CTA Case No. 994 (Decision)

JOVITO JUA.HBZP'etitioner ,' - versus - COJ.U'liSSIOllf.6rl OF IN'l'GHNii.L R.t:VGi'.flJE I�!BL.::!!CIO 11 . DOHL~GO , Hespondent . X- - - - - - - - - - - - - X DE C I S I 0 N This is a petiti on for review of a de c ision of the respondent Commissioner of Internal Hevenue holding that petitioner Jovito Suarez is an independent labor cont ractor vri thin the purview of Section 191 of the Tax Code , and therefore liable for the payment of the total amount of 1~95 . 92 , as fixed and percen~age t~xes , in- clusive of surcharges and compromise penalties for the years 1956 and 1957 . (Exh. 3 , p . 4 , CTA rec . ) The petitioner herein , J ovi to Suarez , is a member of a group of laborers contracted�by Central Santos - Lopez Co . , Inc . , for the unl oading and loading of sugax at its warehouse in Huelle Loney , Iloilo City . For rea- sons of conveniEn ce and expediency so as not t o deal individually wi t h each of the laborers , Central Santos - Lopez Co...,, Inc . requested its lab orers to name one person from runong themselves to be their representative i n the signing of contracts and other business�transac tions related to the unloading and loading of sugar at the 1Jlarehouse of their employer . In compliance ,.,i th said r e quest , the labo~.'ers appointed petitioner Jovi to Suarez

. ' ' Dl!:CI&I01~ - v . 'I' . a . G..:1.1SJC.: t.O . 994 ~2- as their representative . (Exhs . D & E , PI . 34- 36 , CT re c. ; Exh . 2 , p . 11- 13 , BIR rec . ) Purs uant to the above mentioned arrangement , the petitioner , on September 6 , 1955 , entered into a con- tract with Central Santos - Lopez Co ., Inc ., vlherein the latter agreed to pay seven centavos (P0 . 07) for each sack of s ugar unloaded or loaded at its vrarehouse in i�1Uelle Loney , IloiJ..o City . (Bxhg . A & A- 1, p . 7, 1D.-l rec . ; p . 31, CTA rec . ) It Hlay also be stated here ti-:1at in the performance of t heir "limrk , the laborers were not allowed to loiter inside the warehouse , and were to get orders f ro;;l and cooperate vii th .Fernando Abilo, the ware - houseman of Central Santos - Lopez Co . , Inc ., but peti- tioner Jovi to Suarez vias to supervise the vJOrk of the labor�ers . (l1xh . B, p . 32, __;'l'A rec .) For the \vork done , the laborers were paid weekly, through the petitioner . Central Santos - Lopez Co ., Inc ., prepar�ed and issued the pay checks in the name of the petitioner, who �submitted the statements attesting to the number of sacks loaded or unloaded , si6nec1 the cor - responding vouchers, cashed the checks and distributed equally the lveekly payments among the labore:~ s . As his compensation , the petitioner received only an a mount equal to the share of one laborer . (pp . 14-17, t . s . n . ) For the years 1956 and 1957 , Central Santos - Lopez Co ., Inc ., paid to said laborers the amounts of ?8,275 . 80 and l-'12 , 255 o31, respectively , for the unloading and loading of sugar at its 1varehouse . (par. 2 , Partial .::>tipulation of Facts , he::.�ein after referred to as Sti- facts , pp . 29 - 30 , CTA rec .) Inasmuch as the petitioner

