CTA Case No. 2600 (Decision)

i l ; i'! 'I ' w OF �r 1:!~ P:t:Ui'PINES C'\ ur_-.� -� c�- �� 1 v .-~ .l ' ..l. ...~~.t���r- .At-�-~T1 ..>p�r.,' aA.. It~C~! QUEZON CITY KORON/\DAL ELECTRIC LIGHT & POWER CO. , INC ., . Pc titionGr , - versus - CTA CASE NO. 2600 THE Q) l/Jv1I SSIONER OF Il'-!TE RNAL REVENUE, Respondent. X- - - - - - - - - - - - - X DEC I S I 0 N The decisive q0estion involved in this case deals with the p6ssible unconstitution~ application of ~ec- tion 24 (d) of the NationaJ. Internal Revenue Code, as chises that are enjoying income tax exemption in view of the command of the non-impai r ment cl &us e of the Constitutiono Pertinentl y, Secti on 24(d) of thG Tax Code, as amended, provides that the provisions of ex~.st��� ing spcci~l or general laws t o the contrary notwithstand- ing , all corporate taxpay ers not specifically exempt unde r ~ecti o ns 24(c)(l) and 27 of the Code shaJ.J. pay th( rates of income tax provided in said section 6 The parties submitted the following parti~ stip- ulat ion of facts: (pp. 34-35 , CTA records) 1. That the petiti oner is a corporation duly 01:'�U1 ized and existing undc:r and by virtue of the. lavvs of thE Philip pines, with principal office at Ro om 301 Maritima Building , 117 Das- mariftas StrEet, Manila, while the respondent is the duly appointed a nd qualified Commissioner of IntErnal Revenue , with office address at the Depa rtmcnt of Finan e c: Building , Men i.la; a 2. That petit i on er is grant. ee-holder of a leg i slative franchise to operate an electric light, heat and power system in the Municipali- ty of Buayan (now General Santos City), province of South Cotabato;

� DECI S I ON .,__.. C'I., G\ .') E NO . 2 600 -2 3 .. Th.::' t p ursu <Jn�t to n.ev e n ue t-'Iemo r a n d urn C i rculcl r. No . �11- 60 i m~) 1 err:ent i nc ;:(eptJb 1 i c l\ ct No . S'l3 l , pe t i tio:�Jer. f il ed <md p2id under pro- t es t its cc=porate i n c ome taxe s fo r t he year s J. 968 and 1 969 in t he fc 11 ow i n 9 amou nt s : l ~S83 1 9 /�.pr.i l 1 5 , 1 969 Pl4 , 04U . OO Jul y 1 5 , 1969 1~ , o4o . oo 1 89 10 35 /.pr i 1 1 4 , 1 9 7 0 _4_7.._.. 0 q 6 .Q Q 1 580828 Tot:c:i l 4. Tha t on /yri l 24 , 1 9 70 , petitione r fi l ed wj.th r esponden t a l ette r dated Apri l 2 3, . 1 9 7 0 r equesting exemption from paymerrt of i ncome t axes fer t~ �H.:: y'e<.:rs 1 968 and 1 9(,9 . C.1p . 22 - 23 , BIR rec .) ; Ilerno 5 . Tha t en ~ugust 1 8 , 1 970 a T 2 x Cr edit i n f>vcr of pct i tioner cr ed -~ vJ2S j s:;ued iting the::� ~r.1otmt of P 7 ~) ,1 76 . 0U n cp reser!t.ing (?r - ron co.J sly p2 id i nccrr:e taxes fer the :!e,:tr 1 96f3 and the l s t h3lf o f 1969 , under memor<Jndum- dPcJsion of the Chjef , Appe l late Division , d a t - en /,liCUc>t 3 , 1970 , d 1 Jl y ap~.�roved by th e Comrni:-:;- 8 i. one r of I n t ""r n .::~ l r~ e v c n u e (p g 7 2 , GI l<. r e c � ) ; 6 . That in a l etter d a ted P.uq ust. 2::: , 1 972 , r espcnde!!t revoke c"l. Tax c: redit c i�'1 r::c dated l'�.u. ust:. 1 8 , 1 970 and demanded the payment o f the amount of r 7 5 , 1 7 6 . 00 as deficiency income taxes for trw per i cx':l 1 968 ;::;nd 1 969 ( p . 95 , Fin rec . ); 7. That. in o. le~~tr -r of petitioner dat e d ~ep t em bPr 30 , 1972 anrl reccivnd by respon de nt on Oct c: er 5 , 1 972 , p~ t i tioner. re 0 uested for re - con sid eration of the decjsion cf the Co mm i ss i.nn - e r of Int erna l R0 venue ( rp . 9~ - 1 00 , BIR r ec . ) ; 8 . T\:i<"t in a 1 etter- decis.icn dated FPbr u<Lry 1 8 , 19 7 4 , t.he r esporv.!cnt denif~d the> r et!uest. fo r r econside r At i o n and demanded tte paym ent of t he amount of f' 7 5 , 17 6 . on, ex c l usive o:f intP re s t .s trheca t. ) h; ave accrued there on (p- n� . 102- 1 04 , DI R 9 . ThJt b oth parties reserve t he r ight to prrsent. add i t:icn2 l (:?VL , en c e tc s ur; po r t the i r r espective content i ons. Th e o nly add it io na l evide n c e presented during the -. t r i a l o f t his ca se is th e admission b y r ~q 4, , �, ~ o~~ t h a t p e ti t ione r r e c e ive d the l etter- dec i s ion d a t e d Fe b rua ry 1 8 , 1 9 7 <! o n Ma r c h 2-J , 1 9 7 4 � 204

