Hermenegildo Rosales, et al. vs. Oommissioner of Internal Revenue

DECISION

C. T. A. Ci-lSE •'-lO . 614 Petitioners seek to recover the total amount of ~50 .00 assessed against and paid by them as deficiency occupation taxes for the tax year 1956. They also ask that respondent be ordered to pay them the sum of ax:>oOO as expenses of litigation and attorneyt s fees. The uncontroverted facts appear in the stipulation of facts and pleadings submitted by the partiesa

Feti-

tioners are professionals employed as mechanical engineers , civil engineers , physicians and registered nurses in the

Central Azucarera de Don Pedrop

~ asugou , Batangas .

On January 15, 1957, respondent, thru the 1v1unicipal Treasurer of Nasugbu, Batangas , collected from petitioners Hermene- gildo Hosales , Alfredo ~ . Santos , Maximino Salanguit , Manuel Solano $ Ernesto Medrano , Rodolfo ~antos, Pablo Santos , Antonio Pertierra , Henceslao -'angan, Jose Pimentel, Godo- fredo 1.:; o Traj ano ~ Jose Carandang , olicarpo Iviedrano , Criso- gono Ermita , Vicente de las las and Vicente Ordinaria , who are either engineers, lawyers,1or physicians, the respective

DECISIOi'J -

C. T. A. c · SE l'lCJ . 614 - 2 - su;ns of if. 75o00 each, as occupation tax allegedly due in 1957 , and ~25 . 00 each, as defic iency occupation tax alle- gedly due in 1956; and from petitioner s ~i c anor Tolentino and Braulia Ordinaria , who are registered nurses, the res- pective sums of 50.CO each , as occupation tax allegedly due in 1957 , and ~25 . 00 each, as deficienc y occupation tax for 1956.

By vir tue of Republic Act No . 1856 ( amending Sec. 182 ( B of the Tax Code) , whic h provides nx x x that any amount collected in excess of the rates in effect prior _ ~ to January one , nineteen hundred and fifty-seven , shall oe refunded or credited to the taxpayer coqcerned su ject to the pr ovisions of section thr ee hundr ed and nine of this Code• , petitioners, on November 7, 1957 , filed with re spondent claims for refund of the defic ienc y occupation taxe s collected from and paid by them for t he calendar year 1956.

~ithout waiting for r espondent 's action on their claims for refund , petitioners, on January 9 , 1959 , collectively filed the instant petition for r efund in pur- suance of Section 306 of the Tax Code . However, in the stipulation of fact s, re spondent agreed to r efund the ·full amount claimed by each petitioner , except Nicanor Tolentino and draulia Ordinar ia , to whom he agreed to r efund ~26oCO each.

Inasmuch as r espondent agreed to refund to petitioners Her menegildo Rosales, Alfr edo Santos, Maximino Salanguit , Manuel Solano , r ne sto Medr ano , rlodolfo Santos, Paolo Santos, hntonio Per tierra , ~en c e s lao afigan , Jose Pimentel , Godo- f r edo F. Tr aj ano , Jose Car andang , Policarpo viedr ano , Cr i se- gone Er mita , Vicente de las Alas and Vicente Ordinar ia , the

DECISION -

G.T.A.

SE 1'10 . 614 - 3 - full amount individually claimed oy each, and to peti- tioners Nicanor Tolentino and Braulia Ordinaria only ~26.00 each, the remaining issues for our consideration are as follows:

1. Whether or not registered nurses were liable for the payment of occupation tax in the amount of ~24 . 0~ during the taxable year 1956;

2. Whether or not petitioners are en- titled to an award of actual expenses of li- tigation and attorney 1 s fees.

The law involved in the resolution of the first issue is found in Sections 2Jl, as amended oy Republic Act Nos. 42 (whic h took effect on Qcto~er 1, 1946) and 438 (which took effect on June 7, 1950) and 182 (B) Lformerly Section 2:)1 , as amendeQ7', which is an insertion of rlepublic Act No. 1612 to Section 182, (which took effect on August 24, 1956) and which was later amended by rlepublic Act No. 1856 (which took effect on June 22, 1957) , all of the Tax Code , the pertinent provisions of which read as followsa 11SEC. a:n. Amount of privilege tax on occu- pation. - Privilege taxes on occupation shall oe collected as follows , the amount stated being the sum due for the whole year which may be paid annually or semi-annually& il

(a) Lawyers , medical practitioners , land surveyors, architects , certified public account- ants , civil, electrical chemical, mechanical or mining engineers , insurance agents and sub- agents, veterinarians, dental surgeons~ opti- cians, professional appraisers or connoisseurs of tobacc o and other domestic or foreign pro- ducts , licensed ship masters , and marine chief engineers , fifty pesos. (As amended by Republic ct l\Joc. 438. )

X

X

X

X

X

(b) Chief, mates , marine, second engineers, pharmacists , chiropodists, tattooers, and mas- seurs, twenty- four pesos.

