The Treasurer of the City of Manila vs. Uniliver Phils., Inc.

Decision

Page 2 of 18

1. the Decision dated November 3, 2006 rendered by Branch 21 of the Regional Trial Court of Manila, granting herein respondent's claim for refund; and

2. the Order dated July 12, 2007, denying herein petitioner's Motion for Reconsideration.

;

In the first Petition, docketed as C TA AC N0. 46, the Regional Trial Court of Manila, Branch 21, in Civil Case No. 02-104955, entitled "Unilever Philippines, Inc. v. The Treasurer of !:he CihJ nf Mrmiln, II granted respondent's claim for refund of the taxes paid for the fourth (4111) quarter of the taxable year 2000 in the amount of P6,403,030.62.

Similarly, in the second Petition, docketed as C.TA. AC No. 48, the same trial court, in Civil Case No. 04-108907, also entit·led "UniiPver Philippines, Inc. v. The Trerzsllrer of the City of Mnniln, II granted respondent's claim for refund of taxes paid for the first (1st) quarter of the taxable year 2002 in the amount of P11,350,041.07.

While in the third Petition, docketed as C.T.A. AC No. 49, respondent's claim for refund of the taxes paid for the second (2nd) que1rter of the taxable year 2002 in the amount of P11,350,04l.07 was also gra nted by the same trial court, in Civil Case No. 04-109703, likewise entitled "Unilnwr Philippines, Inc. v. The Trensurer of tl1e City of Mrzniln.

11 Since all Petitions for Review involve the same parties and subject matter, We deemed it necessary to consolidate the r1forementioned Petitions Resolution dated April4, 2008. 2 in Our y 2 !?olio, C.T.A. AC No. 46 (Civil Case No. 02-1 04955), pp. 250 - 25 I.

CT A A.C. Nos. 46, 4R. & 49

AntecedeNt Fncts

Petitioner is the City Treasurer of the City of Manila tasked with the implementation of the City's Revenue Code, as well as the collection and ~ssessment of business taxes, license fees, and permit fees. Respondent Unilever Philippines, Inc., on the other hand, is a domestic corporation duly organized under the laws of the Philippines with principal office address at 1351 United Nations Avenue, M<mila . Respondent paid the business taxes collectecl from it by the City of Manila, pursuant to Sections 14 and 21 of Ordinance No. 7794, as amended, otherwise known as the Manila Revenue Code ("MRC"). Section 14 of the said Code provides for the tax on manufacturers, assemblers, and other processors of articles of commerce. The rates for this type of tax have been amended by Ordinance No. 7988 in the year 2000 and Ordimmce No. 8011 in the year 2001. Section 21 of the MRC, on the other hand, impo.ses the tax on businesses subject to excise, value-added or percentage taxes under the NntionaJ Internal Revenue Code ("NIRC"). This provision has likewise beC'n modified by the amendments introduced by Ordinance Nos. 7988 and 8011 .

Respondent, believing that the enforcement of Section 21 of the MRC constitutes double taxation, filed several ciRims for refund with the City Treasurer.

C.T.A. Case No. 46 (Civil Case No. 02-104955) In a letter dated October 4, 2001, respondent fil ed a claim for refund with the City Treasurer for the business taxes it timely paid on October 20, 2000 y CT A A.C. No,. 46, 48. & 49

Decision

Page 4 of I 8

the 4th quarter of the taxable year 2000 in the amount of P6,403,030.62, pursuant to Section 21 of the MRC.3 Having received no response from the City Treasurer, respondent filed a Petition for Refund on October 24, 2002 with the Regional Trial Court of Manila, pursuant to Section 196 of the Local Government Code of 1991 ("LGC").4 The case was docketed as Civil Case No. 02-104955 and raffled to Branch 21 of the · Regional Trial Court of Manila.

