Case Summary (G.R. No. 90637)
Background
Petitioner Mobil Philippines filed an application to retire its business in Makati City on August 20, 1998, as it moved its principal office to Pasig City. Prior to this, it maintained its principal office at the National Development Company Building in Makati City. The application provided gross sales figures of approximately P453.8 million for the calendar year 1997 and P267.9 million for January to August of 1998.
Tax Assessment
Upon evaluating the application, the then Officer-in-Charge (OIC) of the License Division, Ms. Jesusa E. Cuneta, issued a billing slip assessing business taxes for 1998 totaling P1,898,106.96, based on Mobil's gross sales from both the previous year and for the year up to the date of application. This included specific amounts for manufacturing, wholesaling, and additional garbage fees.
Payment and Refund Claim
On September 11, 1998, Mobil paid the full assessed amount under protest and received an official receipt. Subsequently, on July 21, 1999, it filed a claim for refund of P1,331,638.84. The claim was denied by the City Treasurer, asserting that the tax payments reflected business operations in Makati from January 1 to August 31, 1998, before Mobil's official retirement of business in the city.
Trial Court's Decision
Mobil filed a petition with the Regional Trial Court of Pasig City to seek a refund of the business taxes claimed to have been erroneously collected. The trial court ruled that payments made in 1998 corresponded to business tax obligations incurred for the year 1997, which had accrued in January 1998. The court concluded that petitions about tax liabilities were thus unfounded, affirming the validity of additional assessments made for the 1998 business tax.
Arguments on Appeal
Petitioner contested the trial court's decision, arguing that the 1997 gross sales should not determine the business tax due for 1998. It posited that business taxes are effectively fees for the privilege of conducting business for the year in which the tax is paid. The respondents, however, maintained that local taxes, including business taxes, correspond to the profits of the preceding year, supporting the decision as in alignment with local tax regulations.
Distinction Between Business Tax and Income Tax
The court underscored the distinction between business tax and income tax. Business taxes are characterized as costs for the privilege of operating within a municipality for the year they are levied, while income taxes are calculated on profits accrued during the taxable year and are due at stipulated times following fiscal year-end.
Court's Analysis
The court identified errors in the trial court's conclusions regarding liability for taxes based on 1997 revenues. It clarified that the business taxes paid in 1998 pertained to the actual privilege of operating that year and should not be retroactively linked to the prior year's gross sales.
Legal Implications
...continue readingCase Syllabus (G.R. No. 90637)
Case Background
- This case is a petition for review on certiorari seeking to reverse the Decision dated November 22, 2001, by the Regional Trial Court of Pasig City, Branch 268.
- The petitioner, Mobil Philippines, Inc., is a domestic corporation engaged in the manufacturing, importing, exporting, and wholesaling of petroleum products.
- Respondents are local government officials of Makati City responsible for implementing the Revenue Code and collecting business taxes, license fees, and permit fees within the city.
Timeline of Events
- Prior to September 1998, Mobil's principal office was situated at the National Development Company Building in Makati City.
- On August 20, 1998, Mobil filed an application with the City Treasurer of Makati to retire its business as it moved its principal office to Pasig City.
- Mobil declared its gross sales/receipts for 1997 and from January to August 1998 in its application.
- Following an evaluation, the OIC of the License Division assessed business taxes totaling P1,898,106.96 against Mobil for the years 1997 and 1998.
- Mobil paid the assessed amount under protest on September 11, 1998, and received an Official Receipt.
- On July 21, 1999, Mobil filed a claim for refund of P1,331,638.84, which was denied on August 11, 1999, by the City Treasurer.
Legal Proceedings
- Mobil subsequently filed a petition in the Regional Trial Court seeking a refund of the business taxes it claimed were erroneously collected.
- The trial court ruled that business taxes accrued on the first day of January of each year and thus held that Mobil'