Brief for the Respondent in Opposition — Pampanga Sugar Mills v. Trinidad

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SUBJECT-INDEX.

PAGE

Opimons Below P taties eget tata 1-2

Jurischetion TT.. ˙—

The Question rn PPP

Statutes Involved n

Statement of the Car .

Petitioner's Contention 1 . 5

Respondent's Position .

Argument .. 6-8

Conclusion , .

* TABLE OF CASES

7 Allen » Smith. 173 US. 389 8 a

: Alzua . Johnson, 231 U. S. 106 Se ere

Central Azucarera de Bais » Trinidad, 46 Phil. Rep.

* 492 1, 4-5, 56, 7. 8

2 Dowdell vy United States, 221 U. 8. 325 7

1 Flemister * United States, 207 C. S 372 c 7

* Ikanez v. Hong Kong, etc, BK R Corp. 246 U.S. 621 7

* Tidewater Oul Co. v. United States, 171 U.S. 210 8

STATUTES

UNITED STATES

Act of February 14, 1925, Section 7, c. 229, 43 Stat. 936,

040 2

EINES

Revised Administrative Code of 1917, Act No. 2711,

approved March 10. 1917

Section 148 3, 5, 6-7

Section 1459 3. 4. 78

i

IN THE

Supreme Court of the United States

Octoner Term, 1928.

No. 325.

PAMPANGA SUGAR Minus, Petitioner,

vs.

Wencrsiao Trinipap, Collector of Internal Revenue of the

Philippine Islands,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF THE PHILIPPINE ISLANDS.

BRIEF FOR RESPONDENT IN OPPOSITION

OPINIONS BELOW.

The opinion (Decision, ante) of the Court of First Instance

of Manila, January §, 1925 (K. 32-42, Harvey, J). is not offi-

cially reported. It is based upon and follows the decision of

the Philippine Supreme Court in the case of Central Azucarera

de Baas vs. Wenceslao Trinidad, 46 Phil. Rep. 492, pursuant to

the stipulation of the parties in that court (K. 30, 39) that the

issues in this case are “similar to those involved” in that case;

and, accordingly, that court sustained the tax here in question

and gave judgment for the defendant-respondent against the

plaintiff-petitioner.

The opinion of the Supreme Court of the Philippine Islands,

affirming the judgment of the court below (R. 47-62, Osrxanp,

J. with Srreet, MaLcotlu and Romvua.prz, JJ., concurring )

is not yet reported either in the official Philippine reports or in

the Philippine Gazette. The separate opinion of Jounson, J.

concurring pro hac vice (R. 62-64) and the dissenting opinions

of Vittamor, J. (R 65) and of Jouns, J (R. 65-72, with whom

concurs AvanceNa, CJ. K 72) likewise are not yet officially

reported.

JURISDICTION,

Jurisdiction to grant the writ exists under Section 7 of the

Act of February 13, 1925, C 229, 43 Stat 936-940, since the

amount of the tax involved, aggregating 60,911.42, exceeds

the jurisdictional amount of $25,000

There is no other ground of jurisdiction, No question of

the construction or applicabilty of any federal statute is here

presented, The case turns wholly upon the interpretation and

application of local Philippine statutes to the facts before the

court

THE QUESTION

The sole question here presented is whether the fact that the

decision of the Philippine Supreme Court was by a divided court

am! that one member of the court, who voted with the majority

te affirm the judgment of the tral court, stated that his concur:

fence was “pro hae cece” ( founsonw, |. KR en takes this case

out of the setthed rule that this court will not disturb the decision

of the Philippine Supreme Court upon questions of purely Jocal

law

STATUTES INVOLVED

The Revised Adminitrative Code of the Philippine Idands of

1917, Act No 2731, approwesd March 10, 1917, under “Article

,

*

1I1—Supreme Court” of “Title 1V—Judicial Power“, contains

the provision :

Sec. 138. Sessions of court in banc and in divisions.—

The Supreme Court shall, as a body sit in banc, * * “.

Six of the judges of the Supreme Court, lawfully con-

vened, shall be necessary to form a quorum * * * for the

final disposition of a civil case in which the amount in con-

troversy exceeds ten thousand pesos * * *, and the con-

currence of five judges shall be necessary for the pronounce-

ment of a judgment, but when there is a vacancy in said

court five judges shall constitute such quorum, and the

concurrence of four shall suffice for the pronouncement of

the judgment. * .

Section 1459 of the same Revised Administrative Code, under

the heading “Article V-—Privilege Taxes”, part of Chapter 40

of Tithe VII, provides:

Sec. 1489. Percentage tax on merchants’ sales -~All mer-

chants not herein specifically exempted shall pay a tax of

one per centum on the gross value in money of the commodi-

ties, goods, wares, and merchandise sold, * .

Merchant as here used, means a person engaged in the

sale, barter, or exchange of personal property of whatever

character. Except as specially provided, the term includes

manufacturers who sell articles of ther own production.

