Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24039 June 29, 1968
TEODORO PADILLA, plaintiff-appellant,
vs.
CITY OF PASAY, HERMOGENES M. DIEGO as City Treasurer of Pasay City, defendants-appellees.
Padilla Law Office for plaintiff-appellant.
Assistant City Fiscal Herminio A. Avendano for defendants-appellees.
FERNANDO, J.:
In this suit for the refund of a penalty alleged to be erroneously and illegally collected, the amount due and demandable being in excess of what ought to have been paid on the realty tax due, it being shown that the first installment of such tax was paid on time, but the second installment, through oversight, was not remitted until after the lapse of one month from the date due, the question is whether or not the taxpayer should be held liable for the penalty based on the amount of the whole tax to be computed from the date such tax was due or from the time the second installment ought to have been paid but was not. The lower court, on the basis of the statute providing that all taxes on real estate are due and payable annually on the first day of June, held that delinquency is to be counted from such a date even if the first installment were paid on time.
The facts, as alleged by plaintiff Teodoro Padilla against the City of Pasay and its City Treasurer, were substantially admitted. Plaintiff is the absolute owner of the property consisting of land and improvements in the City of Pasay assessed at P113,000.00. Based on such assessment, the total tax due for 1963 on said property was P1,412.50. Plaintiff, as taxpayer, taking advantage of an option granted him by the Pasay City Charter, 1 paid the fifty per cent first installment of the realty tax due that year within the period allowed by law in the amount of P706.25. The second installment in the same amount ought to have been paid not later than October 30, 1963, but through oversight, it was not until December 23, of that year that it was done. Accordingly, defendant City Treasurer required plaintiff to pay a penalty of P169.50. This was paid under protest, it being the contention of plaintiff that, based on the statute, 2 he should have been required to pay only the sum of P28.25, there being only one full month of delinquency, the payment having been made on December 23, 1963. He therefore sought the refund of P141.25 as being in excess of the penalty that could be legally imposed on him. The answer by defendants alleged that the statutory provision correctly construed would not justify the claim for refund of the amount collected, which was the proper penalty under the law.
The lower court, in a decision appealed from, sustained defendants. Thus: "The provision of the first paragraph of the aforequoted Section 43 of Republic Act 183, provides, among other things, that all taxes on real estate for any year shall be due and payable annually on the first day of June and from this date such taxes together with all penalties accruing thereto shall constitute a lien on the property subject to taxation. Consequently, a taxpayer who fails to pay his real estate tax on the first day of June, the date when the tax becomes due and payable, is delinquent from that time on. When plaintiff did not therefore, pay the whole amount of his estate tax due on the first day of June, he already became delinquent from then on. The contention of the plaintiff that he became delinquent only after October 31, 1963, when he failed to pay the second half of the installment for the payment of the total tax due, is erroneous." 3 It therefore dismissed, as already noted, the complaint with costs against plaintiff. Hence this appeal.
In appellant's brief, it is submitted that the taxpayer having been given an option to pay his realty tax in two installments and appellant having paid within the permissible period the first installment, he could not be considered delinquent insofar as the first half of the realty tax is due. His delinquency should date only from November 1, 1963 by virtue of his failure to pay on October 30 of the same year. For appellant, it is inconceivable "how he can be declared delinquent from June 1, 1963 since the second installment of his real estate tax was not yet due on that date but will have become due and payable only on the thirtieth of October 1963." 4 The decision then, according to appellant, "negates the taxpayer's option to pay his realty tax in two (2) installments, as expressly granted" 5 by law and amounted to "unwarranted judicial legislation."
