City of Manila vs. Coca-Cola Bottlers Philippines, Inc.

The Court established that (1) the 30-day period to file a Petition for Review with the CTA from an RTC decision may be extended by 15 days (and another 15 days for compelling reasons) by analogy to Rule 42 of the Rules of Court, but failure to comply with formal requirements regarding the number of copies and submission of certified true copies of the decision is a sufficient ground for dismissal; and (2) when amendatory tax ordinances are declared null and void, the original ordinance reverts to its prior status, thereby reviving an exemption proviso that prevents double taxation where the taxpayer is already paying local business tax under another section of the same ordinance.

The dispute arose from the City of Manila's assessment of deficiency local business taxes against Coca-Cola Bottlers Philippines, Inc. for the third and fourth quarters of 2000. Prior to 2000, Coca-Cola paid local business tax only under Section 14 of Tax Ordinance No. 7794 (as a manufacturer), as Section 21 contained a proviso exempting businesses already paying such taxes. In 2000 and 2001, the City enacted Tax Ordinances No. 7988 and 8011, respectively, which deleted this exemption proviso. These amendatory ordinances were subsequently declared null and void by the Supreme Court in a prior case. The City nevertheless assessed Coca-Cola under Section 21, leading to litigation.

• Prior to February 25, 2000, respondent Coca-Cola Bottlers Philippines, Inc. paid local business tax only under Section 14 of Tax Ordinance No. 7794, being exempt from Section 21 by virtue of a proviso exempting businesses already paying the tax.
• On February 25, 2000, petitioner City of Manila approved Tax Ordinance No. 7988, amending Section 21 by deleting the exemption proviso.
• On February 22, 2001, the City approved Tax Ordinance No. 8011, further amending Tax Ordinance No. 7988.
• Tax Ordinances No. 7988 and No. 8011 were declared null and void in Coca-Cola Bottlers Philippines, Inc. v. City of Manila (G.R. No. 156252, June 27, 2006) for failure to comply with publication requirements and because the latter could not cure the defects of the former.
• Before the declaration of nullity, petitioner City of Manila assessed respondent for deficiency local business taxes amounting to P18,583,932.04 for the third and fourth quarters of 2000 under Section 21 of Tax Ordinance No. 7794, as amended.
• Respondent filed a protest with the City Treasurer, which was not acted upon.
• Respondent filed a civil action for cancellation of assessment with the RTC of Manila, Branch 47, docketed as Civil Case No. 03-107088.
• On July 14, 2006, the RTC dismissed the case, ruling there was no double taxation.
• On November 16, 2006, the RTC granted respondent's Motion for Reconsideration, cancelled the assessment, and barred petitioners from imposing taxes under Section 21, conforming to the prior Supreme Court decision declaring the amendatory ordinances null and void.
• On April 4, 2007, the RTC denied petitioners' Motion for Reconsideration.
• Petitioners received a copy of the April 4, 2007 Order on April 20, 2007.
• On May 4, 2007, petitioners filed with the CTA First Division a Motion for Extension of Time to File Petition for Review, praying for a 15-day extension until May 20, 2007.
• On May 18, 2007, petitioners filed a Second Motion for Extension, praying for another 10-day extension until May 30, 2007.
• On May 24, 2007, the CTA First Division issued a Resolution dismissing C.T.A. AC No. 31 for failure to timely file the Petition for Review by May 20, 2007.
• Unaware of the dismissal, petitioners filed their Petition for Review on May 30, 2007 via registered mail.
• On June 8, 2007, the CTA First Division issued another Resolution reiterating the dismissal.
• On July 26, 2007, the CTA First Division denied petitioners' Motion for Reconsideration, citing failure to comply with Sections 4 and 2 of Rules 5 and 6, respectively, of the Revised Rules of the CTA.
• On January 18, 2008, the CTA en banc dismissed the Petition for Review and affirmed the resolutions of the First Division.
• On February 18, 2008, the CTA en banc denied the Motion for Reconsideration.

• Petitioners claimed they substantially complied with the reglementary period, arguing that Section 1, Rule 7 of the Revised Rules of the CTA makes Rule 42 of the Rules of Court applicable, which provides for a 15-day period extendible by another 15 days, and that in any event, they filed their Motion for Extension on May 18, 2007, before the lapse of the 30-day period on May 20, 2007.
• They contended that the prior Coca-Cola case is not doctrinal or the law of the case because the issue of nullity of the tax ordinances is not the lis mota herein.
• They argued that despite the nullity of Tax Ordinances No. 7988 and 8011, Tax Ordinance No. 7794 remains valid, and they can still assess taxes under both Sections 14 and 21 as originally worded.
• They maintained that imposing taxes under both sections does not constitute double taxation because Section 14 taxes manufacturers while Section 21 taxes persons selling goods subject to excise, VAT, or percentage tax, citing Section 143(a) and 143(h) of the Local Government Code.

• The Petition for Review was filed out of time and failed to comply with mandatory formal requirements under the Revised Rules of the CTA regarding the number of copies and submission of certified true copies of the RTC decisions.
• The prior Coca-Cola case is controlling and doctrinal, having declared Tax Ordinances No. 7988 and 8011 null and void, thereby reviving the exemption proviso in Section 21.
• Respondent is exempt from Section 21 taxes because it is already paying under Section 14, and the deletion of the proviso by the null and void ordinances cannot operate to remove this exemption.
• Imposing taxes under both Sections 14 and 21 constitutes double taxation as both are local business taxes on gross sales/receipts imposed by the same taxing authority for the same purpose and period.

