EN BANC different amounts paid by them under protest to the City of Baguio,
without special pronouncement as to costs. From this decision only
[G.R. No. L-4060. August 29, 1952.]
DR. ESTEBAN MEDINA, DR. JOSE DE LA ROSA, MR. ENRlQUE
SANTAMARIA, and BENGUET DEVELOPMENT CO.,
INC., Plaintiffs-Appellants, v. CITY OF BAGUIO, Defendant-
Appellee.
Francisco A. Reyes for Appellants.
Acting City Atty. Santiago C. Gregorio for Appellee.
SYLLABUS
1. TAXATION; MUNICIPAL CORPORATIONS; THE CITY OF BAGUIO MAY
COLLECT A LICENSE FEE FROM BUSINESS ESTABLISHMENTS
THEREIN. Under Republic Act No. 329, the city council of Baguio
has now the power to tax, to license and to regulate provided that
the subjects affected be one of those included in the charter of the
City of Baguio. In this sense, Ordinance No. 99 of Baguio, which fixes
the license fees to be paid by persons, entities or corporations who
may engage in business within said City, cannot be considered ultra
vires whether its purpose be to levy a tax or impose a license fee.
The terminology used is of no consequence.
2. ID.; ID.; ID; CITY OF BAGUIO HAS NO POWER TO LEVY A SPECIFIC
TAX ON ITEMS OR ARTICLES SOLD BY THE TAXPAYER. The city
council of Baguio does not have the power to levy a specific tax on
items or articles covered by the business of the taxpayer. Unlike a
sovereign state, a municipal corporation is clothed with no inherent
power of taxation. Its charter must plainly show an intent to confer
that power or the municipality cannot assume it. And the power
when granted is to be construed strictissimi juris. An examination of
section 2553(c), of the Revised Administrative Code, as amended,
will reveal that the power given to the city of Baguio to tax, to
license and to regulate only refers to the business of the taxpayer
and not to the articles used in said business. In other words, the
power to levy a percentage tax or a specific tax has been expressly
withheld. Therefore, Ordinance No. 100 of Baguio, levying a specific
tax on gasoline and oil sold in that city, is null and void.
DECISION
BAUTISTA ANGELO, J.:
Plaintiffs brought this action in the Court of First Instance of Baguio
seeking to nullify Ordinances Nos. 62, 99 and 100 of the City Council
of Baguio on the ground that they were enacted without authority or
power, and are oppressive, unjust and unreasonable, and to recover
the taxes and fees they had paid as itemized in the complaint.
Esteban Medina is the owner and operator of Pines Theater, a duly
licensed movie house in the city of Baguio. Jose Y. de la Rosa is the
owner and operator of Plaza Theater, another duly licensed movie
house in the city. Enrique Santamaria is the owner and operator
under a contract of lease of Session Theater, also a duly licensed
movie house in said city, while Benguet Development Co., Inc., is an
operator of a gasoline station engaged in selling gasoline, petroleum
and imported oil products within the city.
Under Ordinance No. 99, Esteban Medina paid under protest a
municipal license for 1949 for two quarters in the amount of P1,200,
and Jose Y. de la Rosa paid under protest a municipal license for the
same year in the amount of P1,800 for three quarters. Under
Ordinance No. 62, Esteban Medina paid an additional tax of
P4,896.60 during the months of July, August, September and
November, 1949. Enrique Santamaria also paid an additional tax of
P1,855.05 during the months of July and August of the same year.
The Benguet Development Co., Inc., on the other hand paid under
Ordinance No. 100 the amount of P3,554.44 as specific tax for
gasoline and oil sold from September 20, 1948, to November 17,
1949.
After trial, the court rendered decision declaring Ordinances Nos. 99
and 100 valid and legal but rendering Ordinance No. 62 null and void
while denying the claim of the plaintiffs for reimbursement of the
the plaintiffs appealed assigning four errors as committed by the
lower court.
The first question to be determined refers to the validity of
Ordinance No. 99 which fixes the license fees to be paid by persons,
entities or corporations who may engage in business within the city
of Baguio. This ordinance fixes a license fee of P120 a year for every
gasoline station installed in the city, and a fee of P2,400 for theaters
which come under class "A", P1,800 for those coming under class
"B", and P1,200 for those coming under class "C." Plaintiffs paid the
fees required by this Ordinance, but now dispute the power of the
city to enact it, contending that it only has the power to impose a
license fee but not to levy a tax upon theaters and gasoline stations
which are operated within its limits. They contend that, while this
ordinance expressly recites that its purpose is to fix or impose a
license fee on the business or trade therein specified, in fact its
purpose is to levy a tax for purposes of revenue under the guise of a
license fee. This, they contend, defendants cannot do.
This contention has no merit. Appellants apparently have in mind
section 2553, paragraph (c) of the revised Administrative Code,
which empowers the city of Baguio merely to impose a license fee
for purpose of regulating the business that may be established in the
city. The power as thus conferred is indeed limited, as it does not
include the power to levy a tax. But on July 15, 1948, Republic Act
No. 329 was enacted amending the charter of said city and adding
to its power to license the power to tax and to regulate. And it is
precisely having in view this amendment that Ordinance No. 99 was
approved in order to increase the revenues of the city. In our opinion,
the amendment above adverted to empowers the city council not
only to impose a license fee but also to levy a tax for purposes of
revenue, more so when in amending section 2553(b), the phrase "as
provided by law" has been removed by section 2 of Republic Act No.
329. The city council of Baguio, therefore, has now the power to tax,
to license and to regulate provided that the subjects affected be one
of those included in the charter. In this sense, the ordinance under
consideration cannot be considered ultra vires whether its purpose
be to levy a tax or impose a license fee. The terminology used is of
no consequence.
Coming now to Ordinance No. 100, we find that its validity is
assailed not only because of lack of power to enact it but also
because it imposes a specific tax on some articles which, it is
claimed, is not contemplated by law.
We have already stated that under its charter, as amended, the city
of Baguio has now the power not only to levy a tax but to impose a
license fee as well. But, can it also levy a specific tax on items or
articles covered by the business of the taxpayer? After an
examination of section 2553 of the revised Administrative Code, as
amended by Republic Act No. 329, we are inclined to uphold the
negative view.
It is settled that a municipal corporation, unlike a sovereign state, is
clothed with no inherent power of taxation. The charter or statute
must plainly show an intent to confer that power or the municipality
cannot assume it. And the power when granted is to be construed
strictissimi juris. Any doubt or ambiguity arising out of the term used
in granting that power must be resolved against the municipality.
Inferences, implications, deductions all these have no place in
the interpretation of the taxing power of a municipal corporation
(Joseph Icard v. City Council of Baguio and the City of Baguio, 83
Phil., 870).
An examination of section 2553(c), of the revised Administrative
Code, as amended, will reveal that the power given to the city of
Baguio to tax, to license and to regulate only refers to the business
of the taxpayer and not to the articles used in said business. This is
clearly inferred from a reading of said section and from the
concluding sentence appearing therein, to wit, "and such other
businesses, trade and occupations as may be established or
practised in the city." One reason for this undoubtedly is the fact that
under section 142 of the Internal Revenue Code (Commonwealth Act
No. 466, as amended by Republic Act No. 39), most of the products
mentioned in the charter, particularly gasoline and oil, are already
specifically taxed, and under section 361 of said code, the city of
Baguio gets a share of 20 per cent of the amount of specific tax
collected. At any rate, the charter of the city of Baguio does not
show plainly an intent to confer that power upon the city of Baguio
and, following the rule already adverted to, this doubt or ambiguity
must be resolved against the city. An indication of the legislative
intent on this matter is Commonwealth Act No. 472 which confers
general authority upon municipal councils to levy taxes, subject to
certain limitations, wherein it was specifically provided that the
general authority so conferred shall not include "percentage taxes
and taxes on specified articles." In other words, the power to levy a
percentage tax or a specific tax has been expressly withheld. It is,
therefore, our considered opinion that Ordinance No. 100 is ultra
vires and has no force and effect.
With respect to Ordinance No. 62, the lower court declared it null
and void and from this part of the decision no appeal has been
taken. That finding should be left undisturbed. As to whether
appellants can collect the additional amounts they charged the
public under the ordinance, the lower court said: "The amount
collected from the theater goers as additional price of admission
tickets is not the property of plaintiffs or any of them. It is paid by
the public. If anybody has the right to claim it, it is those who paid it.
Only owners of property has the right to claim said property. The
cine owners acted as mere agents of the city in collecting the
additional price charged in the sale of admission tickets."