Appellant's theory is not inherently implausible. Nonetheless, it must yield to the specific language of the law which is controlling. The last sentence of the first paragraph of the controlling legal provision 6 reads thus.: "All taxes on real estate for any year shall due and payable annually on the first day of June and from this date such taxes together with all penalties accruing thereto shall constitute a lien on the property subject to such taxation." Two paragraphs later, the taxpayer is given the option to pay "in two installments to be fixed annually by the Municipal Board simultaneously with the rate per centum ad valorem taxation: Provided, That the time limit for the first and second installments shall be set at not later than the thirty-first day of May and the thirtieth day of October of each year, respectively." Then comes the provision as to the penalty to be imposed in case of delinquency and how to fix the same: "At the expiration of the time for the payment of the real estate tax without penalty, the taxpayer shall be subject, from the first day of delinquency, to the payment of a penalty at the rate of two per centum for each full month of delinquency that has expired, on the amount of the original tax due, until the tax shall have been paid in full or until the property shall have been forfeited to the city as provided in this Act: Provided, That in no case shall the total penalty exceed twenty-four per centum of the original tax due."
Constructed together, the above provisions yield no other conclusion but that the taxes are due and payable "on the first day of June" from which date "such taxes together with all penalties accruing thereto shall constitute a lien on the property subject to such taxation." It is true the taxpayer is given the option to pay in two installments with the respective dates for the payment thereof "at not later than the thirty-first day of May and the thirtieth day of October of each year, respectively." Then comes the crucial and decisive provision: "At the expiration of the time for the payment of the real estate tax without penalty, the taxpayer shall be subject, from the first day of delinquency, to the payment of a penalty at the rate of two per centum for each full month of delinquency that has expired, on the amount of the original tax due, until the tax shall have been paid in full or until the property shall have been forfeited to the city...."
The law is specific and mandatory. It calls for application as thus worded. There is no room for interpretation. The penalty is to be based "on the amount of the original tax due." The fact that the first installment was made on time does not benefit the taxpayer at all, if thereafter the second installment were not paid on time. In effect then, the option thus granted, to pay in two installments, must be strictly complied with, otherwise the operation of the plain statutory command that the tax due and payable on June 1st becomes unavoidable, and delinquency is to be computed from such a date.
It is well-settled that a statute, free from any constitutional infirmity, must be enforced as written. The applicable provision, viewed as a whole, makes clear that the penalty must be computed from the time the realty tax was due. To the extent that the lower court decision adheres literally to such provision, it cannot be assailed as erroneous.
The conclusion reached is reinforced by the principle that lies behind a recent decision in Acoje Mining Co., Inc. v. The Commissioner of Internal Revenue. 7 The principal issue in the case, according to the opinion of Justice Castro, is whether "the petitioner's obligation to pay the whole amount of its tax arose upon its failure to pay the first installment thereof on May 15, 1958, without need of notice or demand from the respondent Commissioner." After quoting the appropriate legal provision, 8 that if any installment is not paid on or before the date fixed for its payment, the whole amount of the tax "shall be paid upon notice and demand," the opinion goes on to state that to sustain petitioner's contention that there should be such a notice or demand would be to place in the hands of the Commissioner of Internal Revenue the power to condone interests. Such a consequence, the Court could not look with approval on, not only because of the uncertainty that would be created and the possibility of the uneven applications of the law, but likewise because of the demands of public policy.
It is to be admitted that the case is not squarely in point. Nonetheless, the peremptory requirements of public policy that would stress the necessity for full and unconditional compliance with the language of the law are present in this case. As a matter of fact, in that opinion less than full adherence to the wording of the statute did not suffice to defeat the challenged government exertion of the taxing power. Where, as here, there is no basis for such an assertion, there being fidelity to what is required by the legal provision applicable, what was done by defendant City of Pasay could not be successfully assailed. The obligation to pay a penalty having been thus provided for in language that evinced legislative intent clearly and the taxpayer having it within his power to avoid the imposition of such penalty in the event he chooses to exercise the option of paying in two installments by avoiding late remittance of the tax due, it does appear clear that no departure from the legal norm had been shown. The terms of the statute provide the safest guide as to the statutory policy, to which obedience is due and from which deviation is not allowable. 9
The appealed judgment must stand. According to the express provision of the statute, the penalty at the rate of two per centum on the amount of the original tax due should be imposed "for each full month of delinquency." The payment for the second installment having been made on December 23, 1963, the month of December is to be excluded from computation of the penalty. From June to November, at the rate of P28.25, which is 2% of the tax due, based on P1,412.50, the amount that should be collected is P169.50. Such amount having been collected as penalty, the appellant paid exactly what was due.
