CITY OF MANILA vs. COCA-COLA BOTTLERS PHILIPPINES, INC.

FACTS:
Respondent paid the local business tax only as a manufacturers as it was expressly exempted
from the business tax under a different section and which applied to businesses subject to excise, VAT or
percentage tax under the Tax Code. The City of Manila subsequently amended the ordinance by deleting
the provision exempting businesses under the latter section if they have already paid taxes under a
different section in the ordinance.
This amending ordinance was later declared by the Supreme Court null and void. Respondent
then filed a protest on the ground of double taxation. RTC decided in favor of Respondent and the
decision was received by Petitioner on April 20, 2007. On May 4, 2007, Petitioner filed with the CTA a
Motion for Extension of Time to File Petition for Review asking for a 15-day extension or until May 20,
2007 within which to file its Petition. A second Motion for Extension was filed on May 18, 2007, this time
asking for a 10-day extension to file the Petition. Petitioner finally filed the Petition on May 30, 2007
even if the CTA had earlier issued a resolution dismissing the case for failure to timely file the Petition.

ISSUES:
(1) Has Petitioner’s the right to appeal with the CTA lapsed?
(2) Does the enforcement of the latter section of the tax ordinance constitute double taxation?

HELD:
(1) NO. Petitioner complied with the reglementary period for filing the petition. From April 20,
2007, Petitioner had 30 days, or until May 20, 2007, within which to file their Petition for Review with
the CTA. The Motion for Extension filed by the petitioners on May 18, 2007, prior to the lapse of the 30-
day period on 20 May 2007, in which they prayed for another extended period of 10 days, or until 30
May 2007, to file their Petition for Review was, in reality, only the first Motion for Extension of
petitioners. Thus, when Petitioner filed their Petition via registered mail their Petition for Review on 30
May 2007, they were able to comply with the period for filing such a petition.

(2) YES. There is indeed double taxation if respondent is subjected to the taxes under both
Sections 14 and 21 of the tax ordinance 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.
 GOVERNMENT SERVICE INSURANCE SYSTEM vs. CITY TREASURER OF MANILA

FACTS:
Petitioner GSIS owns or used to own two (2) parcels of land, Katigbak property and
Concepcion-Arroceros property. Both the GSIS and the Metropolitan Trial Court (MeTC) of
Manila occupy the Concepcion-Arroceros property, while the Katigbak property was under
lease with Manila Hotel Corporation (MHC).
The City Treasurer of Manila assessed GSIS unpaid real property taxes due from 1992 to
2002, broken down as follows: (a) PhP54,826,599.37 for the Katigbak property; and (b)
PhP48,498,917.01 for the Concepcion-Arroceros property. The letter warned of the inclusion
of the subject properties public auction of all delinquent properties in Manila should the unpaid
taxes remain unsettled.
The City Treasurer of Manila issued separate Notices of Realty Tax Delinquency with warning
of seizure and/or sale. GSIS wrote back emphasizing the GSIS' exemption from all kinds of
taxes, including realty taxes, under Republic Act No. (RA) 8291.
GSIS filed a petition for certiorari and prohibition with prayer for a restraining and injunctive
relief before the Manila RTC. RTC dismissed GSIS petition and ruled that it is liable.

ISSUES:
1. Whether petitioner is exempt from the payment of real property taxes from 1992 to 2002;
2. Whether petitioner is exempt from the payment of real property taxes on the property it leased
to a taxable entity; and
3. Whether petitioner's real properties are exempt from warrants of levy and from tax sale for
non-payment of real property taxes.

HELD:
1. Pursuant to Sec. 33 of PD 1146, GSIS enjoyed tax exemption from real estate taxes, among other
tax burdens, until January 1, 1992 when the LGC took effect and withdrew exemptions from
payment of real estate taxes privileges granted under PD 1146; (2) RA 8291 restored in 1997 the
tax exempt status of GSIS by reenacting under its Sec. 39 what was once Sec. 33 of P.D. 1146;
and (3) If any real estate tax is due to the City of Manila, it is, only for the interim period, or from
1992 to 1996, to be precise.

