THE TREASURER OF THE CITY OF MANILA v. ALCAN PACKAGING STARPACK CORPORATION (Formerly STARPACK PHILIPPINES CORPORATION)

REPUBLIC OF TilE PHILIPPINES COlJ l-ff OF TAX Al)PEALS QlJ EZON C I TY ENBANC THE TREASURER OF THE CITY C.T.A. EB No. 261 OF MANILA, (C.T.A. AC No. 17) Pe t ition er, -versus - Membe rs: Acosta, P.J., Castaneda, Jr., Bautista, Uy, Casanova, and Palanca-Enriquez, JJ.: ALCAN PACKAGING STARPACK /Jr?f/ Promulgated: ft 7 :), � . , __ CORPORATION (formerly STARPACK PHILIPPINES CORPORATION), Res pond ent. JUI 3 0 2DDZ / "';tJ / i }/u >- X-- --- ---- ------------------ -- - ------- -------------X DECISION CASTANEDA, JR., J.: On appea l are the Decision dated September 11, 2006 and the Resolution dated January 3, 2007 issued by the Court in Division in the case entitled, "Aican Packaging Starpack Corporation(form erly Starpack Philippines Corporation) vs. The Treasurer of the City of Manila", docketed as C.T.A Case AC 17. The assailed Decision decrees that: 1) The Treasurer of the City of Manila refund

DECISION C.T.A. EB . No. 261 (C.T.A. AC No. 17) the amount of P4,527,594. 76 representing erroneously paid local business taxes for the fourth quarter of taxable year 1999, all the quarters of taxable year 2000 and the first three quarters of 2001, including the amount of P728,845 .62 representing excess payment of local business taxes pursuant to Tax Ordinance 7988, as amended by Tax Ordinance 8011, or also known as the, "Manila Revenue Code (MRC), as amended"; and desist from further imposing business taxes under Sections 14 and 21(A) of the same Code. The Resolution dated January 3, 2007 denied the Manila City Treasurer's Motion for Reconsideration for lack of merit. The facts are undisputed: Petitioner, Alcan Packaging Starpack Corporation, is a domestic corporation duly organized under the laws of the Philippines with principal office address at Km. 22, Bo. Mapandan, Ortigas Avenue Extension, Cainta, Rizal while respondent, the Treasurer of the City of Manila, is tasked with the implementation of the Cily's Revenue Code, as well as the collection and assessment of business taxes, license fees and permit fees within the City. For the period beginning fourth quarter of 1999 to the third quarter of 2001, petitioner paid business taxes under Section 21 of the Manila Revenue Code (MRC) in the amount of P4,527,594.76 as evidenced by official receipts issued to it, as follows: Quarter Amount Date Paid OR No. Covered 4th Quarter 1999 5301949.92 18 Oct. 1999 199411 ~ Quarte!:_2000 6231973.08 14 Jan.2000 019388 2nd Quarter 2000 623 973 .08 18 A~OOO 012072 3'd Quarter 2000 623 973.08 18 Jul. 2000 092394 4th Quarter 2000 623 973 .08 19 Oct. 2000 131108 1st Quarter 2001 500 250.84 20 Jan. 2001 139499 2nd Quarter 2001 500 250.84 19 Apr. 2001 202648 500,250.84 189474 3'd Quarter 2001 - 18 Jul. 2001 The City of Manila coll ects business ta xes from petitioner on the basis of Sections 14 & 21 of the MRC. However, the rates imposed under these Sections were amended through the issuance of Ordinance Nos. 7988 and 8011, approved by the City Mayor of Manila in t11e years 2000 and 2001, respectively.

