The CIR assessed deficiency franchise taxes against Lingayen Gulf Electric Power Co. for years 1970-1980, claiming the higher rates under the NIRC instead of the lower rates in the company's municipal franchises. Lingayen protested but was denied. Meanwhile, RA 1090 was passed granting Lingayen a legislative franchise. The court ruled RA 1090's tax provisions should apply and dismissed the CIR's claim. The CIR challenges the constitutionality of RA 1090's tax rate. The Supreme Court upholds RA 1090, finding the legislature has power to grant tax exemptions and classify taxpayers, and RA 1090 merely transferred Lingayen to a new tax class.
Original Description:
G.R. No. L-23771 August 4, 1988 CIR vs LINGAYEN GULF ELECTRIC POWER CO
Original Title
26d g.r. No. L-23771 August 4, 1988 Cir vs Lingayen Gulf Electric Power Co.
The CIR assessed deficiency franchise taxes against Lingayen Gulf Electric Power Co. for years 1970-1980, claiming the higher rates under the NIRC instead of the lower rates in the company's municipal franchises. Lingayen protested but was denied. Meanwhile, RA 1090 was passed granting Lingayen a legislative franchise. The court ruled RA 1090's tax provisions should apply and dismissed the CIR's claim. The CIR challenges the constitutionality of RA 1090's tax rate. The Supreme Court upholds RA 1090, finding the legislature has power to grant tax exemptions and classify taxpayers, and RA 1090 merely transferred Lingayen to a new tax class.
The CIR assessed deficiency franchise taxes against Lingayen Gulf Electric Power Co. for years 1970-1980, claiming the higher rates under the NIRC instead of the lower rates in the company's municipal franchises. Lingayen protested but was denied. Meanwhile, RA 1090 was passed granting Lingayen a legislative franchise. The court ruled RA 1090's tax provisions should apply and dismissed the CIR's claim. The CIR challenges the constitutionality of RA 1090's tax rate. The Supreme Court upholds RA 1090, finding the legislature has power to grant tax exemptions and classify taxpayers, and RA 1090 merely transferred Lingayen to a new tax class.
Facts: The respondent taxpayer, Lingayen Gulf Electric Power Co., Inc., operates an electric power plant sering the ad!oining "unicipalities in the proince of Pangasinan pursuant to the "unicipal franchise granted it under #esolution $os. %& and '(. The )I# assessed against and de"anded fro" the priate respondent a deficiency franchise taxes and surcharges for the years %*&+ to %*(& as prescri,ed in -ection '(* of the $I#C, instead of the lower rates as proided in the "unicipal franchises. Co""issioner de"anded fro" the respondent another deficiency franchise tax and surcharges. #espondent.s protest was denied. Priate respondent then protested the said assess"ents ,ut was denied. Thus, the appeal to the respondent CT/. Pending the hearing of the said cases, #./. $o. 01&0 was passed granting to the priate respondent a legislatie franchise for the operation of the electric light, heat, and power syste" in the sa"e "unicipalities of Pangasinan. The respondent court ruled that the proisions of #./. $o. 01&0 should apply and accordingly dis"issed the clai" of the CI#. The said ruling is now the su,!ect of the petition at ,ar. Issue: 2hether or not -ection & of #./. $o. 01&0 is unconstitutional for ,eing iolatie of the 3unifor"ity and e4uality of taxation3 clause of the Constitution. 5eld: $o / tax is unifor" when it operates with the sa"e force and effect in eery place where the su,!ect of it is found. 6nifor"ity "eans that all property ,elonging to the sa"e class shall ,e taxed ali7e The Legislature has the inherent power not only to select the su,!ects of taxation ,ut to grant exe"ptions. Tax exe"ptions hae neer ,een dee"ed iolatie of the e4ual protection clause. It is true that the priate respondents "unicipal franchises were o,tained under /ct $o. ++8 of the Philippine Co""ission, ,ut these original franchises hae ,een replaced ,y a new legislatie franchise, i.e. #./. $o. 01&0. The ,enefits of the tax reduction proided ,y law 9/ct $o. 0+0+ as a"ended ,y C./. $o. %0' and #./. $o. 01&0: apply to the respondent.s power plant and others circu"scri,ed within this class. #./;$o. 01&0 "erely transferred the petitioner.s power plant fro" that class proided for in /ct $o. ++8, as a"ended, to which it ,elonged until the approal of #./; $o. 01&0, and placed it within the class falling under /ct $o. 0+0+, as a"ended. Thus, it only effected the transfer of a taxa,le property fro" one class to another. 2e do not hae the authority to in4uire into the wisdo" of such act. Further"ore, the (< franchise tax rate proided in -ection '(* of the Tax Code was neer intended to hae a uniersal application. & 2e note that the said -ection '(* of the Tax Code expressly allows the pay"ent of taxes at rates lower than (< when the charter granting the franchise of a grantee, li7e the one granted to the priate respondent under -ection & of #./. $o. 01&0, precludes the i"position of a higher tax. #./. $o. 01&0 did not only fix and specify a franchise tax of '< on its gross receipts, ,ut "ade it 3in lieu of any and all taxes, all laws to the contrary notwithstanding,3 thus, leaing no roo" for dou,t regarding the legislatie intent. 3