GR 90776; (June, 1991) (Digest)
G.R. No. 90776 ; June 3, 1991
PHILIPPINE PETROLEUM CORPORATION, petitioner, vs. MUNICIPALITY OF PILILLA, RIZAL, Represented by MAYOR NICOMEDES F. PATENIA, respondent.
FACTS
Petitioner Philippine Petroleum Corporation (PPC) operates an oil refinery in Pililla, Rizal. The respondent Municipality enacted Municipal Tax Ordinance No. 1 in 1974, imposing a business tax on manufacturers and a storage permit fee for flammable substances. The Secretary of Finance, however, issued circulars directing local treasurers to refrain from collecting local taxes on petroleum products subject to the specific tax under the National Internal Revenue Code. Consequently, the ordinance was not initially enforced against PPC.
In 1986, the Municipality filed a complaint to collect unpaid business taxes from 1979 to 1986, storage permit fees from 1975 to 1986, and mayor’s permit and sanitary inspection fees from 1975 to 1984. The Regional Trial Court ruled in favor of the Municipality, ordering PPC to pay the assessed amounts. PPC filed a petition for certiorari, arguing the taxes and fees were illegally imposed.
ISSUE
The primary issue is whether the Municipality of Pililla can legally collect the business tax, storage permit fee, and other charges from PPC under its Municipal Tax Ordinance, considering the relevant laws and administrative circulars.
RULING
The Supreme Court modified the trial court’s decision. It upheld the Municipality’s authority to impose the business tax on PPC. While petroleum products are subject to a specific national tax, this does not preclude local governments from imposing a local business tax on the manufacturer itself, as expressly allowed under Sections 19 and 19(a) of the Local Tax Code (P.D. No. 231). The Secretary of Finance’s circulars were merely advisory and did not repeal the statutory taxing power of the municipality.
However, the Court disallowed the collection of the storage permit fee. This fee, as imposed, was deemed a charge for a service. Since the storage tanks were owned and maintained by PPC on its own property, and not by the municipality, the fee could not be justified as payment for a municipal service rendered. Regarding prescription, the Court applied Article 1143 of the Civil Code, setting a ten-year prescriptive period for the collection of taxes created by law. Thus, business taxes accruing prior to 1976 had prescribed and were no longer collectible. The decision was affirmed with these modifications.