CTA Case No. 1773

REPUBLIC OF THE PHILIPPIN'S

COURT OF TAX APPEALS

QUEZON CITY

ARGELSS ELECTRIC CORPORA

TION, Petitioner, versns : Ceoiehe CADE NO, 1773

COMMISSIONSR OF INTERNAL

ARVEBUM , / Respondent. 4 a>

DECISTOR

Petitioner spresied from the decision of responient dated March 22, 1966 holding 1t liable for defietency franchise end percentage taxes inelusive of 25% sur- charge, in the amount of 28,683.72 eovering the period from Jamary 1, 1956 to September 30, 1960.

It eppears thet on April 17, 1923, the Municipal Council of Angeles, Pampanga, granted a franehise to Teresa G, de Sepomuceno to install, operate and »ain- tain en electric plant and power system in Angeles, Pampanga, end tc supply the municipality with electric light, heet and power for a period of thirty five (35) yeers,. Anong the conditions set forth in the franchise was the poyment quarterly by the grantee of 1© of her gross income during the first twenty (20) years and 2% abrine the next 15 years remaining life of the fran- chise. Subseqventiy, under a deed of agreement dated November 15, 1949, the original crantes transferred » 280

DECISION «

CTA CAS® HO, 1773 to petitioner Anrceles "leetric Corporation for a veluable consideration, all her rights over the franchise.

The seid municipal franchise cranted under the Authority of Act 667, as amended, expired on April 22, 1958, However, petitioner-taxpaydr was granted onder Repudlie Act fo. 2341, anproved on dune 20, 1959, a new franchise subject te the terms and conditions of Act 3636.

In a letter dated Varen 3, 1961, respondent assessed petitionrr and demanded payment for deficiency franchise and pereentage texes, inelusive ef 25% surcharge, in the amount of #170,288.02 covering the period from Oetober 1, 1952 to September 39, 1960, computed as followst Total gross receipt per sudit ... °6,007,505.77 5% franchise and 3) percentage taxes due thereon > ¢ &® © &© © @ 279,124 «27 less: Amount paid © ® @ @ © & Balemnee «sxe ss esuanvanvssns F 4 ry * Adds 25% gureharge . 1. ss 6 27 486.85 Anount erroneously refunded . «. « TOTAL AMOUNT DUE «oe 2@ 8 @ @ & & ad Petitioner filed a request for cancellation and withdrawal of the assessment on Mareh 29, 1961 which was denied by respondent in @ letter dated “arch 22, 1966. The ortginel assessment of °970,286.02 was reduced to P6E,443.72 covering the period from January 1, 1956 to September 30, 1960, competed as follows:

r Q814

DECISION «

CTA CASF NO, 1773 3 Feriod Gross feceints Jax Due Sind of Tax 191-56 to 422-58 91,717,062.55 9659893012 Franchise 5% be 2Zo5E to 619259 1,062,699.71 31,880.99 Pereentage 3% ins aaa : 215,51 Franchise 5»

Lessa Amount Paid

Balance — # dpepetate Adds 25) surcharge 7%

TOTAL AM°UNT DUS 7

Respoadent computed the aforesaid revised assesszent #769, 649 262 on the theory that:

(a) For the period from 1 January 1956 to 22 \pril 1950 when petitioner had a wunie cipal franchise it was subject to the 5) franchise tax in accordance with the oupreme Court decision in the Hoa Hin cases (0.2. No. L-9696, May 25, 19593 Ge. No. 144703,

(b) For the period from 23 April 195€ to 19 June 1959, when petitioner was opera- ving without a franchise it was subject to 3 ax imposed under section 191 of the Tax ode, and {c) For the period from 20 June 1°59 to 30 September 1960, it was subject to the 5! franchise tex in accordance with the ruling of the Supreme Court in the cases Carear Tleetric © lice Plant Co., Inc. (5.4, Yo. 19257, Ostoder 17, 1956) and Visayan "leetric COeg Sede (Goh, Hos. Toe O09 and 10100, August 30, 1957).

Sot satisfied with the reduction petitiorer, on June 25, 1966, appealed to this Court.

The issues posed to this Court for resclotion are as follows:

1. Whether oar not the right of responilent to collect from the petitioner the sum of §88,543.72 as deficiency franchise and percentage taxes covering the 282 wae *e

J

DRCISION - .

CTA CASR BO. 1773 me period from Janusry 1, 1956 to Sertember 30, 1960 has pre seri bed; .

