Facts:

On February 14, 1936, Walter Bull filed a complaint against Alfredo L. Yatco, the Collector of Internal Revenue, in the Court of First Instance of Manila. Bull sought to compel Yatco to disclose the names of merchants and purchasing firms that had allegedly made sales under false invoices to Simplex Trading Co., Inc., without declaring these sales for tax purposes. He also requested information regarding the amounts of surcharges and compromises paid by these firms to the Bureau of Internal Revenue, as well as a detailed statement of the rewards he was entitled to under the law for providing such information. The complaint asserted that Bull was entitled to a reward and sought an order for Yatco to pay him the corresponding amount, along with the costs of the suit. In response, Yatco, through the Solicitor-General, filed a demurrer, arguing that the Court of First Instance lacked jurisdiction over him as he was acting in his official capacity as a government agent. The demurr...

Facts:

Background of the Case

• Walter Bull, the plaintiff-appellant, filed a complaint on February 14, 1936, with the Court of First Instance of Manila against Alfredo L. Yatco, the defendant-appellee, in his capacity as Collector of Internal Revenue.
• The complaint centered on the alleged refusal of the Collector to pay a reward due to Bull for furnishing information that led to the identification of merchants and purchasing firms involved in making sales under false invoices to Simplex Trading Co., Inc., thereby evading taxation.

Allegations and Relief Sought

• The plaintiff alleged that the Bureau of Internal Revenue had discovered that these merchants and importing entities made sales under false invoices without declaring the sales for taxation purposes.
• Bull prayed that the defendant be ordered to submit a detailed list of the names of the colluded merchants and the corresponding amounts of surcharge and compromise collected by the Bureau.
• Further relief included a declaration of his entitlement to the reward provided under the law, and an order compelling the payment of the reward plus the costs of the suit.

Legal Basis and Statutory Provisions

• Section 2735 of the Revised Administrative Code (as amended by Act No. 3734) was cited, which stipulates the payment of rewards to informers who provide information leading to the arrest and conviction of violators of internal-revenue laws.
• The section provided that the reward amount should be fifty per centum of either the fine imposed or the amount compromised and collected from a violator.
• It also outlined conditions for cases where the collected sum was insufficient to cover all accumulated taxes and penalties.
• The reward scheme was authorized to be executed under regulations issued by the Collector of Internal Revenue with the approval of the Department (Secretary) of Finance.
• The Secretary of Finance, as head of the Department of Finance (under which the Bureau of Internal Revenue is administratively placed), promulgated “Regulations No. 68” on May 12, 1931, clarifying the administrative procedures for reward payment.
• These regulations indicated that the reward claim must first be processed administratively by the Collector and, if still under protest or pending subsequent administrative decisions, not subject to immediate judicial intervention.

Defendant’s Position and Procedural Issues

• The defendant, through the Solicitor-General, filed a demurrer to the complaint on the ground that:
• As an agent of the Government acting in an official capacity, the Collector’s acts are attributable to the Government.
• An action for recovery of a sum of money against the Collector is essentially an action against the Commonwealth of the Philippines.
• Citing special statutory provisions:
• Act No. 3083 required that before any suit against the Government may be instituted, the claim must have been presented to the Insular Auditor with a decision pending for two months.
• Article X, Section 3 of the Constitution similarly mandates that the claim must first be processed administratively, allowing appeal from the Auditor General only after a final adverse decision.
• The trial court (Court of First Instance of Manila) sustained the demurrer based on the lack of procedural compliance in not exhausting the prescribed administrative remedies, notably the failure to secure an adverse decision from the Auditor General.

Subsequent Developments and Concurrences

• After the administrative process was considered as the proper recourse for such moneyed claims, the plaintiff’s appeal centered solely on the alleged erroneous sustainment of the demurrer.
• In a concurring opinion, Justice Laurel agreed with the result but emphasized:
• The claim for reward under Section 2735 must strictly adhere to the rules established by the Collector of Internal Revenue with the approval of the Secretary of Finance.
• The administrative character of the claim, meaning that without proof of compliance with administrative requirements, the cause of action could not proceed to the courts.
• The decision was thus affirmed with costs against the appellant, consolidating the stance that administrative remedies must be exhausted before initiating a judicial suit against the Government.

Issue:

Jurisdiction and Agency

• Whether the Court of First Instance of Manila had jurisdiction over the defendant Collector of Internal Revenue who acts as an agent of the Government.
• Whether an action filed directly against the Collector for a moneyed claim inadvertently becomes an action against the Commonwealth of the Philippines.

Procedural Compliance

• Whether the plaintiff complied with the prescribed administrative steps before resorting to a judicial action.
• Whether failure to present the claim to the Auditor General, as required by Act No. 3083 and Article X, Section 3 of the Constitution, barred the suit in court.

Interpretation of Statutory and Regulatory Provisions

• The interpretation and application of Section 2735 of the Revised Administrative Code and its subsequent administrative regulations regarding the payment of rewards to informers.
• Whether the legal mechanism provided for claims under the reward scheme inherently requires exhaustion of administrative remedies irrespective of the clarity of entitlement.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)