Case Digest (G.R. No. 245887)
Facts:
In 1983, under Presidential Decree No. 582, the Coconut Industry Investment Fund (CIIF) was established from levies on copra sales and invested in six oil mills (the CIIF Oil Mills Group). To manage its investments in San Miguel Corporation (SMC) shares, the CIIF organized fourteen holding companies, one of which was AP Holdings, Inc. (APHI). APHI’s Articles of Incorporation expressly provided that its sole purpose was to acquire, hold, and dispose of shares and other property, to collect dividends and income therefrom, and to direct the operations of subsidiaries, but “shall not act as an investment company or a securities broker and/or dealer nor exercise the functions of a trust corporation.” Over time, APHI received cash and stock dividends on its SMC preferred shares, which it deposited in a trust account earning interest from money market placements. In 1986, the Presidential Commission on Good Government sequestered these SMC shares. On January 24, 2012, this Court in G.R...
Case Digest (G.R. No. 245887)
Facts:
- Parties and Corporate Structure
- Petitioners: City of Davao and Acting City Treasurer Erwin Alparaque.
- Respondent: AP Holdings, Inc. (APHI), one of fourteen Coconut Industry Investment Fund (CIIF) holding companies established to own San Miguel Corporation (SMC) shares.
- CIIF and APHI’s Corporate Purpose
- Presidential Decree No. 582 created the CIIF from levies on copra sales, investing in six oil mills (CIIF Oil Mills Group) and fourteen holding corporations, including APHI.
- APHI’s Articles of Incorporation state its primary purpose as acquiring, owning, holding, managing, and disposing of stocks and income therefrom, expressly excluding acting as an investment company, securities broker/dealer, or trust corporation.
- Dividend Income and Tax Assessment
- APHI received cash and stock dividends from its SMC preferred shares; these proceeds were placed in a trust account yielding interest from money-market placements.
- In 2011, the City Treasurer issued a Business Tax Order assessing 0.55% local business tax (₱723,531.50) under Section 69(f) of the 2005 Revenue Code on APHI’s dividends and interest. APHI paid under protest and filed an administrative refund claim.
- Prior Judicial and Administrative Proceedings
- In 2012, the Supreme Court in G.R. Nos. 177857–58 (Philippine Coconut Producers Federation, Inc. v. Republic) declared CIIF companies and their SMC shares as national government assets for the benefit of coconut farmers.
- RTC (June 22, 2015) held APHI taxable as a “bank and other financial institution” (non-bank financial intermediary) under City Code Section 69(f); motion for reconsideration denied.
- CTA Division (Jan. 30, 2017) affirmed the RTC; motion for reconsideration denied (April 17, 2017).
- CTA En Banc (Aug. 20, 2018) reversed and granted APHI’s refund or credit, ruling APHI not an NBFI and its shares and income as public assets; motion for reconsideration denied (Jan. 23, 2019).
Issues:
- Whether APHI, as a CIIF holding company, is liable to pay local business taxes on dividends and interest from its SMC preferred shares under City of Davao Revenue Code Section 69(f).
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)