CTA Case No. 2254 (Decision)

FF' \ Pi.!C r)f T H' Pi.i'..IPFI, ~.::l; ��l 1:( iF l \X .~PPFALtl ~,JilL ~~�N C Y RANG- AY RUP~L BANK , INC ., Petitioner , - versus - C. T. A. CASE NO . 225lt COM1'1ISSIONR.:"\ OF INTERNAL REVENUE , Respondento X- - - - - - - - - .. X DECI S I 0 N Petitioner , a rural bank organized under Republic Act No . 720 , as amended, is seeking the refund of the sum of ~1 5 , 172 . 00 , representing the income tax which it paid on Hay 15 and August 12, 1969 , covering its 'income from July 1 to December 31 , 1968 . There being no dispute as to the facts , the parties have agreed to submit the case for judgment on the pleadings . The said amount of 11>15,172 . 00 Has paid by petitioner pursuant to Revenue Memo- randum Circular No . lt-1 - 68 of the Bureau of Internal Revenue \vherein it was held that all corporations previously exempt from income tax became subject to such tax by virtue of Section 2lt(d) of the Revenue Code,

DECISION - CTA CASE NO . 2254 2 as amende.d by Section 1 of Republic Act No . 5431, providing that all corporate taxpayers, other than those exempted under Sections 24(c)(1) and 27 of said Code, are subject to tax effective July 1, 1968, regardless of the provisions of existing special or general laws to the contrary. It is alleged on behalf of petitioner that under Republic Act No. 720, as amended, it is exempt from all taxes, and that Sec- tion 24(d) of the Revenue Code, as amended by Section 1 of Republic .ct No. 5431, which provides for the taxability of previously exempt corporations, did not repeal its exemption under its charter . Even assuming that its exemption had been repealed by Republic Act No . 5431, it is contended that its taxability should commence from Jan- uary 1, 1969 and not from July 1, 1968, in view of Section 10 of said Act which pro- vides: "SEC . 10. The prov1s1ons of this Act shall apply to in- come for taxable years beginning after June 30, 1968.1 There is no question that petitioner, (29)

DECISION - CTA CASE NO . 2254 �3 as a rural bank , is keeping its books of account on the calendar year basis , so that the beginning of its taxable year is Jan- uary 1 ending on December 31 each year . Therefore , the beginning of its taxable year after June 30 , 1968 , is January 1, 1969 , and it -vras an error for it to have been required to pay income tax on its income �for the period from July 1 to Dec- ember 31, 1968, because of its exemption under its churter o (Rural Bank of Camiling, Inc . v . Commissi oner of Internal Revenue , C. T. A. No . 2041 , Har rch 1, 1974 , cert . denied in G. R. No . L- 38476 , Jvlay 10, 1974; see also Rural Baru~ of Talisay , (Cebu) Inc . vs . Comm . of Int . Rev ., C. T. A. No . 2250 , Sept . 24 , 1974; Rural Bank of Sariaya , Inc . vs . Comm. of Int . Rev ., C. T. A. No . 2068 , _ Sept . 24 , 1974.) In vievT of our opinion on the effecti- vity clause of Republic Act No . 5431, it is needless to pass upon the question -vrhether or not said Act repealed the exemption from taxation of petitioner under its

DECISION - CTA C SE NO . 225~ charter (Republic ct No . 720 , as amended) . At any rate, the provisions exempting rural banks from taxation under their charter has been re-enacted in Republic ct No o 5939, assuming that Republic ct No . 5~3 1 repealed the prior exemption. WHEREFORE , respondent is ~ereby ordered to refund to petitioner the sum of P15,172 . 00 . No costs . SO ORDERED . uezon City , October 30 , 197~. ROMAN M. UMALI Presiding Judge \�IE CONCUR : I ...__../ ~ t~---. RANON L. AVANCENA ssociate Judge (71)