Consequently, the court denied the claim of appellants for
reimbursement. We find no error in this respect.
Wherefore, the decisions appealed from is hereby affirmed, with the
only modification as to Ordinance No. 100, which is hereby declared
null and void. Defendant is hereby ordered to return to the Benguet
Development Co., Inc., the amount of P3,554.44 it has paid as
specific tax. No pronouncement as to costs.
Pablo, Bengzon, Padilla, Jugo and Labrador, JJ., concur.
RESOLUTION
November 28, 1952 - BAUTISA ANGELO, J.:
This concerns the motion for reconsideration filed by the City of
Baguio in which it seeks to modify the decision rendered in this case
on August 29, 1952.
It is reiterated that Ordinance No. 100 is valid under the provisions
of section 2553(c), as amended by Republic Act No. 329, of the
Revised Administrative Code, and that, granting arguendo that it is
invalid, there is no point to order the City of Baguio to return the
taxes paid under said ordinance to appellant Benguet Development
Co., Inc., for the reason that said taxes were not paid by said
company but by the car owners who bought the gasoline and oil
subject of the tax.
The first claim is not well taken. We already held that section
2553(c), as amended by Republic Act No. 329, merely empowers the
City of Baguio to impose a tax on business and not on the articles
used therein. This is clear in said section and in the other authorities
we cited in the main opinion. The case of Eastern Theatrical Co., Inc.,
Et. Al. v. Victor Alfonso, Et. Al. 1 (46 Off. Gaz., [Supp. 11] p. 303), can
not be cited as a precedent in this case because the tax therein
imposed by the City of Manila is amusement tax. This is not a
specific tax but a tax on business. A municipal corporation, unlike a
sovereign state, is clothed with no inherent power of taxation. The
intent to confer such power must be clear and manifest. Any doubt
or ambiguity must be resolved against the corporation (Icard v. City
Council of Baguio and the City of Baguio, 2 (46 Off. Gaz., [Supp. 11]
p. 320).
The second claim is disputed. It involves a question of fact. It does
not appear in the record that the appellant corporation has collected
the tax from the car owners as agent of the City of Baguio. Counsel
for the city of Baguio sustains the affirmative and pleads that the
ruling applied in the case of the theater-owners wherein it was
declared that the tax should be returned to the persons from whom
it was collected, should also guide the determination of this case.
But counsel for the appellant corporation maintains the contrary and
attempted to show that the tax was collected directly from said
corporation and not from the car owners.
The view of the Court on this point is to leave it pending and remand
the case to the lower court in order that it may be clarified with the
presentation of the necessary evidence considering the precedent
already set on this matter.
Wherefore, the Court holds in abeyance that portion of the decision
relative to the return of the specific tax paid by the Benguet
Development Co., Inc., pending determination of the question of fact
pointed out above, and orders the remand of this case to the lower
court for the presentation of the necessary evidence. After the
presentation of the evidence, the lower court may render judgment
in line with the decision of this Court relative to the theater-owners.
The decision of this Court is maintained in all other respects.
Paras, C.J., Pablo, Bengzon, Padilla, Montemayor, Jugo and
Labrador, JJ., concur.
EN BANC
[G.R. No. L-4887. May 30, 1953.]
UY MATIAO & CO., INC., Plaintiff-Appellee, v. THE CITY OF
CEBU, MIGUEL RAFFIAN, as Mayor; ANATOLIO YNCLINO, as
City Treasurer and JESUS E. ZABATE, as Assistant City
Treasurer cf Cebu City, Defendants-Appellants.
City Fiscal Jose L. Abad and First Assistant City Fiscal
Honorato Garciano for Appellants.
Pedro B. Uy Calderon for Appellee.
SYLLABUS
1. ADMINISTRATIVE LAW; TAXATION; POWER OF CHARTERED CITIES
TO TAX OR FIX LICENSE FEES. The charter of the City of Cebu
authorizes it to impose a tax on, or fix the license fee for, anyone
engaged in the business of buying, selling and storing copra,
because although copra is not mentioned in section 17(m) of
Commonwealth Act No. 58, it does not mean that copra is excluded
therefrom since oil is in the enumeration and the main component
ingredient or constituent part of copra, which is the dried meat of
the coconut, is oil. Not only has the City of Cebu the power to tax, fix
the license fee for, regulate the business and fix the location of
factories and the storage and sale of oil, but also to tax, fix the
license fee for, regulate the business and fix the location of other
establishments likely to endanger the public safety or give rise to
conflagrations or explosions.
2. ID.; ID.; TAX DIRECTLY ON THE PRODUCT, DISTINGUISHED FROM
TAX INDIRECTLY IMPOSED AS INCIDENT TO THE BUSINESS TO BE
TAXED. The tax or license fee imposed by Ordinance No. 38 of the
City of Cebu, for the storage in the petitioners warehouse is not
specific, because it does not subject directly the produce or goods to
tax but indirectly as an incident to, or in connection with, the
business to be taxed. It is a tax on the business of buying and selling
or storing copra. Section 4 of Ordinance No. 38 provides that a
person, firm or corporation engaged in the business of buying or
selling copra and at the same time of keeping, holding or storing it
at his place of business, bodega or elsewhere before disposing of it,
shall pay only the license for engaging in the business of buying and
selling it. It is unnecessary to determine whether it is a tax for
revenue purposes or a license fee to reimburse the city for the
expense incurred by it for service of supervision and issuance of the
permit and license because the City of Cebu is authorized not only to
impose a license fee but also to tax for revenue purposes.
3. CONSTITUTIONAL LAW; TAXATION; PRINCIPLES OF UNIFORMITY OF
TAXATION. Ordinances Nos. 38 and 46 of the City of Cebu are not
unfair, unjust or arbitrary, nor do they violate the principle on
uniformity of taxation. The amount of tax or license fee to be
collected becomes uniform by making the weight the basis thereof
as provided for in the ordinances in question. A five-centavo tax or
license fee for 100 kilos or fraction thereof per month is not arbitrary
but reasonable. The tax or license fee provided for in the ordinances
in question is imposed on every person, firm, or corporation
engaged in the City of Cebu in the business of buying and selling
and storing copra in his or its warehouse located within the City. It,
as well as the exemption (sec. 1, Ordinance No. 38, proviso), applies
equally to all persons, firms and corporations placed in similar
situation.
4. ADMINISTRATIVE LAW, TAXATION; COMMONWEALTH ACT No. 472,
SECTION 3. The tax or license fee in question is not among those
prohibited or beyond the power of the municipal councils and
municipal district councils to impose, as provided for in section 3,
Com. Act No. 472. Besides, Com. Act No. 472 applies only to
municipal councils and municipal district councils and not to cities
like the City of Cebu which has its own charter.
DECISION
PADILLA, J.:
Under and pursuant to the provisions of Ordinance No. 38, series of
1946, as amended by Ordinance No. 46, series of 1947, of the City
of Cebu, the plaintiff and appellee, a domestic corporation, paid
under protest the fees for the storage in its warehouse in the City of
Cebu of copra and/or hemp and/or for engaging in buying and/or
selling copra and/or hemp in the said City, provided for in said
ordinances from 20 December 1948 to 18 November 1949,
amounting to P4,019.07, which, together with the fees paid prior to
December 1948 and those that may be paid under and by virtue of
said ordinances, the plaintiff seeks to recover in this action after a
demand for refund had been refused by the corresponding City
authorities, on the ground that the fee imposed by said ordinances is
unauthorized; constitutes a specific tax prohibited by
Commonwealth Act No. 472; contravenes the national policy and
Commonwealth Act No. 733, which accepted and approved the
Executive Agreement entered into by the President of the United
States and the President of the Philippines, where it is provided that
no export tax shall be imposed or collected by the Philippines on
articles exported to the United States; denies equal protection of the
laws; deprives the plaintiff of its property without due process of law;
is unjust, unfair, discriminatory, oppressive, arbitrary and
confiscatory.
Upon a stipulation of facts and evidence presented the Court of First
Instance of Cebu rendered judgment holding Ordinances No. 38,
series of 1946, and No. 46, series of 1947, null and void; directing
the City of Cebu to refund to the plaintiff the sum of P4,019.07 paid
under protest and such other sums paid after 20 December 1948
(1949), without costs. The City has appealed.
The first and main question to determine is whether the City of Cebu
is authorized under its charter (Com. Act No. 58) to impose and
collect the tax or license fee provided for in the ordinances in
question.
