G.R. No.

L-11988 April 4, 1918

JACINTO MOLINA, plaintiff-appellee,

vs.
JAMES J. RAFFERTY, Collector of Internal Revenue, defendant-appellant.

Acting Attorney-General Paredes for appellant.

Araneta & Zaragoza for appellee.

http://thedigester.blogspot.com/2011/10/molina-v-rafferty-1918.html

Molina v Rafferty (1918)

Molina v Rafferty

April 4, 1918

Jacinto Molina- Plaintiff-Appellee

Rafferty, Collector of Internal Revenue- Defendant- Appellant

Appeal from a judgment of the CFI of Manila

J. Abreu

I. Definition, Concept, and purpose of Statutory Construction

1. Judge Cooley- The underlying principle of all construction is that the intent of the legislature should be sought in the
words employed to express it, and that when found, it should be made to govern…. If the words of the law seem to be
doubtful import, it may then perhaps become necessary to look beyond them in order to ascertain what was in the
legislative mind at the time the law was enacted; what evil, is any, was meant to be redressed;…

2. And where the law was contemporaneously been put upon it, this construction, especially if followed for some
considerable period, is entitled to great respect, as being very probably a true expression of the legislative purpose, & is
not lightly to be overruled, although it isn’t conclusive.

II. Facts:

1. The present case was a rehearing granted to the appellee for a trail court decision on Feb 1, 1918. The petition was
granted and oral argument of the motion was permitted.

2. Jacinto Molina was the owner of various fish ponds in Bulacan. He was required to pay the merchant’s tax required
by the Bureau of Internal Revenue.

3. Molina protested that he was an agriculturist and not a merchant and therefore exempt from the taxes imposed by
the Internal Revenue Law upon the gross sales of merchants.

4. Point of contention- Plaintiff contends that the fish produced by him are to be regarded as an “agricultural product”
within the meaning of the term used in paragraph (c) of Section 41 of Act No. 2339 (Now section 1460 of the
Administrative Code of 1917), enforced when the disputed tax was levied and that he is exempt from the percentage
tax on merchants’ sales established by section 40 of Act No. 2339.

5. Paragraph (c) of Act No. 2339 sec. 41 reads:

In computing the tax above imposed transactions in the following commodities shall be excluded:

(c) Agricultural products when sold by the producer or owner of the land where grown, whether in their original state
or not

6. In the Trial Court, the Honorable Jose Abreu in a carefully prepared decision ordered defendant to refund the
P71.81 paid by plaintiff as internal-revenue taxes and penalties under protest, with legal interest thereon
from November 26, 1915, the date of such payment under protest.
III. Issue:

1. WON fish produced as were those upon which the tax in question was levied are an agricultural product

IV Decision:

Decision set aside. Judgment of lower court affirmed.

IV. Ruling:

1. Purpose of legislative in establishing the exemption – exempting agricultural products from the tax, the farming
industry would be favored and the development of the resources of the country encouraged.

2. As a consequence, it is fairly to be inferred from the statute that the object and purpose of the Legislature was to
levy the tax in question (merchant’s tax) upon all persons engaged in making a profit upon goods
produced by others but to exempt from the tax all persons directly producing goods from the land.
Products were grouped under “agricultural products”.

3. It is also the public interest to encourage the artificial propagation of food. However, if the artificial production of fish
is held not to be included within the exemption of the statute this conclusion must be based upon the inadequacy of the
language used by the Legislature to express its purpose, rather than the assumption that it was actually intended to
exclude producers of artificially grown fish from the benefits conferred upon producers of other substances brought into
the store of national wealth by the arts of husbandry and animal industry.

4. Court held that the ponds where the fish were grown is agricultural land within the definitions set by
the Acts of Congress, the Philippine Commission, and the Mapa vs. Insular Gov’t case.

5. With regard to the question that that the fish artificially grown and fed in a confined area are agricultural
products and therefore exempt, the Court looked deeper. It said that a man might cultivate the surface of a
tract of land patented to him under the mining law, but the products of such soil would not for that
reason be any the less "agricultural products." Conversely, the admission that the land upon which these
fishponds are constructed is not to be classified as mineral or forest land, does not lead of necessity to the conclusion
that everything produced upon them is for that reason alone to be deemed an "agricultural product" within the meaning
of the statute under consideration.