9 „ „*

STATEMENT OF THE CASE.

This was a suit begun by the plaintiff-petitioner, Pampanga

Sugar Mills, in the Court of First Instance of Manila, for the

refund of one per centum “percentage taxes” paid by it under

protest under Section 1459 of the Philippine Administrative

Code, supra, aggregating 00,911.42. Plainuff-petitioner ope-

rates a merchant sugar mill; it does not grow any sugar cane

itself; but it mulls cane brought to it by various growers, and

shares the resulting sugar, or its proceeds, with the growers,—

On to the mill, and 50% to the growers (Supulation of Facts,

Par III. K 25).

The case was begun in the Court of First Instance on Septem-

ber 14, 1922 (K I), but a stipulation was filed in that court on

November 7, 1924 (K. 30) whereby the parties agreed that

the issues ted in this case being similar to

those invol in the case now pending decision be-

fore the Supreme Court of the Philippine Islands,

entitled Central Azucarera de Bais v. Wenceslao

Trinidad, R G No 21490, and the said case having been

submitted already for decision, decision of this case be

held in abeyance until after the decision of the Supreme

Court in the above-mentioned case has been promulgated”

Ten days later, on November 17 1924, the Philippine Supreme

Court decided the Central dow. co de Rass case in favor of

the Collector, holding that bee eas a merchant within

the meaning of the definition of a “merchant” contained in Sec-

tion 1459 of the Administrative Code, supra, and was subject to

the tax presembed by that section Central Azwcarera de Bais

ts Trinidad, No 21490, 46 Phil Kep. 492.) Thereafter, on

January §, 1925, in accordance with that decision of the Insular

Supreme Court, the Court of First Instance entered its “decision”

in the present case (KR 32-42) on favor of the respondent-collec-

tor, expressiy basing its denon (K 39-40) in part upon the

fact that the porties to tins case had stipulated that the wsucs

Aera umvoloed are seular to those determined by the Insular

Supreme Court ia the Central Agucarera de Rass case That

stipulation of the similarity of the issues involved in the two

cases was never withdrawn of muhifed either in the trial court

or in the Insular Supreme Court. Neither the plaintff-pet:

tianer’s motion for new trial in the trial court (K 42-43), nor

its assignment of errors im the Insular Supreme Court (K. 44-45),

questions the correctness of the action of the trial court in ac-

crpting the stipulation of the parties as to the absolute sumlarity

of the issues in the two cases Upon the record, the appeal of

this case to the Insular Supreme Court was samply and plainly

an attempt to induce that court to depart from its decision in the

Cute Arwcarera de Hut case, whoch had been decided by a

divided court, three of the justices, Via % and Jonnson, J],

and AvanceNa, C.J., having dissented. Central Azucarera de

Bais v. Trinidad, supra, 46 Phil. Rep. 492, 501-502.

Upon the appeal of the present case it developed that a divi-

sion of opinion still existed among the justices of the Insular

Supreme Court, but after quite a long delay the present case

was finally decided by that court in accordance with its decision

in the Central Agucarera de Bais case, three of the justices, how-

ever, dissenting (Vittamor and Jouns, II., and AVANCENa,

C. J.; K 65-72), and Justice Jon xo announcing that he con-

curred only ro hac vice” (K. 62-64). The court’s opinion (R.

47-02), written by Mr. Justice Ostranp, was concurred in by

Justices Srreet, Macon, and Romvuatpez ;—that is to say,

four justices concurred in the prevailing opinion of the court,

one justice concurred pro hac vice, and three dissented.

Petitioner's Contention.

Petitioner now contends that inasmuch as, under Section 138

of the Philippine Administrative Code (ante, p. 3), in a case

hike this where the amount in controversy exceeds ten thousand

pesos, “the concurrence of five judges shall be necessary for the

pronouncement of a judgment” of the Philippine Supreme Court ;

and since only four of the judges concurred in the opinion of

that court, the fifth, while concurring in the judgment, expressly

stating that he did so only “pro hac vice’; therefore this court

should not consider the result as a real judgment of the Philip-

pine Supreme Court within the meaning of the rule, which peti-

boner expressly admuts would ordinarih be applied in such a

case as this, that this court will not disturb the decisions of the

territorial supreme court upon questions of purely local law.—

pettioner conceding that no question other than of local law is

here involved

Respondent's Position,

It is the position of the respondent, on the other hand, that

the questions here involved having once been settled by the deci-

sean of the Philippine Supreme Court in the Central Arucarera de

Bais case, supra, in 1924, the issues wherein, by the express

Stipulation of the parties, were “similar” to those in this case;

5

and that earlier decision having been followed by the judgment

of the Philippine Supreme Court in this case, lawfully made in

accordance with its local administrative code,—even though by

a divided court, and even though one justice concurred in the

judgment only for the sake of disposing of the case that there

is here a decision by the Supreme Court of the Philippine Islands,

arrived at in accordance with its local procedure, determining a

question wholly of local law, and therefore within the settled

rule of this court that it will not, on a question of local law or

of the interpretation of a local statute, disturb the judgment of

the Supreme Court of the Philippine Islands. And that the rule

is particularly apphcallle here, since this case is merely an attempt

to re-htigate the same local questions settled, in 1924, by the

former decision of the Insular Supreme Court in the Central

Azucarera de Bass case.

