G.R. No. L-12876. May 26, 1960
COLLECTOR OF INTERNAL REVENUE, PETITIONER, VS. BOHOL UNITED WORKERS, INC., RESPONDENT.
CONCEPCION, J.:
decision of the Court of Tax Appeals. The facts are set forth in said
decision in the following language:
“This
is an appeal from a decision of respondent Collector of Internal
Revenue, assessing and demanding from petitioner the amount of
P60,221.39 as stevedore’s fixed tax, percentage tax, basic and
additional residence taxes and surcharges on its gross receipts for the
period from January 1, 1948 to June 30, 1954, plus penalty in the sum
of P500.00, pursuant to sections 182, 183 and 191 and penalized under
sections 208 and 209 of the National Internal Revenue Code and sections
1, 2 and 5 of Commonwealth Act No. 465 and penalized under section 12
in relation to sections 5 and 7 of the same Act.“It
appears that petitioner, Bohol United Workers, Inc. (hereinafter
referred to as BUWI for brevity), is a labor union duly registered with
the Bureau of Labor in accordance with Commonwealth Act No. 213 and
Republic Act No. 875, with principal office at Tagbilaran, Bohol. The
purposes for which it was organized are to alleviate the conditions of
the workers, to promote mutual help and cooperation among the members
thereof, to help any member in distress, to help the members get a
vision of a more abundant life, to help the government carry out its
Social Justice Program, to help the government promote strong and sound
nationalism. Although the term ‘Inc.’ is appended to petitioner’s name,
it was not organized nor registered as a corporation with the
Securities and Exchange Commission. One of the chapters of the BUWI is
known as the Tagbilaran Chapter. This chapter derives its income from
membership fees of P3.00 from each member, death aids received and
contributions pertaining to the chapter which is equivalent to 2 ½% of
the gross wages of each member obtained from loading and unloading
cargoes on vessels docking in the Tagbiliran Port and the loading and
unloading of the same cargo on trucks for delivery to the warehouses of
the cargo owners or shippers. The members of the Tagbilaran Chapter
consisting of laborers are divided into two groups who work in shifts
and each group ‘is supervised’ by a ‘cabo-cabo’ or ‘capataz’ who is
elected by the laborers from among themselves. In addition, each group
elects from among themselves a group collector, a group treasurer and a
group paymaster. The group collector collects from the shippers or
cargo owners the amount due the laborers for their work, after which he
delivers the said amount to the group treasurer who computes the share
corresponding to each laborer on the basis of share and share alike. In
turn his money is transferred to the group paymaster who pays the
laborers accordingly. The laborer-members return to the group treasurer
5% of their gross wages as their contribution to BUWI which amount is
transferred to the treasurer of the Tagbilaran Chapter who serves
concurrently as Treasurer of BUWI. One half of said contribution (2½)
is credited to and entered in the books of the BUWI.“Upon
examination of tile books of the said Tagbilaran Chapter, the examiner
of the Bureau of Internal Revenue, determined that BUWI failed to
declare its said gross receipts for tax purposes and recommended
accordingly an assessment of taxes in relation thereto. On the basis of
the examiner’s findings and recommendation, respondent Collector of
Internal Revenue, in a letter dated December 27, 1954, and received by
BUWI on January 11, 1955, assessed and demanded from the latter as
stevedore’s fixed tax, percentage tax, basic and additional residence
taxes and surcharges on its gross receipts for the period from January
1, 1948 to June 30, 1954 the total of P60,221.39, computed as follows:
2% tax on P1,072,684.80 gross receipts from Jan. 1, 1948 to Sept. 21, 1950 3% tax on P878,980.26 gross receipts from Sept. 22, 1950 to June 30, 1954 Total percentage tax 25% surcharge thereon Fixed tax, 1948-195 Add: Corp. Residence Tax: C-Regular C-1 25% surcharge Amount Due and Collectible “Upon
receipts of the above assessment petitioner appealed the same to the
Conference Staff of the Bureau of Internal Revenue for review. In
compliance with the condition to the grant of a rehearing before the
Conference Staff, BUWI through its President, Mr. Luis T. Clarin
executed a waiver of the statute of limitations provided for in
sections 331 and 332 of the National Internal Revenue Code. After due
hearing where petitioner herein presented evidence in support of its
case, the members of the Conference Staff recommended that the
assessment of December 27, 1954 be reiterated. This recommendation was
approved by respondent and In a letter dated June 1, 1956 which was
actually received by petitioner on June 20, 1956, the former demanded
the payment of 960,721.39 as percentage tax, surcharge and penalty.
