COMMISSIONER OF INTERNAL REVENUE vs.
PHILIPPINE AIRLINES, INC. - Overseas
Communications Tax
FACTS:
PHILIPPINE AIRLINES, INC paid the 10%
Overseas Communications Tax (OCT) for overseas
telephone calls made through PLDT. It then later filed
with the BIR a claim for refund of the amount paid as
Overseas Communications Tax, claiming that other
than being liable for basic corporate income tax or the
franchise tax, whichever was lower, it was exempted
from all other taxes by virtue of the "in lieu of all
taxes" clause in its charter.
ISSUE:
Is PHILIPPINE AIRLINES, INC liable for the
Overseas Communications Tax?
HELD:
NO. The language of PHILIPPINE AIRLINES, INCs
franchise is clearly all-inclusive --- the basic corporate
income tax or franchise tax paid by respondent shall
be "in lieu of all other taxes except only real property
tax. It is not the fact of tax payment that exempts it,
but the exercise of its option. In the event that
respondent incurs a net loss, it shall have zero liability
for basic corporate income tax, the lowest possible tax
liability. There being no qualification to the exercise of
its options, then Respondent is free to choose basic
corporate income tax, even if it would have zero
liability.
US v. Antonio Abad Santos
36 Phil 243
FACTS:
Abad Santos, the appellant was charged of
violating the provision in Internal Revenue Law which
states that it shall keep a day book in which one
should enter in detail the amount of money received in
the conduct of the business (Circular No. 467 issued
by collector of Internal Revenue). Violation of any
provisions of IRL or any lawful regulation of BIR is
stated in Sec 185 of RA 2339 (Sec 227 of Admin Code)
The appellant owns a printing establishment
called The Excelsior therefore is bound to the circular
that was issued. It was charged in the information that
it failed to make an entry for Jan 5 1915 and therefore
violated the said regulation.
Appellant employed a bookkeeper that is said to
be in-charge of the book.
ISSUE:
Won the appellant is guilty of violating the
Internal Revenue Law.
HELD:
No. The appellant must be acquitted. It is clear
that the appellant had employed a bookkeeper to be
in-charge, and he took no part in keeping the book in
question. Therefore, the appellant knew nothing. Penal
Statutes are to be strictly construed and courts will not
hold a person criminally responsible for the acts of
another, committed without his knowledge or consent,
unless there is a statute requiring it. LA CARLOTA SUGAR CENTRAL vs. JIMENEZ

Peo v. Gatchalian
A statute requires that an employer shall pay a
minimum wage of not less than a specified amount FACTS:
and punishes any person who willfully violates any of
its provisions In September, 1955 La Carlota Sugar Central
The fact that the nonpayment of the minimum wage is a domestic corporation hereinafter referred to as the
not specifically declared unlawful, does not mean that Central, managed, controlled and operated by Elizalde
an employer who pays his employees less than the & Co., Inc., referred to hereinafter as Elizalde, imported
prescribed minimum wage is not criminally liable, for fertilizers. The corresponding letter of credit was
the nonpayment of minimum wage is the very act opened through the Hongkong & Shanghai Banking
sought to be enjoined by the law Corporation in the name of the Central and invoices,
bill of lading, and all other papers incident to said
La Carlota Sugar Central v. Jimenez importation were also in the name of the Central.
STATUTE: tax provided shall not be collected on foreign
exchange used for the payment of fertilizers when
imported by planters or farmers directly or through
their cooperatives
When the fertilizers arrived in the Philippines,
the Central Bank imposed on, and demanded with the
RULING: The importation of fertilizers by an entity
provisions of Republic Act No. 601, as amended, and
which is neither a planter nor a farmer nor a
the Central paid in that connection the total sum of
cooperative of planters or farmers is not exempt from
P20,872.09.
payment of the tax, even though said entity merely
acted as agent of planter or farmer as a sort of
accommodation without making any profit from the
transaction, for the law uses the word directly which
means without anyone intervening in the importation On November 18, 1955 the Central filed,
and the phrase through their cooperatives as the through the Hongkong & Shanghai Banking
only exemption Corporation, a petition for the refund of the P20,872.09
paid as above stated, claiming that it had imported the
fertilizers mentioned heretofore upon request and for
the exclusive use of five haciendas known as
"Esperanza", "Nahalin", "Valencia" owned by
Elizalde "Consuelo" and "Maayon", these last two
managed by the same company, and therefore the
importation was exempt from the 17% exchange tax in
accordance with Sec. 2, Rep. Act 601, as amended by
Act 1375. The Auditor of the Central Bank, however,
denied the petition. The Central requested the Auditor
to reconsider his ruling, but after a reexamination of all
pertinent papers the reconsideration was denied. The
Central then appealed to the Auditor General of the
Philippines, who then, affirmed the ruling of the
Auditor of the Central Bank upon the ground that "the
importation of the fertilizers here in question does not
fall within the scope of the exempting provisions of
Section 2 of Republic Act No. 601, as amended by
Republic Act No. 1357. Accordingly, the decision of the
Auditor, Central Bank of the Philippines, denying the
aforementioned request for refund of 17% exchange
tax, is affirmed. In view of this result, the Central and
Elizalde filed the present petition for review.
