Case Digest (G.R. No. 187631)
Facts:
Batangas City, Maria Teresa Geron, in her capacity as City Treasurer of Batangas City and Teodulfo A. Deguito, in his capacity as City Legal Officer of Batangas City, petitioners, vs. Pilipinas Shell Petroleum Corporation, G.R. No. 187631, July 08, 2015, the Supreme Court Third Division, Peralta, J., writing for the Court.Petitioner Batangas City (an LGU) through its City Legal Officer assessed Pilipinas Shell Petroleum Corporation (PSPC) for alleged business taxes and Mayor’s permit fees based on PSPC’s manufacture and distribution of petroleum products at its Tabangao refinery. The notice of assessment (dated February 20, 2001) demanded P92,373,720.50 and P312,656,253.04 as business taxes for the manufacture and distribution activities, and P4,299,851.00 as Mayor’s Permit Fee computed on gross sales; the assessment invoked Section 134 of the LGC and Section 23 of the Batangas City Tax Code.
PSPC protested (April 17, 2002) contending it was not liable for the local business tax on manufacture/distribution of petroleum products and that the Mayor’s Permit Fees were excessive. The City denied the protest (May 13, 2002) and threatened to withhold issuance of the Mayor’s Permit under the Batangas City Tax Code. PSPC filed a petition for review under Section 195 of the Local Government Code (LGC) before the Regional Trial Court (RTC) of Batangas City on June 17, 2002.
The RTC (Decision of October 29, 2004) sustained Batangas City’s imposition of the business taxes but declared the Mayor’s Permit Fee excessive and revoked that assessment; PSPC was ordered to pay P405,030,003.54 as business tax. PSPC’s motion for partial reconsideration was denied (RTC Order, February 28, 2005).
PSPC then filed a Petition for Review with an urgent application for preliminary injunction before the Court of Tax Appeals (CTA) Second Division (April 27, 2005). The CTA Second Division granted the injunction conditioned on a P500,000,000 surety bond and, after trial, ruled in PSPC’s favor in a Decision dated June 21, 2007: it found PSPC not liable for business taxes on manufacture and distribution of petroleum products under the LGC and held the Mayor’s Permit excessive, ordering refund by way of tax credit. The CTA later amended the dispositive portion (July 31, 2007 Amended Decision) to clarify the exact refund (P3,870,860.00). Petitioners’ motion for reconsideration was denied by the CTA Second Division (Resolution, November 21, 2007).
Petitioners elevated the case to the CTA En Banc via Petition for Review. The CTA En Banc affirmed the Second Division “in toto” (Decision, January 22, 2009) and denied reconsideration (Resolution, April 13, 2009). Thereafter Batangas City filed a Rule 45 Petition for Review on Certiorari with the Supreme Court assailing the CTA En Banc decisions; this is the present petition.
...(Pro-only)Issues:
- Whether the power of local government units to tax business is solely governed and limited by Section 133 and Section 143 of the Local Government Code (LGC) of 1991 (i.e., whether LGUs may impose business taxes on manufacture and distribution of petroleum products).
- Whether the word “taxes” in Section 133(h) of the LGC excludes business taxes (i.e., whether “taxes” in that provision does not encompass local business taxes).
- Whether there is a meaningful legal distinction that permits LGUs to impose business taxes on activities (manufacture/distribution) involving petroleum products despite prohibitions on taxes on the articles themselves.
- Whether Section 133(h) of the LGC is an express limitation that prevails over the general grant of taxing authority in Section 143(h) (i.e., whether the ...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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