G.R. No. 180651, July 30, 2014
NURSERY CARE CORPORATION; SHOEMART, INC.; STAR APPLIANCE CENTER, INC.; H&B, INC.; SUPPLIES STATION, INC.; AND HARDWARE WORKSHOP, INC., Petitioners, v. ANTHONY ACEVEDO, IN HIS CAPACITY AS THE TREASURER OF MANILA; AND THE CITY OF MANILA, Respondents.
D E C I S I O N
Section 21. Tax on Business Subject to the Excise, Value-Added or Percentage Taxes under the NIRC - On any of the following businesses and articles of commerce subject to the excise, value-added or percentage taxes under the National Internal Revenue Code, hereinafter referred to as NIRC, as amended, a tax of FIFTY PERCENT (50%) OF ONE PERCENT (1%) per annum on the gross sales or receipts of the preceding calendar year is hereby imposed:
A) On person who sells goods and services in the course of trade or businesses; x x x
PROVIDED, that all registered businesses in the City of Manila already paying the aforementioned tax shall be exempted from payment thereof.
(a) Nursery Care Corporation P595,190.25 (b) Shoemart Incorporated P3,283,520.14 (c) Star Appliance Center P236,084.03 (d) H & B, Inc. P1,271,118.74 (e) Supplies Station, Inc. P239,501.25 (f) Hardware Work Shop, Inc. P609,953.24
(a) Whether or not the collection of taxes under Section 21 of Ordinance No. 7794, as amended, constitutes double taxation. (b) Whether or not the failure of the petitioners to avail of the statutorily provided remedy for their tax protest on the ground of unconstitutionality, illegality and oppressiveness under Section 187 of the Local Government Code renders the present action dismissible for non-exhaustion of administrative remedy.15
The Court perceives of no instance of the constitutionally proscribed double taxation, in the strict, narrow or obnoxious sense, imposed upon the petitioners under Section 15 and 17, on the one hand, and under Section 21, on the other, of the questioned Ordinance. The tax imposed under Section 15 and 17, as against that imposed under Section 21, are levied against different tax objects or subject matter. The tax under Section 15 is imposed upon wholesalers, distributors or dealers, while that under Section 17 is imposed upon retailers. In short, taxes imposed under Section 15 and 17 is a tax on the business of wholesalers, distributors, dealers and retailers. On the other hand, the tax imposed upon herein petitioners under Section 21 is not a tax against the business of the petitioners (as wholesalers, distributors, dealers or retailers) but is rather a tax against consumers or end-users of the articles sold by petitioners. This is plain from a reading of the modifying paragraph of Section 21 which says:“The tax shall be payable by the person paying for the services rendered and shall be paid to the person rendering the services who is required to collect and pay the tax within twenty (20) days after the end of each quarter.” (Underscoring supplied)
In effect, the petitioners only act as the collection or withholding agent of the City while the ones actually paying the tax are the consumers or end-users of the articles being sold by petitioners. The taxes imposed under Sec. 21 represent additional amounts added by the business establishment to the basic prices of its goods and services which are paid by the end-users to the businesses. It is actually not taxes on the business of petitioners but on the consumers. Hence, there is no double taxation in the narrow, strict or obnoxious sense, involved in the imposition of taxes by the City of Manila under Sections 15, 17 and 21 of the questioned Ordinance. This in effect resolves in favor of the constitutionality of the assailed sections of Ordinance No. 7807 of the City of Manila.
Petitioners, likewise, pray the Court to direct respondents to cease and desist from implementing Section 21 of the questioned Ordinance. That the Court cannot do, without doing away with the mandatory provisions of Section 187 of the Local Government Code which distinctly commands that an appeal questioning the constitutionality or legality of a tax ordinance shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee or charge levied therein. This is so because an ordinance carries with it the presumption of validity.
x x x
With the foregoing findings, petitioners’ prayer for the refund of the amounts paid by them under protest must, likewise, fail.
Wherefore, the petitions are dismissed. Without pronouncement as to costs.
The six (6) cases were consolidated on a common question of fact and law, that is, whether the act of the City Treasurer of Manila of assessing and collecting business taxes under Section 21 of Ordinance 7807, on top of other business taxes also assessed and collected under the previous sections of the same ordinance is a violation of the provisions of Section 143 of the Local Government Code.
Clearly, the disposition of the present appeal in these consolidated cases does not necessitate the calibration of the whole evidence as there is no question or doubt as to the truth or the falsehood of the facts obtaining herein, as both parties agree thereon. The present case involves a question of law that would not lend itself to an examination or evaluation by this Court of the probative value of the evidence presented.