DECI:.3IOI\ CTA CASE NO . 26 00 - 3- For better u nde r s tand ing of the fadt ua l setting of t.he pr<?::>en t procE:ed i ng , .it shou ld be stated , as borne ou t by th e r c' c c r dr:; , th at o n Jur;e 9 , l 95C , r-:r . e r Republic ~ c t No. 466 to construct , maintair ~nd cp- . e r <3 "l,-E��: ,-._-, i:l '."c.' .l c-,:c-, t".t� l.C _l_ J._c_�.h �.'-_ , h1 l-'<-i i". ::_:::.,'.r��,c.1 �t.�J� ,,..Jwr t' .r p. 1 ~--�,.�. ��- t '~' .c;;' .1~ - . Ce1tc l:ic o ! l<~cl.ric Li (' t : t: [, Fc~, .�c r Co ., Jnc ." S ub:~eq u,~n t - J une 1 '-�' I 'Ihi~-; act i on w~s af f irmed o n f\c; p u 1 lj_c !�c t. No . a 1 i:i':1endr::c: tt. of i�ts /\ rt: ic1e s of J nc~~� rporc:.tion c 'nung ing t he corrorate na. rne to L c r onac1a 1 lc c tr-i'c L i<.:_rJ-: L & Pov1e r Co . , Inc . T he said amc:ndn1ent w<~s df.�rrcv"3d by the ::=:e c - (pp . 69-70 , EIR Records .) /,pprcpriatc tc st.cJ.te here ,;:.1~30 is that. s ince 1 950 , pet i t i oner , up to ~ovemb er 1 5 , 1 968 when the Bu reau of Int ernci 1 R,,venue j s.sued it s F<e v c:n ;.; <_:; l"lcrnC'ranC.urn Circu1- ar No . 41-68 i mp l ement :i.ng Repub li c ~', ct Po . 54 31, r es- pondent has not su bjec ted pet i tiOl :�..: r tO incorne t2X o 205 - =��=�-.. _ _ _ _ _ __ _........._......... �-���-~��--���........__~~~----~-------~

DECl:JION CT;\ Cr'-\.~; E NO . 2600 4- Re s pc n -:J.ent ' s b a sis is t1lat. portion of E> e ct.i o n 1 of r~e - p .1b lic ;,ct No . 466 , infr<:>, subje c ting the original franc hise to the terms and c ond itions of the Model Fra:1chise Law (Act 3636), Vihic h provides th a t: tr1e frc�m - chise t >3X ( .f.'c. _) .r-.~.~.,c:�".-~ 1 y ''-)O '"' ' h'-,e.. "�.(J' .'c p . �t�'t�l.c.\ c,_-.'J�� .r�: p.-.c �t.l'�v.L~"L''jI o .f. He - publ ic i\ ct t: c . 39 on Cc-tober 1 1 1 946 ) imposed t herein "s hall be in lie u of c n y c.:nd a ll t u xes 0f a ny kinc'i , n~t u rP , or des cri p tion l evied , established , or collect- The said prOV�- is ion t�. ha.'::; been in terpret.ed O F. . ~~-J�l� c'.~ ~C ' C~~.t~-- l F r ~J~c � h~ �� J� �-,~_, p~.... ~.~. c j ... ' �' . ... - hy the: ..: uprcme Court in t.hc c a se o f c,-"..:-c a r i' lectric 50 , to mean t h at its i ncorpcra t i c n in the franchi s e o f em ~ tion fr c m Jnc o me t a x. (p p . 62 - 69 , HI~ Records . ) fi::�ancL:i.SL2 t.a x ra�te of On t;Jovemb_E:: r l S , 1 'J6f) , h c wevcr , �tre 1.3urc<1U of: In- Intern .o~ l l~cv c ntl'; r:ode , '' <ill. ccrpor<Jti.r�� n::; p r ev i ous ly exempt from inccme t ax by virtue cf gcne r 3 l and speci a l l aHs h ;� ve l est th eir exemptions a n d ~;uch bEdng i::.h e c ase , fhe amendment c a n enc o mpass existinJ fran c hi s es since fr<H1chises are a lso s pe c i<::c l laws. 11 Pu rs uant t o this 206

