Private respondent contends that the "other laws" referred to in this Section is P.D. No. 551 (Lowering the Cost to Consumer of Electricity by Reducing the Franchise Tax Payable by Electric Franchise Holders and the Tariff on Fuel Oils for the Generation of Electric Power by Public Utilities). Its pertinent provisions state:
P.D. NO. 551 was amended on December 19, 1975 by P.D. No. 852 10 with the insertion of the phrase "and for the manufacture, distribution and sale of city gas" between the phrases "... light, heat and power" and "shall be two (2%) ..."
We do not agree with the lower court that the phrase "in lieu of all taxes and assessments of whatever nature" in the second paragraph of Sec. 1 of P.D. No. 551 expressly exempts private respondent from paying real property taxes. As correctly observed by the petitioner, said proviso is modified and delimited by the phrase "on earnings, receipts, income and privilege of generation, distribution and sale" which specifies the kinds of taxes and assessments which shall not be collected in view of the imposition of the franchise tax. Said enumerated items upon which taxes shall not be imposed, have no relation at all to, and are entirely different form, real properties subject to tax.
If the intention of the law is to exempt electric franchise grantees from paying real property tax and to make the two (2%) percent franchise tax the only imposable tax, then said enumerated items would not have been added when P.D. No. 852 was enacted to amend P.D. No. 551. The legislative authority would have simply stopped after the phrase "national or local authority" by putting therein a period. On the contrary, it went on to enumerate what should not be subject to tax thereby delimiting the extent of the exemption.
We likewise do not find merit in private respondent's contention that the real properties being taxed, viz., the machinery for the generation and distribution of electric power, the building housing said machinery, and the land on which said building is constructed, are necessary for the operation of its business of generation, distribution and sale of electric current and, therefore, they should be exempted from taxation. Private respondent apparently does not quite comprehend the distinction among the subject matters or objects of the taxes involved. It bears emphasis that P.D. No. 551 as amended by P.D. No. 852 deals with franchise tax and tariff on fuel oils and the "earnings, receipts, income and privilege of generation, distribution and sale of electric current" are the times exempted from taxation by the imposition of said tax or tariff duty. On the other hand, the collection complaint filed by petitioner specified only taxes due on real properties. While P.D. No. 551 was intended to give "assistance to the franchise holders by reducing some of their tax and tariff obligations," to construe said decree as having granted such franchise holders exemption from payment of real property tax would unduly extend the ambit of exemptions beyond the purview of the law.
The annexes attached to private respondent's comment on the petition to prove by contemporaneous interpretation its claimed tax exemption are not of much help to it. Department Order No. 35-74 dated September 16, 1974 11 regulating the implementation of P.D. No. 551 merely reiterates the "in lieu of all taxes " proviso. Local Tax Regulation No. 3-75 12 issued by then Secretary of Finance Cesar Virata and addressed to all Provincial and City Treasurers enjoins strict compliance with the directive that "the franchise tax imposed under Local Tax Ordinances pursuant to Section 19 of the Local Tax Code, as amended, shall be collected from business holding franchises but not from establishments whose franchise contains the 'in lieu of all taxes' provision," thereby clearly indicating that said provision exempts taxpayers like private respondent from paying the franchise tax collected by the provinces under the Local Tax Code. Lastly, the letter 13 of the then Bureau of Internal Revenue Acting Commissioner addressed to the Matic Law Office granting exemption to the latter's client from paying the "privilege (fixed) tax which is an excise tax on the privilege of engaging in business" clearly excludes realty tax from such exemption.
We also find misplaced the lower court's and the private respondent's reliance on Butuan Sawmill., Inc. v. City of Butuan. In that case, the questioned tax is a tax on the gross sales or receipts of said sawmill while the tax involved herein is a real property tax. The City of Butuan is categorically prohibited therein by Sec. 2(j) of Local Autonomy Act from imposing "taxes of any kind ... on person paying franchise tax." On the other hand, P.D. No. 551 is not as all-encompassing as said provision of the Local Autonomy Act for it enumerates the items which are not taxable by virtue of the payment of franchise tax.
It has always been the rule that "exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority" 14 primarily because "taxes are the lifeblood of government and their prompt and certain availability is an imperious need." 15 Thus, to be exempted from payment of taxes, it is the taxpayer's duty to justify the exemption "by words too plain to be mistaken and too categorical to be misinterpreted." 16 Private respondent has utterly failed to discharge this duty.
We, therefore, find the lower court to have erred in exempting private respondent from paying real property tax on its properties which are enumerated in the complaint. However, in its decision, the lower court found that private respondent owns only three real properties consisting of the parcel of land, machinery shed and machinery, noticeably omitting the ice drop factory mentioned in its complaint by the petitioner. In view, however, of the petitioner's failure to assign such omission as an error, the same should be considered waived.
WHEREFORE, the decision appealed form is hereby REVERSED and SET ASIDE. This case is REMANDED to the lower court for the proper determination of the real property tax liability of the private respondent. This decision is immediately executory.
SO ORDERED.
Gutierrez, Jr. (Chairman), Bidin, Davide, Jr. and Melo JJ., concur.
Footnotes
1 Annex "A" to Petition, Rollo, pp. 9-11.
2 Records, p. 24.
3 Ibid, p. 54.
4 Ibid, p. 26.
5 Ibid, p. 53.
6 Annex "B" to Petition, Rollo, p. 12.
7 123 Phil. 575 (1966).
8 Annex "E" to Petition, Rollo, p. 21.
9 73 O.G. 2589-16 - 2589-17 (April 1977).
10 72 O.G. 1056 (February 1976).
11 Rollo, pp. 37-41.
12 Ibid, pp. 42-43.
13 Ibid, p. 44.
14 Philippines Petroleum Corp. v. Municipality of Pililla, Rizal, G.R. No. 90776, June 3, 1991, 198 SCRA 82, 90 citing Esso Standard Eastern , Inc. v. Acting Commissioner of Customs, L-21841, October 28, 1966, 18 SCRA 488, 490.
15 Commissioner of Internal Revenue v. Pineda, L-22734, September 15, 1967, 21 SCRA 105, 110.
16 Commissioner of Internal Revenue v. P.J. Kiener Co., Ltd., L-24754, July 18, 1975, 65 SCRA 142, 153 citing Reagan v. Commissioner of Internal Revenue, L-26379, December 27, 1969, 30 SCRA 968.
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