VIRGINIA AMOR, ROSABEL B. TIANGSON, GORGONIA GANARAN, CARMEN M. PADERNILIA, LYDIA A. MAGBANUA, SONIA C. DAYOT, GLORIA P. MALUNDO AND NIMFA A. RIEGO, PETITIONERS, VS. COMMISSIONE…

This is an appeal taken by petitioners Virginia Amor, Rosabel Tiangson,
Gorgonia Ganaran, Carmen Padernilia, Lydia Magbanua, Sonia Dayot, Gloria
Malundo, and Nimfa Riego, from the decision of the Court of Tax Appeals (in
C.T.A. Case No. 629) affirming the denial by respondent Commissioner of Internal
Revenue of their claim for refund; pursuant to Section 182(C) (1) of the Tax
Code, of occupation taxes for 1958 paid by them.

It appears that since January 1, 1958, petitioners nave been employed as
pharmacists and registered nurses at the Insular Lumber Company Hospital, at
Fabrica, Negros, Occidental, with monthly salaries ranging from P120.00 to
P190.00. Upon assessment by, and demand frt>m respondent Commissioner,
pursuant to Section 182(b) (2) of the Tax Code, they paid to him the sum
of P50.00 eaeh or a total of P400.00, as occupation taxes for 1958. Their claims
for refund thereof, pursuant to Section 182(c) (1) of the Tax Code,
having been denied by respondent Commissioner, they appealed to the Court of tax
Appeals on February 25, 1959, which court, on August 17, 1959, rendered a
decision affirming said refusal by respondent Commissioner to refund the tax.
Petitioners’ motion for reconsideration of said decision having been denied by
the court, they appealed to us.

Petitioners contend that in view of their meager salaries, they are exempt
from payment of the occupation tax pursuant to the provision of Section
182(c) (1) of the Tax Code which reads:

“SEC. 182. Fixed taxes.—* * * (C) Exceptions.—The following shall be
exempt from the tax imposed in this section:

(1) Persons whose gross monthly sales or receipts do not exceed two hundred
pesos.”

In denying the refund, the trial court, Honorable Mariano Nable presiding,
stated:

“* * * It is suggested, on behalf of petitioners, that the term ‘receipts’ in
the aforequoted codal provision includes salaries, and inasmuch as the gross
monthly salaries of the petitioners did not exceed P200.00, they were exempt
from the payment of fixed occupation tax in accordance with Section 182(C) (1)
of the Tax Code. But, it is contrarily urged by the respondent that the
exemption authorized by said section applies solely to persons engaged in
business on which precentage tax is imposed, and those otherwise subject to the
graduated annual fixed tax.

“It is to be observed that the terms ‘sales’ and ‘receipts’ found in Section
182(C) (1) are conjoined by the word ‘or’. From the context of the statute, we
gather that the word ‘or’ joins two different terms which signify one and the
same idea. As used in the statute under consideration, these terms refer to
receipts of persons who are engaged in business. Nowhere in the said context can
we find a justification for the suggestion advanced by petitioners that the term
‘receipts’ in Section 182(C) (1) of the Tax Code includes salaries. Such
suggestion is a strained and stretched interpretation.

“The conclusion that the term ‘receipts’ appearing in Section 182 (C) (1)
does not embrace salaries is buttressed by the fact that the. whole Section 182,
as amended by Republic Acts Nos. 1612 and 1856, is merely a composite of what
were formerly Sections 182, 193, 201 and 202 of the Tax Code. The modifications
effected by these two statutes consist mainly of increase in tax rates and the
enlargement of subjects of taxation. Except for the word ‘monthly’, which is
different from ‘quarterly’; the phrase ‘or receipts’, a new addendum; and the
amount ‘two hundred’, a reduction of the sum of four hundred-fifty, Section 182
(C) (1) is an incorporated copy of what’ formerly was Section 182(A) of the Tax
Code. It must be noted that under what was formerly Section 182 (A) ‘Persons
whose gross quarterly sales do not exceed four hundred fifty pesos’ were exempt
from the tax imposed in this section. This section was captioned ‘Fixed tax upon
business’. Obviously, the legislative intention to exempt from the fixed tax
only persons engaged in business remained the same. The addition of the term
‘receipts’ to the word ‘sales’ does not make any difference. The resulting
phraseology ‘sales or receipts’, as embodied in Section 182(C) (1), should not
be deemed a change of law, unless there is an evident intention on the part of
the legislature to make such a change (See Taylor, et al. vs. Bowker, 111
U.S. 110, 114). In the instant case, we find no congressional intention to
effect such a change, for the added term ‘receipts’ conveys the same meaning as
‘sales’.

