Title: National Coal Company vs.

The Collector of Internal Revenue Topic: Incorporation and Organization of Private Corporations Facts: 1. Action for brought in the Court of First Instance-Manila for the purpose of recovering the sum of 12044.68php alleged to have been paid under protest by the National Coal Company (NCC) to the Collector of Internal Revenue. 2. Company is a corporation created by Act No. 2705 of the Philippine Legislature 3. Company is engaged in coal mining on reserved lands belonging to the Government. 4. It claimed exemption from taxes under the provision of sections 14-15 of Act No. 2719 and prayed for a judgment ordering Collector to refund to NCC the sum of 12044.68 with legal interest 5. Collector denied generally and specifically all the material allegations except the legal existence and personality of NCC. 6. Collector alleged: a. That the sum of 12044.68 was paid by the plaintiff without protests b. Said sum was due and owing from the plaintiff to the Government of the Philippine Islands under the provision of section 1496 of the administrative code 7. Judge Conception held that the words lands owned by any person, etc. in section 15 of Act No. 2719 should be understood to mean lands held in lease or usufruct, in harmony with the other provisions of section 15 and that a tax of 0.04 per ton of 1,016 kilos on each ton was the only tax which should be collected from the plaintiff a. Sentenced the defendant to refund NCC 11081.11 which is the difference between the amount collected under section 1496 of the Administrative Code and the amount which should have been collected under the provision of said section 15 8. Collector appealed a. The court erred in holding that section 15 of Act No. 2719 does not refer to coal lands owned by persons and corporations b. TC erred in holding that NCC was not subject to the tax prescribed in section 1496 of the administrative code Issue: 1. W/N NCC is subject to the taxes under section 15 of Act 2719 or to the specific taxes under section 1496 of the Administrative Code Held: 1. Yes, Under Administrative Code a. By the said act, the company was granted the general powers of a corporation. By the same law, the Government of the Philippine Islands is made the majority stockholder, evidently in order to insure proper government supervision and control and thus to place the Government in a position to render all possible encouragement, assistance and help in the prosecution and furtherance of the companys business

b. The plaintiff is a private corporation. The mere fact that the government happens to the majority stockholder does not make it a public corporation c. 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 provisions are found to be inconsistent. d. 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. e. Examination of Act No. 2719 i. Act No. 2719 provides an internal revenue duty and tax upon unreserved, unappropriated coal bearing public lands which may be leased by the Secretary of Agriculture and natural Resources and that it provides an internal revenue duty and tax imposed upon any person, firm association, or corporation who may be the owner of coal bearing lands. ii. A reading of said act clearly shows that the tax imposed thereby upon two classes of persons only, Lessees and owners. iii. we are persuaded, considering all the provisions of said Act, that said section 15 has reference only to persons, firms, associations or corporations which had already, prior to the existence of said Act, become the owners of coal lands. Section 15 cannot certainty refer to "holders or lessees of coal lands' for the reason that practically all of the other provisions of said Act has reference to lessees or holders. If section 15 means that the persons, firms, associations, or corporation mentioned therein are holders or lessees of coal lands only, it is difficult to understand why the internal revenue duty and tax in said section was made different from the obligations mentioned in section 3 of said Act, imposed upon lessees or holders. f. From all of the foregoing, it seems to be made plain that the 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. But, is the plaintiff subject to the provisions of section 1496 of the Administrative Code? i. Section 1496 of the Administrative Code provides that "on all coal and coke there shall be collected, per metric ton, fifty centavos." Said section (1496) is a part of article, 6 which provides for specific taxes. Said article provides for a specific internal revenue tax upon all things manufactured or produced in the Philippine Islands for domestic sale or consumption, and upon things imported from the United States or foreign countries. 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.