On November 8, 2002, the City Treasurer of Manila filed her Answer to the Petition for Refund.5 In her Answer, the City Treasurer admitted the fact of payment of the taxes paid under Section 14 of the MRC, as well as those paid under Section 21 thereof. However, she insisted that respondent is not entitled to refund becnuse there is no double taxation.

The case was set for preliminary conference.

During the pre-h·ial, the proceeding in the s;::lid preliminary conference was adopted and the parties agreed to simllltaneously file their respective Memoranda w ithin thirty (30) days.

On Mardl 8, 2004, the City Treasurer submitted her Memorandum, while herein respondent filed its Motion to Admit Memorandum on March 15,2007.6 C.T.A. Case No. 48_Kivil Case No. 04-10890?)_ In a letl er dated January J 2, 2004, respondent fil ed a claim for refund with the City Treasurer for the business taxes erroneously assessed and collected on January 21, 2002, for the 1st quarter of the taxable year 2002 in the 3 Rollo, C.T.A AC No. 46 (Civil Case No. 02-1 04955), pp. 130

I J I

4 !d., p. 7.

5 ld., p. 8.

6 Jd.

,. J"'\ sum of 7 •' CTA A. C. Nos. 46. 48. & 49 P11,350,041 .07, under Section 21 of MRC.7 Despite the lapse of time, the City Treasurer failed to comply with the demand.

Thus, on January 20, 2004, respondent filed a Petition for Refund with the Regional Trial Court of Manila, docketed as Civil Case No. 04-108907.8 On February 20, 2004, the City Treasurer of Manila filed her Answer alleging, among others, that the Petition for Refnnd states no cause of action and that the same is premature under Section 195 of the LGC 9 Thereafter, the case was set for preliminary confe rence. During the pre-trial, the proceeding in the sa id preliminary conference was adopted and the parties agreed to simultaneously file their respective Memoranda within thirty (30) days. On Sep~ernbe r 2:1, 2005, herein respondent filed its Memorandum. On September 27, 2005, the City Treasurer submitted her Memorandum. 10 C.T.A. Case No._ 49 (Civil Case No. 04-109703_)_ In a letter dated March 26, 2004, respondent fil ed w ith the City Treasurer, a claim for refund of business taxes assessed and collected based on Section 21 of the MRC for the 2nd quarter of the taxn hle year 2002 in the sum of P11,350,041 .07.11 However, notwithstanding receipt of the claim for refund, no refund was made by the City Treasurer which constituted a denial of the claim. 7 Rollo, C.T.A. AC No. 48 (Civil Case No. 04-1 08907), p. 31. 8 !d . p. 7.

9 ld , pp. 51 - 59.

10/d., p. 8.

11 Rollo, C.TA. AC No. 49 (Civil Case No. 04-1 09703), pp. 3 1 - 32.

I

CTA A.C Nos. 46. 48, & 49

Hence, respondent filed a Petition for Refu nd on April 16, 2004 with the Regional Trial Court of Manila, Branch 21, docketed as Civil Case No. 04:... 109703.12 On May 17, 2004, the City Treasurer filed her Answer raising, among others, the defense that there is no double tetxation as the tax imposed under Section 21 is not a tax on the business per sP.; rather, it is a tax on the person availing of the goods and services of the business. n The case was subsequently set for preliminary conference. During the pre-trial, the proceeding in the said preliminary conference was adopted and the parties agreed to simultanenusly file their respective Memoranda within thirty (30) days.14 AIJ three Petitions for Refund were consolidated by the Regional Trial Court of Manila, Branch 21.

The following issues were submitted hv the parties for resolution by the trial court:

"1) Whether or not Ordinance Nos. 7988 and 80'1 1 amending the Manila Revenue Code violated the procedural rules of taxa tion for their effectivity and implementation thus cannot be made the basis of assessment of taxes;

2) Whetlwr or not the enforcement of Sec. :2 1 nf the Revenue Code of Mnnila against petitioner constitutef: dnuhle ta'Ca tinn prohibited by law in view of taxes collected by the Citv and paid by petitioner under Sec. 14 of the same Code;

3) Whether or not the taxes paid by petitioner to the City on the basis of Section 21 should be immediately ,efunded." "

~ 12 Roflo, C.T.A. 1\C No. 49 (Civil Case No. 04-1 09703), p. 7. I) lei, pp. 54 - 64.

