[Nos. L-12100 and L-11812.

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 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 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.

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.