lJ.8CloiO} 0 . J.l . 1\. . ~&:l.u ..Jll . 994 -3- did not recurn for taxation purposes the said amount s , tne r espondent ; t l~u the bi~ Regional Di re c tor of Iloilo Ci ty , on February '7 , 1958 , ass e ssed abainst and demanded from him the t o tal s um of 1995. 92 , as� fixed and pe r c entage taxes , inc lus i ve 0.1. surcharge and. compror,lise penal ties . ( p � 3 , Stifacts ; ~~h . 3, p . 4, C1A rec . ) On iebruary 27 , 19)8 , tLe petitioner protested against the assessuent ana requested for its reconsidera- t ion . ( ~h . C, p . 33 , v'l'Arec . ) hO\ve Ver , instead of a ct ing favorably on the request for re consideration and reinvestigation , the respondent , on Dece.nber ? , 1960, r e i terated his ae,nand i'or the pa:rment of the total a tilount of l~95 . 92 . ( p . 4 , [:)tifacts; .wxh . 4 , p . 6 , C'l'1 re c. ) �.ten.c e , t his appeal . �he onl y i ssue � to be decided in this case is whe- ther or not the petit ioner is an independent labor con- t rac tor wi t hi n t he purview of Section 191 of the Tax Code , and theref ore lioble f'or t he payment o :.~. the c ontractor ' s , fixed and per centage t axe3 . Tlw peti t ioner maintains tha t he is not and should not be classifi ed as a contrc..ctor because his job was s i mpl y to represent his grou p of lato rers �v1hen he signed t he cont ract of Septen1ber 6 , 19 55 per ar r�aDgement '~lith Central 3 c...�J.tos - Lopez Go . , Inc ., and that he did n o t act nor derive benefits or profit s as would a real contractor, being just a mer�e ember o:t� ti~e group partic i pating equal.l.y "vli t h his f e llow laborers in the r.ayi. e,;.1ts made by Ce..1tral antos - Lo1:e z Co ., Inc . for their loadil1g and. unloading

DbGlbiOl~ - ._; . 1� ..ti . ._;,J.SE l\0 o 99~- n -� 4- - job . ( p . 3 , I>IeHtorandum for Petitioner , pp . 38 - 43 , C'J:'A rec . ) 'I'lle respondent on the other hand avers tha-c the petitioner is an independent contractor so that the gro ss receipts he r ealize d fro~ the performance of the terms of the contract betv-reen him and the Central Santos - Lopez Co . , Inc . , is subject to the contractor ' s fixed and percentage t axes pres cribed in the Tax Code . ( pp o 3 - 4 , .i!leraorandum for Respondent , pp . 56- 66 , CTA rec . ) lve agree vrith the contention of the petitioner that he is not an 1ndepcndent labor contractor, but .merely a laborer or employee . 'vJhile it appears on t he contract ' Exhibit A- 1 (p . 31 CJ.'A re c . ) of' Se1)tember 6 , 1955, be t - 11reen Centl'al� ,.::<l-ntos - Lopez Co . , Inc . and che petitioner that he :i:s referred to and designated as tt con tr a ctor'(, however , at the hearing of th1s case , tLe petitioner was able to prove to t he satisfaction of the Court that i n truth and in fact he is just an ordinary laborer and that \vhen he signed the contract in question , i1e did so as a member and representative of a group of laborers whic h was contracted by Central Santos - Lopez Co . , Inc . to load and unload sugar . The joint afLu1av it , Exhibit .t: (pp . 35- 36 , CTA rec . ) of the forty - nine (4-9) laborers as well as the Certificction, Exhibit D (p . 34- CTA rec . ) of the Assistant La.nager of' the Central Sar1tos -Lopez Co . , Inc . attest to t:lis fact . This ldnd of arrangement bet'cveen a c otnpany and i tE� laborers vihereby tb0 co::1rJany deals ._,,j_ tL corr~~tly ar~ueC by the petitioner , is of t en resort~d

