G.R. No. L-47413. April 14, 1941.
MARIANO MOLO, plaintiff-appellant, vs. ALFREDO L. YATCO, as Administrator of Internal Revenue, defendant-appellee.

FACTS

The plaintiff-appellant, Mariano Molo, filed an action in the Court of First Instance of Rizal to recover from the defendant-appellee, the Administrator of Internal Revenue, the sum of P350 which he paid under protest as a lending investor’s tax for the years 1929-1934. The trial court dismissed his complaint with costs. At the hearing, plaintiff testified that he was not a lending investor and that his income was mostly from real estate and agricultural rents. On cross-examination, when asked about 10 or 11 specific loan transactions with interest where he was alleged to be the lender, plaintiff repeatedly answered that he did not remember making any of those loans. He refused to categorically swear that he did not make the loans, insisting only on his “I do not remember” answer. The defendant presented as evidence certified true copies of six mortgage documents (Exhibits 1 to 6) from the records of the Register of Deeds of Rizal, in all of which the plaintiff appeared as the lender. These six loans were among those mentioned during cross-examination. The trial court was convinced that plaintiff was not sincere in asserting he could not recollect his participation in these transactions.

ISSUE

Whether or not the plaintiff-appellant was engaged in the business of a “lending investor” as defined by law and was therefore legally liable to pay the corresponding fixed tax.

RULING

The Supreme Court affirmed the trial court’s decision, holding that the plaintiff was indeed a lending investor subject to the tax. The tax was based on Section 1464(x) in relation to Section 1465(v) of the Revised Administrative Code, which defines a “lending investor” as including “all persons who make a practice of lending money for themselves or others at interest.” The Court disagreed with appellant’s contention that the six isolated instances of lending money at interest did not constitute the “practice” or exercise of the profession of a lending investor. While it is true that to be considered a lending investor in the legal sense, one must habitually engage in the business or profession of lending money at interest, and isolated cases do not constitute such exercise, the established facts in this case demonstrated repeated acts indicating that the appellant was indeed engaged in lending money at interest for profit. The evidence showed that on six occasions, the plaintiff accepted mortgages to secure the loans he granted to different persons, from whom he collected interest at 12 percent. Since the appellant failed to prove that these transactions were made accidentally or under compelling circumstances, it is presumed that he was actually engaged in the business of lending money at interest, thereby becoming a true lending investor under the law. The Court also found without merit the appellant’s claim that the appellee failed to prove the periods to which the collected taxes corresponded, as Exhibit A showed the taxes covered specific quarters from 1929 to 1934, which were the periods when the appellant conducted the transactions evidenced by the certified mortgage documents. The appealed judgment was confirmed in all respects, with costs against the appellant.