ISSUE:
Whether or not the importation of the fertilizers
mentioned is covered by the exemption provided by
Sections 1 and 2 of Republic Act No. 601, as amended
by Republic Acts Nos. 1175, 1197 and 1375.
HELD:
No. The law is clear that imported fertilizers are
exempt from the payment of the 17% tax only if the
same were imported by planters or
farmers directly or through their cooperatives. In the
present case, as appellants admit that the Central "is
not the planter ultimately benefited by the fertilizers,
much less a cooperative within the purview of Rep. Act
No. 601, as amended", Also, acting as agent acquires
added force upon consideration of the fact that the
legal provision in question has already established an
exception from the meaning or scope of the term
"directly or through their cooperatives". Hence, the
imported fertilizers in question are not entitled to the
exemption provided by law.
The rule is that the exempting provision is to be
construed liberally in favor of the taxing
authority and strictly against exemption from
tax liability, the result being that statutory
provisions for the refund of taxes are strictly
construed in favor of the State and against the
taxpayer.
Manila Railroad Co. v. Collector of Customs
Issue and Ruling: Whether the lower court is favor of
MRR. Where there is in the same statute a particular
enactment and also a general one what is embraced in
the former, the particular enactment must be
operative and the general enactment must be taken to
affect only such cases within its general language as
are not within the provision of the particular
enactment.
Manila Railroad Company, plaintiff and appellee
v Insular Collector of Customs, defendant and
appellant MALCOLM, J. Promulgated March 12,
1929
FACTS:
Dust Shields (Dust shields are made of wool and
hair. The component material of chief value is the
wool. The purpose of the dust shield is to cover the
axle box in order to protect from dust the oil deposited
therein which serves to lubricate the bearings of the
wheel.) are used by the Manila Railroad Company on
all of its railway wagons. It was the decision of the
Insular Collector of Customs that dust shields should
be classified as "manufactures of wool, not otherwise
provided for." Dust shields are classified for the
purposes of the tariff under paragraph 197 of section
8, of the Tariff Law of 1909 as detached parts of
vehicles for use on railways, and not under paragraph
141 of the same section of the law as manufactures of
wool, not otherwise provided for.
ISSUE:
How should dust shields be classified for the
purposes of the tariff, under paragraph 141 or under
paragraph 197 of section 8, of the Tariff Law of 1909?
"141. Manufactures of wool, not otherwise provided
for, forty per centum ad valorem."
"197. Vehicles for use on railways and tramways, and
detached parts thereof, ten per centum ad valorem."
HELD:
The question to be decided is not whether the
Collector was wrong but whether the importer was
right.
It is the general rule in the interpretation of
statutes levying taxes or duties not to extend their
provisions beyond the clear import of the language
used. In every case of doubt, such statutes are
construed most strongly against the Government and
in favor of the citizen, because burdens are not to be
imposed, nor presumed to be imposed, beyond what
the statutes expressly and clearly import.
Where there is in the same statute a particular
enactment and also a general one which in its most
comprehensive sense would include what is embraced
in the former, the particular enactment must be
operative, and the general enactment must be taken
to affect only such cases within its general language as
are not within the provisions of the particular
enactment.
There are present two fundamental
considerations which guide the way out of the legal
dilemma. The first is by taking into account the
purpose of the article and then acknowledging that it
is in reality used as a detached part of railway
vehicles. The second point is that paragraph 141 is a
general provision while paragraph 197 is a special
provision. We conclude that the trial judge was correct
in classifying dust shields under paragraph 197 of
section 8, of the Tariff Law of 1909, and in refusing to
classify them under paragraph 141 of the same section
of the law. Judgment of the Lower Court is affirmed. No
costs.