2. The leased Katigbak property shall be taxable pursuant to the "beneficial use" principle under
Sec. 234 (a) of the LGC. The provisions allow the Republic to grant the beneficial use of its
property to an agency or instrumentality of the national government. Such grant does not
necessarily result in the loss of the tax exemption. The tax exemption the property of the
Republic or its instrumentality carries ceases only if, as stated in Sec. 234 (a) of the LGC of 1991,
"beneficial use thereof has been granted, for a consideration or otherwise, to a taxable person."
GSIS, as a government instrumentality, is not a taxable juridical person under Sec. 133 (o) of the
LGC. GSIS, however, lost in a sense that status with respect to the Katigbak property when it
contracted its beneficial use to MHC, doubtless a taxable person.

Thus, the real estate tax assessment of PhP54,826,599.37 covering 1992 to 2002 over the
subject Katigbak property is valid insofar as said tax delinquency is concerned as assessed over
said property.
3. GSIS Properties Exempt from Levy. A valid tax levy presupposes a corresponding tax liability.
Nonetheless, it will not be remiss to note that it is without doubt that the subject GSIS
properties are exempt from any attachment, garnishment, execution, levy, or other legal
processes.
FRANCISCO and BETTY WONG and Spouses JOAQUIN and LOLITA WONG, vs. CITY OF ILOILO, ROMEO
MANIKAN as City Treasurer of Iloilo, MELANIE UY and the ESTATE OF FELIPE UYs

Facts:
The respective estates of the Hodges spouses sold the property to Vicente Chan. For some
reason, however, Chan was not able to register the property in his name. Subsequently, Chan passed
away and his estate sold the same property to petitioners Francisco and Joaquin Wong. Because the
estate of Chan was unable to produce the estate tax clearance and the owner's duplicate of title were
only allowed to annotate a notice of adverse claim. The Iloilo City Treasurer Romeo Manikan issued a
general notice of delinquency in the payment of real estate taxes. Because no one contested the said
notice or settled the tax delinquency of the subject property, the City Treasurer sent the notice of sale
to the last known judicial administrator of the estates of the Hodges. However, the said notice was
returned with the annotation "cannot be located."
The property was sold at public auction wherein respondent Melanie Uy was the highest bidder.
Francisco and Betty Wong filed a complaint for the annulment of the auction sale and Government of
Iloilo, City Treasurer Romeo Manikan and the spouses Felipe and Melanie Uy in the Regional Trial Court
(RTC) of Iloilo City. RTC upheld the validity of the tax sale and dismissed the complaints. It reasoned that
because petitioners were not the registered owners of the property, they were not real parties-in-
interest who could assail the validity of the said sale.Aggrieved moved for reconsideration. In a
resolution, the RTC granted the motion and set aside the decision. At the Court of Appeals level, the CA
reversed and set aside the assailed resolutions of the RTC

Issue:
Whether the auction sale was valid.

Held:
Yes. Section 83 of PD 464 states that the RTC shall not entertain any complaint assailing the
validity of a tax sale of real property unless the complainant deposits with the court the amount for
which the said property was sold plus interest equivalent to 20% per annum from the date of sale until
the institution of the complaint. This provision was adopted in Section 267 of the Local Government
Code, albeit the increase in the prescribed rate of interest to 2% per month.
In this regard, National Housing Authority v. Iloilo City holds that the deposit required under
Section 267 of the Local Government Code is a jurisdictional requirement, the nonpayment of which
warrants the dismissal of the action. Because petitioners in this case did not make such deposit, the RTC
never acquired jurisdiction over the complaints. Consequently, inasmuch as the tax sale was never
validly challenged, it remains legally binding.
 THE CITY OF ILOILO vs. SMART COMMUNICATIONS, INC. (SMART)