Section 17, Commonwealth Act No. 58, provides:chanrob1es virtual
1aw library
Except as otherwise provided by law, and subject to the conditions
and limitations thereof, the Municipal Board shall have the following
legislative powers:chanrob1es virtual 1aw library
x x x It is contended that Ordinances Nos. 38 and 46 in question are
(m) To tax, fix the license fee for, regulate the business, and fix the
location of match factories, blacksmith shops, foundries, steam
boilers, lumberyards, shipyards, the storage and sale of gunpowder,
tar, pitch, resin, coal, oil, gasoline, benzine, turpentine, hemp,
cotton, nitroglycerine, petroleum, or any of the products thereof, and
of all other highly combustible or explosive materials, and other
establishments likely to endanger the public safety or give rise to
conflagrations or explosions, and, subject to the provisions of
ordinances issued by the Philippine Health Service in accordance
with law, tanneries, renderies, tallow chandleries, bone factories,
and soap factories.
The trial court is of the opinion that the charter of the City of Cebu
does not authorize it to impose the tax on or fix the license fee for
anyone engaged in the business of buying and selling and storing
copra, because (1) copra is not mentioned in the section above-
quoted; (2) it is not a highly combustible or explosive material; and
(3) the warehouse where copra is stored is not an establishment
likely to endanger the public safety or give rise to conflagrations or
explosions. And having arrived at that conclusion the trial court
deemed it unnecessary to pass upon the other points raised by the
plaintiff, to wit: that the ordinances are unjust and confiscatory;
violate the rule on uniformity of taxes; and deprive persons subject
to the tax or license fee therein provided of their property without
due process of law.
The fact that copra is not mentioned in section 17(m), Com. Act No.
58, does not mean that copra is excluded, because oil is in the
enumeration and the main component ingredient or constituent part
of copra, which is the dried meat of the coconut, is oil. The
substances mentioned in the section hereinbefore quoted are
haphazardly classified in the enumeration, for coal, oil, hemp and
cotton cannot be considered or classified as "all other highly
combustible or explosive materials" like gunpowder, gasoline and
nitroglycerine. Under and pursuant to the provisions of the charter
hereinbefore quoted, the City of Cebu is authorized "to tax, fix the
license fee for, regulate the business and fix the location of match
factories . . . the storage and sale of gunpowder . . . oil, . . . and
other establishments likely to endanger the public safety or give rise
to conflagrations or explosions . . ." There is then an express
authority of the City of Cebu to tax, fix the license fee for, regulate
the business and fix the location of match factories, etc., the storage
and sale of gunpowder, oil, etc., and other establishments likely to
endanger the public safety or give rise to conflagrations or
explosions. Not only has the City of Cebu the power to tax, fix the
license fee for, regulate the business and fix the location of factories
and the storage and sale of oil, but also to tax, fix the license fee for,
regulate the business and fix the location of other establishments
likely to endanger the public safety or give rise to conflagrations or
explosions. There is no question that under its charter the City of
Cebu may tax or impose a license fee on any person, firm or
corporation engaged in the business of buying and selling and
storing copra in a warehouse located in the city, oil being the main
component ingredient of copra, and may regulate and fix its
location, because a warehouse used for keeping or storing copra is
an establishment likely to endanger the public safety or likely to give
rise to conflagrations or explosions. True, copra is not highly
combustible or explosive material, but once ignited, the fire resulting
therefrom, because of the oil it contains, is difficult to put under
control by water and to extinguish it the use of chemicals would be
necessary. For that reason such a warehouse is likely to endanger
the public safety or likely to give rise to conflagrations.
The tax or license fee in question is not specific because it does not
subject directly the produce or goods to tax but indirectly as an
incident to, or in connection with, the business to be taxed. It is a tax
on the business of buying and selling or storing copra. Section 4 of
Ordinance No. 38 provides that a person, firm or corporation
engaged in the business of buying or selling copra and at the same
time of keeping, holding or storing it at his place of business, bodega
or elsewhere before disposing of it, shall pay only the license for
engaging in the business of buying and selling it. It is unnecessary to
determine whether it is a tax for revenue purposes or a license fee
to reimburse the city for the expense incurred by it for service of
supervision and issuance of the permit and license because the City
of Cebu is authorized not only to impose a license fee but also to tax
for revenue purposes.
unfair, unjust, arbitrary and violate the principle on uniformity of
taxation, the amount of tax or license fee to be collected not being
based on the value but on the weight of the product. Such tax or
license fee becomes uniform by making the weight the basis thereof
as provided for in the ordinances in question. A P0.05 tax or license
fee for 100 kilos or fraction thereof per month is not arbitrary but
reasonable. The tax or license fee provided for in the ordinances in
question is imposed on every person, firm, or corporation engaged
in the City of Cebu in the business of buying and selling and storing
copra in his or its warehouse located within the city. It, as well as the
exemption, 1 applies equally to all persons, firms and corporations
placed in similar situation. Market fluctuation in the value or price of
the merchandise, article, or goods subject to tax or license fee does
not make ununiform the rate of such tax or license fee. The fact that
the price of copra has been steadily going down, whereas that of
hemp going up, does not render the tax arbitrary. Precisely, the tax
or license fee provided for in the ordinances in question based on
the weight regardless of value is what makes the tax or fee uniform.
The tax or license fee does not deprive the owner of the copra and
of the warehouse of their property without due process of law,
because it is a reasonable tax or fee and it does not deprive the
dealer of his copra and the owner of the warehouse where it is kept
of his property. If the copra dealer does not want to pay the city tax
or fee, he may buy and sell and store the copra elsewhere. It is not a
tax on export because it is imposed not only upon copra to be
exported but also upon copra sold and to be used for domestic
purposes, if stored in any warehouse in the City of Cebu and the
weight thereof is 100 kilos or more. The tax or license fee in
question is not among those prohibited or beyond the power of the
municipal councils and municipal district councils to impose, as
provided for in section 3, Commonwealth Act No. 472. Besides,
Commonwealth Act No. 472 applies only to municipal councils and
municipal district councils and not to cities like the City of Cebu
which has its own charter.
For the foregoing reasons, the judgment appealed from is reversed,
the complaint of the plaintiff is dismissed, without costs.
Paras, C.J., Feria, Pablo, Bengzon, Tuason, Reyes, Jugo, Bautista
Angelo and Labrador, JJ., concur.
EN BANC
G.R. No. L-6093 February 24, 1954
THE SHELL CO. OF P.I., LTD., plaintiff-appellant,
vs.
E. E. VAO, as Municipal Treasurer of the Municipality of
Cordova, Province of Cebu, defendant-appellee.
C.J. Johnston and A.P. Deen for appellant.
Provincial Fiscal Jose C. Borromeo and Assistant Provincial
Fiscal Ananias V. Maribao for appellee.
PADILLA, J.:
The Municipal Council of Cordova, Province of Cebu, adopted the
following ordinances: No. 10, series of 1946, which imposes an
annual tax of P150 on occupation or the exercise of the privilege of
installation manager; No. 9, series of 1947, which imposes an annual
tax of P40 for local deposits in drums of combustible and
inflammable materials and an annual tax of P200 for tin can
factories; and No. 11, series of 1948, which imposes an annual tax of
P150 on tin can factories having a maximum output capacity of
30,000 tin cans. The Shell Co. of P.I. Ltd., a foreign corporation, filed
suit for the refund of the taxes paid by it, on the ground that the
ordinances imposing such taxes are ultra vires. The defendant
denies that they are so. The controversy was submitted for judgment
upon stipulation of facts which reads as follows:
Come now the parties in the above-entitled case by their
undersigned attorneys and hereby agree to the following
stipulation of facts:
1. That the parties admit the allegations contained in
Paragraph 1 of the Amended Complaint referring to
residence, personality, and capacity of the parties except
the fact that E.E. Vao is now replaced by F.A. Corbo as
Municipal Treasurer of Cordova, Cebu;
2. That the parties admit the allegations contained in
paragraph 2 of the Amended Complaint. Official Receipts
Nos. A-1280606, A-37607422, A-3769852 and A-21030388
are herein marked as Exhibits A, B, C, and D, respectively
for the plaintiff;
3. That the parties admit that payments made under
Exhibits B, C, and D were all under protest and plaintiff
admits that Exhibit A was not paid under protest;
4. That the parties admit that Official Receipt No. A-
1280606 for P40 and Official Receipt No. A-3760742 for
P200 were collected by the defendant by virtue of
Ordinance No. 9, (Secs. E-4 and E-6, respectively) under
Resolution No. 31, series of 1947, enacted December 15,
1947, approved by the Provincial Board of Cebu in its
Resolution No. 644, series of 1948. Copy of said Ordinance
No. 9, series of 1947, is herein marked as Exhibit "E" for the
plaintiff, and as Exhibit "I" for the defendant;
5. That the parties admit that Official Receipt No. A-
3760852 for P150 was paid for taxes imposed on
Installation Managers, collected by the defendant by virtue
of Ordinance No. 10 (section 3, E-12) under Resolution No.