DECISION C.T.A . EB. No . 261 (C.T.A. AC No. 17) On tl1e bases that respondent had unlawfully collected the business taxes under Section 21 of the MRC which amounts to double taxa tion, as well as, under the increased rates which arose from the amendments to Sections 14 and 21 of the MRC by Ordinance Nos. 7988 and 8011, petitioner, on September 27, 2001, fil ed with the City Treasurer its claim for refund of the alleged excess payments of business taxes in the amounts of P4,527,594 .76 and P728,845.62 covering the taxable years 2000 and 2001. Having received no reply from the respondent, petitioner, on October 17, 2001, then fil ed a Petition for Refund before the Regional Tria l Court of Manila. In her Comment, respondent submitted that there is no double taxation when t11e City collected from petitioner business taxes pursuant to Secti ons 14 and 21 of the MRC. fUJther, t11e rates prescribed under the amend ments were issued within the powers of the City to impose. After the pre-trial conference, both parties were directed to submit their respective memorandum considering tl1at the issues raised were purely legal in nature, to wit: a. Whether or not respondent legally collected busi ness taxes under Section 21 of the Manila Revenue Code; b. Whether or not petitioner is entitled to a refund ; c. Whether or not Ordinance Nos. 7988 and 801 1 of Manila are valid and enforceable for lack of defective publication req uirements; and d. Whether or not petitioner is barred from questioning the constitutionality of Section 21 of the Manila Revenue Code and Ordinance Nos. 7988 and 8011. In the assailed Decision of Judge Augusto T. Gutierrez of Branch 47 of the RTC of the City of ~1ani l a , petitioner's claim for refund was di sa llowed on the fi ndings that there is no double taxation beca use unlike the ta x imposed on Section 14 of the MRC, the tax under Section 21 of tl1e same Code is a tax not on the petitioner as a manufacturer, but is rather a tax on the end-users of its products. Further, the lower court ruled that Ordinance Nos. 7988 and 8011 have substantially complied with the publicati ons requirements under Republic Act No. 409 or the Revised Charter of Manila . Petitioner's Motion for Reconsideration fil ed on June 7, 2005 was likewise denied through the lower court 's Order dated September 8, 2005. Hence, thi s petition fil ed on October 21, 2005 ba~ed on tl1e fo llowing grounds: 1. The enforcement of Section 21 of the City of Manila's Revenue Code ag ain st petitioner constitutes double taxation prohibited by law in view of taxes collected by the City and paid by petitioner under Section 14 of the Revenue Code. Thus, all ta xes paid by petitioner to the City on the basis of Section 21 should be immediately refunded; and 2. Ordinance Nos. 7988 and 8011, amending the City's Revenue Code, violated the procedural and substantive rules of taxa tion for their effectivity and implementation; thus, all ta xes col lected by the City and

DEC ISION C.T.A . EB. No. 26 1(C.T.A. AC No. 17) Page 4 o f 18 pa id by petitioner on the basis of tl1ese Ordinances should likewi se be refund ed. 1 Acting on th e Petition, the Court in Division issued a Decision dated September 11, 2006 reversing the Decision dated April 28, 2005 and Order dated September 8, 2005 issued by the Regional Trial Court, Branch 47 of the City of Manila declaring the MRC, as amended ineffective for fa ilure to comply with the publication requirem ents as mandated by law . The Court in Division further rul ed that taxing twice the sale of goods, in the course of its trade or business, by the same taxing authority, for the same taxing period, and for the purpose of rai sing revenu e for the City, and regulating the conduct of th e bu siness bolsters the incidence of double ta xation . The respond ent, now as the " petitioner" filed a Motion for Reconsideration of the Decision dated September 11, 2006 against the petitioner, now as the "respondent". In a Resolution dated January 3, 2007, the Court in Division subsequ ently denied the Motion for lack of merit. Unfazed, the petitioner appealed by way of a Petition for Review with the Court En Bane, and interposed the following assignment of errors of the Court in Division: I- Whether or not the Honorable first Division gravely erred in holding that there is prohibited double taxation in the imposition of Section 21 of the Manila Revenue Code. II - Whether or not the Honorable First Division gravely erred in holding that the subject ordinances did not satisfy the requirements of publication. Rollo, pp. 160-163.