FACTS:
SMART received a letter of assessment dated February 12, 2002 from petitioner requiring it to
pay deficiency local franchise and business taxes, in the amount of P764,545.29, which it incurred for
the years 1997 to 2001. SMART protested the assessment, claiming exemption from payment of local
franchise and business taxes based on Section 9 of its legislative franchise under Republic Act (R.A.) No.
7294 (SMART’s franchise). Under SMART’s franchise, it was required to pay a franchise tax equivalent to
3% of all gross receipts, which amount shall be in lieu of all taxes.
SMART contends that the “in lieu of all taxes” clause covers local franchise and business taxes.
SMART similarly invoked R.A. No. 7925 or the Public Telecommunications Policy Act (Public Telecoms
Act) whose Section 23 declares that any existing privilege, incentive, advantage, or exemption granted
under existing franchises shall ipso facto become part of previously granted-telecommunications
franchise. SMART contends that by virtue of Section 23, tax exemptions granted by the legislature to
other holders of telecommunications franchise may be extended to and availed of by SMART.
The petitioner posits that SMART’s claim for exemption under its franchise is not equivocal
enough to prevail over the specific grant of power to local government units to exact taxes from
businesses operating within its territorial jurisdiction under Section 137 in relation to Section 151 of the
LGC. More importantly, it claimed that exemptions from taxation have already been removed by Section
193 of the LGC, which provides that tax exemptions or incentives granted to, or presently enjoyed by all
persons, whether natural or juridical, including government-owned or controlled corporations, except
local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit hospitals
and educational institutions, are hereby withdrawn upon the effectivity of this Code.

ISSUE:
Whether or not SMART is exempt from the payment of local franchise and business taxes under
Section 9 of its franchise and Section 23 of the Public Telecoms Act.

HELD:
No. The withdrawal of exemptions, whether under Section 193 or 137 of the LGC, pertains only
to those already existing when the LGC was enacted. The intention of the legislature was to remove all
tax exemptions or incentives granted prior to the LGC. As SMART's franchise was made effective on
March27, 1992 — after the effectivity of the LGC — Section 193 will therefore not apply in this case. But
while Section 193 of the LGC will not affect the claimed tax exemption under SMART's franchise, the
court fail to find a categorical and encompassing grant of tax exemption to SMART covering exemption
from both national and local taxes.
DAVAO ORIENTAL ELECTRIC COOPERATIVE vs. PROVINCE OF DAVAO ORIENTAL

FACTS:
Petitioner Davao Oriental Electric Cooperative, Inc. (DOEC) was organized under Presidential
Decree (PD) No. 269 which granted a number of tax and duty exemption privileges to electric
cooperatives. In 1984, PD No. 1955 was enacted by then President Ferdinand E. Marcos. It withdrew all
exemptions from or any preferential treatment in the payment of duties, taxes, fees, imposts, and other
charges granted to private business enterprises and/or persons engaged in any economic activity.
Due to the failure of petitioner to declare the value of its properties, the Office of the Provincial
Assessor assessed its properties. On October 8, 1985, the Provincial Assessor sent the Notice of
Assessment to petitioner which duly received it.
During the same year of 1985, the Fiscal Incentive Review Board (FIRB) issued FIRB Resolution
No. 13-85, the Ministry of Finance issued Local Tax Regulation No. 3-85, and the Office of the Local
Government Finance, Region XI, Davao City issued Regional Office Memorandum Circular No. 42-85, all
of which reiterated the withdrawal of tax exemptions previously granted to business entities including
electric cooperatives.
In May 1990, respondent filed a complaint for collection of delinquent real property taxes
against petitioner for the years 1984 until 1989, amounting to P1,825,928.12. Petitioner contends that it
was exempt from the payment of real estate taxes from 1984 to 1989 because the restoration of tax
exemptions under FIRB Resolution No. 24-87 retroacts to the date of withdrawal of said exemptions.
Further, petitioner questions the classification made by respondent of some of its properties as real
properties when it believes them to be personal properties, hence, not subject to realty tax. It claims
that the tax declarations covering its properties were issued without prior consultation, and without its
knowledge and consent. In addition, it argues that respondent classified its poles, towers and fixtures,
overhead conductors and devices, station equipment, line transformers, etc. as real properties when by
their nature, use, purpose, and destination and by substantive law and jurisprudence, they are personal
properties.
On March 15, 2000, the RTC rendered its decision in favor of petitioner. Respondent appealed to
the CA which set aside the ruling of the RTC.