r_:r.:c:r ~; J () i'J - c �I�,:-._ c.::�..:.,; E r,J C: . 2 6 00 5- i :-:com e t:<:1 x r e c ur n .s u n d p::� icl i n ce>me t .r.: x in t}� E~ r e spe c t - ive am o u nt of ~ 2G , C8C . GC and P4 7 , C96 . 0 C, o r a tota l of On ,J u n e 1 3 , 1 ~1 69 , h owe ve r , a r u Li n g W<3[:3 issu e d b y t. h c 8 u r:-e d u ct Inter n d l l~ e v enu.e ir! t he c ase of C ] -2 V '-C~ cil .la p ri v i l eg e gri n t cd t o f r anchi s e h o l ders is n tta f fP cted cr n =-:vckeo� L�r' tho prov i si o ns o f I<. cp:�b J.i c ct No . 5 4 3 1 be c ,"'. use s aid priv.i l cqe .L'; J n thr:: n;3 ~: ure of a con tr c:: c t v: l ~ ich c .::m n c ~-- bc.� r e s ci n oc' d u n :i l atc:::-aJ. l y by e i t h er cf n e t rel-Je c. l t~1 e provision;-:; cf ex i r,;tj__ q fr ,J: � ch is es o n ent i n the C l ~ v e ci l l a c ose resto r ed the gr?il t e e s to their f o r m ~ r st a tus - t hat of being e xem p t fr o m i nccm~ .. t <:~x a~3 d e c:Li ed in t1�: e C-:::c c u r c ase , .f?JJ.L�9. � ( p . 6 7 , B I J~ emptj o n from p ayment of i ncome t a x (par a 4 , pa rti a l s t i p ulat i o n oi fi::: ct s ), n .'spc::Jd.c::nt , o n : u g ust 1 8 , J (n o, is ~ u ed ~ T ax Cr ed i t Memo i n f a v o r o f p ~ tit ioner c r ed - i �ti ng t he amou n t of ~7 5 ,17 6 . 0( r ep r es en ti ng err o n eous - l y pa i d i nccrr. c ta x fe r U1e ye ar l9 GH ,-wr1 th e fi:. s t !1a l f of 1 969 o (p a r . 5 , pa r t i c:; l sti p u l ati o n o f f 3 cts o) nf':x t_ tr a n s p ire-xi a re new st<:lt:o:)d un der pa ra g raphs 6 , 7 207

�. � LC. 2 600 - 6- c.::nd 8 c f th e _r;:1 rt:. i a l .st.ipulat~ i o n cf feict.s submitt.ed by the particsc ' ..1 tr ~ou~:1 h t .h e parties have pn:~:Den tec1 four quest. - icns fer the r eso lu tion of the Court , the pivot a l and decisive . J.. ""'' � Whether or n et th~ � imposition of the corroratP income tax as prescribed by Rcpublj.c �' cl: No . 5t13l ,~n:encl i ng ~>,ct i o n 24 ( 0 ) of t. hr:~ ,�1<-: titAlc l Internal Hevenue Code on pE; t i t ioncr , in view of the t2x exem~tio n provisio n of itR fr~nchise, would be vi o la t.:.i ve of the c ons U tui.::Lcnu 1 prov:i.s i o n th<} i::. no le~ imp2irJng the ob l igAtion of ccntracts sh0 ll he retitioncr submits t.h;,'l~-- 2s a c;ranteo cL a l c:gis - l dti ve �rancl1isc , i t l~> exempt~ from inc:�;rne t ��.x by v .i.r�-� by Repub l ic \ ct No . 39) ~hich provides that the fr2n - ,, l l t:.c:x c.s cf any }:inc , n:�t:uce or de E; cr-.L~ � tiGn levjcd, established o r collected by e ny auth0rity wh A tso ~ve r x )< x . " This "in lieu o f " prevision c.f the Hode l Fran -� 208

