G.R. No. 181277 ; July 3, 2013
SWEDISH MATCH PHILIPPINES, INC., Petitioner, vs. THE TREASURER OF THE CITY OF MANILA, Respondent.

FACTS

Petitioner Swedish Match Philippines, Inc., a manufacturer, paid business taxes to the City of Manila in 2001. A portion of this payment, amounting to ₱164,552.04, was assessed under Section 21 of the Manila Revenue Code. Asserting that this payment under Section 21 constituted double taxation in light of its separate payment under Section 14 of the same Code, petitioner filed a claim for refund. Upon the alleged inaction of the City Treasurer, petitioner filed a Petition for Refund with the Regional Trial Court (RTC).
The RTC dismissed the petition on procedural grounds, finding that the Verification and Certification of Non-Forum Shopping was executed by the company’s Finance Manager, Tiarra T. Batilaran-Beleno, without proof of her authority from the board of directors. The RTC also ruled on the merits, stating that Sections 14 and 21 imposed taxes of different natures, thus negating double taxation. The Court of Tax Appeals (CTA) Second Division and later the CTA En Banc affirmed the dismissal solely on the procedural defect regarding Ms. Beleno’s lack of authority.

ISSUE

The issues are: (1) Whether Ms. Beleno was authorized to file the Petition for Refund; and (2) Whether the imposition of tax under Section 21 constitutes double taxation given the tax paid under Section 14.

RULING

The Supreme Court ruled for the petitioner on the procedural issue but against it on the substantive tax issue. On the first issue, the Court held that while corporate powers are vested in the board of directors and authority is generally required for a corporate officer to sign a verification, the defect is not always fatal. The requirement is formal, not jurisdictional. The Court recognized exceptions where the signatory’s position, like a Finance Manager, involves comprehensive knowledge of the company’s financial operations and the subject matter of the litigation, implying authority. Furthermore, the subsequent ratification by the board of directors retroactively cured the initial defect. Thus, the lower courts erred in dismissing the case on this procedural ground.
On the second issue, the Court found no double taxation. Double taxation requires that the same property, subject matter, or purpose be taxed twice by the same taxing authority within the same jurisdiction and period. Section 14 imposes a graduated tax on manufacturers based on gross receipts, a local business tax. Section 21 imposes a tax on businesses already subject to certain national excise, value-added, or percentage taxes, which is also a local business tax but levied on a different classification. The taxes are imposed on different tax bases and for different purposes; one is based on the privilege of manufacturing, the other on the privilege of engaging in a business subject to specific national taxes. Therefore, the elements of double taxation are absent. The petition was denied.