3. Courts and lexicographers are in accord in holding that the term agricultural products is not limited in its
meaning to vegetable growth but includes everything which serves to satisfy human needs which is
grown upon the land, whether it pertains to the vegetable kingdom or to the animal kingdom.

4. Purpose of agriculture – obtain from the land the products to which it is best adapted and through it
will yield the greatest return upon the expenditure of a given amount of labor and capital. This is similar
to the process of enclosing an area for fish production and one of the diets of the products are marine
plants rooted at the bottom of the pond.

5. Another distinction was made between fishermen and the people artificially growing fish in ponds so as to delineate
the scope of the occupation tax. Fishermen were made liable to the occupation tax. The ones growing fish in
ponds were not included.

5. As the present case related to US vs Laxa, the court held that Laxa wasn’t controlling due to evidence that the fish
subsisted solely upon free floating algae in Laxa while in Molina, the fish subsisted through plants which grow
from roots which attach themselves to the bottom of the pond, thereby making Molina’s fish in the real
sense a product of the land!

Dissent:

J. Malcolm:

1. illustrates how on the same facts, same law, and the same authorities, judges can arrive at diametrically opposed
conclusions

2. Take the Facts where distinction of marine plants rooted to soil of ponds and floating algae make a small difference,
or
3. Take the Laws the small difference in the meaning of “agricultural products” needs to be ascertained. Primary duty of
the court is to ascertain legislative intention. The decision of the majority on reconsideration in a laudable endeavor
would make this the purpose of the law and would follow this idea consistently to the end.

On the other hand, the original decision would start with the same presumption but finding that to so construe the law
would result in judicial amendment must then necessarily reach a different result; if the Legislature had intended to
exempt all classes of domestic products which would include fish, it would undoubtedly have done so in plain language.

4. When it came to the Authorities with regard to the limits of the term “agricultural products”, another court could very
well instead of prolonging the examples ad infinitum merely judicially repeal the word agricultural and include
everything which would fall under the word products.

Suffice it to say that the argument on motion for reconsideration and the decision of the majority have failed to
convince me that fish — or to accede to the critical suggestion of the majority — that fish produced as were those upon
which the tax in question was levied, are an agricultural product. The administrative ruling of the Attorney-General, the
decision of this court in United States vs. Laxa and the original decision in the instant case should not be overturned by
granting this motion.

Disposition: Judgment of the lower court affirmed

Definitions:

Agriculture – science and art of the production of plants and animal useful to man

Product – anything that is produced whether as the result of generation, growth , labor or thought. Grow – raise,
cultivate

Agricultural products – included animals which derived their sustenance from vegetable growths and are therefore
indirectly the product of the land

G.R. No. 170735 (December 17, 2007)

Immaculada L. Garcia v. Social Security Commission Legaland Collection & SSS

FACTS:

Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, and Consuelo Villanueva were
directors of Impact Corporation. The corporation was engaged in the business of manufacturing aluminum tube
containers and
operated two factories. One was a "slug" foundry-factory located in Cuyapo, NuevaEcija, while the other was an
Extrusion Plant in
Cainta, Metro Manila, which processed the "slugs" into aluminum collapsible tubes and similar containers for toothpaste
and other
related products. Records show that around 1978, Impact Corporation started encountering financial problems. By 1980,
arises a
problem with the employees of the corporation due unremitted SSS contributions issues.

ISSUE:
Whether or not the only surviving director of the corporation is liable for all the workers whole collected and unremitted
SSS contributions, with penalties.

HELD:
The petition is DISMISSED for lack of merit. The surviving director of the Impact Corporation is solely liable
for the unremitted SSS premium contributions and penalties therefor. The petitioner avers that under the social
security law provision, the liability does not include liability for the unremitted SSS premium contributions. But
accordingly, the sections must be understood or interpreted as a whole and not by parts. The liability imposed as
contemplated under the provisions of the social security law does not preclude the liability for the unremitted
amount.