WHEREFORE, the decision appealed from is affirmed. Without pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro and Angeles, JJ., concur.
Separate Opinions
SANCHEZ, J., dissenting:
In this dissent, the writer concedes that the word-by-word montage as it is presented by Section 43 of the charter of Pasay City leaves no leeway for interpretation. In its controlling provisions, said Section 43 reads:
SEC. 43. Taxes on real estate — Extension and remission of the tax. — A tax, the rate of which shall not exceed two per centum ad valorem to be determined by the Municipal Board, 1 shall be levied annually on or before the second Monday of January on the assessed value of all real estate in the city subject to taxation. All taxes on real estate for any year shall be due and payable annually on the first day of June and from this date such taxes together with all penalties accruing thereto shall constitute a lien on the property subject to such taxation.
x x x x x x x x x
At the option of the taxpayer, the tax for any year may be paid in two installments to be fixed annually by the Municipal Board simultaneously with the rate per centum ad valorem taxation: Provided, That the time limit for the first and second installments shall be set at not later than the thirty-first day of May and the thirtieth day of October of each year, respectively.
x x x x x x x x x
At the expiration of the time for the payment of the real estate tax without penalty, the taxpayer shall be subject, from the first day of delinquency, to the payment of a penalty at the rate of two per centum for each full month of delinquency that has expired, on the amount of the original tax due, until the tax shall have been paid in full or until the property shall have been forfeited to the city as provided in this Act: Provided, That in no case shall the total penalty exceed twenty-four per centum of the original tax due.
x x x x x x x x x
Brought to the fore is the question of fixing the starting point of the computation of the delinquency penalty of 2% pursuant to the above law. For, plaintiff, whose tax liability for 1963 was P1,412.50, elected to pay his tax liability in installments. He paid the first installment of P706.25 within the permissible period. He was, however, able to pay the second installment only on December 23, 1963, well beyond the statutory limit of October 30. Collected from him was the penalty amounting to P169.50 representing 2% monthly from June to November, inclusive.
From this state of facts, the majority drew the conclusion that the taxpayer's delinquency penalty should attach beginning June 1, 1963. We take the position that such delinquency penalty starts from October 31, 1963. Thus, the dissent.
1. Back to the statute. It says that the 2% penalty "for each full month of delinquency that has expired" shall be paid. When does this accrue? The same law gives the ready answer. It specifies: " from the first day of delinquency." And, when is this? We read Section 43 in context, thus: "the first day of delinquency" is the first day after "the expiration of the time for the payment of the real estate tax without penalty." The accent is on the words — "without penalty". Accordingly, a taxpayer, who pays the first installment on time will certainly have as his expiry date "without penalty" the last day for paying the second installment. Only thereafter does delinquency start.
2. Now, to the case at bar. Here, the taxpayer elected to pay installments. His rights and liabilities therefore should be gauged by the provisions in the law germane to his choice. The law is clear. The first installment falls due on May 31; the second matures on October 30. He paid the first on time. Was he delinquent in June? July? August? September? October 30? The answer is emphatically No. Contrariwise, we will be depriving him of his statutory right to pay the tax on or before October 30 — without penalty. For, his time within which to pay the tax had not yet lapsed.
3. The next problem thrust upon us is this: Given the fact that he paid the second installment beyond the statutory limit — October 30 — from what time is the delinquency penalty to be reckoned?
