Case Summary (G.R. No. 180651)
Procedural Background
Petitioners paid under protest additional business taxes imposed as condition for 1999 license renewal (Section 21). They sought refund from the City Treasurer, who denied relief. They filed certiorari petitions in the RTC, which were consolidated and eventually dismissed. Appeals to the Court of Appeals (CA) were dismissed for presenting pure questions of law.
RTC Proceedings and Findings
The RTC held that Section 21’s tax is an indirect levy on consumers, not a business tax on wholesalers, distributors, dealers or retailers (Sections 15 and 17). Since petitioners merely collected and remitted the charge, no “strict, narrow or obnoxious” double taxation occurred. The petitions were dismissed for lack of merit.
Court of Appeals Resolution
The CA denied the appeal for lack of jurisdiction under Section 2, Rule 50 of the 1997 Rules of Civil Procedure, finding only questions of law were raised. A subsequent motion for reconsideration was likewise denied.
Issues on Review
- Whether the CA correctly dismissed the appeal as presenting pure questions of law.
- Whether petitioners are entitled to refund of taxes paid under Section 21 on grounds of double taxation.
Applicable Legal Framework
Constitutional Basis: 1987 Philippine Constitution (decision date 2014).
Local Government Code (LGC) Section 143: Grants cities power to impose business taxes, including subsection (h) for businesses subject to national excise, VAT or percentage tax.
Rules of Court: Modes of appeal—Rule 41 (writ of error), Rule 42 (petition for review to CA), Rule 45 (certiorari to SC); Section 2, Rule 50 (dismissal of appeals raising only questions of law).
Supreme Court Ruling on Appealability
The Supreme Court affirmed that petitioners’ notice of appeal and memorandum solely questioned legal conclusions without re-evaluating evidence; thus, the CA properly dismissed the appeal under Rule 50. However, invoking the doctrine of liberality in procedure, the Court opted to resolve the substantive double taxation issue on the merits.
Double Taxation Doctrine and Jurisprudence
Double taxation occurs when the same taxpayer is taxed twice for the same object, purpose, taxing authority, jurisdiction, period, and tax character. The Court drew on City of Manila v. Coca-Cola Bottlers Philippines, Inc. and Swedish Match Philippines, Inc., which held that Section 21’s local business tax duplicates Section 14 (tax on manufacturers) in contravention of LGC Section 143.
Application to Section 21 – Double Taxation Established
Sections 15 and 17 impose local business taxes on
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Facts and Antecedents
- Petitioners are six business corporations duly registered and operating in the City of Manila during 1999.
- The City of Manila imposed local business taxes under:
- Section 15 (Tax on Wholesalers, Distributors or Dealers) and Section 17 (Tax on Retailers) of the Revenue Code of Manila.
- Section 21 of the same Code (Tax on businesses subject to excise, VAT or percentage taxes under the NIRC) as a condition for renewal of business licenses for 1999.
- Section 21 provided for a 0.50% per annum tax on gross sales or receipts of the preceding year, with a proviso exempting “all registered businesses in the City of Manila already paying the aforementioned tax.”
- Petitioners paid under protest the Section 21 tax for the first quarter of 1999 in the following amounts:
- Nursery Care Corporation – ₱595,190.25
- Shoemart, Inc. – ₱3,283,520.14
- Star Appliance Center – ₱236,084.03
- H&B, Inc. – ₱1,271,118.74
- Supplies Station, Inc. – ₱239,501.25
- Hardware Workshop, Inc. – ₱609,953.24
Administrative Proceedings
- March 1, 1999: Petitioners formally requested tax credit or refund from Treasurer Acevedo.
- March 10, 1999: Treasurer Acevedo denied the request.
- April 8, 1999: Petitioners sought reconsideration; no action taken.
- April 29, 1999: Petitioners filed separate certiorari petitions in the Manila RTC (Civil Cases Nos. 99-93668 to 99-93673), later consolidated and raffled to Branch 19.
Issues Agreed for RTC Resolution
- Whether the collection under Section 21 constitutes double taxation vis-à-vis Sections 15 and 17.
- Whether failure to exhaust administrative remedies under Section 187 of the Local Government Code requires d