(As amended by Sec .

4, Republic Act No . 42. )u

DECI SI01'J -

C. T ••

SE • • 614

- 4 - 11SC.C. 182. Fixed taxes -

X X X

(b) un occupation. - Taxes on occupation shall oe collected as follows, the amount stated being the sum due for the whole year:

(1) Lawyers , medical practitioners, archi- tects , interior decorators , certified public accountants , civil, electrical , chemical, me- chanical or mining engineers , insurance agents and suoagents, veterinarians, dental surgeons, opticians , commercial aviators , professional appraisers or connoisseurs, of tobacco and other domestic or foreign products , licensed ship masters and marine chief engineers , ~­ venty-five pesos.

X

X

X

X

X

(2) Land surveyors, chief mates , marine second engineers , pharmacists, registered nurses , chiropodists, tattooers, masseurs , peolotaris, jockeys, professional actors or actresses, sta~e performers and hostesses , fifty pesos.n (As amended by Sec. 4, Hepuolic Act No. 1612. )

(Underscoring supplied.)

•'SEC. 182. fixed taxes -

x x x

(B) On occupation - Taxes on occupation shall be collected as follows , effective J.§n- uary one, nineteen hundred and fifty-sev~u, the amount stated being the sum due for the whole year:

(1) Lawyers , medical practitioners, archi- tects, interior decorators , certified public accountants , civil, electrical , chemical, me- chanical or mining engineers , insurance agents and subagents, veterinarians, dental surgeons, opticians , commercial aviators, professional appraisers or connoisseurs of tooacco and other domestic or foreign products , licensed ship masters and marine chief engineers, seventy- five pesos .

X

X

X

X

X

( 2) Land surveyors, chief mates, marine, second engineers, pharmacists , registered nurses , chiropodists, tattooers , masseurs , pelotaris, jockeys, professional actors or actresses, stage performers and hostesses , fifty pesos.

•

DECISIOl'J -

C. T. A. C 'SE i~O . 614 - 5 - x x x: Pr ovided , f urther, That any amount collected in excess of the r at es in effect pr ior-ro-J anu a~ on e . nineteen hun- dr ed and f i f ty-seven shall be r efunded or credit ed to t he t axpayer concer ned subject t o t he pr ovi s ions of section thr ee hundred and nine of t his Code. x x X11 (As amended by Sec. 1 ~ Hepublic Act No. 1856, )

(Italics

supplied.;

Petitioners contend that r egister ed nurses wer e not subj ect to occupation tax in 1956, for the reason t hat the profession of r egister ed nur se i s not among those enume- rated and made subject to occupation tax under Section an of the Tax Code .

Accor dingly, it i s only under Republic Act i'lo. 1612 and 1856, which r epealed said Se C(tion a:Jl , that registered nur ses wer e made liable for the payment of occupat ion tax.

Respondent, however , maintains that ~e - public Act No . 1856, merely modified Hepublic Act ~o . 1612 by rnaking the increases in the rate s of tax effective on Januar y 1, 1957 instead of Augu st 24 , 1956. It i s urged that this modification did not po stpone the taxability of occupat ions newly included (registered nurs ing oeing one) among the taxable occupat ions oy Republic Act No. 1612. Consequently, it i s pretended that registered nurses wer e liable for the occupation t ax for the year 1956 in tne amount of 24.00.

It must be noted that Defore its repeal by Republic ct L'W . 1612, which took effect on August 24, 1956, Sec- tion :201 of the Tax Code did not provide for the impos ition of privilege taxes on registered nurses. rlepublic Act Ho . 1612 added the occupation of r egister ed nurses to the tax- a.ole occupations, and imposed a pr i vilege tax ther eon in the amount of ~50 . CO .

The latter statute did not expr es sly

DECISION -

C. I . A. CASE l'-!0 . 614 - 6 - enjoin its retrospective operation.

However , Repuclic Act No . 1356 modified Republic ct No. 1612 cy pr oviding that the rates of taxes indicated therein , which are the same as t hose imposed ny Republic Act l~o. 1856, were ef- , fective January 1, ~957 , and by authorizing the refund or credit to the taxpayer of any amount collected in excess of t he r ates D• eti0Ct priur to January 1, 1957. Ubviously, there was no law imposing privilege taxes on registered nurses in the year 1956.

