BIR Ruling

August 25, 1972 Philippine Telegraph & Telephone Corporation 14th Floor Antonino Bldg. T. M. Kalaw St., Ermita Attention: Mr . P . T . Iledan, Jr . Legal Officer Gentlemen : This refers to your letters dated July 13, and November 22, 1971 and February 29, 1972, requesting reconsideration of the decision contained in our letter dated February 11, 1971, holding your Corporation and every branch thereof liable for the payment of an annual fixed tax of P500.00, pursuant to the provisions of Section 182(3)(gg) of the Tax Code, as amended. cdt In reply, I have the honor to inform you that the reasons supporting your request do not warrant a reversal of our stand on the matter. As admitted by you, your franchise (R.A. No. 4161) does not contain specific exemption provision from the payment of the fixed tax although its amendment (R.A. No. 5048) incorporates ipso facto favorable provisions of other franchises enjoying this kind of exemption. It is a well settled rule that "exemption from taxation are highly disfavored in law; and he who claims exemption must be able to justify his claim by the clearest grant or organic or statute law. An exemption from the common burden cannot be permitted to exist upon vague implications." (Collector vs. Manila Jockey Club, G.R. L-8755, March 23, 1956; Asiatic Petroleum Co. v. Daves, 49 Phil. 466. Moreover, the explanatory note of House Bill No. 7289 which later became Republic Act No. 5040, quoted in your letter, refers only to exemption from taxes on your importation of capital goods which obviously does not include exemption from the fixed tax. As regards your argument that the provisions of Section 14 of your franchise, as amended by R.A. No. 5048, apply not only to the provisions of future franchises but also to those of existing ones, suffice it to say that the wordings of the said provision imply that the so-called favorable provisions will apply only to future similar franchises and not on existing ones. Had Congress meant otherwise, it could have so stated in the law explicitly. In view of the foregoing, your request for reconsideration is hereby denied for lack of merit. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue