CTA Case No. 2250 (Decision)

P. �. :>\'.,' !C OF Tftr: Pilll.JPi't~EI! 1 �;I l.T f)F' TAX A PE LS <~;iF~ON Cn'Y RURAL BANK OF TALISAY, (CEBU) INC . , Petitioner , - versus - C.T . A. CASE N0 . 2250 COMlVIISSIONER OF INTERNAL .REVENUE, Respondent . X- - - - - - - - - - - - - - - - - X DE C I S I 0 N Petitioner , a rural bank or gani zed under Republic Act No . 720, as amended, is seeking the refund of the sum of ~839.64, representing the income tax which it paid on April 15 and July 15 , 1969 , covering its income from July 1 to December 31 , 1969. 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 ~839 . 64 was paid by peti- tioner pursuant to Revenue Memorandum Circular No . 41- 68 of the Bureau of Internal Revenue wherein it was held that all corporations previously exempt from income tax bec~e subject to such tax . by virtue of Section 24 (d) of the Revenue Code, as amended by Section 1 of Republic Act No . 5431, providing that all corporate taxpayers , other than those exempted under Sections 24(c)(l) and 27 of said Code, are subject to tax effective July 1 , 1968 , regardless of the provisions of existing spe-

DECISION CTA CASE NO 2250 2 cial or general laws to the contrary. It is alleged on behalf of petitioner that ~der Republic Act No . 720, as amended, it is exempt from all taxes , and that Section 24(d) of the Revenue Code, as amended by Secti6n 1 of Republic Act No . 5431 , which ~rovides for the tax- . ability of previously exempt corporations , did not repeal its exemption under its charter . Even as� suming that its exemption has been repealed by Republic Act No. 5431, it is contended that its taxability should commence from January 1, 1969 and not from July 1, 1968 , in view of Section 10 of said Act which provides & �sec . 10. The provisions of this Act shall apply to income for taxable years beginning after June 30, 1968 . ~ There is no question that petitioner, as a rural bank, is keeping its books of account on the calendar year basis, so that the beginning of its taxable year is January 1 ending on Dec ember 31 each year . Therefore, the beginning of its taxable year after June 30, 1968, is January 1 , 1969 , and it was err or for it to have been required to pay income tax on its income for the period from July 1 to December 31, 1968 , because of its exemption under its charter. (Rural Bank of Camiling , Inc. v . Commissioner of Internal Revenue, C. T. A. No . �2o41, March 1, 1974, cert. denied in G. R. No . L-38476, May 10, 1974; see also The Manila Times Publishing Co. , Inc . v . Commissioner

DECISION - CTA CASE NO . 2250 3 of Internal Revenue, C. T. A. NO . 2053 , December 17 , 1973 , cert . denied in G. R. No . L-38154 , May 10, 1974. ) In view of our opinion on the effectivity clause of Republic Act No . 5431, it is needless to pass upon the question whether or not said Act repealed t he exemption from taxation of petitioner under its charter (Republic Act No . 720 , as amended) . At any rate, the provision exempting rural banks from taxation under their charter has been reenacted in Republic Act No . 5939 , assuming that Republic Act No . 5431 repealed the prior exemption. WHEREFORE , respondent is hereby ordered to refund to petitioner the sum of ~839 . 64 . No costs . SO ORDERED . Quezon City, September 24 , 1974. ~~~~ ROMAN M. UMALI Presiding Judge WE CONCUR: ~A~sI�sSo-LcAiOa4teR.~JuAdL�gVAeRp~ Ei' h. i~-- RAMON L. AVANCENA Associate Judge