14/d., p. 8.

15 Rollos, C.T.A. AC No. 46 (Civil Case No. 02-104955), pp. 52 - 53 ; C.TA AC No. 48 (Civil Case No. 04-108907) pp.l I 0 - I I I; and C. T.A. AC No. 49 (Civil Case No. 04-109703) pp. 83 - 84. Assailed Decision dated November 3, 2006, pp. 3 - 4.

• CTA A C. Nos. 46, 48, & 49

Decision

Page 7 of I ~

The Ruling of the Trial Court

On November 3, 2006, the trial court, th rough Judge Amor A. Reyes, rendered a Decision16 granting the daims for refund of herein respondent. The - trial court agreed with the opinion of the Department of Finance, through the Bureau of Local Government Finance, that Section 21 of the MRC amounts to double taxation in view of the taxes already collected under Section 14 or similar provisions.

In addition, the trial court, citing "the case of Com-Cola Bottlers Philippines, Inc. v. City of Manila, Liberty M. Toledo, ct. n/., 17 ruled that both Tax Ordinance Nos. 7988 and R011 are null and void and without legal effect. Thus, it disposed of the case in this wise:

"WHERFORE, premises considered, the petitions are hereby GRANTED.

The application to petitioner of Sec. 21 of the Tax O rdin;mce No. 7988 as amended by Ta x O rdinance No. 8011 is hereby declared VOID. Respondent is hereby ordered to RF.FUND/CREDIT petitioner the taxes paid under Sec. 2·1 of the sn id ordinance. With costs against respondents.

Decision

Page 8 or 18

Moreover, petitioner argued that the Petitions for Refund are fatally flawed and should be dismissed outright for failure of respondent to plead its capacity to sue. Petitioner likewise claimed that respondent failed to state the authority of Atty. Danilo L Cruz to sign for and on behalf of the respondent On July 12, 2007, the trial court issued an Order20 denying the Motion for Reconsideration.

The Tssues

Hence, the present recourse with petitioner asrrihing to the trial court the following errors:

"L \tVIwther or not the Honorable Regional Trial Court gravely erred in holding that there is double taxation in the imrosition of Section 21 of the Manila Revenue Code, as amended .

TL Whether or not the Honorable Regional Tria l Court gmvely erred in holding that Section 21 is expressly' prohibited by Section 133 of the Local Government Code.

[[T. Whether or not the Honorable .Regional Trial Court gravely erred in holding that Sections ] 95 and 187 of the Lora I Government Code do not apply in the instant case."21 The Ruling of t-l1e Court We find the consolidat-ed Petitions for Review devoid of merit. At t·he outset, We must point out t·hat of the three issues raised by petitioner, only the first and third issues shHll be discussed in this case. The second issue r<1ised by the petitioner was never discussed by the trial court in its Decision dated November 3, 2006 nor in its Order d<1ted July 12, 2007. In fact, a careful reading of the Petitions for Review would reveal that the Decision~ 20 !d . C.TA AC No. 46 (Civil Case No. 02-104955 ) rr 5t'i- 5~ : C'.T.i\ . i\C Nt'. 48 (Civil Case No. 04-108907) pp. 114 - 11 6; and C:J'.A. AC No. 49 (Civil Case No. 04-1 09703) pp. 87 - 89. 21 Rollos, C.T.A. AC No. 46 (Civil Case No. 02-104955) p. 9; C.TA. AC No. 48 (Civil Case No. 04-108907) p. 9; and C.T.A. AC No. 49 (Civil Case No. 04-1 09703) p. 9.

