Visayan Cebu Terminal Co. Inc., the Bureau of Customs and its taxes

The Visayan Terminal Co. Inc., a corporation organized for the purpose of handling arrastre operations in the Port of Cebu, was awarded for the contract of the port operations by the Bureau of Customs in the 1950s.

On March 1, 1952, Visayan Terminal Co. Inc. filed its income tax return for 1951 reporting a gross income of P420,633.40 and claimed deductions amounting to P379,036.95, leaving a net income of P41,595 on which it paid income tax in the sum of P8,319.20.

The deductions claimed by Visayan Terminal Co. Inc were for the salaries, representation expenses, and miscellaneous expenses, among others were the salaries of Juan Eugenio Lo, Felix Go Chan and Teomino Tiu. The deductions were disallowed by the Collector of Internal Revenue, thus giving rise to a deficiency assessment of P18,991.00.

Visayan Terminal Co. Inc. requested for a reconsideration of the ruling of the Collector of Internal Revenue who then modified the deficiency income tax assessment by allowing the deduction of the Visayan Terminal gross income of the salary of Juan Eugenio Lo and the miscellaneous expenses amounting to P532.00. The Collector of the Internal Revenue issued a revised deficiency assessment. It issued an assessment that the Visayan Terminal Co. Inc. has to pay the amount of P23,485.76 due on April 30, 1955.

Visayan Terminal Co. Inc. appealed the ruling of the Collector of Internal Revenue before the Court of Tax Appeals who ruled that there is a deficiency tax for the port arrastre in the amount of P15,517.

During the hearing one of the documents presented and argued upon are the missing vouchers to support the representations claimed to be deducted. Visayan Terminal claimed that it was lost when treasurer Buenaventura M. Veloso's house was burned.

Visayan Terminal Inc. who went to the Supreme Court after losing its case before the Court of Tax Appeals said that the latter acted arbitrarily in considering the representation expenses in 1950, not those incurred in 1949 and 1952, in fixing the amount deductable in 1951.

The Supreme Court ruled that the argument of Visayan Terminal was untenable. The Visayan Terminal according to the Supreme Court had no supporting papers of the alleged representation expenses, that the vouchers and chits covering other representation expenses had been allegedly destroyed, and that there is no documentary evidence on record of any of the representation expenses.

The Supreme Court observed further that there has been no testimonial evidence introduced on any specific time of said alleged expenses, also there is no more than oral proof to the effect that payments had been made by Visayan Terminal Co. to its officers for representation expenses allegedly made by the latter and about the general nature of such alleged expenses.

The Supreme Court on May 30, 1960 ruled that the Court of Tax Appeals was fully justified in concluding that the representation expenses in 1951 should be slightly less than those incurred in 1950. The Visayan Terminal Co. Inc. was then ordered to pay the deficiency tax.

The Visayan Terminal Co. Inc. was represented by Lawyer Ramon Duterte, who was born on December 23, 1901 in Danao, Cebu. Duterte became part of the law firm of Manuel C. Briones, the uncle of Chief Justice Marcelo Briones Fernan.

Atty. Ramon Duterte became Cebu City Mayor when Serging Chiong Veloso Osmeña ran for Congressman in 1957 Duterte was his Vice Mayor then. A son of Ramon by the name of Ronald who also became a lawyer also became Cebu City Mayor in 1983, when Dr. Florentino Solon vacated his post when the latter was appointed Director of the Nutrition Center of the Philippines by then President Ferdinand E. Marcos.