38, series of 1946, approved by the Provincial Board of
Cebu in its Resolution No. 1070, series of 1946. Copy of
.said Ordinance No. 10, series of 1946 is marked as Exhibit
"F" for the plaintiff and as Exhibit "2" for the defendant;
6. That the parties admit that Official Receipt No. A-
21030388 for P5,450 was paid by plaintiff and that said
amount was collected by defendant by virtue of Ordinance
No. 11, series of 1948 (under Resolution No. 46) enacted
August 31, 1948 and approved by the Provincial Board of
Cebu in its Resolution No. 115, series of 1949, and same
was approved by the Honorable Secretary of Finance under
the provisions of section 4 of Commonwealth Act No. 472.
Copy of said Ordinance No. 11, series of 1948 is herein
marked as Exhibit "G" for the plaintiff, and Exhibit "3" for
the defendant. Copy of the approval of the Honorable
Secretary of Finance of the same Ordinance is herein
marked as Exhibit "4" for the defendant.
Wherefore, aside from oral evidence which may be offered
by the parties and other points not covered by this
stipulation, this case is hereby submitted upon the
foregoing agreed facts and record of evidence.
Cebu City, Philippines, January 20, 1950.
THE SHELL CO. OF P.I. LTD. C.D. JOHNSTON
(Sgd.) L. DE BLECHYNDEN (Sgd.) A.P. DE
Plaintif Attys. for the
THE MUNICIPALITY OF CORDOVA (Sgd.) JOSE C
(Sgd.) F.A. CORBO Prov
Defendant Attorney
(Record on Appeal, pp. 15-18.)
The parties reserved the right to introduce parole evidence but no
such evidence was submitted by either party. From the judgment
holding the ordinances valid and dismissing the complaint the
plaintiff has appealed.
It is contended that as the municipal ordinance imposing an annual
tax of P40 for "minor local deposit in drums of combustible and
inflammable materials," and of P200 "for tin factory" was adopted
under and pursuant to section 2244 of the Revised Administrative
Code, which provides that the municipal council in the exercise of
the regulative authority may require any person engaged in any
business or occupation, such as "storing combustible or explosive
materials" or "the conducting of any other business of an
unwholesome, obnoxious, offensive, or dangerous character," to
obtain a permit for which a reasonable fee, in no case to exceed P10
per annum, may be charged, the annual tax of P40 and P200 are
unauthorized and illegal. The permit and the fee referred to may be
required and charged by the Municipal Council of Cordova in the
exercise of its regulative authority, whereas the ordinance which
imposes the taxes in question was adopted under and pursuant to
the provisions of Commonwealth Act No. 472, which authorizes
municipal councils and municipal district councils "to impose license
taxes upon persons engaged in any occupation or business, or
exercising privileges in the municipality or municipal district, by
requiring them to secure licenses at rates fixed by the municipal
council or municipal district council," which shall be just and uniform
but not "percentage taxes and taxes on specified articles." Likewise,
Ordinance No. 10, series of 1946, which imposes an annual tax of
P150 on "installation manager" comes under the provisions of
Commonwealth Act No. 472. But it is claimed that "installation
manager" is a designation made by the plaintiff and such
designation cannot be deemed to be a "calling" as defined in section
178 of the National Internal Revenue Code (Com. Act No. 466), and
that the installation manager employed by the plaintiff is a salaried
employee which may not be taxed by the municipal council under
the provisions of Commonwealth Act No. 472. This contention is
without merit, because even if the installation manager is a salaried
employee of the plaintiff, still it is an occupation "and one
occupation or line of business does not become exempt by being
conducted with some other occupation or business for which such
tax has been paid'1 and the occupation tax must be paid "by each
individual engaged in a calling subject thereto."2 And pursuant to
section 179 of the National Internal Revenue Code, "The payment
of . . . occupation tax shall not exempt any person from any tax, . . .
provided by law or ordinance in places where such . . . occupation
in . . . regulated by municipal law, nor shall the payment of any such
tax be held to prohibit any municipality from placing a tax upon the
same . . . occupation, for local purposes, where the imposition of
such tax is authorized by law." It is true that, according to the
stipulation of facts, Ordinance No. 10, series of 1946, was approved
by the Provincial Board of Cebu in its Resolution No. 1070, series of
1946, and that it does not appear that it was approved by the
Department of Finance, as provided for and required in section 4,
paragraph 2, of Commonwealth Act No. 472, the rate of municipal
tax being in excess of P50 per annum. But at this point on the
approval of the Department of Finance was not raised in the court
below, it cannot be raised for the first time on appeal. The issue
joined by the parties in their pleadings and the point raised by the
plaintiff is that the municipal council was not empowered to adopt
the ordinance and not that it was not approved by the Department
of Finance. The fact that it was not stated in the stipulation of facts
justifies the presumption that the ordinance was approved in
accordance with law.
The contention that the ordinance is discriminatory and hostile
because there is no other person in the locality who exercises such
"designation" or occupation is also without merit, because the fact
that there is no other person in the locality who exercises such a
"designation" or calling does not make the ordinance discriminatory
and hostile, inasmuch as it is and will be applicable to any person or
firm who exercises such calling or occupation named or designated
as "installation manager."
Lastly, Ordinance No. 11, series of 1948, which imposes a municipal
tax of P150 on tin can factories having a maximum annual output
capacity of 30,000 tin cans which, according to the stipulation of
facts, was approved by the Provincial Board of Cebu and the
Department of Finance, is valid and lawful, because it is neither a
percentage tax nor one on specified articles which are the only
exceptions provided in section 1, Commonwealth Act No. 472.
Neither does it fall under any of the prohibitions provided for in
section 3 of the same Act. Specific taxes enumerated in the National
Internal Revenue Code are those that are imposed upon "things
manufactured or produced in the Philippines for domestic sale or
consumption" and upon "things imported from the United States and
foreign countries," such as distilled spirits, domestic denatured
alcohol, fermented liquors, products of tobacco, cigars and
cigarettes, matches, mechanical lighters, firecrackers, skimmed
milk, manufactured oils and other fuels, coal, bunker fuel oil, diesel
fuel oil, cinematographic films, playing cards, sacharine.3 And it is
not a percentage tax because it is tax on business and the maximum
annual output capacity is not a percentage, because it is not a share
or a tax based on the amount of the proceeds realized out of the
sale of the tin cans manufactured therein but on the business of
manufacturing tin cans having a maximum annual output capacity of
30,000 tin cans.
In an action for refund of municipal taxes claimed to have been paid
and collected under an illegal ordinance, the real party in interest is
not the municipal treasurer but the municipality concerned that is
empowered to sue and be sued.4
The judgment appealed from is hereby affirmed, with costs against
the appellant.
Paras, C.J., Pablo, Bengzon, Montemayor, Reyes, Jugo, Bautista
Angelo, Labrador, Concepcion and Diokno, JJ.,concur.
G.R. No. L-28809 May 16, 1983
JULIO LLAMADO, petitioner-appellant,
vs.
COMMISSIONER OF CUSTOMS, respondent-appellee.
Armando & Padilla for petitioner.
The Solicitor General for respondent.
PLANA, J.:
The facts are undisputed. On April 9, 1966, at about 11:00 o'clock
A.M., Cessna plane P.I. C-494 landed at the Alabat airstrip, Quezon
Province, with four persons on board, namely: Romeo Palencia, Osias
Mission, Jacob Lim, and one Identified only as a Chinese mestizo. A
few minutes later the plane took off, piloted by Osias Mission,
leaving behind his three companions who told CAA employees at
Alabat that they would have a picnic. The Chinese mestizo later told
Francisco de Leon, a CAA employee, that is group would use the
airstrip in landing contraband good and offered P1,500.00 to de Leon
which the latter refused. Romeo Palencia, Jacob Lim, and the
Chinese mestizo were picked up by the same Cessna plane at about
1:00 P.M.
At about 5:00 P.M. of the same day, a DC-3 plane (P.I. C-718) landed
at the Alabat airstrip. On board were Jesus Granda and Osias
Mission. It was followed by Cessna plane P.I. C494, which unloaded
two boxes containing "de gaza" lamps and two cases of kerosene,
after which it took off leaving the DC-3.