To uphold that, oy virtue of Re - public ~ct Nos. 1612 and 1856, registered nurses were liable to t he payment of privilege taxes in 1956 would be applying these congressional acts retroactively. ~owhere in the said statutes can we find that the taxes t herein provided were imposable in 1956.

It is well settled in this jurisdiction that ula1.vs have no retroactive effect unles s t he contrary is provided (Filipinas Campania de Seguros v. Collector , C. I . A. Case No . 447 , r~o v. 22, 1958 , citing nrt . 4 , Civil Code of t he Phil. ; Manila Trading~ Supply Co . vs . Santos & Saez , 66 Phil. 237; La Previsora Filipina vs. Ledda , 66 Phil. 573)~ and "a statute should be considered as prospective in its operation whether it enacts , amends or repeals an (excise or privilege) tax, unles s the language of the statute demands or expresses that it shall have a retroactive effect (Lorenzo

v. Posadas, 64 Phil. 353 a-t 366- 367) . u LFilipinas Campania de Seguros v. Collector , icid~ There being no legal oasis for the imposition of occu- pation taxes on registered nurses in the year 1956, we find and so hold that petitioners Wicanor Tolentino and Braulia

DECISION -

C. T. A.

c.:~SE 1~0. 614 - 7 - Ordinaria were not liable for occupation tax during the said year .

We will now determine the second issue of whether or not petitioners are entitled to an award of actual ex- penses of litigation and attorney' s fees. etitioners also contend that , by virtue of Article 22.)8 of the Civil Code of the Philippines, they are entitled to recover from respondent actual expenses and reasonable attorney' s fees . This contention is oased upon the charge that respondent failed to act upon their claims for refund within a rea- sonable time, t hus compelling them to litigate and incur expenses .

On the other hand , respondent urges upon us that his inability to act on the claims for refund was due to petitioners ' failure to submit the original receipts of their payment of occupation tax for 1956; that attorney' s f fees cannot be recovered against the government unless there is a constitutional or statutory provision providing for such award; that there was no clear and convincing proof of the extent of the actual expenses of litigation and attorney' s fees incurred oy petitioners; and granting arguendo that respondent acted arbitrarily in refusing to credit or refund the amounts claimed, the government i s not liacle for such refund.

i~ere omission of respondent to act on petitioners ' claims for refund within a reasonaole time from receipt by the former of said claims does n0t entitle petitioners to an award of actual expenses of litigation and attorney' s fees. While Section 306 of the Tax Code autho±izes a taxpayer to

DECISIO\J -

C. T ••

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• 614 - 8 - claim for the refund of any internal revenue tax alleged to have oeen erroneously or illegally collected, "~owhere and in no wise does t e law (Section 306, Kevenue Code) imply that the Collector of Internal rl.evenue must act upon the claim x x x. u F. J .

~ie er Co., Ltd. vs . David , G. rl .

1 o. L- 5163, pril 22, 1953, 49 O. G. No . 5, p. 1852. ) Moreover , even conceding arguendo that respondent acted arbitrarily in refusing to act on the claims for refund within a reasona.ole time , the government is not liable for the neglect or omissions of its officers or agents in the performance of their duties (Lung Chea , ..... ung Kee ex Co. v. Wrig· t , 46 · il. 44) .

Fi ally, even conceding furt er that the government is lia.ole for actual expenses of litigation and attorney' s fees , petitioners failed to prove t e alleged expenses and fees .

These expenses and fees are in t:e nature of damages , and 0 one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he as proved. 11 (See rlrt . 2199 , Civil Code of the Philippines . ) .

hoK TI-ffi FORE I1 .G O..il\JSID · TICN.S , the responde t is here.oy ordered to refund to each of the petitioners Herme- egildo Rosales , lfredo tvi. Santos , Maxiqlino Salanguit , Jvtanuel Solano , Ernesto Iv1edrano , Rodolf o Santos , ablo !;)antes , Antonio Pertierra , venceslao afigan , Jose irnentel , Godofredo F. Trajano , Jose Carandang , Policarpo Medrano , Crisogono Ermita , Vicente de las Alas , Vicente Ordinario, the sum of ¥25 .00 , and to each of the petitioners t-.licanor Tolentino and draulia Ordinario t e sum of 3:-50.00 , illegally DECISION ~.

C.T.A. CASE NO. 614 ~ 9 collected from them as deficiency occupation taxes for the taxable year 1956, Without special pronouncement as to costs.

ZOE

Presiding Judge

I concurs ssociate Judge I apstains ROMAN M. UMALIT

Associate Judge

en