• Procedural Issues: Whether petitioners substantially complied with the reglementary period to file a Petition for Review before the CTA Division; Whether the CTA correctly dismissed the petition for failure to comply with formal requirements under the Revised Rules of the CTA.
• Substantive Issues: Whether the ruling in the prior Coca-Cola case is doctrinal and controlling; Whether petitioner City of Manila can still assess taxes under Sections 14 and 21 of Tax Ordinance No. 7794, as amended; Whether the enforcement of Section 21 of Tax Ordinance No. 7794, as amended, constitutes double taxation.

• Procedural: The Court ruled that under Section 11 of Republic Act No. 9282 and Section 3(a), Rule 8 of the Revised Rules of the CTA, the 30-day period to file a Petition for Review from an RTC decision may be extended by 15 days (and another 15 days for compelling reasons) by analogy to Section 1, Rule 42 of the Rules of Court. The Court found that petitioners' Motion for Extension filed on May 18, 2007 (before the lapse of the 30-day period on May 20, 2007) and the Petition filed on May 30, 2007 were filed within the reglementary period. However, the dismissal was sustained because petitioners failed to comply with Section 4, Rule 5 (filing only one copy instead of six signed copies) and Section 2, Rule 6 (attaching machine copies instead of certified true copies of the RTC decisions) of the Revised Rules of the CTA. Under Section 3, Rule 42 of the Rules of Court applied suppletorily, such failure is a sufficient ground for dismissal, and the Court cannot relax the rules without justification.
• Substantive: The Court held that the prior Coca-Cola case is controlling and doctrinal, having declared Tax Ordinances No. 7988 and 8011 null and void. Upon such declaration, Section 21 of Tax Ordinance No. 7794 reverted to its original text containing the exemption proviso. Since respondent was already paying local business tax under Section 14, it was exempt from Section 21. The Court ruled that imposing taxes under both sections constitutes double taxation because both taxes are imposed on the same subject matter (privilege of doing business), for the same purpose (city revenue), by the same taxing authority (City of Manila), within the same jurisdiction, during the same taxing period (calendar year), and are of the same kind or character (local business tax on gross sales or receipts). The distinction attempted by petitioners between manufacturers and sellers is specious because Section 143(h) of the LGC applies only to businesses "not otherwise specified" in the preceding paragraphs, and Section 143(a) already covers manufacturers.

• Double Taxation — Defined as taxing the same property twice when it should be taxed only once, or taxing the same person twice by the same jurisdiction for the same thing. Requires identity of subject matter, purpose, taxing authority, jurisdiction, taxing period, and kind/character of tax. Applied to find that taxes under Sections 14 and 21 of Tax Ordinance No. 7794 constitute double taxation.
• Doctrine of Reversion/Revival — When an amendatory law is declared null and void, the original law reverts to its status prior to the amendment. Applied to revive the exemption proviso in Section 21 of Tax Ordinance No. 7794 that had been deleted by the null and void Tax Ordinances No. 7988 and 8011.
• Suppletory Application of Rules of Court — Section 1, Rule 7 of the Revised Rules of the CTA allows the application of Rules 42, 43, 44, and 46 of the Rules of Court suppletorily. Applied here to extend the 30-day period to file Petition for Review by analogy to Rule 42, and to apply Rule 42, Section 3 regarding dismissal for failure to comply with formal requirements.
• Liberal Construction of Rules — While courts may relax procedural rules in the interest of justice, this cannot be done where there is no justification or where the non-compliance involves fundamental requirements such as the number of copies and authentication of documents.

• "Double taxation means taxing the same property twice when it should be taxed only once; that is, 'taxing the same person twice by the same jurisdiction for the same thing.'" — Definition of double taxation.
• "The two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or character." — Elements of double taxation.
• "Although the Court had, in previous instances, relaxed the application of rules of procedure, it cannot do so in this case for lack of any justification." — On strict compliance with procedural rules.
• "Section 143(h) may be imposed only on businesses that are subject to excise tax, VAT, or percentage tax under the NIRC, and that are 'not otherwise specified in preceding paragraphs.'" — Interpretation of LGC provisions regarding business taxes.

• Coca-Cola Bottlers Philippines, Inc. v. City of Manila (G.R. No. 156252, June 27, 2006) — Controlling precedent declaring Tax Ordinances No. 7988 and 8011 null and void; established as the law of the case.
• Commissioner of Internal Revenue v. Bank of Commerce (G.R. No. 149636, June 8, 2005) — Cited for the definition and elements of double taxation.

• Section 11, Republic Act No. 9282 — Governs the mode of appeal and 30-day period to file Petition for Review with the CTA from decisions of the RTC.
• Section 3(a), Rule 8, Revised Rules of the CTA — Implements the 30-day period to file petition for review.
• Section 1, Rule 42, Rules of Court — Applied by analogy to determine that the 30-day period may be extended by 15 days (and another 15 for compelling reasons).
• Section 3, Rule 42, Rules of Court — Applied suppletorily to provide that failure to comply with formal requirements is ground for dismissal.
• Section 4, Rule 5, Revised Rules of the CTA — Requires six signed copies of every paper for cases before a Division.
• Section 2, Rule 6, Revised Rules of the CTA — Requires a clearly legible duplicate original or certified true copy of the decision appealed from to be attached to the petition.
• Section 143, Local Government Code — Grants municipalities and cities the power to impose business taxes; distinguishes between taxes on manufacturers (Sec. 143(a)) and taxes on other businesses subject to excise/VAT (Sec. 143(h)).
• Section 14, Tax Ordinance No. 7794 — Imposes local business tax on manufacturers, assemblers, etc. of liquors, spirits, wines, and other articles of commerce.
• Section 21, Tax Ordinance No. 7794 — Imposes tax on businesses subject to excise, VAT, or percentage taxes under the NIRC, originally containing a proviso exempting businesses already paying local business taxes.