At about 11:00 o'clock of that night, a motorized banca unloaded
cases of "FORTUNE" blue seal cigarettes at the tip of the Alabat
airstrip, making several trips between the shore and a vessel lying
offshore from where the cigarettes were taken, From the shore, the
cigarettes were loaded on board the DC-3 plane by laborers hired by
the Chinese mestizo. Some four hours later, after about 300 cases of
blue seal cigarettes had been loaded, the DC-3 took off, guided by
the lighted "de gaza" lamps brought earlier by the Cessna plane.
The following: day, the DC-3 returned to Alabat, loaded the
remaining cases of "FORTUNE" blue seal cigarettes, and took off for
Porac, Pampanga.
All the landings and take offs of the planes were not recorded in the
logbook at Alabat because their pilots refused to sign the same.
A warrant of seizure and detention of the Cessna plane, P.I. C-494,
was issued on June 1, 1966 by the Collector of Customs of the Port of
Siain, Quezon Province, for violation of Section 2530 of the Tariff and
Customs Code. After hearing, a decision was rendered by the
Collector of Customs declaring the forfeiture of the Cessna plane
pursuant to Section 2530 (a) of the said Code, which was later
affirmed by the Commissioner Of Customs. Subsequently, upon the
filing by petitioner of a P30,000.00 surety bond, the Cessna plane
was released to him.
On appeal the Court of Tax Appeals sustained the decision of the
Commissioner of Customs, thus:
WHEREFORE, the decision appealed from is hereby
affirmed. The forfeited Cessna plane P.I. C-494
having been released to petitioner and secured by
the Philippine Motor Assurance Corporation (PMAC)
Bond No. 267... said bond is hereby forfeited in
favor of the Government. Petitioner Julio Llamado
and the Philippine Motor Assurance Corporation
are hereby ordered to pay, jointly and severally, to
the Collector of Customs of Slain, or any of his
authorized representatives, the amount of
 P30,000.00 corresponding to the appraised value
of the forfeited Cessna plane within thirty days
from the date this decision becomes final.
Dissatisfied, petitioner has appealed to this Court by way of petition
for review.
Petitioner-owner of the Cessna plane contends that the plane cannot
be forfeited under Section 2530 (a) of the Tariff and Customs Code
for it did not come from a foreign country nor did it carry or unload
cigarettes in any place in the Philippines. While not claiming
ignorance of the smuggling operation for which his plane was used,
petitioner further argues that the Cessna plane cannot be deemed to
have been "used" in smuggling since it was not actually used in
transporting the cigarettes but was merely used to bring the "de
gaza" lamps to the Alabat airstrip. As averred in petitioner's brief-
The Cessna plane was used in the bringing of the
"de Gaza" lanterns at Alabat Airstrip. That was its
purpose and nothing more. The "de Gaza" lanterns
were used to light the airstrip so that the DC-3
plane P.I. C-718 may be able to take off. That was
the purpose of the lanterns. The DC-3 plane P.I. C-
718 was used to carry the cigarettes from Alabat
Island to Porac, Pampanga. That was its purpose.
What was used unlawfully in the importation of the
blue seal cigarettes from outside the territorial
jurisdiction of the Philippine waters with intention
to unload. ...
The most that can be said of the Cessna plane in
connection with this case is that it was used or
employed to aid in or facilitate the unlawful
importation of the cigarettes. But unfortunately,
vehicles, vessels, or aircrafts used or employed to
aid in or facilitate the unlawful importations of
articles into the Philippines are not subject to
forfeiture under Philippine laws. (pp. 12-13.)
The issue thus raised is whether or not the Cessna plane was used in
the unlawful importation of cigarettes within the meaning of Section
2530 (a) of the Tariff and Customs Code, which reads:
Any vessel or aircraft, cargo or articles and other
objects shall, under the following: conditions, be
subject to forfeiture:
(a) Any vessel or aircraft, including cargo, which
shall be used unlawfully in the importation or
exportation of articles into or from any Philippine
ports or place except a port of entry, and any
vessel which, being of less than thirty tons
capacity shall be used in the importation of articles
into any Philippine port or place except into a port
of the Sulu sea where importation in such vessel
may be authorized by the Commissioner, with the
approval of the department head.
Under the foregoing legal provision, in order to warrant forfeiture, it
is not necessary that the vessel or aircraft must itself carry the
contraband. There is nothing in the law that so requires.
Nor is it essential that the vessel or aircraft must come from a
foreign country, as argued by the petitioner. The same contention
was urged without success by the owner of the forfeited vessel in
C.F. Sharp & Co., Inc. vs. Commissioner of Customs, 22 SCRA 760.
It is contended that the M/L Cheton should not be
ordered forfeited because . . . it was not used to
transport said cigarettes from a foreign port to any
port or place in the Philippines.
C.F. Sharp & Co., Inc. maintains proceedings. that
paragraph a Section 2530 of the Tariff and
Customs Code does not apply to the instant case
inasmuch as it was not proved that M/L Cheton
was unlawfully used in the importation of articles
into any Philippine port.
There is no question that M/L Cheton was
apprehended carrying untaxed cigarettes of
foreign origin without the necessary papers
showing that they were entered lawfully through a
port of entry. There is no question also that said
cigarettes were liable for forfeiture pursuant to the
Customs and Tariff Code. On the basis of the
aforestated facts, the conclusion is inevitable that
the M/L Cheton was used in connection with
unlawful importation of said cigarettes, The burden
was therefore shifted to the boat's owner to show
that the carriage by M/L Cheton of the smuggled
cigarettes was lawful. No such showing was made.
Hence, the Court of Tax Appeals committed no
error in ordering the forfeiture of the launch in
question. (pp. 762-764.)
In the case at bar, it is undeniable that the Alabat adventure was
entirely and solely a smuggling operation; and the Cessna was
deliberately used to insure its successful prosecution. It brought the
smugglers to Alabat and subsequently delivered the necessary
lighting paraphernalia to enable the cargo plane to take off without
peril and transport the smuggled cigarettes to Luzon.
In our view, this complementary, if collateral, use of the Cessna for
smuggling operation is sufficient for it to be deemed to have been
used unlawfully in the importation or smuggling of blue seal
cigarettes. Note that "importation", by law, commences when the
carrying vessel or aircraft enters the jurisdiction of the Philippines
with intention to unload; and it is "deemed terminated (only) upon
payment of the duties, taxes and other charges due upon the
articles, or (the same has been) secured to be paid ... and the legal
permit for withdrawal shall have been granted." (Tariff and Customs
Code, Section 1202.) The participation of the Cessna, as above
described, was legally an active involvement of the said plane in,
and constituted an unlawful use thereof for, smuggling or illegal
importation within the meaning of Section 2530 (a) of the Tariff and
Customs Code.
WHEREFORE, the decision of the Court of Tax Appeals under review
is hereby affirmed. Costs against the petitioner.
SO ORDERED.
Teehankee (Actg.) C.J., Escolin, * Vasquez and Gutierrez, Jr., JJ.,
concur.
Melencio-Herrera and Relova, JJ., concur.
G.R. No. L-6574 July 31, 1954
GOOD DAY TRADING CORPORATION, petitioner,
vs.
BOARD OF TAX APPEALS, respondent.
 Enrico I. de la Cruz for petitioner.
Office of the Solicitor General Juan R. Liwag and Solicitor Jose P.
Alejandro for respondent.
MONTEMAYOR, J.:
The facts in this case are not disputed. The petitioner Good Day
Trading Corporation imported 238 cases of Chesterfield cigarettes on
February 18, 1952. The corresponding surety bond was filed in its
favor to secure the payment of the sum of P52,360, the amount of
specific taxes due on the cigarette importation, and pursuant to
existing law, the shipment was stored in a bonded warehouse under
the custody of the Bureau of Customs. On September 23, 1952,
while the cigarettes were still in storage, petitioner sold them to one
Buenaventura Isleta for a total sum of P32,000, exclusive of specific
taxes, the sale being conditioned on the buyer paying all the specific
taxes or filing a surety bond with the Bureau of Internal Revenue to
guarantee payment thereof, within 15 days from the sale
agreement, besides paying all the storage fees, fire insurance
premium and other expenses from the date of sale until the
cigarettes have been withdrawn by the buyer.
