G.R. No. L-23771 - Commissioner of Internal Revenue vs. Lingayen Gulf Electric Power Co., Inc.

Parties and procedural history
The Commissioner of Internal Revenue (petitioner) appealed from the Court of Tax Appeals (CTA) decision dated September 15, 1964 in CTA Cases Nos. 581 and 1302, which absolved Lingayen Gulf Electric Power Co., Inc. (respondent taxpayer) of deficiency percentage, franchise, fixed taxes, and surcharges amounting to ₱19,293.41 (for 1946–1954) and ₱3,616.86 (for 1959–1961).
The two cases were jointly heard on agreement of the parties.

Original municipal franchises and BIR assessments
In 1946, the municipalities of Lingayen and Binmaley granted the taxpayer municipal franchises (Resolutions Nos. 14 and 25 of June 29 and July 2, 1946), approved by the President on February 24, 1948.
Section 10 of these franchises required quarterly payments to the Pangasinan Provincial Treasury: 1% of gross earnings for the first 20 years and 2% for the remaining 15 years.
On November 21, 1955, the BIR assessed a deficiency of ₱19,293.41 for 1946–1954, applying a 5% franchise tax under Section 259 of the National Internal Revenue Code (NIRC) instead of the lower municipal rates. The taxpayer’s request for reinvestigation (September 29, 1956) and subsequent protests (July 2 and August 9, 1958) were denied, leading to CTA Case No. 581.
On August 21, 1962, the BIR assessed an additional ₱3,616.86 deficiency for 1959–1961 under the same 5% rate. The taxpayer’s protest (October 5, 1962) was denied on November 9, 1962, prompting CTA Case No. 1302.

Enactment of Republic Act No. 3843
While the CTA cases were pending, R.A. No. 3843 was passed on June 22, 1963, granting the taxpayer a legislative franchise for electric light, heat, and power in the same municipalities.
Section 4 of R.A. No. 3843 imposed a 2% quarterly tax on gross receipts “in lieu of any and all taxes and/or licenses… now or in the future,” and provided that “effective… upon the date the original franchise was granted, no other tax… shall be collected.”

Whether the 5% franchise tax under Section 259 of the NIRC on receipts realized before R.A. No. 3843 is collectible.
Whether Section 4 of R.A. No. 3843 violates the constitutional requirement of uniformity and equality of taxation.
Whether Section 4 of R.A. No. 3843 can be given retroactive effect to preclude collection of prior assessments.
Whether the taxpayer is liable for fixed and deficiency percentage taxes amounting to ₱3,025.96 for the period January 1, 1946 to February 29, 1948 (pre-franchise approval).