Serfino v. Court of Appeals
Case No. 145
G.R. No. 40858 (September 15, 1987)
Chapter VIII, Page 345, Footnote No. 75
FACTS:
A parcel of land, consisting of 21.1676 hectares
situated in Sagay, Negros Occidental, was patented in
the name of Pacifico Casamayor, under Homestead
Patent No. 44139. Upon registration of said patent,
OCT No. 1839 was issued by said office in the name of
Pacifico Casamayor. In 1945, Casamayor sold the land
in favor of Nemesia Baltazar. Apparently, OCT No. 1839
was lost during the war and upon the petition of
Baltazar, the CFI of Negros ordered its reconstitution in
the name of Casamayor. On the same day, TCT No. 57-
N was issued in the name of Nemesia Baltazar but
after the cancellation of OCT No. 14-R. In 1951,
Baltazar sold the property to Respondent Lopez Sugar
Central, which did not present the documents for
registration until December 1964 to the Office of
Registry of Deeds. Said office refused registration upon
its discovery that the same property was covered by
another certificate of title, TCT No. 28985, in the name
of Petitioner.
ISSUE:
W/N the purchase by Respondent Lopez Sugar
Central of the lot in question was null and void from
the beginning.
HELD:
No, applying Sec. 118 of C.A. No. 141, which
prohibits the alienation of homestead lots to private
individuals within 5 years from the date of the
issuance of the patent, and not Sec. 121 which
governs sale to corporations. Since the grant was more
than 5 years before, the transfer to Nemesia Baltazar
was valid and legal.
VILLAVERT vs. Employees Compensation
Commission
Facts:
This is a petition to review the decision of the
Employees Compensation Commission affirming the
decision of the Government Service Insurance System
denying the claim for death benefits.
The petitioner, Domna N. Villavert, is the mother
of the late, Marcelino N. Villavert, who died of acute
hemorrhagic pancreatitis, employed as a Code Verifier
in the Philippine Constabulary. She filed a claim for
income benefits for the death of her son under P.D. No.
626 as amended with GSIS. The said claim was denied
by GSIS on the ground that acute hemorrhagic
pancreatitis is not an occupational disease and that
the petitioner had failed to show that there was a
causal connection between the fatal ailment of
Marcelino N. Villavert and the nature of his
employment.
The record shows that in addition to his duties
as Code Verifier, Marcelino N. Villavert also performed
the duties of a computer operator and clerk typist. On
the day that he died, he performed his duties not only
as code verifier but also handled administrative
functions, computer operation and typing jobs due to
shortage of civilian personnel. Although he was
complaining of chest pain and headache, after a whole
day of strenuous activities, Marcelino was still required
to render overtime service until late in the evening of
the same day. He went home late at night and due to
fatigue, he went to bed. Shortly, Marcelino was noticed
by his mother, herein petitioner, gasping for breath,
perspiring profusely, and mumbling incoherent words.
The petitioner rushed Marcelino to hospital where he
was pronounced dead.
GSIS and the Employees Compensation
Commission denied the claim for compensation on the
ground that the petitioner did not present evidence
that the illness of Marcelino N. Villavert, acute
hemorrhagic pancreatitis, was caused or aggravated
by the nature of his duties as employee of the
Philippine Constabulary.
The Employees Compensation Commission, citing a
book on medicine, said:
In medical science, acute hemorrhagic pancreatitis is
acute inflammation with hemorrhagic necrosis of the
pancreas. It occurs most commonly in association with
alcoholism. The onset of the symptoms often occurs
during or shortly after bouts of alcoholic intoxication. It
also occurs in association with biliary tract disease.
Occ asionally, it occurs as a complication of peptic
ulcer, mumps, viral hepatitis or following the use of
drugs such as glucocorticoids, or chlorothiazide.
However, the Medico Legal Officer of the NBI
stated that the exact cause of acute hemorrhagic
pancreatitis is still unknown despite extensive
researches in this field, although most research data
are agreed that physical and mental stresses are
strong causal factors in the development of the
disease.
Issue:
Whether or not there is direct causal connection
between the fatal ailment of Marcelino N. Villavert and
the nature of his employment which entitles his
mother to claim death benefits
Held:
Yes.
Hemorrhagic Pancreatitis; Compensability
of Claim;Illness directly caused or aggravated by
workmans duties.From, the foregoing facts of
record, it is clear that Marcelino N. Villavert died of
acute hemorrhagic pancreatitis which was directly
caused or at least aggravated by the duties he
performed as coder verifier, computer operator and
clerk typist of the Phil.ippine Constabulary. There is no
evidence at all that Marcelino N. Villavert had a bout
of alcoholic intoxication shortly before he died.
Neither is there a showing that he used drugs.
Statutory Construction, Doubts in
implementation of Labor Code and its
implementing rules resolved in favor of labor.It
should be noted that Article 4 of the Labor Code of the
PHILIPPINES, as amended, provides that All doubts in
the implementation and interpretation of this Code,
including its implementing rules and regulations shall
be resolved in favor of labor.