ISSUES:
1. Whether or not the restoration of the tax exemption under FIRB Resolution 24-87 was not
retroactive to the date of effectivity of PD 1955;
2. Whether or not petitioner could be made to pay taxes based on a wide-sweeping and erroneous
assessment of its real properties.

HELD:
1. CA ruling affirmed. A cursory reading of the resolution bares no indicia of retroactivity of its
application. FIRB Resolution No. 24-87 is crystal clear in stating that “the tax and duty
exemption privileges of electric cooperatives granted under the terms and conditions of PD 269
are restored effective July 1, 1987.” There is no other way to construe it. The language of the
law is plain and unambiguous. When the language of the law is clear and unequivocal, the law
must be taken to mean exactly what it says.
Further, because taxes are the lifeblood of the nation, the court has always applied the doctrine
of strict interpretation in construing tax exemptions. A claim for exemption from tax payments
must be clearly shown and be based on language in the law too plain to be mistaken. Elsewise
stated, taxation is the rule, exemption therefrom is the exception.
2. Section 30 of PD No. 464 (Real Property Tax Code) provides that “any owner who is not satisfied
with the action of the provincial or city assessor in the assessment of his property may, within
sixty days from the date of receipt by him of the written notice of assessment as provided in this
Code, appeal to the Board of Assessment Appeals of the province or city, by filing with it a
petition under oath using the form prescribed for the purpose, together with copies of the tax
declarations and such affidavit or documents submitted in support of the appeal.”

Having failed to appeal the assessment of its properties to the Board of Assessment Appeals,
petitioner cannot now assail the validity of the tax assessment against it before the courts.
Petitioner failed to exhaust its administrative remedies, and the consequence for such failure is
clear – the tax assessment, as computed and issued by the Office of the Provincial Assessor,
became final. Petitioner is deemed to have admitted the correctness of the assessment of its
properties. In addition, Section 64 of PD No. 464 requires that the taxpayer must first pay under
protest the tax assessed against him before he could seek recourse from the courts to assail its
validity.
 COCA-COLA BOTTLERS PHILIPPINES, INC. VS.
CITY OF MANILA, LIBERTY M. TOLEDO – CITY TREASURER AND JOSEPH SANTIAGO

FACTS:

On 25 February 2000, the City Mayor of Manila approved Tax Ordinance No. 7988, otherwise known as
"Revised Revenue Code of the City of Manila" which increased the tax rates applicable to certain establishments
operating within the City of Manila, including that of Coca Cola. Coca Cola then filed a petition before the Department
of Justice (DOJ), against the City of Manila and its Sangguniang Panlungsod, invoking Section 1874 of the Local
Government Code of 1991 and at the same time questioning the constitutionality of Section 21 of Tax Ordinance No.
7988.

Section 21 of the Old Revenue Code states that all registered businesses in the City of Manila that are
already paying the aforementioned tax shall be exempted from payment thereof. This was deleted in the ordinance.
In effect, it now imposed additional business tax on Coca Cola which is already subject to other business tax. It is
contended that the deletion is a palpable and manifest violation of the LGC 1991. Subsequently, DOJ issued a
Resolution declaring Tax Ordinance No. 7988 null and void and without legal effect due to failure to comply with
mandatory publication requirements as provided for in the Local Government Code of 1991 which provides:

"Section 188. Publication of Tax Ordinances and Revenue Measures. – Within ten (10) days after their
approval, certified true copies of all provincial, city and municipal tax ordinances or revenue measures shall be
published in full for three (3) consecutive days in a newspaper of local circulation; Provided, however, that in
provinces, cities, and municipalities where there are no newspapers or local circulations the same may be posted in
at least two (2) conspicuous and publicly accessible places."

Documentary evidence submitted by Coca Cola indubitably shows that subject tax ordinance was published
only once, i.e., on the May 22, 2000 issue of the Philippine Post. Clearly, therefore, City of Manila failed to satisfy
the requirement that said ordinance shall be published for three (3) consecutive days as required by law.

In affirming the nullification of the ordinance as per request of another taxpayer, Singer Sewing Maching,
the BLGF Executive Director issued an Indorsement on 20 November 2000 ordering the City Treasurer of Manila to
"cease and desist" from enforcing Tax Ordinance No. 7988. However, despite the Resolution of the DOJ and the
directive of the BLGF, they still continued to assess Coca Cola business tax for the year 2001. Thus, Coca Cola filed a
Complaint with the RTC of Manila praying that the City be enjoined from implementing the tax ordinance.