A few days after the sale agreement Isleta informed petitioner that
he bought the cigarettes not for himself but on behalf of his
companions who intended to pay the specific taxes with their
backpay certificates or certificates of indebtedness. Petitioner then
wrote a letter to the Collector of Internal Revenue advising him of
the sale, at the same time requesting that should the certificates of
indebtedness with which the buyers intend to pay the specific taxes
on the cigarettes be approved and accepted, the surety bond
previously filed by petitioner be ordered cancelled. This letter was
duly received by the Collector of Internal Revenue.
Afterwards, when despite several extensions given to Isleta and his
companions they failed to show evidence that they had either paid
the specific taxes or filed the corresponding surety bond, petitioner
to avoid deterioration of the cigarettes, decided to rescind the sale
and on December 8, 1952, on account of the specific taxes, it made
an initial payment of P8,800 to the Collector of Internal Revenue and
thereafter attempted to withdraw from storage 40 cases of
cigarettes, covered by the initial payment. The warehouseman,
however, refused delivery saying that Isleta and companions
claimed ownership of the whole shipment because they already had
submitted with the Bureau of Internal Revenue certificates of
indebtedness (Back Pay) for payment of all the specific taxes, which
according to them have already been approved and accepted by the
Bureau. At the same time Isleta came to petitioner's office with a
letter requesting the suspension of the withdrawal of the cigarettes
by petitioner, with the condition that should be (Isleta and
companions) fail to comply with the sale agreement on or before
December 15, 1952, then petitioner may withdraw the whole
shipment and Isleta and companions would pay P10,000 as
liquidated damages.
Eventually, the Bureau of Internal Revenue approved or accepted
the certificates of indebtedness tendered by the buyers as payment
of the specific taxes on the cigarettes, the issuance of the
certificates of indebtedness having been approved by the National
Treasurer of the Philippines. The Bureau of Internal Revenue also
authorized the Bureau of Customs to release to the buyers the whole
shipment; the buyers filed their entries with the Bureau of Customs,
and withdrew all the cigarettes and allegedly sold the same.
Thereafter, petitioner asked for the refund of the P8,800 paid by it in
cash, in view of the full payment of the specific taxes on the
cigarettes by the buyers. The Collector of Internal Revenue granted
the refund and his action was approved by the Secretary of Finance.
No appeal was taken from said decision; but because the amount
involved was more than P5,000 the case was brought before the
Board of Tax Appeals for final resolution under the provisions of
Executive Order No. 401-A, section 9, particularly the second
paragraph thereof. Said section 9 reads as follows:
SEC. 9. In all cases involving an original assessment of
P5,000 or less, the action of the Collector of Internal
Revenue pursuant to his authority to compromise cases and
make refunds under section 309 of the National Internal
Revenue Code, and that of the Commissioner of Customs
pursuant to similar authority under section 1369 of the
Revised Administrative Code, shall in no case become
effective unless approved by the Secretary of Finance.
Copies of the action of the Collector of Internal Revenue or
of the Commissioner of Customs, as the case may be, and
of the approval thereof by the Secretary of Finance shall be
promptly furnished the Board of Tax Appeals, and within
sixty days from the receipt of copy thereof, the Board may,
for justifiable reasons, review the case motu proprio.
But in cases involving an original assessment of more than
P5,000, the approval by the Secretary of Finance of the
action taken as aforesaid by the Collector of Internal
Revenue or of the Commissioner of Customs shall not
become effective until and unless the same is approved by
the Board of Tax Appeals.
The case was set for hearing before the Tax Board and memoranda
were filed after which, the Board issued its resolution dated January
31, 1953. The Board not only reversed the decision of the Collector
of Internal Revenue granting the refund of P8,800 but it also rejected
the payment of the entire amount of specific taxes in certificates of
indebtedness, and ordered petitioner to pay the balance of P43,560
in cash. In other words, the Good Day Trading Corporation which
originally imported the cigarettes whose specific taxes amounted to
P52,360 was held liable and was ordered to pay the whole of said
specific taxes.
Petitioner asked for reconsideration claiming that the payment of
P8,800 in cash amounted to a double payment because the
corresponding amount was later paid with certificates of
indebtedness, accepted by the Collector of Internal Revenue and
approved by the Secretary of Finance; being double payment
petitioner was entitled to a refund; moreover, assuming that
petitioner was not entitled to refund, the Tax Board had neither
authority nor jurisdiction to order petitioner to pay the balance of
P43,560 because it was not involved nor was it an issue in the
matter submitted to the Tax Board of review. Acting upon the motion
for reconsideration the Tax Board denied the same, saying that said
motion was filed out of time; that the resolution had become final,
and that even if the resolution were still subject to modification and
that the Board were to admit that it had no jurisdiction to order the
petitioner to pay the balance of the specific taxes due, still petitioner
would gain nothing by it because the Tax Board may yet and could
reverse the decision of the Collector of Internal Revenue and enjoin
him to collect from petitioner the said amount of the balance,
pursuant to the Board's ruling that the petitioner is the importer of
the cigarettes and so was bound to pay said taxes. Petitioner is now
appealing from the resolution and order of the Board of Tax Appeals.
Incidentally, and to avoid any possible confusion, we might state
that, presumably due to a ruling by this Tribunal (University of Santo
Tomas vs. Board of Tax Appeals, 93 Phil., 376; that the Board of Tax
Appeals was illegally established (because by mere Executive Order)
for the reason that the jurisdiction assigned to it deprived the Courts
of First Instance of their jurisdiction to entertain and pass upon cases
taken to them from actions and decisions of the Collector of Customs
and the Collector of Internal Revenue regarding taxes, assessments,
refunds, etc., Republic Act 1125 was subsequently passed. Said Act
abolished the Board of Tax Appeal, created what is now known as
the COURT OF TAX APPEALS with practically the same jurisdiction
and functions of the former Board of Tax Appeals, and although it
repealed Executive Order No. 401-A nevertheless it provided that all
cases decided by the former Board of Tax Appeals and appealed to
the Supreme Court pursuant to Executive Order No. 401-A shall be
decided by the Supreme Court on the merits, to all intents and
purposes as if said Executive Order 401-A had been duly enacted by
Congress. We are, therefore, deciding this case pursuant to the
provisions of said Executive Order 401-A.
The main ground on which the Tax Board based its resolution is that
petitioner Good Day Trading Corporation is the importer of the
shipment of cigarettes and therefore is the one called upon to pay
the specific taxes, and consequently, should pay the same in cash,
and the Tax Board proceeds to cite authorities defining what is
meant by an importer, namely, that the importer is the primary
consignee to whom the goods are sent and who himself presents the
invoices, makes the entry, receives the bill of lading, and gets the
goods, as distinguished from one who may be the ultimate
consignee, and that it does not include a person who purchases the
goods from the importer after they have been brought within the
jurisdiction of the United States. On the other hand, petitioner claims
that under section 1248 of the Revised Administrative Code which
reads as follows:
SEC. 1248. When importation by sea begins and ends.
Importation by sea begins when the importing vessel enters
are jurisdictional waters of the Philippines with intention to
unlade therein, and is not completed until the duties due
upon the merchandise have been paid or secured to be
paid at a port of entry and the legal permit for withdrawal
shall have been granted, or, in case said merchandise is
free of duty, until it has legally left the jurisdiction of the
customs.
importation is not completed until the duties due upon the
merchandise have been paid and legal permit for withdrawal shall
have been granted; so that the person or entity paying the duties
due and receiving the legal permit for withdrawal and actually
withdrawing the goods becomes the importer.
Under our view of the case, whether or not petitioner is the importer
of the cigarettes in question, is of little import because under section
125 of the National Internal Revenue Code which provides
SEC. 125. Payment of specific tax on imported articles.
Specific taxes on imported articles shall be paid by the
owner or importer to the customs officers, conformably with
regulations of the Department of Finance and before the
release of such articles from the customhouse.
either the owner or importer shall pay the specific taxes on imported
articles. So that if the sale of the cigarettes by the importer to the
owners of the certificates of indebtedness was valid, then said
purchasers become the owners of the shipment and could pay the
specific taxes. We, therefore, believe and hold that the Tax Board
erred in holding that only petitioner Good Day Trading Corporation
was called upon and could pay the specific taxes on the cigarette
shipment.