DEL ROSARIO & SONS V. NLRC
GR L-64204, 31 MAY 1985 (135 SCRA 669)
FACTS:
On 1 February 1978, Del Rosario and Sons
Logging Enterprises, Inc. entered into a Contract of
Services with Calmar Security Agency whereby the
latter undertook to supply the former with security
guards at the rate of P300.00 per month for each
guard. Thereafter, Paulino Mabuti, Napoleo Borata and
Silvino Tudio filed a Complaint against the Security
Agency and petitioner, for underpayment of salary,
non-payment of living allowance, and 13th month pay.
Thereafter, five other guards filed their complaint for
the same causes of action. Petitioner contended that
complainants have no cause of action against it due to
absence of employer-employee relationship between
them. They also denied liability alleging that due to the
inadequacy of the amounts paid to it under the
Contract of Services, it could not possibly comply with
the payments required by labor laws.
Assigned for compulsory arbitration, the Labor
Arbiter rendered a decision dismissing the complaint
for want of employer-employee relationship. When the
case was appealed to the NLRC, the decision was
modified by holding that petitioner is liable to pay
complainants, jointly and severally, with the Security
Agency on the ground that the petitioner is an indirect
employer pursuant to Articles 106 and 107. Hence,
the appeal. The petitioner contended that NLRC erred
in giving due course to the appeal despite the fact that
it was not under oath and the required appeal fee was
not paid; in holding it jointly and severally liable with
the Security Agency; and in refusing to give due
course to its Motion for Reconsideration.
ISSUE(S):
Whether the formal defects of the appeal of the
security agency invalidate the appeal.
Whether the security guards from the agency are
entitled to benefits claimed from the company
HELD:
 The formal defects in the appeal of the Security
Agency were not fatal defects. The lack of verification
could have been easily corrected by requiring an oath.
The appeal fee had been paid although it was delayed.
Failure to pay the docketing fees does not
automatically result in the dismissal of the appeal.
Dismissal is discretionary with the Appellate Court and
discretion must be exercised wisely and prudently,
never capriciously, with a view to substantial justice.
Failure to pay the appeal docketing fee confers a
directory and not a mandatory power to dismiss an
appeal and such power must be exercised with sound
discretion and with a great deal of circumspection,
considering all attendant circumstances. Moreover, as
provided for by Article 221 of the Labor Code in any
proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in Courts of
law or equity shall not be controlling and it is the spirit
and intention of this Code that the Commission and its
members and the Labor Arbiters shall use every and
all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of
due process.
Further, Articles 106 of the Labor Code provides
that in the event that the contractor or subcontractor
fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to
such employees to the extent of the work performed
under the contract, in the same manner and extent
that he is liable to employees directly employed by
him, and Article 107 provides that the provisions of
the immediately preceding Article shall likewise apply
to any person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of any
work, task, job or project. In the case at bar,
petitioner became an indirect employer of
respondents-complainants when petitioner entered
into a Contract of Services with the Security Agency
and the latter hired the complainants to work as
guards for the former. However, the petitioners
liability should be without prejudice to a claim for
reimbursement against the Security Agency for such
amounts as petitioner may have to pay to
complainants. The Security Agency may not seek
exculpation by claiming that petitioners payments to
it were inadequate. As an employer, it is charged with
knowledge of labor laws and the adequacy of the
compensation that it demands for contractual services
is its principal concern and not any others.
The Supreme Court affirmed the judgment
under review, without prejudice to petitioners right to
seek reimbursement from Calmar Security Agency for
such amounts as petitioner may have to pay to
complainants. Costs against the private respondent.

Manahan vs ECC
Facts:
Maria E. Manahan, the widow of Nazario
Manahan Jr., who died of Enteric fever while employed
as a classroom teacher in Las Pinas Municipal High
School on May 8, 1975, claims death benefit from the
Government Service Insurance System under
Presidential Decree 626 but was denied due to the
finding that the ailment, typhoid fever, is not an
occupational disease.
Mrs. Manahan appealed to the Employees
Compensation Commission which affirmed the decision
of the GSIS based on a finding that the ailment of the
deceased, enteric fever, was not induced or
aggravated by the nature of his duties as a teacher.
Petitioner argues that his husbands ailment was
acquired in the duration of his employment, a year
before he succumbed to his death in 1975.
Issue:
Whether or not Petitioner claim for death benefit
should be awarded in accordance to the new labor
code.
