BIR Ruling No. 035-63

April 15, 1963 BIR RULING NO. 035-63 Cagayan Electric Power and Light Co., Inc. 610 Tanduay, Manila Attention : G . T . Abaya President Gentlemen : This is with reference to your letter dated April 3, 1963, requesting an opinion on the franchise tax liability of your Company in view of the enactment and approval of Republic Act No. 3247. LibLex It appears that your Company, by virtue of a municipal franchise, and a certificate of public necessity and convenience issued by the Public Service Commission (Case No. 3917), has been authorized to operate and maintain an electric light, heat and power within the City of Cagayan de Oro for a period of thirty-five years from June 13, 1931. In this connection, you alleged that the company had been paying 5% franchise tax since it resumed its operation after the last war up to June 1961. Since July 1961, however, the Company has been pay on a franchise tax of 3% on its gross earnings in view of the enactment and approval or Republic Act No. 3247 on June 17, 1961, the pertinent provisions of which are quoted as follows: "Sec. 3. In consideration of the franchise and rights hereby granted, the grantee shall pay a franchise tax equal to three percentum of the gross earning for electric current sold under this franchise, of which two percentum goes into the National Treasury and one percentum goes into the City Treasury of Cagayan de Oro: Provided , That the said franchise tax of the three percentum of the gross earnings shall be in lien of all taxes and assessments of whatever authority upon privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted. LLphil "Sec. 4. This Act shall take effect upon its approval." Based on the foregoing facts as presented and taking into consideration the provisions of Republic Act No. 3247, I have the honor to inform you that from October 1, 1946 to June 16, 1961, your Company is liable to the 5% franchise tax on its gross earnings for the reason that it was operating under a municipal franchise. (Balance Power Plant Co., Inc. vs. Commissioner, CTA Case No. 979, Sept. 1962; BIR Rulings Nos. 171, 248 and 381, s. of 1961) Effective June 17, 1961 (date RA 3247 was approved), however, your company is liable to the 3% franchise tax on its gross earnings in accordance with the express provisions of Section 3 of your legislative charter hereinabove quoted. Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue The above ruling was duly signed by the Acting Commissioner of Internal Revenue on April 15, 1963. LLjur (SGD.) P. F. LANDAS Revenue Operations Head (Legal)