? " Yue " Philippine. ~ Gobbs of 74x Appeals Ile Em Ta R Visayan Electric Company vs. = Commissioner of Internal Revenue

DECISION

Petitioner Visayan Electric Co. seeks to recover the respective sums of ~9~129 . 46 4md ~5,552 . 00 , al- legedly collected as compens ting taxes on electrical equipments it purchased abroad.

As these two cases involve the same leg•l issue , they will be disposed of in • single decision.

The facts are stipulated by the partieso C.I.A. Case No. 974.- During the period from January 26, 1956 to December 5. 1957, petitioner pur- chased from abroad electrical equipments , consisting of electric transformers 1 watthour meters and sockets, capacitors , incandescent lamps 1 and wires , clamps and joints , on which compensating taxes aggregating s--9:rl29.46 were paid.

The payments were effected on the dates of entries of the equipments 9> the last having been made on December 5, 1957.

l DECISION • C.T.A.

CASES NOS. 974 & 1008 ~ - 2 - On May 27 ,. 1960, petitioner protested the col- lection and requested for the refund of the ~9 , 129 . 46, which protest and claim for refund were denied by res- pondent.

Hence, the petition to review the denial p which was filed before this Court on November 21R 1960. C. T .A. Case No. 1008.- On May 4 1 19601. petitioner imported electric transformers on which compensating tax amounting to 5 ~ 552 . 00 was paid.

Its protest against the collection and claim for refund of the amount paid therefor having been denied, petitioner instituted the appeal on February 10~ 1961o The basis of petitionerts claim for refund is the exemption provision of Section 8 of its franchise, Act No. 3499 , which reads:

• ~The grantee shall pay the same taxes as are now or may hereafter be required by law from other persons , on its real estate 7 buildings, plant , machineryt and other per- sonal property, except property declared ex- empt in this section.

In consideration of the franchise and rights hereby granted, the grantee shall pay into the municipal trea ~ sury of each municipality in which it is supplying electricity to the public under this franchise , a tax equal to two per f!n- tum of the gross earnings for electric cur- rent sold under this franchise .

Said per-

centage shall be due and payable quarterly and shall be in lieu of all taxes of any kind levied , established or collected by any authority whatsoever , now or in the future 11 on its poles , wires, insulators:t switches, transformers and other structures, installations 11 conductors , and accessories , placed in and over the public streets~ avenues, roids~ thoroughfares , squares, bridges , and other places, and on its fran- chise, rights , privileges . receipts, re- · venues and profits, from which taxes the grantee is hereby express! y exempted. 11 DECISION - C. I . A.

CASES NOS. 974 & 1008 ~ - 3 ....

It is urged on behalf of petitioner that the afore- quoted franchisal provision exempts it from paying taxes , for the re«son that tr•nsformers are specifically mentioned therein as exempt. It has been held in Panay Electric Co. vs . Col- lector , G. R. No. L-6753 , July 30, 1955g where the t•x exemption provision relied upon is exactly the same as the one at bar, that compensating tax is not upon the privilege of using public streets and other places in a way different from the way they are used by the public in general; that the exemption provision refers to those rights and privileges which are not enjoyed by the public in general, but only by the grantee of the franchise , and does not embrace the common right or privilege of every citizen to make purchases anywhere; that the tax is levied upon articles purchased abroad but used in the Philippines; and that the purpose of this t•x is to place purchasers of goods from dealers doing busi- ness in the Philippines on an equal f ooting , for tax pur- poses, with those who buy goods directly out Side the Philippines.

We quote from that case:

111 X x x it is enough to point out that the protested tax is not one upon install•- tions , that is to say, upon the privilege of using public streets and other public plQces in a way different from the way they are used by the public in general . The pro- tested tax is a c ompensating tax levied upon articles purchased abroad but used in the Philippines . X X X 11 x x x t he rights and privileges which the above provision exempts from taxation refer to those which are not enjoyed by the pu lie in gene al 1 ut only by he grantee • ..

DECISICN - C. T. A ..

CASES l'JOS. 974 & 1008 ~ - 4 - of a franchise.