Held:
The medical record of the deceased shows that
he had a history of ulcer-like symptoms (p. 3, ECC
rec.). This butresses the claimant's claim that her
husband had been suffer from ulcer several months
before his death on May 8, 1975. This is likewise
sustained by the medical certificate (p. 12, ECC rec.)
issued by Dr. Aquilles Bernabe to the effect that
"Nazario Manahan was treated for epigastric pain
probably due to hyper-acidity on December 10, 1974."
Epigastric pain is a symptom of ulcer, and ulcer is a
common complication of typhoid fever. There is even
such a thing as "typhoidal ulcer" (p. 812, supra).
Because of these circumstances, the illness that
claimed the life of the deceased could have had its
onset months before December 10, 1974. Such being
the case, his cause of action accrued before December
10, 1974.
In the case of Corales vs. ECI (L-44063, Feb. 27, 1979),
We ruled that:
... Article 294, Title III (Transitory and Final Provisions)
of the New Labor Code provides that all actions and
claims accruing prior to the effectivity of this Code
shall be determined in accordance with the laws in
force at the time of their accrual and under the third
paragraph of Article 292, Title 11 Prescription of
Offenses and Claims, workmen's compensation claims
accruing prior to the effectivity of this Code and during
the period from November 1, 1974 up to December 31,
1974 shall be processed and adjudicated in
accordance with the laws and rules at the time their
causes of action accrued. Hence, this Court applied the
provisions of the Workmen's Compensation Act, as
amended, on passing upon petitioner's claim.
Pursuant to such doctrine and applying now the
provisions of the Workmen's Compensation Act in this
case, the presumption of compensability subsists in
favor of the claimant.
In any case, We have always maintained that in
case of doubt, the same should be resolved in favor of
the worker, and that social legislations like the
Workmen's Compensation Act and the Labor Code
should be liberally construed to attain their laudable
objective, i.e., to give relief to the workman and/or his
dependents in the event that the former should die or
sustain an injury.
Moreover, the constitutional guarantee of social
justice and protection to labor make Us take a second
look at the evidence presented by the claimant.
As a teacher of the Las Pias Municipal High
School at Las Pias Rizal, the deceased used to eat his
meals at the school canteen. He also used the toilet
and other facilities of the school. Said the respondent
Commission," ... it is not improbable that the deceased
might have contracted the illness during those rare
moments that he was away from his family, since it is
medically accepted that enteric fever is caused by
salmonella organisms which are acquired by ingestion
of contaminated food or drinks. Contamination of food
or water may come from the excretion of animals such
as rodents flies, or human beings who are sick or who
are carriers, or infection in meat of animals as food.
Meat, milk and eggs are the foods most frequently
involved in the transmission of this type of species,
since the organism may multiply even before
ingestion. ..." These findings of the respondent
Commission lead to the conclusion that the risk of
contracting the fatal illness was increased by the
decedent's working condition.
In view of the foregoing, the petition for review is
meritorious.

Rule on the construction of labor laws
1. Manahan v. ECC
This Court applied the provisions of the Workmens
Compensation Act, as amended, on passing upon
petitioners claim. The illness that claimed the life of
the deceased may have its onset before 10 December
1974, thus, his action accrued before 10 December
1974. Still, in any case, and in case of doubt, the same
should be resolved in favor of the worker, and that
social legislations like the Workmens Compensation
Act and the Labor Code should be liberally
construed to attain their laudable objective, i.e., to
give relief to the workman and/or his dependents in
the event that the former should die or sustain an
injury. Pursuant to such doctrine and applying now the
provisions of the Workmens Compensation Act in this
case, the presumption of compensability subsists in
favor of the claimant.
2. Villavert v. ECC
From the foregoing facts of record, it is clear that
Marcelino N. Villavert died of acute hemorrhagic
pancreatitis which was directly caused or at least
aggravated by the duties he performed as code
verifier, computer operator and clerk typist of the
Philippine Constabulary. Further, Article 4 of the Labor
Code of the Philippines, as amended, provides that all
doubts in the implementation and interpretation of this
Code, including its implementing rules and regulations
shall be resolved in favor of labor.
3. Del Rosario & Sons v. NLRC
Articles 106 of the Labor Code provides that in the
event that the contractor or subcontractor fails to pay
the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable
with his contractor or subcontractor to such employees
to the extent of the work performed under the
contract, in the same manner and extent that he is
liable to employees directly employed by him, and
Article 107 provides that the provisions of the
immediately preceding Article shall likewise apply to
any person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of any
work, task, job or project. The Supreme Court
affirmed the judgment under review, without prejudice
to petitioners right to seek reimbursement from
Calmar Security Agency for such amounts as petitioner
may have to pay to complainants.