During the pendency of the said case, the City Mayor of Manila approved an amendment of the same tax
ordinance which was again challenged by Coca Cola before the DOJ on the grounds that (1) said tax ordinance
amends a tax ordinance previously declared null and void and without legal effect by the DOJ; and (2) said tax
ordinance was likewise not published upon its approval.

The amendatory ordinance was likewise declared null and void by the DOJ, it being a mere amendatory
ordinance of Ordinance No. 7988. The omnibus motion of petitioners for reconsideration of the resolution of April
23, 2003 which denied the motion for an extension of time to file a petition is DENIED for lack of merit.

Meanwhile, on the basis of the enactment of Tax Ordinance No. 8011, the City of Manila filed a Motion for
Reconsideration with the RTC of Manila which the court a quo granted stating that considering that Ordinance No.
7988 (Amended Revenue Code of the City of Manila) has already been amended by Ordinance No. 8011 entitled
"An Ordinance Amending Certain Sections of Ordinance No. 7988" approved by the City Mayor of Manila on February
22, 2001, the case must be DISMISSED.
ISSUE:

Whether or not Tax Ordinance No. 7988 is null and void and of no legal effect due to the City's failure to
satisfy the requirement of publication for three consecutive days, regardless of the amendatory ordinance issued.

HELD:

Tax Ordinance No. 7988 is null and void as said ordinance was published only for one day in the 22 May
2000 issue of the Philippine Post in contravention of the unmistakable directive of the Local Government Code of
1991. The City should have enacted another tax measure which strictly complies with the requirements of law, both
procedural and substantive. The passage of the assailed ordinance did not have the effect of curing the defects of
Ordinance No. 7988 which, any way, does not legally exist."

Thus, the amending law, having been declared as null and void, in legal contemplation, therefore, does not
exist. Furthermore, even if Tax Ordinance No. 8011 was not declared null and void, the trial court should not have
dismissed the case on the reason that said tax ordinance had already amended Tax Ordinance No. 7988. As held by
this Court in the case of People v. Lim, if an order or law sought to be amended is invalid, then it does not legally
exist, there should be no occasion or need to amend it.
 Surigao vs CTA
57 SCRA 523

Facts:
Petitioner Surigao Electric Co., grantee of a legislative electric franchise, contested a warrant of
distraint and levy to enforce the collection from "Mainit Electric" of a deficiency franchise tax plus
surcharge. Thereafter the Commissioner, by letter dated April 2, 1961, advised the petitioner to take up
the matter with the General Auditing Office, enclosing a copy of the 4th Indorsement of the Auditor
General dated November 23, 1960. This indorsement indicated that the petitioner's liability for
deficiency franchise tax for the period from September 1947 to June 1959 was P21,156.06, excluding
surcharge.
Subsequently, in a letter to the Auditor General dated August 2, 1962, the petitioner asked for
reconsideration of the assessment, admitting liability only for the 2% franchise tax in accordance with its
legislative franchise and not at the higher rate of 5% imposed by Sec. 259 of the NIRC, which latter rate
the Auditor General used as basis in computing the petitioner's deficiency franchise tax. An exchange of
correspondence between the petitioner, on the one hand, and the Commissioner and the Auditor
General, on the other, ensued, all on the matter of the petitioner's liability for deficiency franchise tax.
The controversy culminated in a revised assessment dated April 29, 1963 in the amount of
P11,533.53, representing the petitioner's deficiency franchise-tax and surcharges thereon for the period
from April 1, 1956 to June 30,1959. The petitioner then requested a recomputation of the revised
assessment in a letter to the Commissioner dated June 6, 1963.
The Commissioner, however, in a letter dated June 28, 1963 denied the request for
recomputation. Petitioner appealed to the CTA which was subsequently dismissed on the ground that
the appeal was filed beyond the thirty-day period of appeal provided by Sec. 11 of Republic Act 1125.