Thus the Court is constrained to dismiss the instant petition for lack of jurisdiction under Section 2, Rule 50 of the 1997 Rules on Civil Procedure which states:“Sec. 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.
WHEREFORE, the foregoing considered, the appeal is DISMISSED.
THE COURT OF APPEALS, IN DISMISSING THE APPEAL OF THE PETITIONERS AND DENYING THEIR MOTION FOR RECONSIDERATION, ERRED IN RULING THAT THE ISSUE INVOLVED IS A PURELY LEGAL QUESTION.
THE COURT OF APPEALS ERRED IN NOT REVERSING THE DECISION OF BRANCH 19 OF THE REGIONAL TRIAL COURT OF MANILA DATED 26 APRIL 2002 DENYING PETITIONERS’ PRAYER FOR REFUND OF THE AMOUNTS PAID BY THEM UNDER PROTEST AND DISMISSING THE PETITION FOR CERTIORARI FILED BY THE PETITIONERS.
THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ACT OF THE CITY TREASURER OF MANILA IN IMPOSING, ASSESSING AND COLLECTING THE ADDITIONAL BUSINESS TAX UNDER SECTION 21 OF ORDINANCE NO. 7794, AS AMENDED BY ORDINANCE NO. 7807, ALSO KNOWN AS THE REVENUE CODE OF THE CITY OF MANILA, IS CONSTITUTIVE OF DOUBLE TAXATION AND VIOLATIVE OF THE LOCAL GOVERNMENT CODE OF 1991.20
x x x For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.26
Our rules of procedure are designed to facilitate the orderly disposition of cases and permit the prompt disposition of unmeritorious cases which clog the court dockets and do little more than waste the courts’ time. These technical and procedural rules, however, are intended to ensure, rather than suppress, substantial justice. A deviation from their rigid enforcement may thus be allowed, as petitioners should be given the fullest opportunity to establish the merits of their case, rather than lose their property on mere technicalities. We held in Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation that:Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties' right to due process. In numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the demands of substantial justice and equity.
x x x [T]he issue of double taxation is not novel, as it has already been settled by this Court in The City of Manila v. Coca-Cola Bottlers Philippines, Inc., in this wise:Petitioners obstinately ignore the exempting proviso in Section 21 of Tax Ordinance No. 7794, to their own detriment. Said exempting proviso was precisely included in said section so as to avoid double taxation.
Double taxation means taxing the same property twice when it should be taxed only once; that is, “taxing the same person twice by the same jurisdiction for the same thing.” It is obnoxious when the taxpayer is taxed twice, when it should be but once. Otherwise described as “direct duplicate taxation,” the two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or character.
Using the aforementioned test, the Court finds that there is indeed double taxation if respondent is subjected to the taxes under both Sections 14 and 21 of Tax Ordinance No. 7794, since these are being imposed: (1) on the same subject matter – the privilege of doing business in the City of Manila; (2) for the same purpose – to make persons conducting business within the City of Manila contribute to city revenues; (3) by the same taxing authority – petitioner City of Manila; (4) within the same taxing jurisdiction – within the territorial jurisdiction of the City of Manila; (5) for the same taxing periods – per calendar year; and (6) of the same kind or character – a local business tax imposed on gross sales or receipts of the business.
The distinction petitioners attempt to make between the taxes under Sections 14 and 21 of Tax Ordinance No. 7794 is specious. The Court revisits Section 143 of the LGC, the very source of the power of municipalities and cities to impose a local business tax, and to which any local business tax imposed by petitioner City of Manila must conform. It is apparent from a perusal thereof that when a municipality or city has already imposed a business tax on manufacturers, etc. of liquors, distilled spirits, wines, and any other article of commerce, pursuant to Section 143(a) of the LGC, said municipality or city may no longer subject the same manufacturers, etc. to a business tax under Section 143(h) of the same Code. Section 143(h) may be imposed only on businesses that are subject to excise tax, VAT, or percentage tax under the NIRC, and that are “not otherwise specified in preceding paragraphs.” In the same way, businesses such as respondent’s, already subject to a local business tax under Section 14 of Tax Ordinance No. 7794 [which is based on Section 143(a) of the LGC], can no longer be made liable for local business tax under Section 21 of the same Tax Ordinance [which is based on Section 143(h) of the LGC].
Based on the foregoing reasons, petitioner should not have been subjected to taxes under Section 21 of the Manila Revenue Code for the fourth quarter of 2001, considering that it had already been paying local business tax under Section 14 of the same ordinance.
x x x x
Accordingly, respondent’s assessment under both Sections 14 and 21 had no basis. Petitioner is indeed liable to pay business taxes to the City of Manila; nevertheless, considering that the former has already paid these taxes under Section 14 of the Manila Revenue Code, it is exempt from the same payments under Section 21 of the same code. Hence, payments made under Section 21 must be refunded in favor of petitioner.