What about the payment of the balance of P43,560 ordered by the
Tax Board to be paid by petitioner in spite of the paying of the entire
specific tax in certificates of indebtedness? We agree with the
petitioner that only the question of the refund of P8,800 was in issue
and was involved in the matter considered and decided by the Tax
Board. It will be remembered that there was no appeal from the
decision of the Collector of Internal Revenue approving the refund,
which decision was approved by the Secretary of Finance. If it was
brought to the Tax Board at all, it was because of the provisions of
section 9 of Executive Order No. 401-A already reproduced at the
first part of this decision. Under said section, in cases of original
assessments involving P5,000 or less, in one case and involving
more than P5,000 in another it is the action of the Collector of
Internal Revenue pursuant to his authority to compromise cases and
make refunds under section 309 of the National Internal Revenue
Code, that is subject to review and approval by the Tax Board. So
that the assessment and payment of the specific tax of P52,360 in
themselves, where there was neither dispute nor appeal, was not
subject to review by the Tax Board. What was subject to review and
what was in issue here was the refund of P8,800 approved by the
Collector of Internal Revenue and approved by the Secretary of
Finance because that was an action taken by the Collector of Internal
Revenue pursuant to his authority to compromise cases and make
refunds under section 309 of the National Internal Revenue Code.
Consequently, the consideration and resolution by the Tax Board
should be confined to that amount and to the propriety of the
refund, nothing more.
One of the reasons if not the main consideration behind the action of
the Tax Board in ordering the payment of the whole of the specific
taxes by the petitioner, and in cash, is reflected in a portion of its
resolution which we quoted:
. . . . It is apparent that interested parties wanted to
negotiate their backpay certificates by circumventing the
law and as wisely recommended by the Collector of Internal
Revenue in his memorandum "as a measure of sound fiscal
policy, the acceptance of applications for issuance of
certificates of indebtedness for the payment of specific tax
on imported articles, should be disapproved." To allow the
purchasers the payment of specific tax on imported goods
in backpay certificates will open a way to unscrupulous
dealers to speculate in the negotiation of backpay
certificates.
The Tax Board in its resolution added that "it is highly improper for
the Government to accept certificates of indebtedness in lieu of
cash." We can well understand the point of view of the Tax Board.
There is reason to suspect that the 29 alleged purchasers of the
cigarettes whose certificates of indebtedness (back pay) were used
to pay the specific taxes, were not bona-fide purchasers; that they
were not interested in the cigarettes imported but were solely
concerned with getting their backpay liquidated by any one who
may have bought the same at a discount and later used them to pay
the specific taxes by making it appear that 29 persons who had
nothing in common but their ownership of backpay certificates, and
who heretofore were never importers, dealers or buyers of foreign
cigarettes, all of a sudden were drawn and banded together to invest
in a commodity they never dealt in or were interested in, and
became purchasers and owners of the entire shipment of cigarettes.
The interest taken and solicitude shown by the Tax Board for the
Government and the public, is commendable indeed. However, the
present appeal has to be decided solely on the basis of the pertinent
provisions. Whether or not owners of backpay certificates should be
given certificates of indebtedness ostensibly to be used to pay taxes
but in reality to be speculated upon and negotiated by some
unscrupulous persons, is wholly the legal concern of the Treasurer of
the Philippines and the Department to be affected later by the use of
said certificate of indebtedness. The attitude of the Tax Board
intended to minimize this anomalous practice may be of great
interest to the department or departments of the Government
charged with the issuance of certificates of indebtedness based on
backpay, and the acceptance of the same in payment of taxes.
In view of the foregoing, the resolution of the Tax Board denying the
refund of the P8,800 and ordering petitioner to pay the balance of
P43,560 is reversed. No costs. Let copies of this decision be
furnished the Treasurer of the Philippines and the Secretary of
Finance.
Paras, C.J., Pablo, Bengzon, Reyes A., Jugo, Bautista Angelo,
Labrador, Concepcion and Reyes, J.B.L., JJ.,concur.
EN BANC
G.R. No. L-27822 December 24, 1927
LUZON BROKERAGE CO., INC., Plaintif-Appellant, vs. JUAN
POSADAS, JR., as Collector of Internal Revenue, Defendant-
Appellee.
J. W. Ferrier for appellant.
Attorney-General Jaranilla for appellee.
VILLA-REAL, J.:
The present appeal was taken by the plaintiff, the Luzon Brokerage
Co., Inc., from the judgment of the Court of First Instance of Manila
which affirmed the decision of the Collector of Internal Revenue on
the internal-revenue tax imposed on certain playing cards, upholding
the action taken by him under the provision of Act No. 3246, and
dismissed the complaint, with the
costs.chanroblesvirtualawlibrary chanrobles virtual law library
In support of its appeal the appellant assigns the following alleged
errors as committed by the trial court in tis decision, to wit: (1) The
lower court erred in finding that the internal-revenue tax levied and
collected in the present case was lawfully levied and collected upon
the playing cards in question; (2) in finding that the date of the
withdrawal of said playing cards from the customhouse determined
the rate of internal-revenue tax to be paid thereon; (3) in failing to
find that the internal-revenue tax rate applicable to the imported
playing cards in question was the one in force on November 20,
1925, the date of the arrival of the importing vessel; (4) in
dismissing the plaintiff's complaint; (5) in overruling plaintiff's
motion for a new trial.chanroblesvirtualawlibrary chanrobles virtual
law library
Section 1251 of the Revised Administrative Code of 1917 reads as
follows:
SEC. 1251. When duties accrue on imported merchandise. - Unless
otherwise specially provided by law, duties shall accrue upon
imported merchandise upon the arrival of the importing vessel
within the jurisdictional waters of the Philippine Islands with intent to
unload.
And section 1248 of the same Code states the following:
SEC. 1248. When importation by sea begins and ends. - Importation
by sea begins when the importing vessel enters the jurisdictional
waters of the Philippine Islands with intention to unload therein, and
is not completed until the duties due upon the merchandise have
been paid or secured to be paid at a port of entry and the legal
permit for withdrawal shall have been granted, or, in case said
merchandise is free of duty, until it has legally left the jurisdiction of
the customs.
The pertinent part of section 1478 of the same Code provides:
SEC. 1478. Articles subject to specific tax. - Specific internal-revenue
taxes apply to things manufactured or produced in the Philippine
Islands for domestic sale or consumption and to things imported
from the United States or foreign countries, but not to any thing
produced or manufactured her which shall be removed for
exportation and is actually exported without returning to the Islands,
whether so exported in its original state or as an ingredient or part
of any manufactured article or
product.chanroblesvirtualawlibrary chanrobles virtual law library
In case of importations the internal-revenue tax shall be in addition
to the customs duties, if any.
And section 1480 of the same Code says:
SEC. 1480. Payment of specific tax on imported articles. - Internal-
revenue taxes on imported articles shall be paid by the owner or
importer to the customs officers, conformably with the regulation of
the Bureau of Internal Revenue and before the release of such
articles from the customhouse.
In the decision written by Mr. Justice Johnson in the case of Asiatic
Petroleum Company vs. Rafferty (38 Phil., 475), the following is
stated:
. . . The theory of the law, with reference to the internal-revenue tax
upon such merchandise, seems to be that the tax is not due and
payable until it is about to be put into the commerce or trade of the
country. The condition of the market at a particular time, or the
situation in business generally, might cause the producer to withhold
his merchandise and not allow it to be removed from the place of
production for months, or even years; could he, under the above
quoted provision of the law, be required to pay the internal-revenue
taxes until he saw fit to place his product upon the market? While
the law permits the producer of taxable merchandise to delay the
payment of the internal-revenue tax until "immediately before
removal of the same from the place of production,"the duly
authorized and promulgated regulation of the defendant
himself permits the importer of taxable merchandise to deposit the
same in a bonded warehouse and to delay the payment of internal-
revenue tax until the same is about to be removed therefrom. . . .
Consequently, merchandise imported to these Islands from foreign
countries is subject to two taxes, namely: Custom and internal
revenue. In accordance with section 1251 of the Administrative Code
above quoted, duties shall accrue upon the arrival of the importing
vessel within the jurisdictional waters of the Philippine Islands with
intent to unload; and, in accordance with section 1248 of the same
Code, also quoted above, the importation of said merchandise is not
completed until the duty to which it is subject has been paid, or,
until it has legally left the jurisdiction of the customhouse in case it
is exempt from the payment of duties. According to section 1480 of
the same Code, above cited, internal-revenue taxes on imported
articles must be satisfied before the release of such articles from the
customhouse.chanroblesvirtualawlibrary chanrobles virtual law
library
Now then; from what time is the importer or owner of the imported
merchandise obliged to pay the internal-revenue tax? When the
importation is completed by the payment of the customs duties? or,
when the importer or owner withdraws it from customhouse and
places it on the market?chanrobles virtual law library
According to the doctrine above cited, imported merchandise is not
subject to the payment of internal-revenue tax except just before it
is withdrawn from the customhouse for the purpose of placing it on
the market, being on the same footing with merchandise
manufactured or produced in the country for its sale and
consumption therein, which is not subject to the payment of internal-
revenue tax, except just before its transfer from the place of
production, in accordance with section 1479 of the Administrative
Code, which reads as follows:
SEC. 1479. Payment of specific tax on domestic products. - Specific
taxes on domestic products shall be paid by the manufacturer,
producer, owner, or person having possession of the same; and
exceptions as otherwise especially allowed such taxes shall be paid
immediately before removal from the place of production.
