which voluntarily, or without notice from the Treasurer of Puerto Rico were paid unduly or in excess,” the reimbursement of which is authorized by law and “is refused by the Treasurer of Puerto Rico”; and it is expressly provided that the jurisdiction of the court may not be pleaded “until there has been a proper administrative decision in the matter on the part of the Treasurer of Puerto *828Rico in accordance with law.” And § 13(a) of the Judiciary-Act of 1952 provides that the Superior Court shall have cognizance of all cases, etc., in connection with or affecting the levy, collection ... of all kinds of taxes ... as well as of claims for taxes “collected by unlawful procedure or which . . . were paid unduly or in excess,” the reimbursement of which has been refused by the Secretary.
From those legal provisions it will be seen that the problem is not only the common problem of res judicata, but also a more serious one of lack of jurisdiction over the matter on the part of the Secretary in the administrative field, and also lack of jurisdiction of the trial court over the matter and, hence, of this Court on review. This is so because the tax sought to be recovered and which gives rise to this proceeding had been judicially adjudicated by final, unappealable and executory judgment of a court acting with jurisdiction. In other words, after judgment was entered in civil action No. 10 sustaining the propriety and collection of the tax in question, this tax was no longer an illegal or improper tax, or in excess of the amount due, and administratively the Secretary of the Treasury lacked jurisdiction to entertain a request for refund on the merits, according to above-copied legal provisions. That tax, as judicially adr judicated in civil action No. 10 by final and unappealable judgment, was money belonging to the public treasury of Puerto Rico; only its execution and collection was proper, and the Secretary of the Treasury was without power to order its refund under new administrative criteria on the ground that it was unlawful or in excess of the amount due.
Since the jurisdiction of the court cannot be invoked or used unless there is already an administrative determination on the matter, as required by law, in the action for refund the court as well as the Secretary lacked jurisdiction over the matter and there could be only one pronouncement to this effect. In view of the special procedures governing *829this type of tax litigation, any further consideration as to whether or not these taxes, sustained by a final and un-appealable judgment, were unlawful, improper or excessive, was prohibited both administratively and judicially.
The trial court, notwithstanding it had correctly disposed of the case, unnecessarily and without jurisdiction, in my opinion, entered into other considerations involving the rule announced in Flora v. United States, 357 U.S. 63, 362 U.S. 145 (on reconsideration). This Court also decides the matter on the rule laid down in Flora.
In view of the fact that the much-discussed and controvertible Flora case, as correctly stated by Mr. Justice Belaval in his opinion, does not involve any constitutional pronouncement which may be binding upon us, but merely a statutory construction of federal tax laws; in view also of the fact that as a result of the application of Flora this Court has been compelled to overrule our case law which responded to a public policy of local interest; notwithstanding the Flora decision was issued in 1958, our Legislature, which annually deals with tax legislation, has not amended our laws in order to render ineffective the cases of Anglade v. Sec. of the Treasury, 79 P.R.R. 785 (1957), and Inter-American Orange Crush v. Sec. of the Treasury, 81 P.R.R. 302 (1959), which are now overruled; and that there has been a marked, local, legislative norm to permit and facilitate the partial payment of 'taxes without expressly requiring that they be paid in full if litigation is desired, I reserve to myself any views on this aspect of the case until the occasion for facing it shall be unavoidable.
I believe that the judgment appealed from should be affirmed on the basis of res judicata as well as lack of jurisdiction over the matter both administratively and judicially, since once the tax was sustained in civil action No. 10 by final and unappealable judgment for The People of Puerto Rico, it was no longer illegal or improper, or in excess of *830the amount due, which are the only grounds upon which the State authorizes the claim and litigation of a refund.
Of course, if in the execution of the judgment entered in case No. 10 any amounts are collected in excess of those adjudicated thereunder, appellant has a remedy either within the foreclosure proceeding or in some other way. This is not the situation in this case, as concluded by the trial court and by this Court, since the taxpayer had not fully paid her part of the tax.
In view of these considerations and for no reasons, I am of the opinion that the judgment appealed from dismissing the complaint should be affirmed.
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Separate opinion of