DEC ISION C.T. A. EB. No. 26 1 (C.T.A . AC No. 17) III - Whether or not the Honorable First Division gravely erred in holding that the 1991 local Government Code prevails over Republic Act No. 409 or the City Charter of Manila. IV - Whether or not the Honorable First Division gravely erred in ordering the refund of the taxes already paid. 2 We shall address the assigned errors seriatim . On Direct Duplh:ale Taxation Petitioner asserts that the Court in Division erroneously ruled that the taxes imposed under Sections 14 and 21 of the MRC, as amended are tantamount to direct duplicate ta xation. Section 14 is a ta x upon the business establishment; while Section 21 is a tax on the end -user of respond ent's product. As a withholding ag ent, the ta xes collected by the respond ent are remitted to lhe City Manila. Sections 14 and 21 clearly pertain to different objects of taxation. The power of local government units (LGUs) to levy ta xes, fees or charges extends to any other tax base, subject to the conditions stated in Section 186 of Republic Act 7160 or id entified as, "the 1991 Local Government Code" which provides : SEC. 186. Pu1ver w Le vy Other l'u.xes, Fees, or Charges . - Local govern men t units may exercise the power to levy taxes, fees or charges on any base or subj ect not otherwise specifi cally enumera ted herein or taxed under the provi sions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shal l not be unjust, excessive, oppressive, confi scatory or contra ry to declared national policy: Pmvided, ) imher, That tt1e ordinance levying such taxes, fees or charges shall not be enacted wi thout any pri or publi c hearing conducted for the purpose. Section 186 is a self-executing provision of R.A. 71 60, and the imposition of additional ta x under Section 21 of the MRC, as amended is within the ambit of Roll o, p. 14. '. II v.,

DECISION C.T.A. EB . N o. 261 (C.T .A. AC No. 17) the authority of the City of Manila. Thus, the City Council of the Manila as a legislative body primarily determines the nature(kind), object(purpose), extent(rate), coverage(subjects) and situs(place) of taxation. The plenary authority to tax is further supplemented by Section 143 (h) of R.A. 7160 granting LGUs the power to impose taxes "on any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax: provid ed, that on any business subject to excise, value-added ta x ("VAT') 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." In the words of Section 143(h) of R.A. 7160, the only limitation, if there exists, on the imposition of ta x under Section 21 of the MRC, as amended is that the rate shall not exceed 2% of the gross sales or receipts of the preceding calendar year. The limitation does not obtain in the case at bar because the MRC, as amended imposes, "a tax of 50% of the 1% per annum on the gross sales or receipts of the preceding calendar year." The power of the LGUs to impose tax is no longer statutory, but is constitutional in scope directly conferred under Section 5, Article 10 of the 1987 Constitution allowing LGUs, to create its own sources of revenue and levy taxes, fees, and charges, subject to the guidelines and limitations, as Congress may provide, consistent with the basic policy of loca l autonomy. Such taxes, fees, charges shall accrue exclusively to the LGUs.

DECISION C.T.A. EB. No. 26 1 (C.T.A. AC No. 17) In its Comment, respondent alleges lhat Section 21 of the MRC, as amended imposes taxes on business or articles of commerce subject to excise, VAT, or other percentage ta xes under the 1997 National Internal Revenue Code ("NIRC"), as amended. The businesses or articles of commerce of manufacturers are likewise subject to busin ess taxes under Section 14 of the MRC, as amended which does not distinguish between businesses that are and are not subject to excise, VAT, or other percentage taxes under th e 1997 NIRC, as amended . The definition of manufacturing covers not on ly manufacturing per se, but includes the sa le of manufactured goods. A person that merely manufactures for own use or consumption cannot be subject to business taxes, since there is no activity where profit is generated. Notably, th e taxes imposed on the business pertain to "gross sa les or receipts//, not "cost of sa les or receipts~~. Sections 14 and 21 of the MRC, as amended involve two local taxes imposed on the same busin ess activity by only one public authority, the City of Manila, en forced within the same taxing jurisdiction, for the purpose of raising revenues for the City, and to reg ulate the conduct of the business which accrue and become due on the same taxing period. Direct duplicate taxation is clearly operational in the case at bar. The petitioner erroneously maintains that the respo nd ent is a withholding agent for the City of Manila, and the person liabl e to pay the tax is the person paying for the goods. Since the person paying for the goods is the one liable, the business activity lhat is being ta xed is the purchase of the goods. The act of "purchasing// is not a business activity.

