Facts:
Meralco is the holder of a franchise to construct, maintain, and operate an
electric light, heat, and power system in the City of Manila and its suburbs.
In 1962 and 1963, Meralco imported and received from abroad copper wires,
transformers, and insulators for use in the operation of its business. The Collector of Customs, as deputy of the
Commissioner of Internal Revenue, levied and collected a compensating tax. Meralco claimed for refund for the said years,
but such claims were either not acted upon or denied by the Commissioner.
Issue:
Whether or not Meralco is exempt from payment of a compensating tax on poles,
wires, transformers and insulators imported by it for use in the operation of
its electric light, heat, and power system.
Held:
Meralco is not exempt from paying the compensation tax provided for in Section
190 of the Tax Code, the purpose of which is to “place casual importers, who
are not merchants on equal footing with established merchants who pay sales tax
on articles imported by them.” Meralco’s claim for exemption from payment
of the compensating tax is not clear or
expressed, contrary to the rule that “exemptions from taxation are highly disfavored
in law, and he who claims exemption must
be able to justify his claim by the clearest grant of organic or statute law.” Tax exemption are strictly construed against
the taxpayer, they being highly disfavored and may almost be said to be “odious
to the law.” When exemption is claimed, it must be shown indubitably to exist,
for every presumption is against it, and a well-founded doubt is fatal to the
claim.
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