Hence, petitioner filed its petition for review before this Court on
July 18, 1956.
“The principal issues involved in this case may be stated as follows:
- Is the petitioner Bohol United Workers, Inc. liable to the stevedore’s
fixed, percentage and residence taxes, including surcharge and penalty,
imposed under the National Internal Revenue Code and Commonwealth Act
No. 465, respectively? and if in the affirmative.- Is the tax due for the period from January 1, 1948 to September 30, 1949 still collectible?”
The Court of Tax Appeals decided the first issue in the negative, for
which reason it no longer passed upon the second issue and reversed the
decision of the Collector of Internal Revenue.
Appellant maintains that:
“1. The Court of Tax Appeals erred in holding that the Bohol United Workers, Inc. is not engaged in stevedoring work.
“2.
The Court of Tax Appeals erred in holding that the Bohol United
Workers, Inc. is simply a labor union and not engaged in stevedoring
work.“3. The Court of Tax Appeals erred in holding that
the Bohol United Workers, Inc. is not liable for any fixed, percentage,
basic and additional residence taxes.”
In
support of its pretense, appellant reiterates its arguments in the
Court of Tax Appeals, namely, that the union is actually engaged in
stevedoring business because: (1) it enters into contracts with the
cargo owners; (2) it issues receipts, like Exhibit 6, for handling
charges paid thereto; (3) the main work of its members is to load and
unload cargoes in and from vessels, without any intervention from the
officers thereof, except as to the proper placing of the cargoes inside
the hull of the ship; and (4) the case at bar is similar to that of
Cebu Arrastre Service vs. Collector of Internal Revenue (99
Phil., 297; 53 Off. Gaz., 2487) in which it was held that the Cebu
Arrastre Service was subject to taxation as a stevedore.
The Court of Tax Appeals correctly disposed of the foregoing pretense of appellant herein in the following language;
“Proceeding
to the first issue, in denying liability for such taxes, petitioner
maintains that it did not act as stevedore-contractor as provided in
section 191 (a) of the Tax Code on the ground that there never
was any contractual relation between it and the shippers or shipowners,
and that all. its acts were confined within the legitimate functions of
a labor union in accordance with Republic Act No. 875, otherwise known
as the Magna Carta of Labor.“Respondent on the other hand
maintains that petitioner through its Tagbilaran Chapter, has actually
engaged in the stevedoring business at the Tagbilaran Port because as a
condition precedent for the employment of a laborer at the Tagbilaran
Port, membership or affiliation with the BUWI is indispensable and it
is petitioner which finds employment for its members and recommends to
the shippers or shipowners, who should or should not be allowed to work
at the Tagbilaran Port. Respondent further cites the following facts to
be considered in support of its contention—no laborer can be dismissed
without the approval of petititioner; in case of failure of shippers to
pay the laborer-members for the handling charges, collection thereof is
made with the aid of petitioner’s legal counsel; petitioner supplies
laborers to casual shippers, such as government shippers.“We
find no merit to the contention of respondent. The aforementioned acts
of petitioner are legitimate functions of a labor union sanctioned by
section 24 of Republic Act No. 875 and are within its powers as the
sole and exclusive collective bargaining representative of all its
laborers handling cargoes at the Tagbilaran Port. In fact, petitioner’s
character as a labor union with sole and exclusive right as collective
bargaining representative has been established in Case No. 117-MC
entitled ‘Bohol United Workers, Inc. vs. Lim Poh and Sons
(Sweet Lines and Pablo Lim), et al., of the Court of Industrial
Relations. We quote hereunder the pertinent portions of its Order
(Exhibit D, petitioner) dated July 2, 1956.—‘This is a petition filed by the Bohol United Workers, Inc., a
legitimate labor organization, hereafter referred to as BUWI, seeking
that it be certified as the sole collective bargaining agent of all
laborers handling the cargoes of the respondent at the wharf in
Tagbilaran, Bohol.“All the
respondents, with the exception of Caltex (Phil.) Inc., do not dispute
petitioner’s allegation that its members are in their employ as
handlers of respondent’s goods or cargoes and have manifested that they
will abide by whatever decision the Court may render. The Court finds,
therefore, that the members of the BUWI are employees of these
respondents.* * * * * * *
“Lim
Poh and Sons admits that the affiliates of petitioning union have been
handling the cargoes of its vessels but, nevertheless, opposes the
petition mainly on the grounds that the relation between them is not
only temporary because their services have been merely tolerated but
marked with discord as well and that the relief sought by petitioner,