DECISION C.T.A. EB . No. 261 (C.T .A. AC No. 17) Pelitioner's argumenls deserve scant consideration. Double taxation means taxing th~ same property twice when it should be taxed only once. This means that the same person is taxed twice by the same jurisdiction for the same thing." It is obnoxious when the ta xpayer 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 they must be of the same kind or character. 3 It is imperative to ascertain if the taxes levied to by the City of Manila under Section 21 of the MRC, as amended, in addition to the taxes collected under Section 14 of the MRC, as amended constitute direct duplicate taxation. Pursuant to Sections 143 and 151 of R.A. No. 7160, a city is authorized to levy the following ta xes: SEC. 151. S~.:upe uf Taxing Powers. - Excep t as otherwise provided in this Code, the city, may levy the ta xes, fees, and charges which the province or municipality may impose: Xxx SEC. 143 . J'ax u 11 1Jusi11ess. - The municipality may impose ta xes on the following businesses: (a) On manufacturers. assemblers. repackers. processors. brewers, distillers, rectifiers, and compounders of liquors, distilled spirts, and wines or manufacturers of any article of commerce of whatever kind or nature. in accordance with the following schedule: XXX XXX XXX (b) On wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature in accordance with tile following scl1edule: 3 Commissioner uf lnlemul Revenue vs. !:Junk oflhe 1-'hi/ippine Is/wid~, G.R. No. 147375, June 26, 2006, 492 SCRA 551 citing C ommissioner uf!ntemal Re1�enue vs. Solidbank C01porati un, G.R. No. 148191, November 25, 2003, 416 SCRA 436.

DEC ISION C.T.A. EB. N o. 26 I (C.T.A . AC No. 17) XXX XXX 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 tl1is Section: XXX XXX XXX (d) On retai lers, xxx (e) On contractors, and other independent co ntractors, in accordance with the following schedule: XXX XXX XXX (f) On banks and other finan cial 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, comm issions and discounts from lending activiti es, income from financial leasing, dividends, rentals on property and profit from exchange or sa le of property, insurance premium. (g) On peddlers engaged in the sa le of any merchandise or article of commerce, at a rate not exceeding fifty pesos(PSO .OO) per peddler annually. (b) 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 sha ll not exceed two percent (2% ) of gross sales or receipts of the preceding ca lendar year. (Underscoring Ours for emphasis. ) The sanggunian concerned may prescribe a schedule of graduated tax rates but in no case to exceed the rates prescribed herein. Sections 143(a) to (g) of R.A. No. 7160 specifically identify the entities liable to business ta xes. The clause "on any business, not otherwise specified in the preceding paragraphs" referred to in Section 143(h) of the R.A. 7160 means that a city is permitted to levy taxes on businesses not enumerated under Sections 143 (a) to (g) of R.A. 7160. Sections 14 and 21 of the MRC, as am ended which emanate from Sections 143 (a) to (h) of R.A. 7160 empower the City of Manila to impose the following ta xes:

