CTA Case No. 974 (Decision)

)V VISAYAI-J ELt:.-cT IC CQVlPANY~ . Petitioner1 - versus - C.I . A. CASE NOo 974 C. I.A. CASE NO. 1008 COviMISSIO\JE OF I NTE 'JAL Rb.VEI'IUE, H.espondento X- ~ - ~ - � - ~ - ~ - ~ � X VISAYA.l~ ELECT -IC CQvtPANY 1 Petition er , - versus - COMMISSIQ\JEl OF INTE&\JAL REVEl\JUE s Respondent . X~ ~ - - � ~ ~ � � - - ~ � X DECISION Petitioner Visayan Electric Co . seeks to recover the respective sums of ~9~129 . 46 4md ~5,552 . 00 , al - legedly collected as c ompens ting taxes on electrical equipments it purc hased abroad . As these two c ases involve the same leg�l issue , they will be disposed of in � single dec ision . 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 lamps1 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- c entage 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 . 9 74 & 1008 ~ - 3 .... It is urged on behalf of petitioner that the afore - quoted fran chisal provision e xempts 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 e xemption 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 artic les 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 artic les purchased abroad but used in the Philippines . X X X 11 x x x t he rights and privileges which the above provision e xempts 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 onne ction, we mu st not lose sight of the purpose for which the compensating tax has been institutedo XXX 1The purpose of this pro- posal _is to plac e persons pur- c ha sing 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 exemption s 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 purc hases equipment abroad . x x x11 Consequently1 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. / v SO ORDERED. Manila, October 5r 196L I CONCUR: Assoc iate Judge ROMAN M. UMALI concurs in a separate opiniono

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