.. ' DECl:.)ION -7 Carcar El ect ric & Ic e Pl ant Co ., In c ., �!..!2.2f 2 , t o mean t1E"\t i t.s i n cor ror ati o n in Lh e f r anchise of the r::JT �3 nt ce has t he ef f ect of g ran t ing such grantee exemption fr Om i nccn:e t ax . S i nce the franchise of re tition e r c on s ti ~ tutes a contract between the State and petitione r , and the l atte r a ccepted th e fra nchi se so l e l y u ~on the ter -ms <3nd ccndiLL o ns thereof , pc t:i t i c�nc"! r c:.trques that the c~ l ig tion 0 f con tr 2 cts shal l be ~as~ed. t i or: , except under the ccn ~ition th~t j t sha l l be sub - �-� p~rt of sal~ fre~ch i se . n t: ( Lea L :i.n v .s. Davi d , l _) t.crna l !"<.ev enuc , L - JF.428 , ''fH:-i. l 3C , 1 963 , 7 QC1\i\ 7 28 ; Jmus E l ect r ic Co. vs. Court of T a. x !">ppea l s , L - 22121 , ~arc h l R, 1 96 7 , 19 SCRh 6 1 2 ; Guag u a E l e ctric Lig ht vs . Colle ct cr of Internal R0 ven u e , L- 236 11 , Apr il 21 , 209

- ---- -------~------ n:::::c 1 ;;; I C1N CTA CiS~ NO . 2600 - 8- 10 l 9 C: 7 u , 0,--''--".~: '' "'/�', 'J O / ~:-~l � ) Indeed , Secti on 1 cf pet itioner ' s "j f r c:cn ch:i .'3e , !<eP' -~b lic J\ ct 466 , explicit l y provj_des : " :~c c tio n 1. ~;ur:jcc t to t .he terms and co1~.d it icn s estab l isb:: d in ,'\ 0 -t Nurnhe r ed Thirty-six hundred and thirty-six, as amend- ed by Corn .:onwea l th 7, 0 -:.: Numbered Une h u n d red .:_; nd. t h .i rty - t V70 1 a ncJ t O �the provi;; tons Of the Co nst.:Ltu tion , then::: j s 0rantecl t.o ,Jose Cat.o li- c o , for a period of tv:enty- f ive yea rs �ron< tLc ~pprova l o f this ~ ct, the right , p r iv i l e ge ;:1nc~ a tl t:.hc,ri ty tc construct , m.:::dnt.ain , and or,::c - r ate An e l ectric l jght , heat and power p l ant frr t'lt' purpose~ c.f c::;oncrat i ng 2r�~�J distributing e l e c tric lj ght , hent and/or power for s~ l e within thl-.:: l�1unicipa l lt'/ of Duay.:1n , Prov ince Df Cot~,Jbc::tc : Fre:;!_~~~:1cd , That the holder of t .hc.: frAnthise ~erein granted shall sta rt the ope - raticn t.1 e r eof 1,;i t.f::i.n cne , nd h�alf yc;.-:: r s from ap}�rov=: l r-� sairl fr<":JChise o" ,\nd in se c Ljc�n 1 2 cf ~:luid �'', ct. 1\Jo . Jc,:�3\") , vh:Lcl1. t .o.-~l: ,;f - fee~ on De c embe r 7 , 1 929 , i t ~rcvidcs the fo l lowing : " ~~.c~c o 1 2 . Th j.~; f.r;J.~�:c~1:isE~ j.s ~:; r cn l:ec1 s~J~:~ ..... ject t;c t.he ore v.L.l.icns ()f /.c t: !\i<.L-nbcJ:-cd Three thc:..;sc:nrl one hun(~red c:tr:('; t:~:L<;ht: , c1S amenc'ed , s_nd _ tU~~b _i:_h.Q_\J.f:~J�,h"~.i~.::_�o:;Ling_..:2TKl. l) i'�.Q!..L.t!::i"= _r.,'.Qn - 0 j t l CI}__t-_!_1.~~-t.._j""!._ dl_~:_J,_1 __ Lf:.-_.,"?_..t.:_lt.i?C -t� __tq__ a r:l::::Dd]ItC]l:t, a -l_te_r ,'!:.!:.i c r~-- cr r: e1:~eil1__tw . the .0.S!: t:. i o n"ll il."2s e~- b 1 v o :c b v the (_:_c::_Q_q r�.�.~.::_Q.f__!::_he _Ur}): t. c:d=-_Li..t .QJ e !?. , and t.h.:1t it :.;ha ll bo .:o<1bject i.:1 all r espe c ts to the l ir:d.u�,t:ic-ns u pon c61 porat:icns anrJ _!:- h~::~_S:.f:.smt. i._n r,;.____c_f___i r 2 ~1Ch.iE..c:3--...C cm..L..1..i n c;� c". ;i.....~�-� .t..b.O-.L;c;.;~.::-....t....i.~t~i..cm nf_j}'":_'~_Lll.2_-L:j_.p: ~ jJl�~.I"i. , c,n�-3 aJ.sc ;:;c:>j e ct t .o thP p:cc�V-� ic:;ic�n;:; cf _ c t l�l urnbered Fo urteen hl.~n6rec1 iJ.m~ fif ��- t\1 - nine oE tlJc� r~l,j l :ir.~�r)inc:\ L eg:.Lr;."lr.; ttlr��c:> , as CilT1C' 1 l�~~ w ec3 ~ (.,ct. !\Tc � 36J(i , f"c'T!�:�!aneni: .<1;H'i Genera l .r.,tc:: - t:'~ tE;s , �.~o lQ I , p . 61?.2 , 19 7 1 eeL; r.:;J:.phasis o3up - p l ied J � i t d j d sc l.Fi th t1;e u n(1t=:!:"st.~"TV3 ir;c �tl~ ��. t tho c onsti tut ic:n - <:< 1 an3 si:iJtutcry r c.; s e rv c:,ti.cr. :'l of the~ r:igh�t of: Cong r e s s 1 or t .Lc Na ti c na.l Ass ernb ly, to amend, a l �t e r 1 modify or re pea l p etition e r' s fr anchise when public interest so r equ ires became an unwritten c onditi on t hereof .