Issue:
Whether the petitioner's appeal to the CTA was time-barred.

Held:
YES. To sustain the petitioner's contention that the Commissioner's letter of June 28, 1963
denying its request for further amendment of the revised assessment constitutes the ruling appealable
to the tax court and that the thirty-day period should, therefore, be counted from July 16, 1963, the day
it received the June 28, 1963 letter, would, in effect, leave solely to the petitioner's will the
determination of the commencement of the statutory thirty-day period, and place the petitioner — and
for that matter, any taxpayer — in a position, to delay at will and on convenience the finality of a tax
assessment. This absurd interpretation espoused by the petitioner would result in grave detriment to
the interests of the Government, considering that taxes constitute its life-blood and their prompt and
certain availability is an imperative need.
 SILKAIR PTE, LTD. v. COMMISSIONER OF INTERNAL REVENUE

FACTS:
Petitioner is a corporation organized under the laws of Singapore which has a Philippine
representative office, is an online international air carrier.
Silkair filed with the Bureau of Internal Revenue (BIR) for the refund of excise taxes for their
purchase of jet fuel.
The CIR, in their reply, said that petitioner failed to prove that the sale of the fuel was directly
made from a domestic oil company to them. The excise tax on petroleum products is the direct liability
of the manufacturer/producer, and when added to the cost of the goods sold to the buyer, it is no
longer a tax but part of the price which the buyer has to pay to obtain the article.
The CTA denying Silkair’s petition stated that as the excise tax was imposed manufacturer of
petroleum products, any claim for refund should be filed by the latter; and where the burden of tax is
shifted to the purchaser, the amount passed on to it is no longer a tax but becomes an added cost of the
goods purchased.

ISSUE:
Whether Silkair PTE. Ltd. can claim for tax credit.

HELD:
No. The proper party to question, or seek a refund of, an indirect tax is the statutory taxpayer,
the person on whom the tax is imposed by law and who paid the same even if he shifts the burden
thereof to another. Thus, Petron Corporation, not Silkair, is the statutory taxpayer which is entitled to
claim a refund based on Section 135 of the NIRC of 1997.
Even if Petron Corporation passed on to Silkair the burden of the tax, the additional amount
billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a purchaser.
 United International Pictures vs CIR CTA

Facts:
This case involves a disputed assessment issued against petitioner for deficiency internal
revenue taxes in the aggregate amount of P13,137,261.29, inclusive of interests and surcharges,
covering the taxable year ended December 31, 1994. Petitioner United International Pictures filed its
corporate income tax return for the calendar year ended December 31, 1994.
In August 9, 1995, Letter of Authority No. 89422 was issued by the Revenue District Officer of
Revenue District No. 34, authorizing the examination of the1994 books of accounts and other
accounting records of petitioner for all internal revenue taxes for the period January 1, 1994 to
December 31, 1994. For failure on the part of the petitioner to comply with the said subpoena, a
criminal complaint was filed.
A memorandum report was made by the revenue officer in-charge recommending the issuance
of the final assessment notice and the collection of petitioner's deficiency internal revenue taxes based
on the best evidence obtainable.
On August 19, 1998, petitioner received from the respondent a Preliminary Collection Letter
(PCL) for the former's internal revenue liabilities for 1994 to which petitioner protested on the ground
that the issuance of the PCL without prior assessment notice has no legal basis and that the assessment
notice is invalid for its failure to comply with Section 228 of the Tax Code, i.e., the assessment notice
does not state the facts and the law upon which the assessment was made.

Issue:
Whether the assessment notice was validly filed?

Held:
No. After a meticulous examination of the transmittal letter and related documents, we find
that said transmittal letter does not clearly indicate that what was actually mailed were the formal or
final assessment notices with appurtenant demand letters. As a matter of fact, we note that except for
VAT deficiency assessment, the amounts listed in the transmittal record are quite different from the
amounts indicated in the formal assessment notices. For in reality, the amounts pertain to the amounts
mentioned in the pre-assessment notices as petitioner's tax liabilities excluding interest charges. It
appearing that no final assessment notice was sent or that petitioner did not receive any final
assessment notice, it follows that the same could not become final and demandable.