ARGUMENT

Petitioner expressly admuts (Petinoner’s brief, p 18) that

“ordinarily a final judgment by the local Supreme Court

on the interpretation of a local tax statute would not be

disturbed by this Honorable Cours”;

but it contends ( Petition, pp 5-6; Petitioner's brief, pp 17-18)

that inasmuch as Me Justice Johnson's opimon “shows that he

dissents entirely from the fundamental doctrine underlying the

opimon of the majorty” (Petitioner's bret. p17), therefore

the rule is not applicable in this case

The petitioner's contention overlooks the facts that (1) the

Insular Supreme Court's interpretation of Section 148 of the

Philippine Admunistrative Code, determining the number of

justices of that court “necessary for the pronouncement of a

judgment” i as much a determination of a question of local

law,-~of the interpretation of a local procedural statute,—as is

any other determination that it may make interpreting or applv-

ing any other local statute of the Philippine Islands: and (2)

that its decision in the present case was simply an adherence to

6

its prior decision in the Central Asucarera de Bais case in which

it is not questioned that the requisite number of justices con-

curred (Central Asucarera de Bais v. Trinidad, supra, 46 Phil.

Rep. 492) ; and in which, by the express stipulation of the parties

in this case in the trial court (R. 30), and the express finding of

that court upon that stipulation (R. 39-40,—never objected to

as to this point by either of the parties either in the trial court or

in the Insular Supreme Court), the issues there involved were

“similar to those involved” in the present case.

The decision of which petitioner here complains is therefore in

reality the decision of the Insular Supreme Court in the earlier

case,—-adnuattedly purely upon a question of local law, and fully

within the admuttedly settled rule that this court will not ordi-

narily disturb the determination of the territorial supreme court

upon such questions.

And it is manifest that the procedure of the Insular Supreme

Court in the present case, by which it arrived at a judgment

adhering to its former decision of the tax questions here in-

volved, is also a decision of that court upon a question of local

law; viz, of the interpretation of the local procedural statute,

Section 138 of the Administrative Code, directing the procedure

of the Philippine Supreme Court in arriving at its decisions

That court, in arriving at this judgment, was compelled to

construe and apply that statute. This court has repeatedly said

that it does not disturb the judgments of the Supreme Court of

the Philippine Islands upon questions of local procedural law,

any more than upon other questions of local las Alzua v.

Johnson, 231 U.S. 106, 110; / hang v. Hong Kong, ce. Rg

Corp, 246 U.S. 621, 627; Flewuster vy. United States, 207 U. S.

372, 378: Dowdell vo United States, 221 U. S. 325, 327-329

It follows that no reason exists why the same rule should not be

apphed to this case as to any other tax involving purely the

interpretation of local Philippine tax statutes, that, as it is stated

by petitioner's counsel themselves (Petitioner's brief, supra, p.

18), “ordinarily a final judgment by the local Supreme Court

on the interpretation of a local tax statute would not be disturbed

by thes Honorable Court”

But in any event, the decision of the Supreme Court of the

Philippine Islands, that this petitioner sugar company is a “man-

ufacturer’, and therefore a “merchant” within the meaning of

Section 1459 of the Philippine Administrative Code, is right,—

or, at least, is surely not clearly erroneous.”

This court has held that “In the case of sugar a process of

strict manufacture is also involved in converting the cane into

its final product. en vo Swuth, 173 U. S. 389, 399; relied

upon by the Philippine Supreme Court both in its opinion in this

case (K 55-57, 61), and also in us former decision, Central

Azucarera de Bas vo Trinidad, supra, 40 Phil. Rep 492, 498.

Confer, also Tidewater Ol Co. » Umted States, 171 U. 8 210,

210. .

CONCLUSION

Petitioner here presents no sufficient reason for the exercise

of the extraordinary jurisdiction of this court by certiorari; no

federal question is involved; nothing except the interpretation

and application to particular facts of local Philippine tax statutes.

This case is simply an attempt to re-litiygate in this court local

questions that were settled by the judgment of the Supreme

Court of the Philippine Islands in the Central Azwcarera de Bais

case in 1924. The writ of certioran should be denied

Respectfully submitted,

Witttam Cartron Ricey,

Licufc nun! Colonel, Judge Advocate,

eittorney for Respondent,

Jousx & Hew,

Major General, The Judge Advocate General

Detrin Jamanttta,

Attoracy General of the Phihppine Islands

Of Counsel