DE.CISlCl'J CTA CASE NO . 2600 - 9- constituti o na l end statutory provisi�~; n2 co;1stj_t:ute p::>r t o -r= t_l-le cb li g:-:,t ion c f contracts . served by r cs pcn ~ en t, i t is cl e ar fr c m t h e abcv e - c ucteri ~ r ovi s i r �ns that ~r~g r css r e s er verl t he right Lc: c-:: lftCriC1 , olt. e r�, mo ~J.if~l 0.~-~ r P.~�(?3 l pc: ~-~. itj_ci�'~ : l- ' ~) f r :--� 11 - e r:- -.v.ith fill} hn o ':Jlc~ d gc ._, f thr: re s c�rv ;:�- t_ j_c n cl ~:t U~:>c~ , ... .__ ... I r; c" ' ( n.-:-.c--.). J. �-~:-:.,L.,J ,-~��,:..u. .,.-�(�v-.,'JC1�. l ' 1-.- ;~.., .t. l~.- t.-..,.. O . 1 ., ~ r c� '-' ~ .) f C -1 )-'1�1 ,J,J_n c (' r .,., ' I �v [�) " (~()l!i - . l\.... I\.� -, . -L~.r:::n J Fl:r~ J' .n ?0 l or.:. ') . ..,!\,__. -..J , ~-" ../ I en 5 ' Co d c; , u po n ~>e t. ltic tF::c _L;:; n e t , th c r- e f crc' , vi o l a tiv 2 o~ the con stitu ti o na l p r ov isio n that n o law i mpa i r i n g 0/ c c,ntrac t .s sh3ll J:- r. [X 1[.;sed H ��.:. , -. r- c�l-, me "t r� r� l. _,_ -; / / l 1_. _ 1.,., ~- �J l . l . C..J. t ,__, 1 21:t

]. DECIS I ON CTA CAS~ NO ~ 2600 - 10 - 54 31 did not r epea l o r r Pvcke i ts exempt ion fr om in- ccme tax bec ause th e f r anchise tax provided i n i t s franchis~ is a c ommuta t i ve t ax , c ompounding or c om - mut i ng fer a just equivalent all.other t axes . inc l ue ~ ing the ll':C:)me tax , payab l e by i.t , .i.n vie w o� the ".in 1 ieu of <.:.ny a.nd. c:ll taxe s 11 provis icn of its s pec.i.<.J. .l cr.arte r. lien e e , payment of t he fr <.."l.l'!Ch ise t".dX i ncludes payment G~ its income taxa Sec tion 24 (d ) of the Nationa l Interna l Rev enue I.._;� Code , as amended by Repub l ic Act No . 5431 , t extually r eacls : " ~)c,~c . 24 . &!�5._Df T,-.x r;n C'c� Y"[.l.Qr at: iQ.ll.S.. (d ) The provisions of exj st.inr;;1 sp e c i a l or genera l law~=, t .o �the coni:rary nct\Tithstanding , all corporate t a xpa ye rs not s pccj_fica l l y ex- empt unde r 3ecti o ns twenty- four (c ) (1) and b�:cmty seven of t .his Cede~ shaJ. .�! pay the r<:'te:; provided in th i. s secticn . 1\l � corrx:n:~ations , agGncies , oc instrumenta liti es own ed or con- �trol l ed by the Governn1 ent. _, incl udin<;_; the Go- v e rnment S e rvice Insurance Sy~; em and the Soc i a l Sec uri t y Syst:em but excl1.1dinq c:~c1uca tiona l instituions , shall pay such rote of t :C�)< upon t h e ir �taxabl e> n et :inc ome c:.s are im - posed by this section upon as sociations or corpo rations eng2ged in a similar business or indus try o 11 Assuming tha t the l i ab ility of p e titioner for in- t a x is gGver n ed by its franchise or spec i al c har- ter l:)e c ausf':: U 1e franchise t:ax payahle by it inc l udes the payment of i t s income tax , it is qu i te apparen t j a;1d exp l ic j_ t unde r t he t:crms c f th e ame nde: tory 1 <-' 'Ai I / t hat all c orpo r a te taxp ayer s who se l i ab il ity o r non- l iab ility f or income t ax i ~ gov ern ed by genera l o r . gpe c ia l l aws , u nl ess spec i fi c al l y exemp~ u nder Se c- t i ons 24( c) (1) and 27 of t he Nat i on a l Interna l Rove- _!2.U~ Cod e, a r e n e w r eq uir ed t o P0Y t h e ra t es of i n - 212

