CTA Case No. 614 (Decision)

MPUBLlC O.t" i Hf' tllLII-'Yl.N., COURT OF l'AX AP.PEAU UAND...4 HER.MENEGI IDO HOS LES 1 LF EDO C. T . A. Ci-lSE �'-lO . 614 Mo S 'HOS, NlAXI Hl-JO SALAr~WI T; ivW'lli L OOlPJ-JO, ER.r-Jt:STO MEDR NC , HODOLFO SA TOS, PA W ' TOS, J 'lTO~UO PERTIE.rlrl.A , JEHCESIAO P GAN , JOSE PIMENTAL , OODOFREDO F . EtAJ ' O, JOSE CARANDJ,HG, .FOLICAKFO MED. NO , CdiOOw(O ErliviT , VICEl~TE DE LAS LAS , VICENTE OHDI1~ -, IO, NIC NO . TOLENTil 0 and BRAUlA ORDINAI-UO, Petitioners , - versus - OJMivliSSIONER OF INTEl NAL REVENUE , Respondent. X- - - - - - - ~� - - - - - - X DECISION 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 unc ontroverted 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- s u;ns of if. 75 o00 eac h , a s occupation tax allegedly due in 1957 , and ~25 . 00 eac h , as defic ienc y occupation tax alle- gedly due in 1956; and from petitioner s ~ic anor Tolentino and Braulia Ordinaria , who are registered nur s e s, the re s- pe ctive s ums of 50 . CO eac h , as occupation tax allegedly due in 1957 , and ~25 . 00 eac h , as defic ienc y occ upation 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 exce ss of the rates in effec t prior _ ~ to January one , nineteen hundred and fifty-seven , s hall oe refunded or credited to the taxpayer c oqc erned su jec t to the pr ovision s of s ec tion thr ee hundr ed and nine of this Code� , petitioners, on November 7 , 1957 , filed with re s pondent c laims for refund of the defic ienc y occupation taxe s c ollec ted from and paid by them for t he c alendar year 1956. ~ithout waiting for r e s pondent 's action on their c laims for refund , petitioner s, on January 9 , 1959 , c ollec tively filed the in stant petition for r efund in pur- su anc e of Section 306 of the Tax Code . However, in the s tipulation of fa c t s, re s pondent agreed to r efund the �full amount claimed by eac h petitioner , except Nic anor Tolentino and draulia Ordinar ia , to whom he agreed to r efund ~26oCO eac h . Ina smuc h a s r e s pondent agreed to refund to petitioners Her menegildo Ro s ale s, Alfr edo Santos, Maximino Salanguit , Manuel Solano , r ne s to Medr ano , rlodolfo Santos, Paolo Santo s, hntonio Per tierr a , ~enc e s lao afigan , Jo s e Pimentel , Godo- f r edo F. Tr aj ano , Jo s e Car andang , Polic arpo viedr ano , Cr i s e- gone Er mita , Vic ente de las Al as 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 con sideration 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 No s. 42 (whic h took effe ct on Qcto~er 1, 1946) and 438 (whic h took effe c t 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 (whic h took effec t on June 22, 1957) , all of the Tax Code , the pertinent provisions of which read as followsa 11 SEC. a:n . Amount of privilege tax on oc cu- pation . - Privilege taxes on occupation shall oe collected as follows , the amount stated being the sum due for the whole year whic h may be paid annually or semi-annually& il (a) Lawyers , medic al 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- 11 SC.C. 182. Fixed taxes - X X X (b) un occu pation . - 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, electr ical , 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 urt her, That an y amount c ollected in exce ss of the r at e s in effe ct pr ior-ro-J anu a~ on e . nineteen hun- dr ed and f i f ty-s even s hall be r efunded or credit ed to t he t a xpa yer c oncer ned su bje ct t o t he pr ovi s ion s of s ec tion thr ee hundred and nine of t his Code . x x X11 (As amended by Sec. 1 ~ Hepublic Act No . 1856, ) (Italics supplied .; Petitioners c ontend that r egister ed nurs e s wer e not subj ec t to occupation tax in 1956 , for the rea s on t hat the profe ss ion of r egis ter ed nur s e i s not among tho s e enume - rated and made subje c t to occupation tax under Section an of the Tax Code . Acc or dingly, it i s only under Republic Act i'lo . 1612 and 1856 , whic h r epealed s aid Se C( tion a:Jl , that regi stered nur s e s wer e made liable for the payment of occu pat ion tax . Re s pondent, however , maintain s that ~e - public Ac t No . 1856, merely modified Hepublic Ac t ~o . 1612 by rnaking the increa s e s in the rate s of tax effe ctive on Janu ar y 1 , 1957 in stead of Augu st 24 , 1956. It i s urged that this modific ation did not po stpone the taxability of occupat ion s newly inc luded (regis tered nur s ing oeing one) among the taxable occupat ion s oy Republic Act No . 1612. Con s equently , it i s pretended that registered nur s e s wer e liable for the occupation t ax for the year 1956 in tne � amount of 24 . 00. It mu s t be noted that Defore it s repeal by Republic ct L'W . 1612, whic h took effe ct on Augu s t 24 , 1956 , Sec- tion :201 of the Tax Code did not provide for the impo s ition of privilege taxe s on regis tered nurs e s. rlepublic Act Ho . 1612 added the occ upation of r egis ter ed nurse s to the tax- a.ole occupations, and impo s ed a pr i vilege tax ther eon in the amount of ~50 . CO . The latter statute did not expr e s sly

DECISION - C. I . A. CASE l'-!0 . 614 - 6- enjoin its retro s pective operation . However , Repuclic Ac t No . 1356 modified Republic ct No. 1612 cy pr oviding that the rates of taxes indic ated therein , which are the same a s t ho se imposed ny Republic Act l~o. 1856 , were ef- , fe c tive January 1 , ~957 , and by authoriz ing the re fund or credit to the taxpayer of any amount c ollected in exce ss of t he r ate s D� eti0Ct priur to January 1 , 1957 . Ubviously , there was no law impo sing privilege taxes on registered nur ses in the year 1956. To uphold that, oy virtue of Re - public ~ct Nos . 1612 and 1856 , re gi stered nurses were liable to t he payment of privilege taxes in 1956 would be applying these c ongressional 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 juris diction that ula1.vs have no retroac tive effec t unle s s t he c ontrary is provided (F ilipina s Campania de Seguros v . Colle ctor , C. I . A. Ca s e No . 447 , r~o v. 22 , 1958 , c iting nrt . 4 , Civil Code of t he Phil . ; Manila Trading~ Su pply 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 (exc ise or privilege) tax, unle s s the language of the statute demands or expresses that it shall have a retroactive effect (Lorenzo v . Posada s, 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 petitioner s Wic anor 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 Philippine s, 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� � ~'E 1 � 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 c laim 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 c onc eding 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 performanc e 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 suc h pe cuniary 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 , Ma xiqlino 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 eac h of the petitioners t-.lic anor Tolentino and draulia Ordinario t e sum of 3:-50 . 00 , illegally

DECISivi'IJ - C. T.. � <.,; SE 1 o 614 -9- collected from them as deficiency occupation taxes for ~� the ta).(aole y7a/ 1956. ithout special pronou cement as to costso fi.J ORDERED � JVianila , March 16 , 1960 . ~~~ Presiding ~udge I concur& I a.ostains