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256 SUPREME COURT REPORTS ANNOTATED

Com. of Internal Revenue vs. Hawaiian-Philippine Co.

No. L-16315. May 30, 1964.

COMMISSIONER OF INTERNAL REVENUE, petitioner

vs. HAWAIIAN-PHILIPPINE COMPANY, respondent.

Taxation; Fixed and percentage taxes; Warehouseman.—A

warehouseman is one who receives and stores goods of another for
compensation.
Same; Same; Same; Sugar central storing sugar of its planters
is a warehouseman.—A sugar central storing sugar of its planters
in its warehouses and collecting storage fees after the first ninety
days of deposit is liable as warehouseman for the payment of the
fixed and percentage taxes prescribed in Sections 182 and 191 of
the National Internal Revenue Code.
Same; Same; No double taxation on taxing sugar central for
its warehouse business.—A sugar central's warehousing business,
although carried on in its relation to the operation of its central, is
a distinct and separate business, and there can be no double
taxation where the State imposes a tax on its warehouse fees
collected.

PETITION for review of a decision of the Court of Tax

Appeals.
The facts are stated in the opinion of the Court.
     Solicitor General for petitioner.
     Hilado & Hilado for respondent.

DlZON, J.:

This is a petition filed by the Commissioner of Internal

Revenue for the review of the decision of the Court of Tax
Appeals in C.T.A. Case No. 598 ordering him to refund to
respondent Hawaiian-Philippine Company the amount of
P8,411.99 representing fixed and percentage taxes assessed
against it and which the latter had deposited with the City
Treasurer of Silay, Occidental Negros.
The undisputed facts of this case, as found by the Court
of Tax Appeals, are as follows;
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"The petitioner, a corporation duly organized in accordance with

law, is operating a sugar central in the City of Silay, Occidental
Negros. It produces centrifugal sugar from sugarcane supplied by
planters. The processed sugar is divided between the planters and
the petitioner in the proportion stipulated in the milling
contracts, and thereafter is deposited in the ware-

257

VOL. 11, MAY 30, 1964 257

Com. of Internal Revenue vs. Hawaiian-Philippine Co.

houses of the latter. (Pp. 4-6, t.s.n.) For the sugar deposited by the
planters, the petitioner issues the corresponding warehouse
receipts of 'quedans'. It does not collect storage charges on the
sugar deposited in its warehouse during the f irst 90 days period
counted from the time it is -extracted from the sugarcane. Upon
the lapse of the first ninety days and up to the beginning of the
next milling season, it collects a fee of P0 30 per picul a month.
Thenceforth, if the sugar is not yet withdrawn, a penalty of P0.25
per picul or fraction thereof a month is imposed. (Exhibits 'B-1',
'C-1', 'D-1', 'B-2', 'C-2', p. 10, t.s.n.)
"The storage of sugar is carried in the books of the company
under Account No. 5000, denominated 'Manufacturing Cost
Ledger Control'; the storage fees under Account No. 521620; the
expense accounts of the factory under Account No. 5200; and the
so-called 'Sugar Bodega Operations' under Account No. 5216,
under which is a Sub-Account No, 20, captioned, 'Credits'. (Pp. 16-
17, t.s.n., Exhibit 'F'.) The collections from storage after the lapse
of the first 90 days period are entered in the company's books as
debit to CASH, and credit to Expense Account No. 2516-20 (p. 18,
t.s.n.).
"The credit for storage charges decreased the deductible
expense resulting in the corresponding increase of the taxable
income of the petitioner. This is reflected by the entries enclosed
in parenthesis in Exhibit 'G', under the heading "Storage
Charges". (P. 18, t.s.n.) The alleged reason for this accounting
operation is that, inasmuch as the 'Sugar Bodega Operations' is
considered as an expense account, entries under it are 'debits'.
Similarly, since 'Storage Charges' constitute 'credit', the
corresponding figures (see Exhibit 'C') are enclosed in parenthesis
as they decrease the expenses of maintaining the sugar
warehouses.
"Upon investigation conducted by the Bureau, it was found
that during the years 1949 to 1957, the petitioner realized from
collected storage fees a total gross receipts of P212,853.00, on the
basis of which the respondent determined the petitioner's liability
for fixed and percentage taxes, 25% surcharge, and

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administrative penalty in the aggregate amount of P8,411.99

(Exhibit '5', p. 11, BIR rec.)
"On October 20, 1958, the petitioner deposited the amount of
98,411.99 with the Office of the City Treasurer of Silay. (Exhibits
'I' and 'I-1', pp. 59-60, CTA rec.) Later, it filed its petition for
review before this Court (Exhibit 'K', p. 25, CTA rec.)"