DECISION C.T.A. EB. No. 261 (C.T.A . AC No . 17) Section 14 . /i.v.: un Manl!facturen �. An�emb/ers u!lll other l'rocessors- There is hereby imposed a graduated tax on manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers and com pounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature, in accordance with the following schedule With gross sales or receipts for the Amount of Tax Preced ing calendar year in the amount of: XXX XXX XXX Section 21. - li.v.: on !Jusiness Su~ject /o 1he li.xcise. Value-Added or Per..:enlage Tuxes 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 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 ca lendar year is hereby imposed: A) On persons who sell goods and services in the course of trade or business; and tl1ose wl1o import goods whether for business or otherwise, as provided for in sections 100 to 103 of the NIRC as administered and determined by the Bureau of Internal Revenue pursuant to the pertinent provisions of the said code. XXX XXX XXX 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 U1e end of each quarter. A cursory examination of the aforesaid provisions shows that being a manufacturer, the respondent is taxed pursuant to Section 14 of the MRC, as amended, and as a business entity subject to excise, value-a dded or percenlage tax under Section 21 of lhe same Code. Sections 14 and 21 essentially relate to the same business. Manufacturing cannot be delineated from the sa le of a product. Section 4 (o) of the MRC, as amended defines a manufacturer, to wit: Section 4. Words and Phrases- When used in this Ordinance: XXX XXX XXX o) " Manufacturer" - includes every person who by pl1ysica l or chemical processes, alters the exterior texture of form or inner substance of any raw material or manufactured or partially manufactured product in such manner as to prepare it for special use or uses to which it could not have been put in its original cond ition, or who by any such process alters the quality of any such raw or material or manufactured or partially ., ,.)

DECISION C.T.A . EB. No. 26 1 (C.T.A . AC No. 17) Page II of 18 manufactured product so as to reduce it to marketable shape or prepare it for any of L11e use of industry, or by who an y sucl1 process combines any such raw material or manufactured or partially manufactured products with other materials or products of the same or different kinds and in such manner that the fini shed product of such process or manufacture ca n be put to a special use or uses to which such raw material or manufactured or pa1tially manufactured products in their original cond ition co uld not have been put, and who in addition alters such raw ma terials or manufactured or partially manufactured prod ucts or com bines the same to produce such fin ished product for the purpose of their sale or distribution to others and not for his own use or consumption. Logically, any business that is engaged in manufacturing sells the product it manufactures, and generally is subject to excise, value-added, or percen tage taxes . Thus, the additional ta xes imposed under Section 21 of the MRC, as amended defies Section 143 (h) of R.A. No. 7160 which prohibits the imposition of additional taxes on the same business enumera ted in Sections 143 (a) to (g) of the sa id la w. Considering that the respondent already pays to the City of Manila, the business taxes on its gross receipts as a manufacturer under Section 14 of the MRC, as amended, the paym ent of the same taxes on gross receipts on its business subject to excise, VAT or percentage taxes under Section 21 involving the sam e period is tantan10unt to direct duplica te taxation. Assuming arguendo that t he end -users are those liable to ta x under Section 21 of the MRC, as amended, the activity being taxed is the purchasing power of the consumers which is not a business activity. On th e p11blic:atiun ~~l Ta.x Ordiuanc:e 7988, w;� amended by Tax Ordinan ce 8011 It is the petitioner's stance that both Tax Ordinance 7988 and 8011 were published four times, in accordance with Republic Act 409 or the "Revised I �j

