[ G.R. No. 4393. January 08, 1909 ] 12 Phil. 397
[ G.R. No. 4393. January 08, 1909 ]
LA COMPAÑIA GENERAL DE TABACOS, PLAINTIFF AND APPELLEE, VS. THE CITY OP MANILA, DEFENDANT AND APPELLANT. D E C I S I O N
TORRES, J.:
On the 21st of March, 1905, counsel for the Compañia General de Tabacos filed a written complaint against the city of Manila, claiming the refund of the sum of P88,698, illegally collected from said company, together with legal interest thereon from April 13, 1904, until the same should be settled; the company also claimed the return of P45,746.97, with legal interest thereon, which it had paid in excess taxes; at the close of the trial, the Court of First Instance rendered judgment on the 11th of September of said year, and sentenced the defendant city of Manila to refund the first-mentioned amount, with legal interest thereon from the date of the complaint with the costs; as to the second amount claimed, the defendant was absolved, because it was not shown that the plaintiff had paid it to the defendant city. The defendant excepted to the above judgment, and this court, on February 14,1907, reversed the same and directed that a new trial be held in order that the plaintiff might prove which portion of the so-called illegal taxes had been actually collected and received by the city of Manila. The case was reopened, and the new trial held in the court below on the 5th of June, 1907; the testimony of witnesses was taken, and the documents marked A, B, C, D, and E, exhibited by the plaintiff, to which the adverse party objected, were made of record, and the trial judge, rendered a new judgment on the 28th of September, 1907, ordering the city of Manila to pay the Compañia General de Tabacos the sum of P88,698 with legal interest thereon from the 13th of April, 1904, and costs. To said judgment the defendant excepted and in addition moved for a new trial; the motion being overruled, the petitioner also excepted, and the bill of exceptions was presented and approved on the 22d of October, 1907, In order to be able to declare as unjust the collection and payment of the sum of P88,698, the refund of which is herein claimed, it becomes necessary to ascertain whether the plaintiff company did unduly, and for a second time pay the said amount after having already paid it or whether it was compelled to do so without the existence of any legal provision authorizing such collection, or to compel it to pay the same, either as a tax on its profits, or as an industrial tax. The matter at issue is the industrial tax established in this country under the general regulation approved by the royal order of June 19, 1890, which regulation, together with its tariffs, was enforced until the 1st of July, 1904, when it was repealed by Act No. 1189 7of the Commission, dated July 2 of the said year; and based on the provisions of the said regulation, the return of that sum, which the plaintiff company had paid as a tax of 5 per cent on the profits of its business during the years 1901, 1902, and 1903, is demanded in the complaint. The action is brought against the city of Manila, notwithstanding the fact that the amount was paid to the Collector of Internal Revenue, or the Administrador de Hacienda Publica for the reason that the money was turned over to the municipal treasury of Manila. It is absolutely necessary for the proper settlement of this litigation, that it be effectively shown that, according to the terms and provisions of the aforesaid regulation, the taxes denominated therein as industrial, urbana, and tax on profits, are separate and entirely distinct taxes, involving diverse conceptions and meanings in their administrative economic consequences and effects, without it being possible ever to confuse them or mistake the one for the other, because the taxpayer, who is compelled to pay one or all of them, can in no manner evade their imposition and payment by “computation,‘y except in the manner prescribed and authorized by the said regulation. The generic denomination of the various taxes therein established is industrial taxation, but the general conception of the tax does not exclude the diversity and special nature of its imposition on each of the various branches of industry, commerce, professions1, arts or occupation, according to their respective classification in the tariffs. (Articles 1 and 22 of the regulation.) Although the 5 per cent tax on the net profits, which banks and joint-stock companies were obliged to pay, is a tax of an industrial character, it can not in any way be mistaken for the other industrial taxes mentioned in the general rules and enumerated in the tariffs. Hence, a taxpayer who has paid the said tax of 5 per cent can not allege exemption from payment of the industrial tax for carrying on the industry or commerce in which he is engaged. Article 23 6i the aforesaid general rules reads:
“Unless otherwise provided for, the person carrying on in the same premises, shop or store, two or more industries trades or businesses included in the same tariff, will pay tax on the one subject to the higher rate; if the industries, trades or businesses should be governed by different tariffs, the taxpayer will be required to obtain a license for the highest taxable industry, trade or business, in each tariff, in which he may be engaged. “If the industries are carried on in separate stores, shops or premises, tax chargeable to the different industries will be collected, even if they should belong to the same tariff.”