.-. DECISION CTA CASE NO . 2 600 .l - 11 - come t ax specified in Sec tion 24 of the Code as amend- ed by Rep ~ b lic Act No . 543 1. The ame ndat o ry law em- ploys th e \vo rds "all corpo rate t axpaye rs n o t s pecifi - cally exempt und er Sectio ns � 24 (c) .( 1) and 27 of thi s Code "- v1ith out more. No t hing ther e said s peaks of the exemption of corporations pay ing a commutative t ax o r not pay ing any i ncome tax p ri o r to the enactment of Repub lic Act No . 543 1 . No justification c a n b e found , therefore , fo r r eadi ng i nto t he l aw ah exemption whi ch u is n ot t he-r e . He cannot ignore t.r:c principle t hut. ex- p ress mentio n in a statute of an exemption precludes reading o t hc~ rs i nto it. (Mani l a E l e c tri c Compa n y v s . Mis ae l Vera, L- 299 8 7 , and Ma nil a El e c tri c Company v s . Be nj ami n Tabios , .L- 23847 , Oc tobe r 2 2 , 1 975 , 6 7 SCRA 3 51, ci ting Ho a rd vs . Sears , Roebuc k & Co ., 122 Co nn . s H l I 1 9 3 I 1 tl f5f A 0 2 6 g ) / On this po in t , r espon~ent corre c t l y argues , quat - i ng the opinio n of the S 0 cretary ( now Mini ste r) of Justice , conta i ned in his 3rd Indorsement to the Sec- re t a ry (n ow Mi n i ster) of Finan c e , dated March 2 8 , 1 969 , that: " The c onte n tion thut. Hepubl ic Ac t. No . 543 1 mere l y i n t end e d to c hange the existing ra tes of corporate tax applicab l e to c orpor- ations a l ready subject to income t a x and pot t o l i f t the t ax exemptions g r anted by s pecia l l aw , is without me ri t , j ust as the argument th a t t he t e r m ' cc.rpo.rate t axpayer � should be cons t r ued as referring only to those corpor- ations alr eady subj e ct to t a x a t the time of the amendment. For in providin g for the gen- eral app l ication of th e new t a x rates a nd e xpress l y exc l uding therefrom ' al l corpor a t e t a.xpaye rs 1 n o t spe c)-..fi cal1 ~~ exempt un de r Sec ti o n � ��� 27 cf t his Code ' which sig- nifica nt l y refer to ent ities wholly exempt f r cm

\...~ ' DECI S I ON CT~ CASE NO . 2600 - 12 - l' nc o me t� ax , o<"' e Ci-�l' on ~"Aq ( a'' ) wa ~ e v1� o~ e n ~1-. .1y meant to be appl icabl e even to c orporot i ons en j oying i ncome tax e x empt ion before t he enac tment of R . A. 5131 . Othe r wise, t here wou l d h a v e been n o need fer sai ~ e xcl u si o n . The re sultin g c on- cll,sion is �th at o utsi de of th ese referred t o in S 8 ct.j_on 24 (c) ( 1 ) and 27 cif UH~ �r 3 x Code , r�e�-c_- a ll cocparations whcse li abi l ity for incom e t a x �-\,:;�,-:;~_,-�---:befc 6verr1'ii d by-~q-enEral-'Ta~;:g�-o r - cs rpae�scsi u. l -osjt:-a. -gt~ur tes a p1'1TTcanr Pra to oeslgnated e s i~ e o tlP s�-�or--co-rpc) (~ n trETeS-;-a .r. e n cvJ s'u13Joc-t to t h er a f c s p r e.s crineo J.n r-:t_ . r,-;- 543l-,-�Tt1n2fe.rscor1~ng - o-u r s ; --p: - r i c. , CTl\ 1~ecords .) Not much need be sairl O .n..... 'J"::'�� e->i-� . 1. t--~- ']. . c �, �t��t p r I ...:.>. OtJI'?r po i nt , ._. __ citing the c ~scs of Mani la Ra ilr oad Company vs . Raffert y. 40 Ph i l . 224 , and Phi li ~p in e R2 i l way Comp2ny v s , Co ~- l e ct or of In ter n al R0 venu 8 , 9 1 Phil. 35 , that a spe c- ia l l a w o r cha rt e r may not bP am0nd c d , alter ed, or rc- pea l e d , by genera l law, by impl icat i o n. Whi l e it is a c a no n of statutory co n s truc tion that a late r stat- ute , gen e r a l in its term ~ and not e~ p ress l y r ep ea lin g spec lal statute, wil l ordinari l y not af f ect the ' tl ~; :::c c ia l provisions of such earli c.:: r s ta t n t e , the cl ean - >.i \l L /0.j ( up phrase �� �.:he prcv :i..s i ons �.:.~ f E."x :Ls �t i nq sc�ecic:1l or qc::n --- ~ { \t e r al la ws t~o the contrary n c t _,,d t .hs tand :i.r~<J " ~rnp l oyed in Repub l i c / .ct No . 54 3 1 is so cl ear , expr ess , exp li- ~ ~ ----------~------ cit a n d rnanife.st �that it l nd.ubi tab.ly inc l udes v.T.it!-Li.n ( it s b r oad sweep t he f r a nc: ise or s pe ci a l c harter of pet i t icn(?.r . In gr~n tin g ~e titi c n er a l eg i s l at i ve fran - c h i se to operate an elec tric l i ~ ht , heat and power sys - tern. in the municipa lit y cf Bu ayan (n o w Gen ::o ral Sa nt os City ) , pro vinc e of South Cotaba to , Cong ress rni(,Jht ~ave c cnside r ed a nd made provisio n fo r a ll the ci r c ums - tance s of t he parti cul a r cas e , b ut the ro1-ver of Con~; - res s to a mend , a l t e r o r r epea l when publi c inte r Pst