CTA A.C Nos. 46, 48. & 49 the Order referred to and quoted in the said Peti tions are the Decision dated October 3, 2006 and the Order dated December 12, 2006, rendered by Branch 33 of the Regional Trial Court of Manila, and not the Decision dated November 3, 2006 nor the Order dated July 12, 2007 rendered by Branch 21 .22 As We see it then, there is no reason for Us to discuss Section 133 of the LGC in relation to Section 21 of the MRC as the assailed Decision dated November 3, 2006 and the Order dated July 12,2007 never declared that " tax on the end-user amounts to a sales tax which is expressly prohibited by Section 133 of the LGC." Double taxation exists We shall now proceed to discuss the issue on "double taxation." In the case of Commissioner of fnlernnl l\P7.'PI111P v. Solidbnnk Corporation,23 the Supreme Court defined " double taxation" as:

"Double taxation means taxing the same property twice when it should be taxed only once; that is, 'xxx taxin p; the same person twice by the same j11risdiction for the same thing.' Tt is obnoxious when the taxpayer is taxed twice, when it should be but once. Otherwise described as 'direct duplica te taxation,' the two taxes must be imposed on the same subject matter, for the same purpose, by the same tet xing authority, within the same jurisd iction, during the smne taxing period; and they must be of the same kind or character." (Citntions omitted) In the case at bar, the two tax provision" concerned are Sections 14 and 21 of the MRC, to wit:

"Section 14. Tax 011 Manu[nrt11rr>rs. Asse111hlers ond other Processors - There is hereby imposed a gradunted tax on manufacturers, assemblers, repackers, processors, brevvers, distillers, rectifiers and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nahue, in accordance with the following schedule xxx" "Section 21 . Tox on Business S11hiPct to 11w Fxrise, Vnlue-Added or ~ // Percentage Taxes Under the NIRC - On any of the following businesses / 22 Jd , C.T.A 1\C No. 46 (Civil Case No. 02-1 04955) rr. 9 - 12: <"I .A .-\C No. 11R (Civi l Case No. 04- 1 08907) pp. 9- I 2; and C.T.A AC No. 49 (Civil Case No. 04-1 09703) pp. 9 - 12. 23 G.R. No. 1481 9 1, 416 SCRA 436, November 25,2003.

CTA A .C. Nos. 46, 48, & 49

Decision

Page 10nf 18 and articles of commerce subject to the excise, value-added or percentage taxes under the National Internal Revenue Code hereinafter the NIRC, as amended, a tax of fifty percent (50%) of one percent (1 %) per annum on the gross sales or receipts of t·he preceding calendar year is hereby imposed:

A)

On persons who sell goods and services in the course of h·ade or business; and those who import goods whether for business or otherwise, as provided for in Sections 100 to ] m of the NIRC as administered and determined by the Bureau of Internal Revenue pursuant to the pertinent provisions of the said code.

XXX

XXX

"

XXX

Petitioner insists that there is no douhl e taxa tion as Sections 14 and 21 of the MRC pertain to different tax objects. According to petitioner, Section 14 is a tax on the business of the respondent as a manufacturer, w hile Section 21 is a tax upon the end-users.

We do not agree.

This argument has already been squn rely resolved in the case of Swedish Match Philippines, Inc. v. The Trensurer of r-lw City of Mnniln.24 In that case, We ruled that double taxation exists.

The r ertinent portions of Our discussion therein are as follows:

"On the issue of double taxation, this Court rules in favor of the petitioner. The power of the Citv of Manila to tax is based on Sections 151 and 143 of the Local Government Code, to wit: 'SEC 151. Scope of Taxing Powers. -

Except as

otherwise provided in this Code, tlw Citv mav levy the taxes, fees, and charges which the province or municipality may impose: xxx' 'SEC 143. Tax on Business. - The municipality may impose taxes on the following businesses:

(a) On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and w ines or manufacturers of any article of commerce of whatever kind or nah1re, in accorda nce with the following schedule:

