VERONICA SANCHEZ vs.

THE COLLECTOR OF INTERNAL REVENUE

G.R. No. L-7521 October 18, 1955

REYES,J.B.L.,J:

FACTS:

Veronica Sanchez owns a two-story, four-door “accessoria” building at Libertad Street, Pasay
City. The building was constructed in 1947 and since then, the appellant lives in one of the
apartments and rented out the rest to other persons. The building has an assessed value of
P21,540 and the land is assessed at P7,980 for a total of P29,540. In 1949, Sanchez derived an
income of P7,540 from the rented apartments.

Other than the apartments, Sanchez also runs a small dry goods store in Pasay market where she
derives an annual income of about P1,300.

In 1951, the Collector of Internal Revenue demanded from Sanchez the payment of P163.52 as
income tax for the year 1950 and P637 as real estate dealer’s tax for the years 1946 to 1950, plus
P50 as compromise. Under protest, Sanchez paid the taxes demanded. October 1951, she files an
action before the RTC of Manila for the recovery of the paid taxes claiming that she is not a real
estate dealer and therefore cannot be taxed of real estate dealer’s tax.

RTC Manila: Found Sanchez to be a real estate dealer as defined bu section 194 of the National
Internal Revenue Code, as amended by RA No.s 42 and 588, and declared the tax collected was
valid.

ISSUES:
1. Whether or not Veronica Sanchez is a real estate dealer.
2. Whether or not charging Veronica Sanchez of income tax, real estate tax and real estate
dealer’s tax pertaining to one and the same property constitutes double taxation.

HELD:
I
YES. Section 194 of the Tax code before it was amended by RA no. 588 defines real estate
dealers as all persons who for their own account are engages in the sale of lands, buildings or
interest therein or in leasing real estate.

(RA No. 588 cannot be applied since it took effect only in 1950 and the tax demanded was for the
year 1946 to 1950, Hence the applicable law is the Tax Code amended by RA 42 only)

Based on the kind and nature of her building, she constructed the four-door accessory purposely
for rent or profit; that she has been continuously leasing the same to third persons since its
construction in 1947; that she manages her property helself; and that said leased holding appears
to be her main source of livelihood, shows that the appellant is engaged in the leasing of real
estate, and is a real estate dealer as defined by section 194 of the Internal Revenue Code, as
amended by RA No. 42

II
NO, it does not constitute double taxation. As held in People vs. Mendaros “it is a well settled
rule that licence tax may be levied upon a business or occupation although the land or property
used therein is subject to property tax” and that “the state may collect an ad valorem tax on
property used in a calling, and at the same time impose a license tax on the pursuit of that
calling” the imposition of the latter kind of tax being in no sense a double tax.

> Apartment house in question was constructed only in 1947, while the real-estate dealer’s tax
demanded and paid was for years 1946 to 1950. Therefore the appellant is entitled to refund fo
the tax paid for the year 1946 amounting to P37.50.