CTA Case No. 2237 (Decision)

REPUBLIC OF THE PHILIPfiNES COURT 'OF TAX APPEALS . Quezon City RURAL BANK OF l1ALASIQUI , I NC., C.T. A. CASE NO . 2237 Petitioner, - versus - COJ:�:iiVIISSIONER OF I NI'ERNAL REVEl'l'UE, Respondent . X- - - - - - - - - - - - - - X DECISI O N Petitioner, a rural bank organized under Republi c Act No . 720, as amended, is seeking the refund of the sum of �2 , 122 . 83 , representing the income tax which it paid on April 15 , 1969, covering the period 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 �2 , 122. 83 was paid by petitioner pursuant to Revenue V.emorandum Circular No. .4J,-68 of the Bu.;,. reau of Internal Revenue wherein it was held that all corp- orations previously exempt from income tax becam.e ��$Ubject to auch 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 un- der Sections 24( c )(l) 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 Re- public Act No . 720, as amended, it is exempt from all taxes , and that Section 24(d) of the Revenue Code, as amended by Section 1 of Republic Act No. 5431, which provides �for the

DECISION - C.T.A. CASE NO . 2237 - 2- taxability of previously exempt corporations , did not repeal its exemption under its charter . Even assuming that its exemption has been repealed by Republic Act No . 54311 it is contended that its taxability should commence from January 1 , 1969, and not from July 1 , 1968, in view of Section 10 of said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 : usee . 10. The proVJ.sJ.ons of this Act shall apply to income for taxable years beginning after June 30, 1968. tt 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 December 31 each year. Therefore, the beginning of its tax- able year after June 301 1968 is January 11 1969, and it was error for it to have been required to pay income tax on its income for the period from July 1 to December 311 1968, be- cause of its exemption under its charter. (Rural Bank of Camiling, Inc . v . Commissioner, C.T.A. No . 2041 1 Harch 1 , 1974, cert . denied in G. R. No . L-38476, Hay 10, 1974; see also The Venila Times Publishing Co ., Inc . v . Commissioner of Int . Rev ., C.T. A. No.. 2053 , Dec . 171 19731 cert . denied in G. R. No. L- 38154, ~~y 10, 1974. ) In view of our opinion on the effectivity clause of Republic Act No . 5431, it is needless to pass upon the issue of whether or not said Act repealed the exemption from taxation of petitioner under its charter (Republic Act No . 7201 as amended) . At any rate, the provision exempting rural banks from taxation under their charter has been re- enacted in Republic Act No . 5939 , assuming that Republic Act No., 5431

DECISION - C.�r .A. CASE NO . 2237 - 3- repealed the prior exemption. \-JHEREFORE, respondent is hereby ordered to refund to petitioner the sum of �21122. 83 . No costs . SO ORDERED. Quezon City, September 24, 1974. ~-'...____ ROMAN H. UHA.LI } Presiding Judge WE CONCUR : .�..ns :/t:tfl;y f Associate Judge L -L ~ r RAHON L. AVANCENA Associate Judge