DECISION C.T.A. EB. No. 26 1 (C.T.A . AC No . 17) Charter of the City of Manila". The Court in Division disregarded the overwhelming evidence that before its approval, Tax Ordinance 7988 was published twice on December 25, 1999 in the Manila Standard, and the Philippine Post, and after its enactment, the same was pub lished on May 22, 2000 in the Philippine Post and May 24, 2000 in the Manila Standard. Tax Ordinances 7988 and 8011 are no longer subject to the stringent requirements of Section 188 of R.A. 7160 because these tax ordinances are amendatory to Tax Ordinance 7794, the original "Manila Revenue Code". Petitioner further points out that the respondent should have taken the opportunity to dispute the validity and enforcea bility of the ordinances by filing an appeal before the Secretary of Justice under Section 187 of R.A. 7160, a condition sine qua non in the filing of redress before the courts . The failure of a taxpayer to question the validity of a tax ordinance or reven ue measure with the Secretary of Justice is fatal to its claim. These ordinances enjoy the presumption of validity, unless declared void by the courts. Respondent argues that the publication of tax ordinances for three consecutive days in a newspaper of local circulalion is mandatory. The Court disagrees with the petitioner's contentions. The publication of a tax ordinance for three consecutive days in a newspaper of local circulation is a requisite under Section 188 of R.A. 7160; while Section 17 of Republic Act 409 mandates that prior to the enactment of an ordinance, the publication thereof sha ll be undertaken in two daily newspapers of general circulation, and after its approval, the same shall be published, also in ~J.J

DECISION C.T.A. EB. No. 261 (C.T.A. AC No. 17) Page 13 of I8 two newspapers of general circulation". Section 188 of R.A. 7160 vis-a -vis with Section 17 of R.A. 409 read: SEC. 188 . Publicutio11 of Tux Ordincm~�es and Revenue Meas ures. - Within ten (10) days after tl1eir approval, certified true copies of all provincial. city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consewtive days in a newspaper of loca l circulation: Provided, however, That in provinces, cities, and municipalities where there are no newspapers of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places. XXX XXX XXX SECTION 17. i_eg islative procedure. - The Board shal l hold two ordinary sessions for the transaction of business during each week on days which it shall fix by resolution, and such extraordinary sessions, as may be called by the Mayor. It shall sit with open doors unless otherwise ordered by an affirmative vote of the majority of all the members. It shall keep a record of its proceedings and determine its rules of procedure not herein set forth . A majority of all the members of the Board shall constitute a quorum for the transaction of business, and the affirmative votes of a majority of all the members shall be necessa ry for the passage of any ordinance or resolution. Ordinary motions may be approved by a majority of those present. The ayes and nays shall be taken and recorded upon the passage of all ordinances, upon all resolutions or motions directing the payment of money or creating liability, and, at tile request of any member, upon any otl1er resolution or motion. Each proposed ordinance shall be published in two daily newspapers of general circulation in the city, and shall not be discussed or enacted by the Boa rd until after the third day following such publica ti on. Each ordinance enacted by the Board, and each resolution or motion directing the payment of money or creating liability, shall be forwarded to the mayor for his approval. Within ten days after t11e receipt of the ordinance, resolution or motion, the mayor shall return it with his approval or veto. If he does not return it within that time, it shall be deemed to be approved. If he returns it with hi s veto, hi s reasons therefor in writing shall accompany it. It may then be again enacted by the affirmative votes of two-thirds of all members of the Board, and again forwarded to the mayor for his approval, and if with in ten days after its receipt lle does not again return it with his veto, it shall be deemed to be approved. If within sa id time he again returns it with his veto, it shall be forward ed fortl1with to lhe President for his approval or disapproval, which shall be final. No partial veto of any ordinance, resolution or motion sha ll be allowed . Each approved ordinance shall be sealed with the city sea l, signed by the book kept for the purpose; shall be published in two daily newspapers of genera[ circu lati on in the city, within ten days after its approval; and shall take effect and be in force on and after tile twentietll day following its publication, if no date is fi xed in the ordinance. (Underscoring Ours for emphasis. ) I,;

