COMMISSIONER OF INTERNAL REVENUE

vs.
FIREMAN'S FUND INSURANCE COMPANY and the COURT OF TAX APPEALS

FACTS:

herein private respondent Fireman's Fund Insurance Company entered into various insurance contracts
involving casualty, fire and marine risks, for which the corresponding insurance policies were issued.
From January, 1952 to 1956, documentary stamps were bought and affixed to the monthly statements
of policies issues; and from 1957 to 1958 documentary stamps were bought and affixed to the
corresponding pages of the policy register, instead of on the insurance policies issued. On July 3, 1959,
respondent company discovered that its monthly statements of business and policy register were lost.
The loss was reported to the Building Administration of Ayala Building and the National Bureau of
Investigation on July 6, 1959. Herein petitioner was also informed of such loss by respondent company,
through the latter's auditors, Sycip, Gorres and Velayo, After conducting an investigation of said loss,
petitioner's examiner ascertained that respondent company failed to affix the required documentary
stamps to the insurance policies issued by it and failed to preserve its accounting records within the
time prescribed by Section 337 of the Revenue Code by using loose leaf forms as registers of
documentary stamps without written authority from the Commissioner of Internal Revenue as required
by Section 4 of Revenue Regulations No. V-1. As a consequence of these findings, petitioner, in a letter
dated December 7, 1962, assessed and demanded from petitioner the payment of documentary stamp
taxes for the years 1952 to 1958 in the total amount of P 79,806.87 and plus compromise penalties, a
total of P 81,406.87.

The compromise penalties consisted of the sum of P1,000.00 as penalty for the alleged failure to affix
documentary stamps and the further sum of P 600.00 as penalty for an alleged violation of Revenue
Regulations No. V-1 otherwise known as the Bookkeeping Regulations.

Issue: Whether or not respondent company may be required to pay again the documentary stamps it
has actually purchased, affixed and cancelled.

Ruling:

It is a general rule in the interpretation of statutes levying taxes or duties, that in case of doubt, such
statutes are to be construed most strongly against the government and in favor of the subjects or
citizens, because burdens are not to be imposed, nor presumed to be imposed beyond what statutes
expressly and clearly import.

There appears to be no question that the purpose of imposing documentary stamp taxes is to raise
revenue and the corresponding amount has already been paid by respondent and has actually become
part of the revenue of the government. In the same manner, it is evident that the affixture of the stamps
on documents not authorized by law is not attended by bad faith as the practice was adopted from the
authority granted to Wise & Company, one of respondent's general agents. Indeed, petitioner argued
that such authority was not given to respondent company specifically, but under the general principle of
agency, where the acts of the agents bind the principal, the conclusion is inescapable that the
justification for the acts of the agents may also be claimed for the acts of the principal itself

Be that as it may, there is no justification for the government which has already realized the revenue
which is the object of the imposition of subject stamp tax, to require the payment of the same tax for
the same documents. Enshrined in our basic legal principles is the time-honored doctrine that no person
shall unjustly enrich himself at the expense of another. It goes without saying that the government is not
exempted from the application of this doctrine.

MITHI NG BAYAN COOPERATIVE MARKETING ASSOCIATION vs ANTONIO ARANETA

G.R. No. L-14575

Facts: There herein petitioners appealed with respect to that part of the judgement upholding the
legality of the imposition of the sum of P3590. 53 as taxes and surcharge due and denying its claim for
refund of the said amount being and association organized under the provisions of the cooperative
marketing law, act no. 3425.

ISSUE: Whether or not the petitioner is an association organized under the provisions of the Cooperative
Marketing Law, Act No. 3425, as amended, exempt from the payment of privilege tax or fixed tax upon
business and percentage tax.

Ruling:

No, Although the witnesses for the petitioner association testified that they were members of, the
petitioner association and were either owners of riceland or farmers who milled their palay in the
ricemill of the petitioner association, yet such testimony alone does not establish the fact that all of the
members of the petitioner association are engaged in the production of agricultural products. In the
stipulation of facts submitted to the courts the parties merely agreed that the persons who brought and
milled their palay in the petitioner's ricemill, would testify that they were known or called in the
community by the names or nick names appearing therein; that they themselves brought their palay or
had it brought through their respective relatives landlords or employers to the ricemill for milling; and
that to abbreviate the proceeding and avoid a lengthy and costly litigation, the said persons appearing in
the list would no longer be present to testify at the hearing of the case. The evidence at hand does not
sufficiently establish the fact that all members of the petitioner association are engaged in the
production of agricultural products. Hence it cannot be said to have been organized as a cooperative
marketing assiocation and entitled to exemption from the payment of taxes provided for in section 48 of
the cooperative marketing law, act 3425 as amended.