Case Digest (G.R. No. 187631) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In G.R. No. 187631 decided on July 8, 2015, Batangas City, represented by Maria Teresa Geron as City Treasurer and Teodulfo A. Deguito as City Legal Officer, sought to collect local business taxes and mayor’s permit fees from Pilipinas Shell Petroleum Corporation, which operates a refinery and depot in Tabangao, Batangas. In February 2001, Batangas City assessed Shell for ₱92,373,720.50 as a tax on manufacturing petroleum products, ₱312,656,253.04 as a tax on distribution, and ₱4,299,851.00 as mayor’s permit fees, relying on Sections 134 and 23 of the Local Government Code (LGC) and the city’s tax code. Shell paid ₱98,964.71 in 2002, then formally protested the assessments as unlawful and confiscatory. The protest was denied and Shell elevated the matter to the Regional Trial Court (RTC) of Batangas City in June 2002. The RTC upheld the business tax assessments but struck down the mayor’s permit fee as excessive, ordering Shell to pay ₱405,030,003.54 and authorizing Batangas Cit Case Digest (G.R. No. 187631) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Petitioners
- Batangas City, a local government unit (LGU) with capacity to sue and be sued.
- Maria Teresa Geron, City Treasurer; Teodulfo A. Deguito, City Legal Officer of Batangas City.
- Respondent
- Pilipinas Shell Petroleum Corporation (PSPC), operator of an oil refinery and depot in Tabangao, Batangas City.
- Assessment and Protest
- February 20, 2001 Assessment
- Business taxes of ₱92,373,720.50 (manufacture) and ₱312,656,253.04 (distribution) of petroleum products.
- Mayor’s Permit Fee of ₱4,299,851.00 based on gross sales.
- Basis: Section 134, Local Government Code (LGC) of 1991 and Section 23, Batangas City Tax Code of 2002.
- Protest and Denial
- PSPC’s protest (April 17, 2002): challenged authority to impose business tax on petroleum manufacture/distribution; contended that permit fees were excessive, arbitrary and confiscatory.
- Petitioners’ denial (May 13, 2002): invoked Section 14, Batangas City Tax Code to withhold issuance of Mayor’s Permit for non-payment.
- RTC Proceedings
- Petition for Review before RTC Batangas City (June 17, 2002): reiterated non-liability and unreasonableness of fees.
- RTC Decision (October 29, 2004)
- Upheld business taxes: ordered PSPC to pay ₱405,030,003.54.
- Revoked Mayor’s Permit Fee of ₱4,299,851.00 as grossly excessive.
- Motion for Reconsideration denied (February 28, 2005).
- CTA Proceedings
- Petition for Review with Urgent Application to CTA Second Division (April 27, 2005)
- Writ of Preliminary Injunction granted upon ₱500,000,000.00 surety bond; collection of taxes held in abeyance.
- CTA Second Division Decision (June 21, 2007)
- Modified RTC judgment: held PSPC not liable for business taxes on manufacture and distribution.
- Declared Mayor’s Permit Fee excessive; ordered refund of ₱3,525,010.50 as tax credit.
- Motion for Clarification (July 13, 2007): corrected refund amount to ₱3,870,860.00; Amended Decision issued.
- Denial of Reconsideration (November 21, 2007).
- CTA En Banc Decision (January 22, 2009): affirmed in toto the Amended Decision and Resolution.
- Denial of Reconsideration by CTA En Banc (April 13, 2009).
- Supreme Court Petition
- Petitioners filed Rule 45 petition for review, assigning errors in the CTA’s interpretation of Sections 133(h) and 143(h) of the LGC regarding local business taxation of petroleum products.
Issues:
- Whether a local government unit, under the Local Government Code of 1991, is empowered to impose business taxes on entities engaged in the manufacture and distribution of petroleum products.
- Whether Section 133(h) of the LGC, which prohibits “taxes, fees or charges on petroleum products,” forbids imposition of local business taxes on petroleum manufacturing and distribution.
- Whether the term “taxes” in Section 133(h) excludes local business taxes and distinguishes between taxes on articles and taxes on business.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)