24 C.T.A. AC No. 15 (Civil Case No. 01- 102074), July 2 1,2006.

I

CTA A. C. Nos. 46,18'. & 49

Decision

Page II of 18

XXX

XXX

XXX

(h) On any business, not othetwise specified in the preceding paragraphs, which the sa nggunian concerned may deem proper to tax: Provided, Thnt 011 nny business subject to excise, value-added or percentage tnx under the National Internal Revenue Code, as amended, the mte n( lax shall 110/ exceed two percent (2% ) of gross sales or receipts of the preceding cnle11rlar yenr. The sanggunian concerned may prescribe a schedule of graduated tax rates but in case to exceed the rates prescribed herein.' It is clear from subsection (h) that if a business is already taxed under sub-sections (a) .to (g), such a business should no longer be taxed under subsection (h) thereof. In othor words, the afore-quoted subsection (h) gives the sanggunian concerned the power to tax businesses not otherwise enumerated in the Local Government Code. Based on the above provisions of the 1 ~oca l Government Code, the City of Manila en acted the Manila Revenue Code, Ordinance No. 7794. In this instant case, the involved provisions are: 'Section 14.

Tax 0 11 Mnnrt(nrhtrcrs, Assern/J/ers nnd other

Processors

- There is hereby imposed p;raduated tax on manufacturers, assem biers, repackers, procPssors, brewers, dis tillers, rectifiers and corn pou nciers of liq 11ors. distilled spirits, and wines or ma11ujacturers of n11y articll' of commerce of whatever kind or nature, in accorcia nce with the following schedule: xxx.

Section 21.

Tax on Business Sul1;ert Ia Excise, Value- 1\r/rled or Percentage Taxes Under tlw N II~C - On any of the following businesses and articles of commerce subject to excise, value-added or percentage t<1xes under the National Internal Revenue Code hereinafter referred to as NIRC, as amended, a tax of fifty (50%) of onf' Cl%) percent per anmtm on the gross sales or receipts of t·he prered ing calendar year is hereby imposed:

A) On persons who sell goods and services in the course of trade or business; and those who import goods whether for busine'is or otherwise, as provided for in Sections 100 to 1 en of the NTRC as administered and determined by the Bureau of

Internal

f{evenue pursuant In the pertinent provisions of the said cociP.

Indubitably, Section 14 of the Manila Revenue Code is based on Section 143(a) of the Local Government Code, w hile Section 21 in turn is a variation of Section 143(h), also of the Local Government Code. It is to be n oted that under Section 143(h) of the Local Government Code, the business tax that may be imposed on 'anv husiness', com es with the proviso 'not othenvise specified in tire preceding pn r~g rnphs .' This could only mean that the municipality, or city, shall only rmpose the tax in eithey •• CTA A.C. Nos. 46. 4R, & 49 one of the paragraphs but n.ot both. When the City of Manila imposed both taxes through Sections 14 and 21 of the Manila Revenue Code, the same definitely contradicts the express mandate of Section 143(h) of the Local Government Code.

Section 21 of the MRC reads 'on nny of 11/(' following businesses and articles of commerce subject to excise, mlue-added or percentage taxes under the National T nternal Revenue Code hereinafter rejerrerl to as NIRC, as amended, a tax of xxx is hereby imposed: On persons who sell goods and services in the course of trade or business; and !:hose w ho import goods whether for business or otherwise xxx.' Thus, it is evident from the foregoing that Section 21 does not impose indirect taxes on businesses but imposes tax on businesses and articles of commerce which is subject to excise, VAT or percentage tax under the National Internal Revenue Code. Jn addition, an examination of Section 14:1(h) of the Local Government Code shows that the phrase 'on any lmsiness subject to excise, mlue-arlrlerl or percentage tax under tire Nntinnnl lnfemnl Revenue Code' merely qualifies or limits the rate of ta x to be imposed on businesses already subject to excise, value-added or pc>rcentage tax under the National Internal Revenue Code and does not authorize Local Governments to impose such taxes. Hence, respondent's contention is without m erit. Moreover, the City Treasurer, in holding petitioner also liable under Section 21 of the Manila Revenue Code, (when it is already paying taxes under Section 14 of the same Code), violated the mandate of Section 143(h) of the Local Government Code, that forms the basis of Section 21, which clearly disallows the imposition of additional taxes on businesses already taxed under its other subsections.