“Petitioners are not entitled to exemption from the payment of occupation tax
on pharmacists and registered nurses, for the reason that their professional
services were not devoted exclusively to a branch of the service of the
Government of the Philippines or were applied under its direction, nor were same
entirely devoted to a religious, educational, or charitable institution, or
hospital, sanitarium or to a similar establishment, not conducted for private
gain. (See Section 182 [C] [7] of the Tax Code.)

Finally, it is a well settled rule that exemptions from taxation are highly
disfavored in law; and he who claims an exemption must be able to justify his
claim by the clearest grant of organic or statute law. An exemption from a
common burden cannot be permitted to exist upon vague implication. (Asiatic
Petroleum Co. vs. Elanes, 49 Phil., 466; House vs. Posadas, 53
Phil., 338; Philippine Telephone and Telegraph Co. vs. Collector of
Internal Revenue, 53 Phil., 639; Collector of Internal Revenue vs. Manila
Jockey Club, 99 Phil., 289.) In the case at bar, petitioners have failed to
justify their claims for exemption by the clearest grant of
law.”

Petitioners argue, on the other hand, that the addition of the term “or
receipts” to the word “sales” when the law was amended clearly indicates that
“salaries”, included in the term “receipts”, come within the exception which
refers not only to the fixed tax on business under paragraph (A) of Section 182
of the Tax Code, but also to the occupation tax under paragraph (B) of the same
section, especially taking into account that paragraph (C), Exception, reads
“the following shall be exempt from the tax imposed in this section“,
which, it is argued, precisely contains both paragraphs (A) and (B).

The error in this argument is that it is predicated solely on paragraph (1)
and disregards or overlooks the other paragraphs enumerating the exceptions
under (C) of the Section in question which, in its entirety, reads:

“SEC. 182. * * *

“(C) Exceptions.—The following shall be exempt from the tax imposed in this
section:

“(1) Persons whose gross monthly sates or receipts do not exceed two hundred
pesos.

(2) All persons in public market places, selling exclusively domestic meat,
fruits, vegetables, game, poultry, fish and other similar domestic food
products.

“(3) Peddlers and sellers at fixed stands and other similar selling-places
engaged exclusively in the sale at retail of domestic meal fruits, vegetables,
game, poultry, fish, and similar domestic food products, whose total stock in
trade on any one day does not reach a retail value of one hundred pesos.

“(4) Producers of commodities of all classes working in their own homes,
consisting of parents and children living as one family, when the value of each
day’s production by each person capable of working is not in excess of five
pesos.

“(5) Owners of animal drawn two wheeled vehicles.

“(6) Owners of bancas.

“(7) Persons employed in arty branch of the service of the Government of the
Philippines whose entire professional services are devoted exclusively thereto
or are applied under its direction, or persons devoting their entire
professional services to any religious, educational, or charitable institution,
or hospital, sanitarium, or to any similar establishment, not conflicted for
private gain, in respect to the tax imposed by paragraph (B) of this
section.”

As is evident from the language of the law, the exceptions detailed under
Nos. (1) to (6) involve business of some kind or another, and, logically, are
the ones applicable to fixed taxes en the different businesses described in
paragraph (A). Note that not all the businesses described in paragraph (A)
involve sales. In subparagraph (3) thereunder are described “Other fixed taxes”
payable by manufacturers, producers, stockbrokers, real estate brokers, customs
brokers, immigration brokers, owners of race tracks, film owners, lessors or’
distributors, business agents, among others, who do not “‘engage in sale
transactions. It is for this reason that the word “receipts” has been added to
the term “monthly sales” in the exception, in order to include the income or
earnings of those mentioned in the subdivision “other fixed taxes” under the
general paragraph “(A) On business”.

On the other hand, the provision applicable to the occupation tax is No. (7)
of the above-quoted section which, in express language, speaks of the exception
“in respect to the tax imposed by paragraph (B) of this section”.

It appearing that petitioners are not employed in any branch of the service
of the Government or of any religious, educational, or charitable institution,
or hospital, sanitarium, or any.similar establishment not conducted for private
gain, they are not exempt from the occupation tax herein involved and are,
therefore, not entitled to the refund of the tax paid by them.

In the light of the foregoing, the decision of the Court of Tax Appeals
appealed from is affirmed, with costs against the petitioners-appellants. So
ordered.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L., Paredes and Dizon, JJ., concur.