GR 187631; (July, 2015) (Digest)
G.R. No. 187631; July 8, 2015
BATANGAS CITY, MARIA TERESA GERON, In her capacity as City Treasurer of Batangas City and TEODULFO A. DEGUITO, In his capacity as City Legal Officer of Batangas City, Petitioners, vs. PILIPINAS SHELL PETROLEUM CORPORATION, Respondent.
FACTS
Petitioner Batangas City, through its City Legal Officer, sent a notice of assessment to respondent Pilipinas Shell Petroleum Corporation demanding payment of business taxes for the manufacture and distribution of petroleum products, and a Mayor’s Permit Fee based on gross sales. Respondent filed a protest, contending it was not liable for local business tax on these activities and that the Mayor’s Permit Fees were exorbitant. Petitioners denied the protest and threatened to withhold the Mayor’s Permit for non-payment. Respondent filed a Petition for Review before the Regional Trial Court (RTC) of Batangas City. The RTC sustained the imposition of business taxes but found the Mayor’s Permit Fee excessive and ordered its revocation. Respondent appealed to the Court of Tax Appeals (CTA) Second Division, which granted the petition, holding respondent was not subject to the business taxes due to an express limitation in the Local Government Code and that the Mayor’s Permit was excessive, ordering a refund. The CTA Second Division later amended its decision to clarify the refund amount. The CTA En Banc affirmed the Second Division’s Amended Decision. Petitioners filed the present Petition for Review on Certiorari.
ISSUE
Whether Batangas City can legally impose local business taxes on Pilipinas Shell’s business of manufacturing and distributing petroleum products.
RULING
No. The Supreme Court affirmed the decisions of the CTA. The imposition of local business taxes on the manufacture and distribution of petroleum products is expressly prohibited by Section 133(h) of the Local Government Code of 1991, which states that local government units have no power to impose taxes on articles subject to excise taxes under the National Internal Revenue Code, unless otherwise provided. Since petroleum products are subject to excise tax under the NIRC, Batangas City is proscribed from levying local business taxes on respondent’s manufacturing and distribution activities. The Court also upheld the finding that the Mayor’s Permit Fee was excessive. The petition was denied for lack of merit.