They therefore do not include the common right or privilege of every Cit izen to make purchases anywhere • urn this c onnection, we must not lose sight of the purpose for which the compensating tax has been institutedo

X X X

1The purpose of this pro- posal _is to place persons pur- c hasing goods from dealers doing business in the Philippines on an equal footing, for tax'pur- poses1 with those who purchased goods directly from without the Philippines.

Under the present tax law, the former bear the burden of the local sales tax because it is shifted to them as part of the selling price de- manded by the local merchants 1 while the latter do not.

The proposed tax will do away with this inequality and render jus- tice to merchants and firms of all nationalities who are in legiti- mate business here, paying taxes and giving employment to a large number of people.r "If petitioner htad purchased the equip- ment in question in the Philippines there would be no question that it would have to bear the burden of the sales tax because the same would have to be added to the purchase price by the dealer and petitioner might not escape the burden by invoking the exemptions granted in its franchise .

There would ap- pear to be no good reason why petitioner should be allowed to elude that burden by exempting it from paying compensating tax when it purchases equipment abroad. x x x11 Consequently 1 we hold that petitioner is .Q..Q,i ex• empt from the payment of the compensating tax provided for in Section 190 of the Tax Code. Moreover,. the action of petitioner to recover the amounts aggregating ~9~129 . 46 is already barred by pres- DECISICN - C. T . A.

C SES NOS. 974 & 1008 ' - 5 - cription, it appearing that the instant action for refund was begun beyond two years from the dates of / payments~of the taxes .

~HEREFORE? the decisions denying the claims for refund are hereby affirmed, with costs against / petitioner.

/

I CONCUR:

Associate Judge ROMAN M. UMALI concurs in a separate opiniono

Republic of the Philippines

GOURT OF TAX APPEALS

MANILA

VISAYAN ELECTRIC COMPANY, Petitioner, = versus « CeTsAse CASE NO. 974

COMMISSIONER OF INTERNAL

REVENUE, Respondent.

x oso e# ew aeeaee oe“ = & x VISAYAN ELECTRIC COMPANY, Petitioner, = versus « C.TsAe CASE 16. 1008

COMMISSION&R OF INTERNAL

REVENUE, Respondent.

CONCURRING OPINION

I coneur. I should like, however, to make some observations on the period within which texpayers may appeal to this Court in cases involving refund of internal revenue taxese Section 296 of the Revenue Code requires that a taxpayer who believes thet he has erroneously or file legally peid oan internal revenue tax must file with the Commissioner of Internel Revenue 4 written clpim for refund within two yeets after payment and must in-~ stitute court action for recovery thereof within the gome period, whether or not the Commissioner — e decision on the claim for refund. On the other hand, Section 7 of Republic Act No. 1125 provides that the Court of Tax Appeals shall have exclusive appellete jurisdiction to review by appeal decisions of the Com-.

missioner in all matters involving, among others,

CONCURRING OPINIGN «

CeoTeAe CASESMOS 974

and 100 - 2 » Claims for refund of internal revenue taxes, and Sec- tion 1] of said Act requires that the appeal from the decision of the Commissioner must be filed with said Court within 30 days from the date of receipt of such decision, The Supreme Covrt expressed the opinion that Section 316 of the Revenue Code requiring the insti- tution of court action for recovery of an internsl rev-~ enue tax within two years from the dete of payment, with or without a decision of the Commissioner, is inconsistent with Section 11 of Republic Act No. 1125.

Said the Supreme Courts

"While we cennot feign innocence of the existence of visible inconsisten- in the provision of Section 206 of the National Internal Revenue Code, as construed by this Court «- requiring the institution of court proceeding fer the recovery of taxes erroneously or Siheserey, Siaetes within 2 years from pa t ereof, action taken by A gepesiine 4 et... na enue on the claim for refund of | the same, which the taxpeyer must first undertake -. and Section 11 of Republic Act Na. 1125 specifically providing that actions should be brought to the Court of Tax Appeals within 3 days from re- _ eeipt of the decision of the Collector of Internal Revenue, considering that both mandatory provisions must construed a and that for purposes of the case a rno fur- ther discussion would be necessary, we leave app A ae dissertation on the same to some other opportune time. We feel free, however, to state that although to ‘courts belong the prerogative and power of construction and interpretation and while we do not shirk from that duty bestowed on Us by law, the legislative branch of the Government should teke neo- tice of such apperent conflicts in our statute books and start the elimination of the same by corresponding legislation.