if granted, would permit/monopoly of the loading and unloading work by
only one labor group and unduly restrict free enterprise for capital
and labor. It is contended by the partnership that it has the absolute
right to terminate at will its relation with the BUWI and determine for
itself the person or persons it desire to employ.‘The stand of respondent carrier is untenable. From its own admission
and as further established by the evidence, the workers affiliated with
the petitioner are employees of Lim Poh and Sons and for this reason,
it is immaterial whether or not their relations is temporary or
harmonious. Moreover, while certification results in monopoly of
representation by one labor organization for purposes of collective
bargaining for some period of time, it does not necessarily forbid or
prevent the formation or continued existence of other labor groups
within the same bargaining unit. Finally, the fact that an employer has
the right to hire and fire employees does not preclude a union of
employees from applying for certification.‘There is
only one kind of work involved in this case; loading and unloading of
cargoes on and from vessels operated by respondent Lim Poh and Sons and
hauling them from the dock to the warehouses of their owners or
consignees or vice-versa. The Court finds, and so holds, that the unit
appropriate for collective bargaining is that composed of all the
laborers doing this work for the benefit of all the respondents [except
Caltex (Phil.) Inc.]‘The petitioner was organized
shortly after liberation. It is composed of not less than 400 laborers,
most of whom have for many years been continuously working for the
respondents as stevedores.‘Under these facts, and
considering the entire record of the case, the Court is convinced and,
therefore, finds that the petitioner has been designated or selected
for the purpose of collective bargaining by the majority of the
laborers in the unit described above.‘In View of the
Foregoing, the Bohol United Workers, Inc. is hereby certified in
respondent Lim Poh & Sons as the sole and exclusive collective
bargaining representative of all the workers engaged by it for the
loading and unloading of its vessels in the port of Tagbilaran, Bohol.
The same labor organization is likewise certified as the sole and
exclusive collective bargaining agent of all the laborers handling
cargoes in said port, in respondents (names omitted).’The foregoing determination made by the Court of Industrial Relations
is controlling in the matter of petitioner’s status. In there, the
members of BUWI have been found to be employees or laborers of the
shipowners or the owners of cargoes handled at the Tagbilaran Port.
While the members individually perform the work of handling the loading
and unloading of cargoes at the Tagbilaran Port and are the stevedores
themselves, BUWI merely serves as a labor union or organization to
protect its, members and cannot be said to be engaged in the
stevedoring business itself.“Although BUWI also supplies
laborers to casual shippers in Tagbilaran Port, we are inclined to
agree with petitioner that on this matter the latter merely acted as an
information center to such casual shippers who are not well versed with
the procedures followed at the Tagbilaran Port. As a matter of fact,
there is no showing that a contract for handling was entered into by
petitioner and the casual shippers.“In further support of
the theory that petitioner acts as a stevedoring contractor, respondent
cites the fact that claims for damages to cargo loaded and unloaded by
union members are presented to the union and the latter advanced the
payment for damages. However, we find this to be but a matter for the
convenience of the cargo owners and for the protection of the union. It
appears that the claim for damages is presented to petitioner in order
that it may investigate the same and pin-point the person or persons
responsible for damages. In most instances the union member concerned
has no ready cash to answer for the damages, hence BUWI advances the
same, but the amount so paid is collected from the laborer or laborers
found responsible therefor. Liability for such damage is borne
personally by the laborer-member at fault and not by petitioner.Respondent presented and capitalizes upon a copy of an alleged receipt
(Exhibit 6, p; 51 BIR records) purportedly issued by petitioner to a
merchant-shipper for the payment of handling service. This alleged copy
of receipt bears a certification by the revenue examiner that it was
copied from petitioner’s record. However, respondent did not call upon
Uy Kee, the merchant payee to testify as to the party with whom he had
entered into a contract for the handling of his cargo. The receipt in
question at most shows only that payment was made by the cargo owner
and received by BUWI which collection is in accordance with the
procedure of the union as outlined earlier above.“Respondent
cites in support of its contention three (3) cases involving
stevedoring. The first case cited is that of Cebu Arrastre vs.