This brings us to the definition of the word "delinquency". The ordinary dictionary meaning of delinquency is "failure, omission, or violation of duty". 2 Jurisprudence defines it also as "failure or omission of duty, a fault, a misdeed, an offense, a misdemeanor, a crime." 3 From this, we cannot but extract a view that the first day of delinquency here is that day following the day the taxpayer fails or omits to perform or violates his statutory duty. As aforestated, the taxpayer was called upon by law to pay the second installment of the tax not later than October 30. Hence, the first day of delinquency — for purpose of imposing the penalty — is October 31.
In the position we thus take, we find comfort in the precept enunciated by this Court in the early case of U.S. vs. Labadan, 4 that "the mere failure to pay one's taxes does not render one delinquent until and unless the entire period has elapsed within which the taxpayer is authorized by law to make such payments without being subjected to the payment of penalties." This is but in confirmation of an earlier view also expressed by this Court in U.S. vs. Estavillo, 5 that a "taxpayer is delinquent if he fails to pay his taxes within the period fixed by statute or executive order."
Stated by way of paraphrase, we say that "until and unless the entire period" for the payment of the second installment, i.e., June 1 to October 30, shall have elapsed "within which the taxpayer is authorized by law to make such payments without being subjected to the payment of penalties", the ineluctable conclusion is that he is not delinquent before the last day — October 30 — shall have expired. Otherwise, we will be imposing a suspensive condition in the payment of installments without penalty. And, we think that this is not written into the statute.
4. Of course, we have not overlooked the charter provisions that the tax becomes "due and payable annually on the first day of June." But the words "due and payable" can merely denote the existence of a simple indebtedness without reference to the time of payment; they do not necessarily have to refer to the time limit or the date on which the taxes must be paid. 6 In fact, under the statute the city council may fix the time of payment on installments and at times other than June 1. Here, the city council fixed the installment dates, viz: the first installment is up to May 31; but the second goes beyond June 1 — it may be paid on or before October 30. All of which goes to show that the term "due and payable annually on the first day of June" connotes the idea of simple indebtedness when it comes to installment payments, not the precise time for payment.
The result is that in opting to pay by installments, plaintiff here does not automatically become delinquent as of the first of June. The accrual of the penalty falls on October 31, not earlier. U.S. vs. Estavillo, supra, fortifies our view. This Court there made the significant statement: "It should be idle to say that penalties could be imposed and personal property seized and sold before the taxpayer become delinquent. Such a procedure would be taking property without due process of law, ...." 7
5. Acoje Mining Company, Inc. vs. Commissioner of Internal Revenue, L-19318, March 27, 1968, cannot be analogized to the present case. Acoje was decided upon factual premises different from those in the case at bar. It is true that in Acoje the Commissioner granted the taxpayer the privilege to pay the tax due on installments. The time for the payment of the first as well as that for the second installment had elapsed without payment having been made. Acoje paid in full afterwards. Readily can it be seen that the penalty should be reckoned as of the date when the whole tax became due. Logically, this Court held that Acoje's liabilities must be governed by the provisions the Tax Code relating to full payment, that is, paragraphs (b) and (e) of Section 51 thereof, not Section 51(c) covering payment on installments. Because, the taxpayer did not avail of such right.
6. Worthwhile noting once again is that the first part of Section 43 provides that realty tax becomes "due and payable" on June 1 of every year. Whereas, in the later part of the section, which authorizes installment payments, the due date of payment of the first installment is May 31, not June 1. The clearly expressed congressional direction is that in building a framework for the payment and collection of real property taxes, different due dates of payment are set. One is for those who pay the tax in full, and those who fail to pay 50% of the tax on May 31 who are deemed to have chosen to pay in full. In which case they should pay the full amount of the assessment on June 1. But those who prefer to pay in installments reckon with two dates: May 31 and October 30, the due dates of payment of the first and second installments, respectively. These two dates should not be jumbled with June 1. To do so would undermine the tax structure established.