Section 131(o) of the Local Government Code and Article 220(o), Part One, Rule xxx Local Government Taxation, Implementing Rules & Regulations, define a 'manufacturer' in the foll owing manner: A mnnu(ncf11rer includes every person who, by physical or chemical process, alters the exterior tcxh1re or form or inner substance of any raw material or manufacturerl or partially mi1nufaclured product in such mamwr as to prepare it for special use or uses to which it could not hi1vP bePn put in its original condition, or who by any such process, alters the qui1lily of any such raw material or manufi1ctured or partially manufactured products so as to red11cf' it t·o mi1 rketable shape or prepare it for any of the use of inciu<;try, or who by any such process, combines any such raw mi1terial or nlimufactured or partially manufactured products with othPr materials or products of the same or of different kinds and in such manner that the finished products of such process or manufacture can be put to a special use or uses to which such raw material or manufactured or partially manufachn erl in their original condition could not have been put, and who in addition, alters such raw material or manufactured or putii1lly manufactured products, or combines the same l:o produce such finished products for the purpose of their sale or dislTibution to others and not for his own use or consumption.

CTA A.C. Nos. 46, 48. & 49

Decision

Pogc 13of1 8

Pursuant to the above definition, a manufacturer is any person that changes or modifies any product to take the form of another, either to prepare it for special uses or to transform it to some marketable shape, for tlw purpose of selling or dish·ibuting them to others for a fee. In this case, petitioner is being taxed under Section 14 as a manufacturer of goods, and additionally taxed under Section 21(a) on its business of selling manufactured goods. This is a clear case of double taxation. Double taxation or direct duplicate taxation in its 'obnoxious' form means, the taxing twice of the same taxing authority, within the same taxing jurisdiction or dish·ict, for the same purpose and the same period, of the same property in the same territory. All these elements exist in this case.

Respondent nonetheless argues that no double taxation exists because Section 14 is a tax on the manufacturers, assemblers, and other processors while Section 21 is a tax on the end-users or on the persons payin g for the goods or services and not on the business itself and the seller of the goods or services is a mere withholding agent of the City of Manila.

This argument is untenable. Section 21 c l e<'~ rl y reads that a tax is imposed on the business subject to excise, va lue-added or percentage tax. Simply put, Section 21 is a business tax on persons who sell goods and services in their trade or business, and those who import goods whether for business or otherwise. To adopt the view of the respondent that the end-users arc the persons subject to tax under Section 21, would mean that the activity that is being taxed is tlw pu rchase of goods or the 'purchasing power' of the buyer, but the same is not a business activity. While there is some truth to respondent's cJaim that double taxation is not prohibited, it becomes 'obnoxious' w here a taxpayer is being taxed twice for the benefit of the same governmental entity, for the same purpose. Thus, the Court cannot countenance this form of doubl e taxation." (Citations omillerl) (E 111phnsis S11J7f'licrl) Also, in the recent case of The Treasurer of tllf City of Manila v. Unilever PlnHppinPs, /nc.,2S We reiterated O ur view that businesses taxed under Sections 14, 18, and 24 of the MRC can no longer be taxed under Section 21 thereof as the imposition of the business taxes under Sections 14 and 21 of the MRC, as amended, constitutes double taxation.