2. Whether or not respondent ia estopped from assessing and-collectinr the aforesaid taxes in view of the resolution of the Soar’ of Tax Anpeels in Tax Appeal Cage "o, 160; and

3. Whetner or not petitioner is Mable to pay a surcharge of 25%) for failure to pay the aforesaid Je-~ fictency taxes.

Petitioner contenis that from November 12, 1966, the date the Answer of responient was file? in Court to March 3, 1961, the date the origina} essesenent was issued, more than five yeers lapse? em, therefore, the right of respondent to collect the sforrsaid sssessnent hed preseribed in accordance with Section 332(¢) of the Tax Code, We find petitioner's contention without merit, Ym ie a.sottled role tnat the five-yeser porescrictive period fixed by the Nevenue Code within which the government may collect the tax iz to be counted from the last revised assessment made at the instance of the taxpayer (Snerol v. Collector of Internal Reverme, 6 SCHA 304). The recors of this onse in effect shows thet after receipt of petitioner's motion for reconsideration re- spondent ordered the Regional Director of "smpanga for further investigetion ant, as a result thereof a re- vised ussetement was issued reducing the amount of the deficiency tax. :

It ig likewise a established doctrine that an

PRECISION ~

CTA CAST NO. 1773 5 appeal by the texpayer to the Court of Tax appeals is at the sane time an action for colleetian by the govern- ment since the lutter is e concomitant of the appeal (Collector v. Hohol Land Transportation, 107 Phil.

965, 973; General insurence and Surety So. v. Conm. of Int. Rev., GaN. No. Le29805, April 30, 1963).

In the light of the foregoing doctrines, the right of responient to collect the deficiency tax in question hed not oreseribed when retitioner eppealed to this Court on June 26, 1966 since the period fer collection started to run only on Merch 22, 1966 when respondent revised his previcus arcsessuent reducing it to PO8,44+3.72. Less than forr ronths had elapsed.

Respondent assessed the deficiency tax from January 1, 1956 to April 1958 et the rate of 5s 3% from April 23, 1958 to June 19, 1959 while petitioner operated without « franchise which expired on “pril 22, 1958, ané 5% from June 20, 1959, when petitioner obteined a new franchise, to September 3-, 1969, This assessment is to ouf mind correct, and as a watter of fact peti- tioner does not question its correctness, However, petitioner raises the defense of reg adiudicata. It claims that respondent is barred from using the aforesaid rates becense of a prior judgment rendered on December 3, 1953 by the defunct Beard of “» 984 RE eee EE —————e—— ee

DRCISION «

CTA CASE §O, $773 6 Tax Appeals in © case entitled In Ke Claim for Sefund of Overpaid Franchise Tex = Angeles “lectric Corporation, Tax Appesl No. 160, wherein the Board held thet under ite municipal franchise of 4pril 17, 192} petitioner is only liable for 1% franchise tax for the first 20 years of its existenes and 2) for the remaintog 15 years. in this respect it is well to note that Cese No. 16° involved taxes for the 2nd quarter of 1951 to the third quarter |

Bian

In the defense of reg adjudioata there shovit be identity of parties, identity of subject matter and identity of eause of action (Moran's Commentaries of the Anles of Court, Yol. 11, pe 363, 17° edd. This case involves the deficiency tax from January 1, 1956 to Sentember 30, 1960 while Case No, 160 aforesaid involves taxes before sald period. Moreover, Case ‘o. 169 involved the momicipal franchise tax of petitioner while the present case involves not only the mni¢iral franchise but also the law applicable after the expiration of the life of sai? franchise on April 22, 1956 and the new franchise which petitioner obtained om June 20, 1959. Needless to say there {s no identity of subject matter between the two cases.

Petitioner having falled to pay the tax due the government, it follows that the 25% surcharge is impossble pursuant to Section 25% of the Tax Code. The imposition ie

DSCiIsION «

CTA CAST NO, 1773 ?

neither the Commissioner nor the Courts may waive the same. (Kopnel {Pails J Ine. v. Colleator of Internal Revenue, GR. No. 11977, Sentember 21, 1950, 4€& Orr. Gas. p. 9€3 Yutivo Sons Mnrdware Co. v. Coll. of Int. Reve, 1 SORA 160, Purakan Plantation Co. v. Domingo, 19 SCRA 151.)

WHTRE FORE, the deeision appesled from is hereby affirmed. Without pronouncement as to costs.

SO ORDFRPD.

Qvezon City, December &, 1975.

fbn oe

RAMON Le AVANCILA

Asscelate Judge

we CONCUR:

°) A MStAO he ler Reneesete vudge

A

ro eo 286