7. We take the facts and figures in this case. Padilla's original liability was P1,412.50. He paid on time the first installment amounting to P706.20. The second installment, he paid on December 23, 1963. Under the majority view, the second installment is delinquent from June 1, 1963; hence, the penalty is 2% of P1,412.50 (the original tax due) multiplied by six months, or P169.50. Under the same view, supposing Padilla did not pay the first installment on May 31, 1963 but paid the whole tax on December 23, 1963, the penalty would still amount to P169.50. The same amount in either case. No distinction. This flouts the statutory setup.
Now, if Padilla's delinquency will start from October 31, 1963 — as we believe it should — the penalty due would only be 2% of P1,412.50 or P28.25. If he paid the whole tax on December 23, 1963, the penalty would be P169.50. There is difference in penalty in the instances cited. This, we perceive, is in accord with the statutory scheme.
As shown, under the majority view, it makes no difference if a taxpayer pays the first installment on time or makes no payment at all. The immediate effect of this procedure is to remove the inducement to taxpayers to pay at least 50% of the tax on or before May 31. Well it is to recall at this point that the "continuance of regular and uniform receipt of the public revenue is essential to the continued existence of the state"; 8 and "[i]n passing revenue laws the legislature takes notice of the habits of the people, and of the season in which they can do so without sacrifices." 9 Thus was Section 43 of Pasay City's charter patterned to assure continuous flow of revenue into its coffers throughout the year. This way, the burden remains the same, yet lighter to carry.
In the end, we say that "statutes levying taxes or duties" are "not to extend their provisions beyond the clear import of the language used"; and "burdens are not to be imposed, nor presumed to be imposed, beyond what the status expressly and clearly import." 10 It is also in this perspective that we dissent.
Upon the view we take of this case, the 2% ad valorem penalty on the amount of the original tax due (P1,412.510). should be assessed from October 31, 1963. Because the late payment of the second installment was made on December 23, 1963, only the penalty for one full month is due in the amount of P28.25.
Dizon, J., concurs.
Footnotes
1Section 43, par. 3, Republic Act No. 183.
2Ibid, par. 6.
3Decision of the lower court, Record on Appeal, pp. 26-27.
4Brief for the Plaintiff-Appellant, p. 12.
5Ibid, p. 17.
6Section 43; Republic Act No. 183.
7L-19378, March 27, 1968.
8Section 51(c), National Internal Revenue Code, Commonwealth Act No. 466 as amended.
9Cf. Lizarraga Hermanos v. Yap Tico, 24 Phil. 504 (1913); People v. Mapa, L-22301, Aug. 30, 1967: Pacific Oxygen and Acytelene Co. v. Central Bank, L-21881, March 1, 1968; Dequito v. Lopez, L-27757, March 28, 1968.
SANCHEZ, J., concurring:
1On December 28, 1962, the Municipal Board of Pasay City passed Ordinance No. 279, Sections 1 and 2 of which provide:
"SECTION 1. Payment of real property tax of one and one fourth (1 1/4) per centum ad valorem for the year 1963 may be made as follows:
1st Installment of 50% of the tax - payable without penalty from January 1st to May 31, 1963.
2nd Installment of 50% of the tax - payable without penalty from June 1st to October 31, 1963.
SEC. 2. Delinquent payments shall be subject to the penalty not exceeding 2% for each month of delinquency on the original tax due."
2Webster's Third New International Dictionary, 1964 ed., at p. 597.
3People's Savings Bank vs. Retail Merchants' Mut. Fire Ins. Ass'n of Iowa, 123 N.W. 198, 199, 146 Iowa, 536; 11 Words and Phrases, Perm. Ed., 644.
426 Phil. 239, 242.
519 Phil. 478, 490-491.
6Commissioner of Internal Revenue vs. Visayan Electric Company, L-22611, May 27, 1968, citing authorities.
7At p. 490.
851 Am. Jur., p. 848.
9State vs. Bryant, 28 S.E. 551, 552.
10Manila Railroad Co. vs. Collector of Customs, 52 Phil. 950, 952, citing U.S. vs. Wigglesworth [1842], 2 Story, 369; Foehlich & Kuttner vs. Collector of Customs [1911], 18 Phil. 461.
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