After due hearing the Court of Tax Appeals rendered the

appealed decision.
258

258 SUPREME COURT REPORTS ANNOTATED

Com. of Internal Revenue vs. Hawaiian-Philippine Co,

The only issue to be resolved in the case at bar is whether

or not, upon the facts stated above, petitioner is a
warehouseman liable for the payment of the fixed and
percentage taxes prescribed in Sections 182 and 191 of the
National Internal Revenue Code which read as follows:

"SEC. 182. FIXED TAXES—(a) ON BUSINESS (1) PERSONS

SUBJECT TO PERCENTAGE TAX.—Unless otherwise provided
every person engaging in a business on which the percentage tax
is imposed shall pay a fixed annual tax of twenty pesos. x x x,"
"SEC. 191. PERCENTAGE TAX ON ROAD, BUILDING,
IRRIGATION, ARTESIAN WELL, WATERWORKS, AND
OTHER CONSTRUCTION WORK CONTRACTORS,
PROPRIETORS OR OPERATORS OF DOCKYARD, AND
OTHERS. x x x warehousemen; plumbers, smiths; house or sign
painters; lithographers, publishers, except those engaged in the
publication or printing and publication of any newspaper,
magazine, review or bulletin which appear at regular intervals,
with fixed prices for subscription and sale, and which is not
devoted principally to the publication of advertisements; printers
and bookbinders, business agents and other independent
contractors, shall pay a tax equivalent to THREE PERCENTUM
of their gross receipts. x x X."

Respondent disclaims liability under the legal provisions

quoted above, alleging- that it is not engaged in the
business of storing its planters' sugar for profit; that the
maintenance of its warehouses is merely incidental to its
business of manufacturing sugar and in compliance with
its obligation to its planters. We find this to be without
merit.
It is clear from the facts of the case that, after
manufacturing the sugar of its planters, respondent stores
it in its warehouses and issues the corresponding
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"quedans" to the planters who own the sugar; that while

the sugar is stored free during the first ninety days from
the date the "quedans" are issued, the undisputed fact is
that, upon the expiration of said period, respondent
charges and collects storage fees; that for the period
beginning 1949 to 1957, respondent's total gross receipts
from this particular enterprise amounted to P212,853.00.
A warehouseman has been defined as one who receives
and stores goods of another for compensation (44 Words

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VOL. 11, MAY 30, 1964 259

Com. of Internal Revenue vs. Hawaiian-Philippine Co.

and Phrases, p. 635). For one to be considered engaged in

the warehousing business, therefore, it is sufficient that he
receives goods owned by another for storage, and collects
fees in connection with the same. In fact, Section 2 of the
General Bonded Warehouse Act, as amended, defines a
warehouseman as "a person engaged in the business of
receiving commodity for storage."
That respondent stores its planters' sugar free of charge
for the first ninety days does not exempt it from liability
under the legal provisions under consideration. Were such
fact sufficient for that purpose, the law imposing the tax
would be rendered ineffectual.
Neither is the fact that respondent's warehousing
business is carried in addition to, or in relation with, the
operation of its sugar central sufficient to exempt it from
payment of the tax prescribed in the legal provisions
quoted heretofore, Under Section 178 of the National.
Internal Revenue Code, the tax on business is payable for
every separate or distinct establishment or place where
business subject to the tax is conducted, and one line of
business or occupation does not become exempt by being
conducted with some other business or occupation for
which such tax has been paid.
Lastly, respondent's contention that the imposition of
the tax under consideration would amount to double
taxation is likewise without merit. As is clear from the
facts, respondent's warehousing business, although carried
on in relation to the operation of its sugar central, is a
distinct and separate business taxable under a different
provision of the Tax Code. There can be no double taxation
where the State merely imposes a tax on every separate
and distinct business in which a party is engaged.
Moreover, in Manufacturers Life Insurance Co. vs. Meer,
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G.R. No. L2910, June 29 1951; City of Manila vs. Inter-

Island Gas Service, G.R. L-8799, August 31, 1956, We have
ruled that there is no prohibition against double or
multiple taxation in this jurisdiction.
WHEREFORE, the decision appealed from is reversed
and set aside, with costs.
260

260 SUPREME COURT 'REPORTS ANNOTATED

People vs. Antonio

     Bengzon, C.J., Padilla, Bautista Angelo, Labrador,

Concepcion, Reyes, J.B.L., Barrera, Paredes and
Makalintal, JJ., concur.
     Regala, J., did not take part,

Decision reversed and set aside.

Notes.—Double taxation has been otherwise described as

"direct duplicate taxation". For double taxation to exist, the
same property must be taxed twice, when it should be
taxed but once. Double taxation has been also defined as
taxing the same person twice by the same jurisdiction for
the same thing (cf. Manila Motor Co., Inc. v. Ciudad de
Manila, 72 Phil. 336; Victorias Milling Co., Inc. v.
Municipality of Victorias, etc., L-21183, Sept. 27, 1968).
Double taxation, in general, is not forbidden by our
fundamental law. We have not adopted, as part thereof, the
injunction against double taxation found in the
Constitution of the United States and of some States of the
Union (De Villata v. Stanley, 32 Phil. 541; City of Manila v.
Inter-Island Gas Service, 99 Phil. 847, 854; Syjuco v.
Municipality of Parañaque, L-11265, Nov. 27, 1959; City of
Bacolod v. Gruet, L-18290, Jan. 31, 1963; Pepsi-Cola
Bottling Co., etc. v. City of Butuan, et al., L-22814, Aug. 28,
1968).
Double taxation was also dealt with in Compañia
General de Tabacos de Filipinas v. City of Manila, et al., L-
16619, June 29, 1963.

——oOo——

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