7 25 C.TA. AC No. 2R (Civil Case No. 06-1 14255), November 2R. 1007. citinf! UnileFer ?hils, vs. The Treasurer of the City of Manila. C. T.A. AC No. 25. June 18. 2007: Swedish ,\f,,tr-/1 Phils .. Inc. vs. The Treasurer of the City of Manila. C. /'.A . A C No. 15. July 21. 2006: International Container I erminal Services vs. The City of Manila, et a/. , C. T.A. AC No. II. May 17. 2006: Zm·con Development Corp. vs. The City Treasurer of the City of Manila. C.T.A. AC NO. 24, May 16. 2007; Liberty M Toledo. in her capacity as the Treasurer of the City of Manila vs. Unilever Phils., Inc .. C. T.A. AC No. 21, May 10. 2007.

CT A A.C. Nos. 4fi. ~ R , & 49

Decision

Page 14ofl 8 Once more, We stand by Our ruling.

Double taxation exists as the City of Manila imposes taxes on the manufacturing business of the respondent under both Sections 14 and 21 of the · MRC. Section 14 of the MRC imposes a tax on the manufacturers based on the gross sales for the preceding year in accordance with the schedule stated therein, under the authority of Section 143 (a) of the LGC. While Section 21 of the MRC provides for the imposition of a te1x of fifty percent (50%) of one (1 %) per rmnum on the gross sales or receipts on businesses and articles of commerce subject to excise, value added or percentage taxes under the NJRC, under the authority of Section 143 (h) of the LGC. However, considering that respondent is already taxed under Section 14 of the MRC bnsed on Section 143 (a) of the LGC, it can no longer be taxed und er Secti0n 21 0f the same Code, as Section 143 (h) of the LGC, upon which Section 21 is based, allows the imposition of business tax only on businesses not otherwise specified in the preceding paragraphs thereof. No doubt the clear tenor of r <'tragraph (h), Section 143 of the LGC, is t0 prohibit double taxation of businesses taxed under paragraphs (a) to (g) thereof.26 For this reason, We are in accord with the ruling of the trial court that Section 21 of the MRC amounts to double tax0tion .

I

26 Unilever Philippines, Inc. v. The Treasurer of the City of Manila. C.T.A. AC No. 25 (Civil Case No. 03-107304), June I 8, 2007.

CTA II .C. Nos. 46, 48, & 49

Decision

Page 15of l8

Sections 187 and 195 of the Local

Government Code do not apply Petitioner contends that the Petitions for Refund should have been dismissed because respondent failed to comply with Sections 187 and 195 of the ' LGC, which provide that:

"Sec. 187.

Procedure for Appmml rmrf Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearing. - xxx : Provided further, That any question on the constitutionality or lega lity of tax ordinances or revenue measures may be raised on appea l within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt 0f the appeal: xxx: Provided, finally, That within thirty (30) days after recPipt 0f t·he dPcision or the lapse of the sixty-day period without the- Secretary of Justice, acting upon the appeal, the aggrieved party may file the appropriate proceedings with a court of competent jurisdiction."

"Sec. 195.

Protest of Assessment. - When the local h·easurer or his duly authorized representative finds thi'lt the correct taxes, fees, or charges have not been paid, he shall issuP a notice of assessment stating the nature of the tax, fee, or charge, the am0unt of deficiency, the surcharges, interests and penalties. Within sixty (60) ciavs from the receipt of the notice of assessment, the taxpayer may file a writ ten protest with the local b·easurer contesting the assessment; otherwisf', the assessment shall become bnal and executory. The local b·easurer shall decide the protest within sixty

(60) days from the time of its fili.ng. If the locC! l !Teasurer finds the protest to be wholly or partly meritorious, he shall issnP a notice cancelling wholly or partially the assessment. However, -if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly or partly with notice to the taxpayer. The taxpaver shall have thirty (30) days from the receipt of the denial of the protesl or from the lapse of the sixty-day (60) period prescribed herein ,,vithin w hich to appeal with the cou rt of competent jurisdiction, o th e rwi~e the assessment becomes conclusive and unappealable."

Petitioner is of the view that smce respondent failed to appeal the revenue measure within 30 days from its enr1ctment, respondent may no longer file the Petitions for Refund.

