Ormoc City v. Ormoc Sugar Company, Inc.

[CA No. 38910-R. January 5, 1971.] ORMOC CITY , petitioner and appellee , vs . ORMOC SUGAR COMPANY, INC. , respondent and appellant . Cleto P . Evangelista for respondent and appellant. Acting City Fiscal of Ormoc City Teofilo R . Redubla for petitioner and appellee. SYLLABUS TAXES AND ASSESSMENTS; INCOME TAX; CORPORATIONS; DISCRETION TO FILE RETURNS WITH ANY OF OFFICERS NAMED IN SEC. 46(c), NATIONAL INTERNAL REVENUE CODE. It is not mandatory for a corporation to file its income tax returns in the place where its principal office is located. The law gives it the discretion of filing its returns with any of the revenue officers mentioned in Section 46(c) of the National Internal Revenue Code. D E C I S I O N ALVENDIA , J p : In its petition for mandamus with preliminary injunction filed with the Court of First Instance of Leyte on January 7, 1966, the petitioner seeks to compel respondent Ormoc Sugar Company, Inc., to file its income tax return and pay its income tax in Ormoc City, alleging that the respondent has neglected and refused, and is neglecting and refusing, to perform a legal duty imposed on it at the time of the filing of the instant petition; that petitioner has no other plain, speedy and adequate remedy in the ordinary course of law; and that it would be unfair and unjust for the respondent to pay its income tax in a place other than Ormoc City where it has its principal place of business as the petitioner would stand to lose its 30% share in the internal revenue allotment to which it is entitled pursuant to Section 11 of Republic Act No. 2343, amendatory to Section 360 of the National Internal Revenue Code. Alleging further that the case calls for immediate relief, the petitioner prays for the issuance of a writ of preliminary injunction enjoining the respondent from filing its income tax returns in a place other than Ormoc City and to pay its income tax to the petitioner, which was issued on January 12, 1966, upon the petitioner's filing of a bond in the amount of P1,000.00. Answering the petition, the respondent claims by way of special and affirmative defenses that its principal office is not in Ipil, Ormoc City, but in Manila where it has its books of account and other data from which its income tax returns are prepared; that while the respondent does not deny its obligation under the law to file its income tax returns pursuant to its fiscal year, yet under the law it has the discretion as to the suits or place where to file it, provided that same is one of those designated in Section 46(c) of the Income Tax Law, as amended; and that the petitioner not having shown a clear, absolute and legal right, mandamus will not lie against the respondent to control the discretion vested in it by law in the matter of where to file its income tax returns or to pay its taxes. Before the hearing, the parties submitted a stipulation of facts in which they agreed (1) that the Articles of Incorporation of the respondent company provides "that the place where the principal office of the corporation is to be established in Manila, Philippines"; (2) that the respondent paid the first installment of its corporate income tax for the fiscal year 1964 in the municipality of Albuera, Leyte in the sum of P385,789.00 under Official Receipt No. C-2773801 dated January 15, 1965, and the second installment thereof in the City of Ormoc in the amount of P385,789.00 under Official Receipt No. C-0522856 dated April 19, 1965; (3) that eight motor vehicles were registered in the name of the respondent with the Land Transportation Commission, Ormoc City; and (4) that the respondent paid in the City of Ormoc the first installment of its corporate income tax in the amount of P7,797.50 per Official Receipt No. C-4360001 dated January 17, 1966 and the second and last installment in the amount of P7,797.50 under Official Receipt No. C-4793310 dated April 22, 1966. The parties further agreed that the facts stipulated upon shall be considered in addition to whatever documentary and testimonial evidence in they might present at the hearing of the case on the merits. After trial, the court a quo rendered judgment in favor of the petitioner and against the respondent, enjoining the respondent from filing its corporate income tax returns and paying its income tax outside petitioner's jurisdiction, and to file its income tax returns and top pay its income tax with the petitioner or within its jurisdiction, with costs against the respondent, and making the writ of mandatory injunction already issued, permanent. From said judgment, the respondent appealed to this Court assigning the following errors: I "The court a quo erred in issuing the writ of mandamus prayed in by the petitioner-appellee, ordering the respondent-appellant to in its income tax returns and to pay its income tax with the former within its jurisdiction. II "The trial court likewise erred in granting the preliminary mandatory and prohibitory injunction sought in the basic petition by the appellee against the appellant, and making it permanent. III "The trial court finally erred in awarding costs to the appellee." The basic issue in this case is whether or not the respondent corporation is under a legal duty to file its income tax returns and to pay its income tax in Ormoc City. aisadc In this connection, Section 46(c) of the National Internal Revenue Code provides, with respect to corporations, that "The return shall be made to the Collector of Internal Revenue, provincial revenue agent, or to the treasurer of the province, city, municipality in which is located the principal office of the corporation where its books of account and other data from which the return is prepared are kept. . . ." In support of its petition, the petitioner contends that the respondent corporation has its principal office in Ormoc City; hence, pursuant to the provision of Section 46(c) of the National Internal Revenue Code, it must file its income tax returns and pay its income tax in said City. We find the petitioner's contention untenable. It is admitted in the stipulation of facts submitted by the parties that, under the respondent's Articles of Incorporation, it is expressly provided "that the place where the principal office of the corporation is to be established is Manila, Philippines". Apart from this, it has also been shown (1) that the President, Vice-President, Treasurer and Secretary, as well as the General Manager, Assistant General Manager and the Board of Directors of the respondent corporation held their offices in the City of Manila; (2) that all transactions and policies are decided in Manila; (3) that all its books of account are kept in Manila; (4) that milling contracts are signed in Manila, although the planters may sign them in Ormoc City; (5) that all cash come from Manila and reports are sent to Manila at the end of every week; and (7) that meetings of the Board of Directors are always held in Manila all of which would confirm the fact that the respondent corporation indeed has its principal office in the City of Manila, not in Ormoc City. It is true that the respondent corporation carries out sugar milling business within the jurisdiction of the petitioner. However, this does not prove that it also has its principal office there. For the place of the principal office of a corporation does not necessarily mean the place where its business is transacted, but where its books and records are ordinarily kept and where processes may be served upon it (Fisher, The Philippine Law of Stock Corporations, p. 22). In this case, aside from the admission of the parties, there is ample evidence to show that the respondent corporation has its principal office in the City of Manila. At any rate, under Section 46(c) of the National Internal Revenue Code, a corporation may file its income tax returns with either the Collector of Internal Revenue, or provincial revenue agent, or the treasurer of the province, city, or municipality in which is located the principal office of the corporation where its books of account and other data from which the return is prepared are kept. Hence, even assuming arguendo that the respondent's principal office is in Ormoc City, it is not mandatory for it to file its income tax returns in said City, for the law gives it the discretion of filing said returns with any of the revenue officers mentioned in Section 46(c) of the National Internal Revenue Code. It appearing, therefore, that the respondent corporation is under no legal duty to file its income tax returns and pay its income tax in Ormoc City, the writ of mandamus prayed for in the petition would not lie against it. WHEREFORE, the decision appealed from is hereby reversed and set aside. The petition for mandamus is hereby dismissed and the writ of injunction issued by the court a quo , dissolved. No pronouncement as to costs. SO ORDERED. Muoz Palma and Leuterio, JJ . , concur.