BISAYA LAND TRANSPORTATION Co., INC., petitioner, vs. COLLECTOR OF INTERNAL REVENUE, respondent. COLLECTOR OF INTERNAL REVENUE, petitioner, vs. BlSAYA LAND TRANSPORTATION Co., INC., respondent. GR Nos. L-12100 and L-11812. May 29, 1959

GR Nos. L-12100 and L-11812. May 29, 1959

BISAYA LAND TRANSPORTATION Co., INC., petitioner,

vs.

COLLECTOR OF INTERNAL REVENUE, respondent. COLLECTOR OF INTERNAL REVENUE, petitioner, vs.BlSAYA LAND TRANSPORTATION Co., INC., respondent.

Facts:

Bisaya Land Transportation Co. acquired equipment from the United States Commercial Co. which it used in the operation of its buses, without paying the corresponding compensating and specific taxes. On investigation of its books by revenue agents, it was discovered that its gross receipts of the transportation business from 1946 to 1951 were not declared for taxation. It was also found that from 1945 to 1952, the petitioner issued freight receipts but the corresponding documentary stamps were not affixed thereto. A deficiency additional residence tax was also determined.

After a series of exchange of communications between the petitioner and the Collector of Internal Revenue, the latter assessed the petitioner and demanded the total amount of P4,949.91, consisting of (1) compensating tax; (2) common carrier's percentage tax; (3) documentary stamp tax; and (4) additional residence tax.

The CTA upheld the assessment as to the deficiency common carrier's percentage tax for 1946 and the first quarter of 1947 and the additional residence tax for 1947, it ruled that such had been barred by the statute of limitations. The petitioner alleged that the CTA erred in not holding that the claim for compensating tax and residence tax has already prescribed.

Issues:

(1)   Whether the claim for compensating and residence tax has already prescribed

(2)   Whether the compensating tax, documentary stamp tax and common carrier's percentage tax are not chargeable

Ruling:

(1)   No. Petitioner’s claim that the period of prescription should be computed from the filing of its income tax returns, is without merit.

First, the said returns were not introduced as evidence in court so there was no means to determine the data included in the returns to apprise the Bureau of Internal Revenue that the company should pay the compensating tax.

Second, income tax returns contain a statement of the taxpayer's income for a given year. The taxpayer is not supposed to declare in said returns that he has purchased or received "from without the Philippines", commodities or merchandise that are subject to the compensating tax. Generally, such purchases are not "income," and, hence, have no place in income tax returns.

(2)   No. Bisaya Land Transpo is liable for the said taxes.

The company claimed that the equipment and materials it purchased from agencies of the U. S. Government are not subject to compensating tax because they were acquired, not for business purposes but "in furtherance of the war efforts" since the acquisition was made between June 1945 and January 1947.

However, the hostilities in Japan and Europe ended in 1945. Moreover, the company was engaged in business as a public utility operation and such services as it may have rendered to the armed forces were merely incidental to said business. Neither is it exempt from common carrier's percentage tax by reason of such service to the armed forces, because the party being taxed is not said organization, but the company. This tax is based upon the gross receipts of carriers, independently of the source of such receipts.