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PHILIPPINE REPORTS ANNOTATED VOLUME 105

[Nos. L12100 and L11812. 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
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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
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PHILIPPINE REPORTS ANNOTATED VOLUME 105

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.
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1340 PHILIPPINE REPORTS ANNOTATED

Besides, 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.
Decision affirmed. Concepcion, J., ponente.

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