The plaintiff acknowledges that, as a joint-stock company, according to the said general rules, it was obliged to pay 5 per cent tax on the net profits distributed to its stockholders, in accordance with its respective balance sheets, under the provisions of paragraph 4 of tariff 1 of the industrial tax, the said company not being one of those exempted by No. 58 of the table of exemptions. The plaintiff also acknowledges that, as a corporation or a joint-stock company, it was under obligation to pay the tax indicated in the said tariff by reason of the commerce or industry carried on by it through its branch offices or agencies in the different provinces of this archie pelago, as prescribed in the respective tariff, class, number, rate and item. The plaintiff likewise acknowledges that it was obliged to pay the city tax (contribucion urbana), and subsequently, upon the abolishment of the latter by Act No. 183 of July 30, 1901, the land tax on the real estate in its possession, although, according to the note at foot of the said paragraph 4 of tariff 1, the city tax which banks and mercantile associations have paid on their realty, is to be computed as a part of the tax collectible on their dividends. On these suppositions, what was the motive for the claim set up by the Compañia General de Tabacos against the city of Manila, into whose treasury the money was paid, and, as claimed, improperly paid? The motive is, and this is the question set up by the plaintiff, that in its opinion, in the amount of the 5 per cent tax imposed upon its dividends, there should be computed, not only the total urbana tax, and subsequently the land tax paid in lieu thereof, but also the amount of the industrial tax paid by it in the provinces through its agencies or branch offices, alleging that, as a joint-stock company or corporation, it should pay but one tax only; that, therefore, in addition to the urbtma tax, the total industrial tax paid by it for carrying on commerce and industries in several provinces of the Archipelago should be computed in the 5 per cent paid on the net profits. The plaintiff has not cited any article of the regulation which authorizes this last computation. Before proceeding further, and before inquiring whether or not the Compailia General de Tabacos has any legal foundation for its claim, it should be stated that the municipality of the city of Manila was only constituted and established on the 7th of August, 1901; therefore, the latter can not be held responsible for sums collected, although improperly, by its predecessor prior to that date, and that notwithstanding the fact that such sums were ultimately deposited in its treasury, the truth is that the money was actually paid to the Administracion de Hacienda Publica or the Collector of Internal Revenue of Manila, upon an examination of the annual reports, accounts, and balance sheets of the taxpaying company, without any intervention on the part of the municipality. (Article 36 of the General Rules.) Upon an examination of the one hundred and eleven articles of this regulation, the only law applicable in this case, the seven tariffs with their respective explanations, and the table of exemptions attached to the said regulation, we fail to find anything which provides either explicitly or by implication for the alleged computation of the total amount of the industrial tax paid by the plaintiff company in tlie 5 per cent tax on the net profits to its stockholders, so that the said company should pay the Government but one sole tax which is the 5 per cent tax alluded to and that as, according to the law, the city tax and subsequently the land tax was also computable in this tax, by a wide and liberal interpretation of the regulation this new tax should also be computed in the aforesaid tax of 5 per centum. The theory of a sole tax probably pursued by the plaintiff, dreamed of by some of the economists and financiers of the civilized world, does not appear to have been adopted in any part of the said regulation of which articles 8, 13, 23, 24, 29, and others, and the tariffs annexed thereto fully demonstrate the system established of compelling the different manifestations of commerce, industry, art, profession or occupation not included in the table of exemptions, to sustain the burdens of the government. If the only law that governs this case does not authorize the computation of the industrial tax in the amount of the 5 per cent tax imposed upon dividends to be divided among the partners, which is the theory advanced by the plaintiff, as expressly provided in reference to the city tax, there is no legal authority for acceding to the prayer of the complaint. Even though the 5 per cent tax payable on dividends of companies or mercantile associations to