,:.,_..,.., . .......,-............. .... ~ � � 1���1�~ \ .. , !"1"111 .......... ,_,_,,. I,JOIO.,.,.,~~~ --:��-.~~ ""!'"'---�~ ,.,~ ��~ "' I. ! DECISION CTA C1\ SE HF. P 2 600 - 13 - so req uires, a s provi ded in the Cons t itution and in the f ranchi~3 e of pe tition e r , :_s also a p a rt of pe tit-� i ti o ner ' s ch arte r. It c a n not: , therefore, - be said _!.ha_:.t Congress , by adopt ing Republic Act No . 5 431 prescrib~ I~ \fr ing t.he rates of income t:,::tx to be pa iJl by c crporatJons , '\ ! un l ess sp e cifi c a ll y ex e mp t und er Se c tions 2 �1 (c) (1 ) and _ r ~ -27 of the Tax Co d e, hns not included pe titi one r whose {' \ ., " l i abi lity fo i income t a x is gov erned by its s peci a l c -! " (.,..) ' . / -c har ter, o t herH-ise .the cle-a r -cut -nroviso - "-The provi c> - -. i~ \j t .l e sense ., We arc not to indulg e , therefore , in statutory construction bec ause the l aw is cl ear . Our duty is on l y to app l y the l aw as it is writt. en . we rul e t hat. sJnce petit.ion e r a c cet) te'd its fr owchise with t he unders t anding of t .he right of Cong r ess to a l ter, a mend , modify c r r epeal the s ame , and it (pet - itioner ) is not s pecifically exemp t under S8 ctions 24 (c) ( 1) and 2 7 of the Nat.icrJal Int c .:. nal P.pven u e Code , t he i mpds i tion of th e i ncome t ax as prescribed by Re- puL�l i c !.l e t No . 5 131 amend.i ng S 0 c tion 21 (d) of �the; Tax Co de doe~ s n o t vi o L:>.t e t.he non-impair me n t: c l a u se of the Constitut i. on . VJ:i th t .h.is conclus---ion , :L t foll C� h'S t h<:!t pE': ti ti uner is l iab l e to pay i ncome tax J.n c: c c o:cd - ance wi t h t he r a te s pr<: s c rib(dunder the pro visio ns of ~e ction 2 4 ( d ) of the Tax Cod e a s amended b y Reput lic i\ct. No . 5431. In fin d in g no meri t 1' n pet 1� t1� c n er I s cause, t h e Court c a nnot ov erl ook th e .well- settled rule that one 215