.U.c.,Cl~:>IOl'i - C. '1 � ;l. . CASE ~ u- . to b:;� c o1�.panie:. and their laborei s . (Be:.:mis .J vs . ~1ij os de., ..J)Cc;.no , I-"-.: ., G. R� .iio . 1- 11606, :feb . 28 , 19 59 ; 56 o. c. . 5296 . ) J.~or�euvel' , nut GVeJ.:y rer~, .JI: uL.o G.Llt~r.:> irto "' c� tr .ct J.L� ..,,rh<:.cever nature. o~. cbaL_tcter i.; a contractor ther e c an �o;;: no doubt th:.., t com~.:on la~Jore~ s �,;ho u or~;: b:y t~c ~~y or ~iced work un:cr a C1Gtract CL ~ot ~0 co1si - dereJ c.::;,J�lt::.''--ctors so as to hole them l i.nLle for the :J<'Y- men t of the contractor 1 ::, fi~ced :..C:.ld pe:tcentages ta es prGs- cri bed in the "~atio11al Inter-.t.J.al .. t'-'venue Code . (:.Wu~o n Jtevedoring ~o . vs. l'rinidad , L;-3 Phil . 803; La Carlot a Sugar Central vs. Trinidad, 43 P,'il . 816 . ) One of tLe maL1 chc..racter�istics of a contr'-,ct in- volving i ndependent contractors , wi~ c t. distinguis~es i t from the r elati on of mas-cer and servant or employer and employee , is that i:lhJ.le t ile servant or er.u.rl:Jyee is under t he control and supervision of the mas tel' and en.ployer , res~ec tivelJ , the independent contractor acts indepen - dently of his employer being re::;rJonsible only to the latter for t he result of the wor~;: or undertaking . ( Fressel v s . Mariano Uy c:1.aco ;-:ions v.. Co . 3L1- -~hil . 122; p . 15 Javier on the Law on Agency . ) In the present c ase , the peti tioner Jov i to ~uare z is not allmved to act ind.ependently, as would an inde- pendent c ontracto r, as clear l y stated in the memol~andma , Exhibit B ( p . 3 2 CT11. rec . ) dated Dece1:1ber 4 , 1955 of Carlos Lopez , General 1'1alwger of the Central .Santos - Lopez

� Ci..JiOJ - -.: . �.J.' . .... . C.L �' .t U o 994 ~6- Co . , Inc . to their \-Iareilouseman, Fernando Abilo, which meLorandum in part reads as follov!s: n4 . lou are t.l ..e one solely responsible of tue bodega . ,_,ee to it that nobody is allo'.. ed to loiter ins ide aJ~U vl1Ci t t:1e C..J.l~ tractor a.1u his ;ner:. a.J..~e not to be allm1ed to in- terfere \ �i th ~-our assigned res ponsibili - ties . ':�J.1e contr "Ctor �.s onl ". tLe;:r;'JL_to sute:r:vise h � ~ r.1~.n and tt...a.t they .a~to coo"'erate and ge c ordEi_I'S iro_m -,/O\L_in the 'er ~or.L,H:;.nce ol vour ducle�......Qy_Y.l.J'...t.lle of his contract ." (lnderscoring supplied . ) e l10t tho.�L; t!"le 8-lleuea tax liability of the r_;eti - t.1..0 er was fir.3 c bro'-"wllt to the attention of the respondent t1.rou:;l an anonymous letter . (.... xh . 1 , p . 4 , - L., rec . ) In ti..e ensuing inves tige:. tion conducted bJ :Ollt .'1-.gent . icanor .~ . Jegara , tLe latter reported to his superiors that peti- tio er Jovito Suarez "acts as a reurcsentc:,tive of tl1e la- borers in transc...cti.n:; bu.slnes.., 1 i th tLe ma.1agemen t 11 of Central Santos - Lopez Co . , Inc . (...::xh . 2 , pp . 11- 13, Llli rec . ) 'I' is is another clear indicc.tion thc:r~ t~1e peti tio.i.wr is on.l � one of t~1e laborei�s contr.: cted b Gentral ,-,an tos- Lopez Co . , Inc ., c:..nd t11ero.fore is not liable to 1,ay- t.1e contrc...ctor r s fixed an'- 1erccntabe taxes vTLlCL... the r spon - dent .1 . e -cs to collect i'rod hi / _......,_-...I.!J �'CLu...., finci.in.; petl tio..1er J�ovi to ...uarez to be a lauorer and not an independent labor contractor , the d eci- sion a:rpealed from is her l5y reversed , vithout ?ronolillCe - ent as to l-Os-es . u a.) J.l.\JJ.wl,..... .U 0 1�.anila , Decer:1ber 20 , 1961 .. �e concur: .l. Ui .... ~... .li . LL 1 �� I .. ss~ciate Judge