/ CONCURRING OPINION w C.T.A. CASBESNOS. 974 and }008 ~ 2u (See aleo Rufino Lopez & Sons, Inc. ve Court of Tex Appeals, 38 0, G. No. I”, pe 3065, ‘and Sempaguita Shoe and Slipe per Feetory v. Commissioner of Customs, et ol., Ge se NO. LelO825, prom. January 14, 19958).* (Collese of Oral and Dental Surgery v. Court of Tax Appeals, Ge Re NOo LelO446, Jane 28, 1958, ) Netwithstending the ‘visible inconsistency" of Section 306 of the Revenue Code with Section 11 of Republic Act No. 1125, it has been held that the old law (Sec. 36, Revenue Code) must prevail over the new law (Sec. 11, % A. Noe 1225). (Coll. of Int. Rev. Ve CoToNey Ge Re NOs Lell494, Jon. 28, 1961.) Tt may be pointed cut, however, thet in the case of Section . 35 of the Revenue Code, it has been held that inso- fer as it is inconsistent with Section 11 of Republic Act lio. 1125, it is deemed to have been modified by the latter.

“It therefore appeers from the above thet when in the opinion of the court the collection of the tax by the Collecter of Internal Revenue may jeopardize the interest of the taxpeyer it may, at any stage of the proceeding, suspend the col- lection and require the taxpayer either to deposit the amount claimed or file a gurety bond for not more than double the amo with c 218 i seid Act to effect that *Any law or pert of law, or any executive order, rule or reguiation or part thereof, inconsis- tent with the provisions of this Act is hereby repealed' (Section 21)." (Colle of Int. Reve Ve Avelino, Ge Ke No. L-9202, Move 19, 1956; underscoring supplied. )

"We 2 with petitioner thet Sece tion 35 of the Netionel Internal Revenue Code precludes the use of injunction to restrain the collection of taxes, but as

CONCURRING OPINION «

C.T.Ae CASES NOS. = 974 and 1008 o~4e this Court has already proncunced view of the existence of the provisions of Section 1] of Republic Act No. 1125 sllowing the Tex Court te issue said writ of injunction ers 5 x) a limitations, the for mu be. Seemed +O nave Seen moc. fied pS NE (Collector of Internal Revenue ye Aveli o

t. Rev. =m Asner, Ge R No. L-10370, Sons “si, 19583 underscoring supplied. )

As the law now stands, Section 305 of the Revenue Code, to the extent thet it is in conflict with Sec- tion 11 of Republic Act Ne. 1125 hes been modified by the latter in view of the repealing clause (Sec.

21) of Republic Act No. 1125. On the other hand, Sec- tion 306 of the Revenue Code, notwithstanding its in- consistency with Section 11 of Republic Act Ne. 1125 and the repealing clause of seid Act, has not been modified by the new law. Is it necessary in the case of Section 306 that “the legislative brench of the Government should take notice of such apparent conflicts in our stetute beoks and start the elimination ef the same by corresponding legislation?" The apparent ine consistency in the above doctrines is not easily un- derstandablee Mowever, since it is now apparently set- tled thet o taxpayer must institute his “appeal” to this Court, with or without a decision of the Commis. sicner of Intermel Revenue on his cleim for refund, . within two yeers from the date of payment of the tax sought to be refunded as provided in Section 6 of the Revenue Code, instead of the thirty-dey period previd- ed in Section 1] of Nepublic net Noe 1125, I am now

CONCURRING OPINION «

«5 « prepared to fully coneur in the majority opinion.

In these cases, the claime for refund were filed within two years from the dates of paymente Decisions were rendered by respondent denying the claims for ree fund. The appeal in each case was sdmittedly filed with this Court within thirty deys from the date of receipt of the decision of respondent, no question have ing been reised in regard thereto, in accordance with Section 11 of Republic Act Ne. 1125, but beyond the twoeyear period required by Section 206 of the Revenue Code. Therefore, following the doctrine laid down in Collector of Internal Revenue v. Court of Tax Appeale, Ge Re "Oe L=ll494, January 28, 1961, petitioner come too late te this Court.

ROMAN M. UMALI

Associate Judge