Bisaya Land Transportation v. CIR G.R. Nos.

L-12100 and L-11812 1 of 1

[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. Petitions for review of a decision of the Court of Tax Appeals.
The facts of this case as found by the court a quo are as follows:
Between June 1945 and January 15, 1957, petitioner 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 respondent 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.
On January 11, 1955, the present petition for review was filed with the Court of Tax Appeals, which rendered a
decision upholding 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, the collection of which was held to be barred by the
statute of limitations.
In its brief, the petitioner company alleged that the Court of Tax Appeals erred (1) in not holding that the claim for
compensating tax and residence tax has already prescribed and (2) that the Compensating tax, documentary stamp
tax and common carrier's percentage tax are not chargeable. The Government has also appealed.
Held: Petitioner's pretense that the period of prescription, in relation to the first assignment of error, should be
computed from the filing of its income tax returns, is without merit. To begin with, said income tax returns have
not been introduced in evidence and therefore, there was no means to determine what data were included in said
return to apprise the Bureau of Internal Revenue that the company should pay the compensating tax.
Secondly, 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) Under its second assignment of error, the company maintains 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". Suffice it to note that the acquisition of said effects took
place between June, 1945 and January, 1947 while the hostilities in Japan and Europe ended in 1945.

Notwithstanding the immunity of the Government from taxes, the principle is also well recognized that the
Government may tax itself. There is no constitutional limitation on the power of the Congress to tax the Armed
Forces of the Philippines if it wishes to do so.