�, . ,... . DECISION CTA CAS E ~0 . 2600 - 14 - who cl a i ms to b e exempt from the p a ymen t of a parti - cular t ax must do so u ndei clear Qnd unmistak a b l e ter ms fo u nd in t h e s t a t u t e . Tax exemptio n s are strict- l y c onst r ued against the t axpayer ~ they being hi gh l y � dis f a voreo and may a l mos t be saJd " to be od i ous to t_he law ." He who c l airns an exernpt~ i on must be ab l P t o point to some posit i ve provision of l aw c reating th e right ; it c annot be allowed t o exist upon a me re v ague imp l icatio n or inferenc e . (Asia t ic Petrol eum I ' \,._.,.' vs . Llanes ; 49 P ~il . 4 66 , 471 ; Union Ga r men t Co ., lnc . vs. Court cf Ta x /,pEj e <:l1.s , .L-1 6809 , .Ti"Jn\.Jary 31, 1 962 , t1 SCHi\ 304; Ph i li p;�)ine /. c e t_y l ~:~rw Co . , Jnc . vs . Corn1n:i s - sicncr of Jn terna l Revenue , L- 1970 7 , August 17, 1 967 , 20 SCRA 1 056 ; Repub lic Flour Mil ' s , lnc . vs . C o~ 1 j s~ l o n- er of Inte r nal r<cv enue , L- 25602 , February 1 8 ~ 1 97C , ~l SCRA 5 20 ; Commis si oner of�customs vs . Ph ilipp in e ~ c e - tylene Co . & Court of Tax Appea l s , L-22413 , May 29 , 1 9 7 1, 3 9 SCRA 71 ; Davao Li ht and Powe r Co . , Inc . vs . Commissio e r of Custo ms , L-28902 , March 29, 1 972 , 44 SCRA 122 . ) to have been s u rrende r ed unless the i n t ention to s ur- render is rn �, nifest ed by wc�rds toc.1 pl0in t .o be mist:. a ken (Ohio Life Insuranc e & Tru st Co . vs . Debolt, 60 Howard , 416) , fer the state cannot stri p itself o f the most essentia l po we r o~ t axation .b ,, clo u.lJt f tll t.vorc.J s ; it C2r1-� )_ no t, by ambiguous lang uage, be deprived of t h is high- ~s t attri bute o f sovereignty ( E r ; e ,.., - ; � ���ay 1 f\(..i --~'-"v c..~v � vs . # __ Cor:Lif!Onwea 1 th of Fennsy l ve.n i a , 21 i.-Ja lJ.a :.:;e , 49 2 , 49 9 ) � 216 ..

DECI~;lON - CTA CASE NO . 2600 �- 1 5 - So, whe n exemp tion is cl a i rned.., :L 1.: rnu s�t be shmm indubitably to exi s t, for ever y presumption is against it , and a we ll- founded doubt is fa tal to the cl a im ( Fa r ringto n vs. Tennescee & Co unty by , U q- �~-' o .~::J ., 6"7 9 1 68��t~.:.� )� ( �n�..~.; J'. a. t -'L '~- l. ~-e�-t�rolG.::. �c-L~: ~ �~~c� ~.) ,. Llan es 1 4 9 Phi l . 46 6 , 4 71; Manila Ele c tr ic Company vs~ Conurdss:Loner of Interna l Revem.w L~2998 7 & L-:2 3844 i Octob Pr 22 , 1 9 75, 67 SCRA 3 51.) I n the same.manner , claims i cr r efund ~re construed strictly agalnst \....) clai man ts� since a cl aim for r efund is i n t 1e na ture of an exempt i on from taxation . ( Co~�nrnicr.; i ()rtE~I- c-:-f In .. .. tPrna l Revenue vs . Ledesma , L- 1 7 509, J~nuary 30 , 1970, 3 1 '-=' c !� r~p ::.J .1_.:) � ) ~.) ....... , '1. A.: \ jn revoki~g on \ugus t 22 , 1 9 7 2 the Tax Credit MP~c dat�o::d /\.uqust 1 8 , 1 9 7 0 is~:ued --Y him :in :favor of r-�c:t:.-. '�' - . , ; ' i ng e rroneous l y paid i ncome tax for the year 1968 and the 1 st ha l f of 1 969 o Sin e ~ petitioner had a l ready fu lly appl 10i the tax credit in the amount of ?75 ,176.00 , in payme nt of its i nterna l rev enue tax l iabi li ties , the decision o f r espondent dated February 18, 197 4 denying peti ti oner 1 s r equest fo r r econsideration of the rcvo- c ation of its t a x c redit memo and demanding pavment of the amount of P 7 5 , 176.or , excl usive of i ntereGt that hav e a c c ru ed t he reon mus �t bt::- .s llst<:d ned . Con s c~:::ru:?nt.ly , petitione r Koronada l E l sctri c Light & Power Co . , In c. 1 i s he r eby order ed to pay respondent Commissioner c1 Internal Reve n ue the amount of ~ 7 5 ,17 6 . 00 , exc l usi~e 217

.) ;. ,'. \ DECISION 2600 CT/\ C /\~)E' - Hi of interes �t �tha.t h a v e ac crued t .he.r�eon Q WHEREFCRE , the decision nppe a l ed from is her eby affirmed at petitioner ' s c os tso SO Ol:;> DERED . u ue ?on City , Metro Mani l a , June 26, 1 97 9 0 � ~~~ - - Ac t ing Presid ing Judge