KE: Urtie of THF Philippin’ 8 Gourt of Tax Appeals Quezon Gity > Philippine Acetylene Company, et al. vs. & 1019 the Commissioner of Internal Revenue

DECISION -

CTA Nos. 931 & 1019 4m DD

17-33 7-11-60 A-1090082

4.8 7-15-60 A-2017272 £665.90 CTeAe No, 1019 Ey we) 8-15-60 A-2124015 43.85 8- 8-60 4&-1091023 16.85 9-12-60 &-1091901 5.50 9-14-60 A-2247392 13.08 10-11-60 A-2261368 13.78 10-13-60 A-1092662 40.96 11-11-60 A-1093407 26.82 11-18-60 &-227463 L7 .4o 12-13-60 &-221691 _ 6.15 12-20-60 A- 2443927 13.54 1-19-61 A-204619 £239.73 AGGREGATE AMOUNT - 2903.63.

Subsequently, petitioner claimed the refund of the said tax on the ground that the National Power Corporation is exempt from sales tax. The claims for refund were denied by respondent on the ground that the exemption granted to the National Power Corporation under the provisions of Republic Act No. 358 refers only to direct taxes and does not extend to indirect taxes. Similarly, all the requests for reconsideration were denied. Hence, these appeals.

The common issue to be resolved in these cases is whether or not the Philippine Acetylene Company is exempt from the payment of sales tax on its sales of oxygen and acetylene gases to the National Power Cor- poration, In relation to C.T.A. No. 931, the question of ' .,

I

DECISION -

CTA Hos . 931 & 1019 ,_ 3 - prescription of petitioner ' s right to institute a suit for the recovery of the amount off-533 . 57 \vas also raised .

Petitioner contends that under the provision of 3epublic Act 1 o. 358 , as amended by Republic Act No . 987 , the National Power Corporation is exempt from the payment of "all taxes , 11 and therefore, the sales of oxygen and acetylene gases to the said corporation are also exempt from the payment of sales tax. The pertinent provision of the said law provides as follows:

11SEC . 2. To facilitate payment of its indebtedness , the National Power Corpora- . tion shall be exempt from all taxes, except real property tax , and from all duties, fees, imposts , charges and restrictions of the Bepublic of .the Philippines, its prov- inces , cities and municipalities . n The issue is not new.

In similar cases involving the same parties , this Court consistently held: ~~", .fe find the contention of the peti- tioner without merit .

To our mind~ under the above quoted provision of oect1on 2, , l epublic · ct No . 3 58, the National Power Corporation is exempt from the payment of only those taxes directly payable by it. ,\s correctly stated by the .c<;xecutive Secretary in his letter dated February 26, 1955 to the General hanager of the National Power Corporation, ' the exemption granted by Republic Act No . 358 applies only to direct taxes but does not extend to indirect taxes.

x x x that doc- trine of tax immunity is not applicable where the tax is an inci.irec t tax col- lectible from the manufacturer , producer or importer. '

DECISION

~ C'l'it Nos . 931 & 1019 - lt - 11 The case at bar involves the assessment and payment of sales tax prescribed by action 186 of the Tax Code .

It is a direct tax on sales of articles or goods ' to be \ pa i d by the manufacturer or producer ' - t he original sell er - li.ke the pe- titioner herein, and not by the buy- er .

Therefore , petitioner Philippine Acetylene Company , t he manufacturer or producer of the oxygen and acety- lene gases s old to the Na tional Pov;er Corporation , cannot claim exemption from the payment of sales tax simply because it3 buyer - t he Na tional Power

Corporation -

i s exemp t from t !1e pay- ment of all t axes .

Exemptions from taxatlon are hi ghly disfavored in law and ca nnot be permitted to exist upon a vague implication .

(&siatic Petro- leum Co . vs . Llanes , lt9 Phil. lt66 . ) 11It is the universal and estab- lished rule tha t he who claims an exemption from his share of the common burden of taxation mus t justify his claj_m by shov.ling that t he Legislature intended to exempt him by \AJords too'-- plain to be mistaken .

(Government vs .

Monte de Piedad , 36 Phil . lt2 . ) Exemp- .

tion from taxation mus t be shovm in- dubitably to exis t .

The presumption is always against any surrender of the taxing pov1er .

(Noli.na vs .

afferty , 37 Phil . 5lt5. )

In the present case, the petitioner succeeded in showing to our satisfaction that the Na tiona.l Power Corporation is exempt from the payroont of all taxes, except real prop- erty tax , but it failed to prove that it is exempt from the payment of the sales tax assessed on the sales of oxygen and acetylene gases to the Na- tional Power Corporation. 111 (Philip- pine Acetylene Company v . The Com- missioner of Internal eve.nue, C. T.A. No . 898, Mar . 2, 1962 and Philippine Acetylene Company laban kay Komis - yonado N g :\.en tas In ternas, H. P. B. Bl g . 708 , Pasiya ng Ika 17 ng 8etyembre, 1965. )

DEC I SION -

· CTA Nos . 931 & 1019 - 5 - We see no plausible reason to depart from the above- mentioned ruling.

VIith respect to the amount of i-533 . 57 pai d by pe t itioner on September 18, 1958 , it appears that the suit for r efund of the amount was incor- pora ted only in the Amended an6. Supplemental Peti- tion for Review filed with this Court on October 18, 1960.

Applying the well established rule t ha t an amendment vJhich introduces a new or different .cause of action, making a new or different demand , is equivalent to a fresh suit , upon a new cause of action, and t he statute of limitations continues to run until the amendment is filed (See Ruymann & Farris v . Dir . of Lands, etc ., 34 Phil. 428, citing 25 Cyc ., 1308 , and cases cited . ) , we find that the action was instituted thirty- one (31) days beyond the period provided by law which reads as follmvs: 11Recoverv of tax erroneouslj!: .91: illegaii,y collected .- x x x.

In any case , no such suit or proceeding shall be begun after the expiration of t wo years from the date of payment of the t ax or penalty . "

(Sec . 306 , National Internal Revenue Code) . The t axpayer ' s f ailure to comply wit h the requirement regarding the institution of the a ction or proceed- ing in court within two (2) years after the payment of the tax is a bar to the recovery of the same ,

I

DECISIOl -

C~C.i-l. Nos . 931 & 1019 - 6 - irres:)ective of whether or not a claim for refund of such t axes filed vii th the Collector of Internal ~evenue is still pending action by the latter . (College of Oral & Dental Surgery v . Coll., G. R. ho . L- l04ll-6 , Jan . 28, 1958; Gibbs v . Co11. , G. ;.i . Ho . 1-13453 , Feb . 29 , 1960 and Ishc'lr Singh v . Com- missioner of Internal Hevenue, C.T . A. No . 1167, July 30 , 1965) .

The action for recovery of the sum of ¥533 y5. 7 therefore, has already prescribed. /m~REJ.70 E, the above- entitled cases should be, as they are hereby 7-is 'issed . petitioner .

0 ORD.'""R.Z.D .

With costs against ~uezon City , October 12 , 1965. \1,f'i' CONCUR:

liEYES , Sr.

siding

Judge