It is undisputed that petitioner paid business taxes based on Sections 14 and 21 for the fourth quarter of 2001 in the total amount of P470,932.21. Therefore, it is entitled to a refund of P164,552.04 corresponding to the payment under Section 21 of the Manila Revenue Code.
1 Rollo, pp. 74-78; penned by Associate Justice Josefina Guevarra-Salonga with Associate Justice Vicente Q. Roxas and Associate Justice Ramon R. Garcia concurring.
2 Id. at 80-81.
3 Id. at 19.
4 Id. at 82, 86.
5 Id. at 84, 98.
6 Id. at 86-88.
7 Id. at 90-92.
8 Id. at 93-98.
9 Id. at 99.
10 Id. at 333.
11 Id. at 100-241.
12 Id. at 255.
13 Id. at 26, 266.
14 Id. at 24.
15 Id. at 333.
16 Id. at 335-337.
17 Id. at 418-419.
18 Id. at 77-78.
19 Id. at 81.
20 Id. at 27.
21 RULES OF COURT, Section 2, Rule 41 (1997).
22 RULES OF COURT, Section 2, Rule 42, (1997).
23 Section 1, Rule 45, Rules of Court (1997); Republic v. Malabanan, G.R. No. 169067, October 6, 2010, 632 SCRA 338, 344-345.
24Latorre v. Latorre, G.R. No. 183926, March 29, 2010, 617 SCRA 88, 99.
25 G.R. No. 176842, February 18, 2008, 546 SCRA 180, 184.
26 See also First Bancorp, Inc. v. Court of Appeals, G.R. No. 151132, June 22, 2006, 492 SCRA 221, 238, where the Court issued a similar explanation, to wit:A question of fact exists when a doubt or difference arises as to the truth or falsity of alleged facts. If the query requires a reevaluation of the credibility of witnesses or the existence or relevance of surrounding circumstances and their relation to each other, the issue in that query is factual. On the other hand, there is a question of law when the doubt or difference arises as to what the law is on certain state of facts and which does not call for an existence of the probative value of the evidence presented by the parties-litigants. In a case involving a question of law, the resolution of the issue rests solely on what the law provides on the given set of circumstances. Ordinarily, the determination of whether an appeal involves only questions of law or both questions of law and fact is best left to the appellate court. All doubts as to the correctness of the conclusions of the appellate court will be resolved in favor of the CA unless it commits an error or commits a grave abuse of discretion.27 Tamondong v. Court of Appeals, G.R. No. 158397, November 26, 2004, 444 SCRA 509, 517.
28Rollo, p. 418.
29Sevilleno v. Carilo, G.R. No. 146454, September 14, 2007, 533 SCRA 385, 389.
30 G.R. No. 182341, April 23, 2010, 619 SCRA 333, 342-343.
31Rollo, pp. 43-44.
32 Id. at 49.
33 Section 143. Tax on Business. – The municipality may impose taxes on the following businesses:
(a) On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature, in accordance with the following schedule: xxx
(b) On wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature in accordance with the following schedule: xxx
(c) On exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities enumerated hereunder at a rate not exceeding one-half (1/2) of the rates prescribed under subsections (a), (b) and (d) of this Section: xxx
(d) Provided, however, That barangays shall have the exclusive power to levy taxes, as provided under Section 152 hereof, on gross sales or receipts of the preceding calendar year of Fifty thousand pesos (P50,000.00) or less, in the case of cities, and Thirty thousand pesos (P30,000) or less, in the case of municipalities.
(e) On contractors and other independent contractors, in accordance with the following schedule: xxx
(f) On banks and other financial institutions, at a rate not exceeding fifty percent (50%) of one percent (1%) on the gross receipts of the preceding calendar year derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premium.
(g) On peddlers engaged in the sale of any merchandise or article of commerce, at a rate not exceeding Fifty pesos (P50.00) per peddler annually.
(h) On any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax: Provided, That on any business subject to the excise, value-added or percentage tax under the National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year.
34Rollo, p. 485.
35 Id. at 484.
36 Id. at 486-487.
37 G.R. No. 181845, August 4, 2009, 595 SCRA 299 and G.R. No. 167283, February 10, 2010.
38 G.R. No. 181277, July 3, 2013, 700 SCRA 428, 439-442.
39 Section 14. – Tax on Manufacturers, Assemblers and Other Processors. – There is hereby imposed a graduated tax on manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature, in accordance with any of the following schedule: x x x