DECISION C.T.A. EB. No . 26 1 (C.T.A . AC No. 17) In the case of Cocu-Culu BuLtlers Philippines, inc. vs. City of Mtm ila,-1 tl1e Supreme Court finally put to rest on tl1e nullity of the amendatory Tax Ordinance Nos. 7988 and 8011 for failure to comply with Section 188 of R.A. No. 7160 ratiocinating: x x x It is undisputed from the facts of the case that Tax Ordinance No. 7988 has already been declared by lhe DOJ Secretary, in its Order, dated 17 August 2000, as null and vo id and without legal effect due to respondents' failure to sa tisfy the requirement that said ordinance be published for three consecutive days as requi red by law. Neither is there quibbling on the fact that the sa id Order of the DOJ was never appealed to the City of Manila, thus, it l1ad atta ined finality after the lapse of tile period to appeal Furthermore, tt1e RTC of Manila, Branch 2 1, in its Decision dated 28 November 2001, reiterated the find ings of lhe DOJ Secretary that respondents fail ed to follow the procedure in the enactment of tax measures as mandated by Section 188 of the Local Government Code of 1991, in that they fai led to publish Tax Ordinance No. 7988 for three consecutive days in a newspaper of loca l circulation. From the foregoing, it is evident that Tax Ordinance No. 7988 is null and void as sa id ordinance was publist1ed 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. Despite lhe nullity of Tax Ordinance No. 7988, the court a quo, in the assailed Order, dated 8 May 2002 , went on to dismiss petitioner's case on the force of the enactment of Tax Ordinance No. 8011, amending Tax Ordinance No. 7988. Significantly, sa id amending ordinance was like wise declared null and void by the DOJ Secretary in a Resolution, dated 5 July 2001 , elucidating that "fljnslead r!f' wnemling Ordinance No. 7988, /herein) respondent should have enacted cmother tax measure which slrictlv complies with the requirements o[ law, both procedural wui subslullli ve. Th e passage o[ th e assailed ordinance did not have the e{fect o[ curing th e defects o( Ordinance No. 7988 which, an v way, does n ot le~:allv exist." Said Resolution of the DOJ Secretary had , as well. atta ined fina li ty by virtue of the dismissal with fin ality by this Court of respondents' Petition for Review on Certiorari in G.R. No. 157490 assailing the dismi ssa l by the RTC of ]'1an!~ranch 17, of its appea l due to lack of jurisdiction in its Order, dated 11 August 2003 . Based on ti le foregoing, this Court must reverse tile Ord er of th e RTC of Manila, Branch 21, di smi ssing petitioner's case as there is no basis in law for such di smissa l. The amending law, having been declared as null and void , in legal conte mplation, therefore, does not exist. Furthermore , even if Tax Ordinance No . 8011 was not declared null and void , the trial court should not have di smi ssed the case on the rea son that sa id tax ordinance 11ad already amended Ta x 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, tl1en it does not legally G.R. No. 156252, June 27, 2006, 493 SCRA 279.

DECISION C.T.A. EB. No. 261 (C.T.A . AC No. 17) Page 15 o f 18 exist, tl1~[e should l.Je no occasion or need to amend it. (Underscoring Ours for en 1phasis. ) WHEREFORE, prem ises considered, the instant Peti tion is hereby GRANTED. The Orders of the RTC of Manila, Branch 21, dated 8 May 2002 and 5 December 2002, respectively, are hereby REVERSED and SET ASIDE . SO ORDERED. Indubitably, the validity of a tax ordinance is contingent with due comp liance of the publication requirements laid down in Section 188 of R.A. No. 7160. Speda/ provision of a genera/ law verswi general provision of a special law According to the petitioner, the Court in Division wrongfu lly adjudged the supremacy of R.A. No. 7160 as against Republic Act 409. Republic Act 7160 is a general law affecting LGUs which shou ld yield to the City Charter of Manila, Republic Act 409, a special law specifica lly providing for the organization of the City of Manila. We are not persuaded. A genera l law is defined affecting all of the people of the state or all persons or things of a particu lar class; while a special law is one which relates either to particular persons or things, or to particular persons or things of a class or which operates on a portion of a class instead of all the class. 5 A general law and special law on the same subject must be harmonized to give effect to both. An irreconcilable conflict between the two would necessarily mean that the special law prevai ls over the general law, regardless of their dates Ruperta Martin, Stuwtu1y Cum tmctiun, Revised Edilion (1984), p. 28. :...t.J