Collector of Internal Revenue, 99 Phil., 297; 53 Off. Gaz. (8) 2487. We
believe this case is not applicable to the instant case because the
Cebu Arrastre Service directly contracted with cargo owners for the
handling of cargoes, collected payment from the cargo owners, and paid
the laborer-members on its own account as an employer. In the case at
bar the members were employees of the cargo owners and the laborers
themselves collect from the cargo owners for their services. The
petitioner has further no intervention in the distribution of the
payment for the handling service to the laborer-members, except to
insure the collection of the contribution due from each member, which
it is entitled as a labor union. Neither is the case of Agusan
Stevedoring Union vs. Collector of Internal Revenue (C.T.A.
Case No. 18, November 18, 1954) applicable because, in that case, the
Agusan Stevedoring Union designated the ‘foreman,’ ‘tallyman’,
‘checkers’, etc., who managed the loading and unloading. In the instant
case, the ‘capataz’ and other officers of each group of laborers are
elected by the members of the group and are only confirmed afterwards
by BUWI. Hence, the responsibility of the group officers is directly
towards the members of each group and not to BUWI. The last case cited
is Union Obrera Makabayan vs. Collector of Internal Revenue
(B.T.A. Case No. 177, September 22, 1954). We also find this case
inapplicable to the present case because in the former case it was the
petitioner organization itself that entered into a contract of handling
cargoes with the shippers, while in the instant case, as aforesaid, the
contract of handling was directly entered into with the shippers or by
the laborers themselves or through their chosen ‘capataz’ and not by
petitioner. And as a final but common distinction from the three
aforecited cases, the laborers in these cases were employees of the
stevedoring contractor and the latter transacted on its own with the
shipowners and cargo owners whereas, in the case at bar, the laborers
are employees of the shipowners or cargo owners.“Finding
as we do hold that petitioner BUWI is a legitimate labor union and not
engaged in stevedoring business, it follows that it is not liable for
the payment of fixed and percentage taxes imposed by Sections 182 and
191 of the Tax Code on stevedores nor of the residence tax under
Section 2 of Republic Act No. 465.”
It may
not be amiss to note, also, that the Cebu Arrastre Service was neither
a labor union nor a labor organization, but, in the language of this
Court, “an association of persons engaged in the handling of cargoes
carried by coastwise vessels.” Upon the other hand, respondent herein
is—as found by the Court of Tax Appeals, and this is not disputed by
appellant herein—”a labor union duly registered with the Bureau of
Labor in accordance with Commonwealth Act No. 213 and Republic Act No.
875″, organized “to alleviate the conditions of the workers, to promote
mutual help and cooperation among the members thereof, to help any
member in distress, to help the members get a better vision of more
abundant life, to help the government carry out its Social Justice
Program, to help the government promote strong and sound nationalism.”
Thus stevedoring is not even part of its objective, and it is more than
a labor organization, as the term is defined in Section 2, Subdivision
(e), of Republic Act No. 875.
Wherefore, the decision appealed from is hereby affirmed, without special pronouncement as to costs. It is so ordered.
Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, and Gutierrez David, JJ., concur.
Reyes, J.B.L., and Endencia, JJ., took no part.