which paragraph 4 of tariff 1 of the regulation refers was denominated an industrial tax, it would be no reason why the amount of the industrial tax paid by the same under different contributive items should be computed in said tax, because according to the said regulation, corporations or individuals in these Islands engaged in any industry, commerce, profession, art, or occupation not expressly exempted, were obliged to pay it. (Article 1 of the regulation. ) It is a proven fact, which the parties have admitted, that the plaintiff company paid into the Administracion de Hacienda Publica de Manila (internal revenue office), and not to the municipality, the sum of 88,698 pesos as a tax of 5 per cent on the net profits distributable among its stockholders, corresponding to the years 1901, 1902, and 1903; the collection was lawfully made in this city for the reason that the administration and management of the said company resided in this city, and because the law did not impose upon the company the obligation to liquidate and pay said tax of 5 per cent in the provinces, by means of its agencies, which would have been an absurdity. (Article 36 of the said regulation.) In the said sum there should only be computed the 83,307.89 pesos which the plaintiff company paid first as urbana and later as land tax corresponding to the year 1901, 22,103.18 pesos; to the year 1902, 43,520.49 pesos; and to the year 1903, 17,684.22 pesos, the same being the only tax allowed by the regulation, according to the note at foot of No. 4 of tariff 1; the computation should, however, be now made upon liquidation by the Bureau of Internal Revenue. Under no consideration can the pretended computation of the amount paid as industrial tax in the total amount of the 5 per cent tax on dividends distributed among the stockholders of the plaintiff company be held to be in accordance with law, because there is no legal provision authorizing it. This second computation is inexplicable and can not be reasonably inferred from the contents of the said regulation and its tariffs. Otherwise one sole tax would have been established, and the administration of the revenue would have been simpler, easier and more expeditious. On the other hand the record does not show that any amount was illegally collected from the plaintiff by way of taxes. If no computation was made of the amount paid by it firstly as urbana and subsequently as land tax, as part of the tax due on its dividends, it was and is entitled to claim it and to obtain the refund thereof. In order to arrive at this declaration of the only right that the plaintiff has, it is not necessary for this court to consider the modifications introduced by the laws in force enacted by the Commission with regard to the disposition of funds collected by the Bureau of Internal Revenue, for the reason that such action pertains to the Department of Finance, and the final settlement of this contention can easily be reached through the administration of the law by the Bureau of Internal Revenue from which the city received the amount whose return is now claimed. Aside from this, it should be noted that in this decision, the deduction or computation of the total amount of the urbana or land tax paid by the plaintiff company on its real property, situated both in this city and in the provinces from the aggregate amount of the 5 per cent of the net profits of the company is considered to be in accordance with law, for the reason that the said 5 per cent tax comes from all the profits obtained in its general business throughout the Archipelago. Therefore, by virtue of the considerations above set forth it is our opinion that it should be held, as we do hereby hold: First, that the amount of the industrial tax paid to the Administration by the Compaña General de Tabacos can not be computed in the 5 per cent tax on its dividends; second, that the only tax that should be computed therein, according to the general rules approved by royal order of June 19, 1890, was the urbana (city tax), and later the land tax which substituted it; and third, that in the sum which is the basis of the complaint, and which is the aggregate of the 5 per cent tax on dividends, there should have been computed the urbana and land taxes paid and corresponding to the three years 1901, 1902, and 1903; and, in consequence thereof, we must and do hereby order the Municipal Board of the city of Manila to refund to the plaintiff company the sum of P83,307.89, Philippine currency, which should have been computed in the amount claimed, or deducted therefrom. The judgment appealed from is thus affirmed in so far as it agrees with this decision; no special ruling is made as to the costs of either instance. So ordered. Mapa, Johnson, and Tracey, JJ., concur.