GR 17133; (December, 1965) (Digest)
G.R. No. L-17133 December 31, 1965
U.S.T. COOPERATIVE STORE, petitioner-appellee, vs. THE CITY OF MANILA and MARCELINO SARMIENTO, as Treasurer of the City of Manila, respondents-appellants.
FACTS
The petitioner-appellee, U.S.T. Cooperative Store, is a duly organized cooperative association registered with the Securities and Exchange Commission under Commonwealth Act No. 565 as amended and under the jurisdiction of the Cooperative Administration Office. Its net assets never exceeded P500,000 during 1957, 1958, and 1959. Republic Act No. 2023 , the Philippine Non-Agricultural Cooperative Act, was approved on June 22, 1957. Section 66(1) of this Act exempts cooperatives with net assets of not more than P500,000 from all taxes and government fees. Unaware of this exemption, the appellee paid municipal taxes and license fees to the City of Manila from July 1957 to December 1958, totaling P12,345.10. Upon discovering the exemption in May 1959, the appellee requested a refund from the City Treasurer, which was denied, leading to this suit.
ISSUE
Whether the U.S.T. Cooperative Store is entitled to a refund of the municipal taxes and license fees it paid, based on the tax exemption provided under Section 66(1) of Republic Act No. 2023 .
RULING
Yes, the U.S.T. Cooperative Store is entitled to a refund. The Supreme Court affirmed the decision of the Court of First Instance of Manila. The Court held that the appellee is exempt from taxes under Section 66(1) of Republic Act No. 2023 because it was deemed registered under the Act (per Section 4(1)) and its net assets did not exceed P500,000. The appellants’ contention that the exemption did not apply because the cooperative transacted business with the general public was rejected, as the law (Section 58) only restricts the volume of such transactions and does not prescribe loss of exemption as a penalty for violation. Furthermore, the payment was deemed not voluntary but made under a mistake of fact (lack of knowledge of the new law’s enactment and exemption, as it was published months later), and thus recoverable. No negligence was attributed to the appellee for continuing payments under a mistaken belief of its obligations.