The CIR assessed Lingayen Gulf Electric Power Co. franchise taxes at a higher rate than specified in the company's municipal franchises for certain years. Lingayen appealed. Subsequently, RA 3843 was passed granting Lingayen a legislative franchise at a tax rate of 2% of gross receipts "in lieu of any and all taxes" and "effective further upon the date the original franchise was granted." The CTA applied RA 3843 and dismissed the cases. The Supreme Court affirmed, finding that Section 4 of RA 3843 was constitutional and was intended to apply retroactively based on the language "effective further upon the date the original franchise was granted."
The CIR assessed Lingayen Gulf Electric Power Co. franchise taxes at a higher rate than specified in the company's municipal franchises for certain years. Lingayen appealed. Subsequently, RA 3843 was passed granting Lingayen a legislative franchise at a tax rate of 2% of gross receipts "in lieu of any and all taxes" and "effective further upon the date the original franchise was granted." The CTA applied RA 3843 and dismissed the cases. The Supreme Court affirmed, finding that Section 4 of RA 3843 was constitutional and was intended to apply retroactively based on the language "effective further upon the date the original franchise was granted."
The CIR assessed Lingayen Gulf Electric Power Co. franchise taxes at a higher rate than specified in the company's municipal franchises for certain years. Lingayen appealed. Subsequently, RA 3843 was passed granting Lingayen a legislative franchise at a tax rate of 2% of gross receipts "in lieu of any and all taxes" and "effective further upon the date the original franchise was granted." The CTA applied RA 3843 and dismissed the cases. The Supreme Court affirmed, finding that Section 4 of RA 3843 was constitutional and was intended to apply retroactively based on the language "effective further upon the date the original franchise was granted."
The CIR assessed Lingayen Gulf Electric Power Co. franchise taxes at a higher rate than specified in the company's municipal franchises for certain years. Lingayen appealed. Subsequently, RA 3843 was passed granting Lingayen a legislative franchise at a tax rate of 2% of gross receipts "in lieu of any and all taxes" and "effective further upon the date the original franchise was granted." The CTA applied RA 3843 and dismissed the cases. The Supreme Court affirmed, finding that Section 4 of RA 3843 was constitutional and was intended to apply retroactively based on the language "effective further upon the date the original franchise was granted."
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CIR v.
LINGAYEN GULF ELECTRIC POWER
CO., INC Petitioner: The Commissioner of Internal Revenue Respondents: Lingayen Gulf Electric Power Co., Inc and the Court of Tax Appeals Ponente: Sarmiento, J. Aug. 4, 1988 DOCTRINE The question of whether a statute operates retrospectively or only prospectively depends on the legislative intent. FACTS Lingayen Electric, operates an electric power plant serving both Lingayen and Binmaley, Pangasinan, pursuant to the municipal franchise granted it by their respective municipal councils, under Resolutions Nos. 14 and 25 of 1946, respectively. Section 10 of these franchises provide that: x x x The said grantee in consideration of the franchise hereby granted, shall pay quarterly into the Provincial Treasury of Pangasinan, one per centum of the gross earnings obtained thru this privilege during the first twenty years and two per centum during the remaining fifteen years of the life of said franchise. BIR assessed against and demanded from the Lingayen Electric the total amount of P19,293.41 representing deficiency franchise taxes and surcharges for the years 1946 to 1954 applying the franchise tax rate of 5% on gross receipts as prescribed in Section 259 of the National Internal Revenue Code, instead of the lower rates as provided in the municipal franchises. Lingayen Electric requested for a reinvestigation of the case on the ground that instead of incurring a deficiency liability, it made an overpayment of the franchise tax. BIR denied the request reiterated the demand for payment. Lingayen Electric appealed to the CTA. CIR demanded from Lingayen Electric the payment of P3,616.86 representing deficiency franchise tax and surcharges for the years 1959 to 1961 again applying the franchise tax rate of 5% on gross receipts as prescribed in Section 259 of the National Internal Revenue Code. Lingayen Electric protested but its request for reconsideration was denied so it appealed to the CTA. Pending the hearing of the said cases, RA 3843 was passed on 1963, granting to the private respondent a legislative franchise for the operation of the electric light, heat, and power system in the same municipalities of Pangasinan.
Section 4 thereof provides that: In
consideration of the franchise and rights hereby granted, the grantee shall pay into the Internal Revenue office of each Municipality in which it is supplying electric current to the public under this franchise, a tax equal to two per centum of the gross receipts from electric current sold or supplied under this franchise. Said tax shall be due and payable quarterly and shall be in lieu of any and all taxes and/or licenses of any kind, nature or description levied, established, or collected by any authority whatsoever, municipal, provincial or national, now or in the future, on its poles, wires, insulator x x x and on its franchise, rights, privileges, receipts, revenues and profits, from which taxes and/or licenses, the grantee is hereby expressly exempted and effective further upon the date the original franchise was granted, no other tax and/or licenses other than the franchise tax of two per centum on the gross receipts as provided for in the original franchise shall be collected, any provision of law to the contrary notwithstanding. CTA held that RA 3843 should apply and accordingly dismissed the cases. ISSUES 1) WON Section 4 of RA 3843 is unconstitutional NO 2) WON Section 4 of RA 3843 could be given retroactive effect so as to render uncollectible the taxes in question which were assessed before its enactment YES RATIO 1) The 5% franchise tax rate provided in Section 259 of the Tax Code was never intended to have a universal application. The said Section 259 of the Tax Code expressly allows the payment of taxes at rates lower than 5% when the charter granting the franchise of a grantee, like the one granted to the private respondent under Section 4 of RA 3843, precludes the imposition of a higher tax. RA 3843 did not only fix and specify a franchise tax of 2% on its gross receipts, but made it in lieu of any and all taxes, all laws to the contrary notwithstanding, thus, leaving no room for doubt regarding the legislative intent. Charters or special laws granted and enacted by the Legislature are in the nature of private contracts. They do not constitute a part of the machinery of the general government. They are usually adopted after careful consideration of the private rights in relation with resultant benefits to the State x x x in passing a special charter the attention of the Legislature is directed to the facts and circumstances which
the act or charter is intended to meet. The
Legislature consider (sic) and make (sic) provision for all the circumstances of a particular case. In view of the foregoing, The Court finds no reason to disturb CTAs ruling upholding the constitutionality of the law in question.
the date the original franchise was granted, no
other tax and/or licenses other than the franchise tax of two per centum on the gross receipts . . . shall be collected, any provision to the contrary notwithstanding. RA 3843 therefore specifically provided for the retroactive effect of the law.
2) The question of whether a statute operates
retrospectively or only prospectively depends on the legislative intent. In the instant case, Act No. 3843 provides that effective . . . upon