Again, We do not subscribe to this argument. An appeal to the Secretary of Justice pursuant to Section 187 of the LGC is not necessary where there is no question on the constitutionality or legality of tax ordinances or revenu~ CTA A.C. Nos. 46, 48 . & 49 measures.27 It is well to note that respondent is not questioning the validity or constitutionality of Section 21 of the MRC. Instead, respondent is asking for a refund of business taxes erroneously assessed and collected under Section 21 of the MRC on the ground that this imposition constitutes double taxation. Thus, Section 187 does not apply in this case.

Besides, the issue of the constitutionality of Tax Ordinance Nos. 7988 and 8011 has already been resolved in the case of Cocn-Coln Bottlers Philippines, Inc. v. City of Mnniln, Liberty Toledo, et. nl.,28 where the Supreme Court declared the ordinances null and void on the ground of failure to comply with the publication requirements.

Anent the argument of petitioner that respondent is estopped from claiming refund because it failed to protest or a ppea 1 the assessment as required in Section 195 of the LGC, We find the same untenable. As aptly pointed out by respondent, citing Alcnn Packaging Starpack Corporation (jornierly Stnrpnck Philippines Corpornfion) 11. ThP Trerzsurer of the City of Manilrz, 29 Section 195 of the LGC pertains to protests on the e1ssessment/ s issued by the local treasurer against a taxpayer who hCls been found to have not paid its correct taxes, fees, or charges. Such is not the situation in the instant case. Atty. Danilo L. Cruz is authorized to file the PetitioJ1uo_r_Re{und Finally, petitioner avers that respondent failed to state the authority of Atty. Danilo L. Cruz to file the Petitions for Refund. Petitioner alleges that? 27 Zarcon Development Corporation v. The City Treasurer of Manil a. C.T.i\ . AC No. 24, May 16, 2007; City of Manila. ct. a!., v. Columbia Pictures Industries. Inc., C.T.A. AC Nn. 2'J. August 30. 2007: and The Treasurer of the City of Manila v. Unilever Philippines, Inc., C.T.A. AC No. 28. November 2H. 2007. 28 Supra, note 14.

29 C.T.A. AC No. 17 (Civil Case No. 01-1 02097), September II , 2006. ,· CTA A.C. Nos. 46, 48, & 49 authority was shown to prove that Atty. Cruz was authorized to stgn the Verification and Certification of Non-Forum Shopping. This deserves scant consideration as the Secretary's Certificate attached to the Petition for Refund expressly states that /\tty. Danilo L. Cruz is duly authorized to sign the Verification and Certification for and in behalf of the respondent. 30 All told, We find no reason to reverse the ruling of the trial court.

WHEREFORE, the consolidated Petitions for Review are hereby DENIED for l<1ck of merit. The Decision dated November 3, 2006 and Order dated July 12, 2007 rendered in Civil Case Nos. 02-104955, 04-108907, and 04- 109703 are hereby AFFIRMED.

Accordingly, petitioner is hereby ORDERED TO REFUND or ISSUE TAX CREDTTS to respondent, Unilever Philippines, Inc. in the amounts of P6,403,030.62, P11,350,041.07, and P1l,350,041 .fl7 representing erroneously paid local business taxes for the fourth quarter of the taxe1ble year 2000, first quarter of the taxable year 2002, and second qwuter of the taxable year 2002, respectively.

WE CONCUR:

~~ - c~ ERNESTO D. A COST A

Presiding Justice

CAESAR A. CASANOVA

Associate Justice

CERTIFIC A TI ON

Pursuant to Section 13, Article VJTT nf the Constitution, it is hereby certified that the conclusions in the above Decision were reached after due consultation with the members of the Division of the Court of Tax Appeals before the case was assigned to the writer of the opinion of the Division. I' L---v. l~ ERNESTO D. ACOSTA

Presiding Justice

Chairman, First Division Court ofTax Appeals

Library