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National Coal Co. vs Collector of Internal Revenue 46 Phil 583

DOCTRINE: The plaintiff is a private corporation. The mere fact that the Government happens to the majority stockholder does not make it a public corporation. Act No. 2705, as amended by Act No. 2822, makes it subject to all of the provisions of the Corporation Law, in so far as they are not inconsistent with said Act (No. 2705). As a private corporation, it has no greater rights, powers or privileges than any other corporation which might be organized for the same purpose under the Corporation Law, and certainly it was not the intention of the Legislature to give it a preference or right or privilege over other legitimate private corporations in the mining of coal.

FACTS: The National Coal Company was created by Act No. 2705 and was granted the general powers of a corporation “and such other powers as may be necessary to enable it to prosecute the business of developing coal deposits in the Philippine Island and of mining, extracting, transporting and selling the coal contained in said deposits.” Two months later, the Philippine Legislature passed Act No. 2719 to provide for the leasing and development of coal lands in the Philippine Islands. Seven months after the company’s creation, the National Coal Company took possession of coal lands within a reservation in the Zambaonaga Peninsula. Plaintiff harvested coal on public lands between 1920 and 1922 collecting a total of 24,089.3 tons of coal.

Appellant CIR then subjected the mined coal to a specific tax of P0.50 per metric ton under Act 1496 which subjected coal collected by non-owners of land for P12,044.68. Plaintiff claimed a refund from the CIR arguing exemption from taxes under the provision of sections 14 and 15 of Act No. 2719, and prayed for a judgment ordering the defendant to refund to the plaintiff said sum of P12, 044.68, with legal interest from the date of the presentation of the complaint, and costs against the defendant.

The trial court decided in favor of Plaintiff extending the definition of ownership and should be understood to mean “lands held in lease or usufruct” and should be taxed only P0.04 per ton of coal under Section 15 of Act No. 2719.

ISSUE:  Whether the plaintiff is subject to the taxes under section 15 of Act No. 2719, or to the specific taxes under section 1496 of the Administrative Code?

HELD: Plaintiff is liable for the taxes imposed under Section 1496 of the Administrative Code.

Plaintiff is neither a lessee nor an owner of coal-bearing lands, and is, therefore, not subject to any other provisions of Act No. 2719. It having been demonstrated that the plaintiff has produced coal in the Philippine Islands and is not a lessee or owner of the land from which the coal was produced, we are clearly of the opinion, and so hold, that it is subject to pay the internal revenue tax under the provisions of section 1496 of the Administrative Code, and is not subject to the payment of the internal revenue tax under section 15 of Act No. 2719, nor to any other provisions of said Act.

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