Commissioner of Internal Revenue vs. Hawaiian-Philippine Company G.R. No. L-16315

COMMISSIONER OF INTERNAL REVENUE vs. HAWAIIAN-PHILIPPINE COMPANY G.R. No.
L-
16315
Facts:
Hawaiian-Philippine Company, 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
and thereafter is deposited in the warehouses of the latter. 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 first 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. Henceforth, if the sugar is not yet
withdrawn, a penalty of P0.25 per picul or fraction thereof a month is imposed.
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 Bureau determined the Co.s liability for fixed and percentage taxes, 25% surcharge, and
administrative penalty in the aggregate amount of P8,411.99.
The Co. deposited the amount with the Office of the City Treasurer of Silay. Later, it filed its
petition for review before the CTA. The Co. disclaims liability, 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.
The Co. contend that the imposition of the tax under consideration would amount to double taxation.
Issue:
Whether or not petitioner is a warehouseman liable for the payment of the fixed and percentage taxes.
Whether or not there is Double Taxation.
Held:
SEC. 182. of the Tax Code provides that 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. SEC.
191 also provides that warehousemen shall pay a tax equivalent to THREE PERCENTUM of their gross
receipts. A warehouseman has been defined as one who receives and stores goods of another for
compensation. 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. 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 "quedans" to the planters who own the sugar and
collects storage fees upon the expiration of the 90 day period. The fact that respondent's warehousing
business is carried in addition to, or in relation with, the operation of its sugar central is not sufficient to
exempt it from payment of the tax prescribed in the legal provisions quoted. 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.
COMMISSIONER OF INTERNAL REVENUE vs PROCTER & GAMBLE PHILIPPINE
MANUFACTURING CORPORATION and THE COURT OF TAX APPEALS (G.R. No. L-66838
December 2, 1991)
FACTS:
Procter and Gamble Philippines declared dividends payable to its parent company and sole stockholder,
P&G USA. Such dividends amounted to Php 24.1M. P&G Phil paid a 35% dividend withholding tax to
the BIR which amounted to Php 8.4M It subsequently filed a claim with the Commissioner of Internal
Revenue for a refund or tax credit, claiming that pursuant to Section 24(b)(1) of the National Internal
Revenue Code, as amended by Presidential Decree No. 369, the applicable rate of withholding tax on
the dividends remitted was only 15%.
ISSUE:
Whether or not P&G Philippines is entitled to the refund or tax credit.
HELD:
YES. P&G Philippines is entitled.
Sec 24 (b) (1) of the NIRC states that an ordinary 35% tax rate will be applied to dividend remittances
to non-resident corporate stockholders of a Philippine corporation. This rate goes down to 15% only
if the country of domicile of the foreign stockholder corporation shall allow such foreign corporation a
tax credit for taxes deemed paid in the Philippines, applicable against the tax payable to the
domiciliary country by the foreign stockholder corporation. However, such tax credit for taxes deemed
paid in the Philippines MUST, as a minimum, reach an amount equivalent to 20 percentage points
which represents the difference between the regular 35% dividend tax rate and the reduced 15% tax
rate. Thus, the test is if USA shall allow P&G USA a tax credit for taxes deemed paid in the
Philippines applicable against the US taxes of P&G USA, and such tax credit must reach at least 20
percentage points. Requirements were met.

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COMMISSIONER OF INTERNAL REVENUE vs. HAWAIIAN-PHILIPPINE COMPANY G.R. No.

Hawaiian-Philippine Company, a corporation duly organized in accordance with law, is

Whether or not there is Double Taxation.

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