The time, then, that the imported merchandise becomes subject to
the payment of the internal-revenue tax, depends upon the will of
the importer or owner of said merchandise; because, while he has
not decided to withdraw it from the customhouse and place it on the
market, and has not requested permission to do so, he is not bound
to pay said tax.chanroblesvirtualawlibrary chanrobles virtual law
library
According to the stipulation of facts and the admissions made during
the trial, the boxes of playing cards arrived in the port of Manila on
November 20, 1925, at 8 o'clock in the morning, but were not
declared for payment of the internal-revenue tax until December 1st
of the same year, neither was the amount of the estimated tax
deposited, nor was permission requested to withdraw said boxes
from the customhouse, except on December 2,
1925.chanroblesvirtualawlibrary chanrobles virtual law library
The law in force the payment of internal-revenue taxes on imported
merchandise at the time of the arrival of the playing cards in
question, was section 7, Act No. 2835, amending section 1498 of the
Administrative Code, and the one in force on the date upon which
the declaration for the payment of the internal-revenue tax on said
imported merchandise was made, was Act No. 3246, which became
effective December 1, 1925.chanroblesvirtualawlibrary chanrobles
virtual law library
If the importer or owner of the important merchandise may select
the time in which he should pay the amount of the internal-revenue
tax on the same from the time it arrives in the port of Manila until it
is withdrawn from the customhouse, and the herein plaintiff-
appellant not having taken advantage of the favorable provisions of
section 1498 of the Revised Administrative Code as amended by
section 7 of Act No. 2835, and not having paid the internal-revenue
tax while said section was in force, but only after the new law, Act
No. 3246, went into effect, it cannot now make claim for the
recovery of the internal-revenue tax paid under the law in force at
the time payment was made.chanroblesvirtualawlibrary chanrobles
virtual law library
Briefly, then, the time for the payment of the internal-revenue tax on
merchandise, from the date of arrival in port until just before it is
withdrawn from the customhouse, depending upon the will of the
importer or owner, the law in force at the time the payment is made
must prevail; because, voluntary human acts are governed by the
laws in force at the time they are done, unless there is a legal
provision to the contrary.chanroblesvirtualawlibrary chanrobles
virtual law library
In view of the foregoing, we find no error in the judgment appealed
from and the same is affirmed in all its parts, with the costs against
the appellant. So ordered.chanroblesvirtualawlibrary chanrobles
virtual law library
Avancea, C.J., Johnson, Street, Malcolm, Villamor, Ostrand and
Johns, JJ., concur.
EN BANC
G.R. No. L-24247 May 13, 1968
COMPANIA GENERAL DE TABACOS DE FILIPINAS, petitioner,
vs.
ACTING COMMISSIONER OF CUSTOMS, respondent.
Ross, Selph, Salcedo, Del Rosario, Bito and Misa for petitioner.
Office of the Solicitor General for respondent.
CASTRO, J.:
The lone question tendered for resolution is whether a vessel,
engaged in foreign trade, which berths at a privately-owned wharf or
pier is liable to the payment of berthing fees under section 2903 of
the Tariff and Customs Code which reads:
Ports without cargo shed. Every vessel engaged in foreign trade
which berths at a pier, wharf, bulkhead-wharf, river or channel
marginal wharf at any national port in the Philippines without cargo
sheds, or which makes fast to any vessel lying at such wharf or pier,
for the purpose of discharging and/or loading cargo shall pay a
berthing fee of three centavos per registered gross ton of the vessel
for the first twenty-four hours, or part thereof, exceeding three
hours: Provided, That the maximum charge shall not exceed three
hundred pesos per day.
The petitioner, contending that it was exempt from the payment of
such fees, asked for a refund of what it had paid. The Collector of
Customs of the port of Cagayan de Oro denied the claim for refund.
So did the Commissioner of Customs. A resort to the Court of Tax
Appeals likewise proved unavailing.
Hence the present recourse.
In June 1961, the vessels Rita Maersk and Effie Maersk docked at the
Bugo pier at the port of Cagayan de Oro, for doing which the
Collector of Customs of the port levied and assessed on them the
sum of P379.25 as berthing fees. The petitioner Compania General
de Tabacos de Filipinas, as agent of the ships, protested the
imposition and collection of the fees on the ground that the Bugo
pier is owned and operated by the Philippine Packing Corporation,
and that under section 2903 berthing fees are assessable only
against a vessel berthing at aGovernment pier or wharf. It maintains
that such charges can be collected only if the Government affords
pier and wharf facilities in the port.
To begin with, berthing charges are assessed against a vessel "for
mooring or berthing at a pier, wharf, bulk-headwharf, river or
channel marginal wharf ... or for mooring or making fast to a vessel
so berthed; or for coming or mooring within any slip, channel, basin
or river or canal under the jurisdiction of any port of the
Philippines."1They are like wharfage dues in the sense that they are
imposed for the use of wharf, regardless of the ownership thereof,
the only difference between the two being that while berthing
charges are assessed against the vessel,2wharfage dues are
assessed against the cargo.3 In an early case,4 this Court noted that
the old Customs Tariff Law of November 15, 1901 "has been
construed ... to mean that the Government of the Philippine Islands
is entitled to levy and collect a duty of $1 per gross ton 'as a charge
for wharfage' upon all articles, goods, wares and merchandise
exported, through the ports of entry of the Philippine Islands, and
that construction has been acquiesced in and accepted, and the
money paid without any protest or objection for twenty-six years, for
many years of which the Government never even owned or operated
a wharf."5 This was held significant because "the very fact that
Congress has not seen fit to repeal or change the law is a very
potent argument in favor of sustaining that construction." 6 The Court
could rightly conclude, therefore, that wharfage dues are collectible
regardless of the fact that shipment is made from a private wharf.
That is still good law.7 And as berthing fees are identical to wharfage
dues in policy the same rule must perforce apply with respect to
them.1vvphi1.nt
Is this a governmental imposition from which there is no conceivable
benefit to be derived by those on whom it falls? As noted
in Philippine Sugar Centrals Agency, the money derived from
wharfage dues (and, give may add, from berthing charges)
constitutes a trust fund for the purpose of acquiring and constructing
wharves by the Government. The Government maintains bodies of
water in navigable condition and it is to support its operations in this
regard that dues and charges are imposed for the use of piers and
wharves regardless of their ownership. Otherwise stated, these dues
and charges are in the nature of taxes which are collected by the
Government to support its operations in relation to customs affairs. 8
Indeed, the issue is not one of first impression. In Luzon Stevedoring
Corporation vs. Court of Tax Appeals and Commissioner of
Customs,9 where the factual setting is similar to that in the case at
bar, this Court, speaking through Mr. Justice Conrado V. Sanchez,
unequivocally sustained the Government's right to collect berthing
charges even if the pier be privately owned, in the following words:
Adverting to the terms of the law, it is quite apparent that the
government's right to collect berthing charges is not planted upon
the condition that the pier be publicly owned. The statute employs
the word pier without more. Nothing there said
speaks private or public pier. Where the law does not exact the
nature of ownership as a condition, that condition should not be read
into the law. We are not to indulge in statutory construction. Because
the law is clear. Our plain duty is to apply the law as it is written....
It thus results that a vessel which as much as comes within any slip,
channel, basin, river or canal under the jurisdiction of any port in the
Philippines is subject to the charge. It is unnecessary that that vessel
be moored to a pier or to a berthed vessel. But why? Because port
facilities afford benefit to the vessels mentioned in the statute; and
the maintenance and development of the port, and the purchase,
conditioning and replacement of the equipment thereof all to
enable such vessels to make use of pier or wharf are the concern
of the government. 10 Petitioner's vessels enjoy the benefits of such
governmental undertaking. Petitioner should thus contribute thereto.
ACCORDINGLY, the decision dated January 28, 1965 of the Court of
Tax Appeals is affirmed, at petitioner's cost.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ.,
concur.
Concepcion, C.J., concurs in the result.
Fernando, J., is on leave.