DECISfON C.T.A. EB. No. 26 1 (C.T.A . AC No. 17) Page I 6 o f 18 of passage. 6 G.t.Nt'HALJA SPl!-'CJALJJJUS NON Dl!.'HOGANT. 7 This canon of statutory construction does not apply if the specia l statute refers to a subject in genera l, which the general statute treats in particular. Succinctly stated, a particu lar provision embraced in a general statute is favored, as against a general provision in a specia l law as enunciated in the case of Liwayvvay Vimuns- Chaw vs. Fortune Tubm:cu Curpuration8, where the Supreme Court exp lained that: x x x There is no question that the Revised Charter of the City of Manila is a special act since it relates only to the City of Manila. whereas the Local Tax Code is a general law because it applies universa lly to all loca l governments. Blackstone defines general law as a universal rule affecting the entire community and special law as one relating to particular persons or thing s of a class. And the rule commonly said is that a prior special law is not ordinarily repea led by a subseq uent general law. Jhe fact that one is special and the other general crea tes a presumption that the special is to be considered , as remaining an exception of the genera l, one as a general law of the land , the other as the law of a particular case . However, the rul e readily yi elds to a situation where the special statute refers to a subject in general. whi ch the general statute trea ts in particular. Th[is] exactly is the circumstance obtaining in the case at bar. Section 17 of the Revised Cl1arter of the City of Manila s~ ks of "ordinance" in general, i.e., irrespective of the nature and scope thereof, whereas, Section 43 of the Local Tax Code relates to "ordinances levying or imposing taxes, fees or other cl1arges" in particular. In regard, therefore, to ordinances in general. the Revised Charter of the City of Manila is doubtless dominant, but, that dominant force loses its continuity when it approaches the realm of "ordinances !eying or imposing taxes, fees or otl1er charges" in particular. There, the Loca l Tax Code contro ls. Here, as a l way~ g~ll~lf!L provision must give way to a parti ~ular_provision. Special provision governs. x x x 9 (Und erscoring Ours for emphasis.) Applying the forego ing, although R.A. No. 409 is a specia l law intended exclusive ly for the City of Man ila and R.A. No. 7160 the entire Philippines, the pertinent provision of Section 188 of R.A. No. 7160 particu larly delves on the publication of tax ord inances, as contradistingu ished with the provision of Lop!!z. Jr. vs. Civil Service Commission, G.R. No. 87119, April16, 1991, 195 SCRA 777. 7 Philippilll! N(//iOnal Oil Company V.I . Cour/ ufAppeuls , G. R. Nos. 109976 and Philippine Nutiunai!Junk vs. Court uf;lpp<!uls, G.R. No. 112800, April 26, 2005, 457 SCRA 32 . G.R. No. 141309, June 19, 2007. Citing 13ugalsing v~ . Namire::., G.R. No . L-41613, December 17, 1976, 74 SCRA 306.

DECISION C.T.A . EB . No. 26 1 (C.T.A . AC No. 17) Section 17 of R.A. No. 409 which comprehensively relates to the publicalion of any ordinance. Section 188 must prevail over Section 17 of R.A. No. 409, a general provision. Thus, the Court in Division correctly declared Section 188 as the appropriate provision governing the publica tion of ta x ord inances. In view of the existence of direct duplicate ta xa tion, and the flawed publication of the MRC, as amended, the Court in Division correctly granted the refund of erroneously paid business taxes in lhe amount of P4,527,594.76 for the fourlh quarter of 1999, all the quarters of 2000 and th e first three quarters of 2001, and the amount of P 728,845.62 representing excess payment of loca l business taxes under th e same Code. WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit. According ly, the Decision dated September 11, 2006 and Resolution dated January 3, 2007 are AFFIRMED. SO ORDERED . Ru;;;;rla f. cfsrr~t~J~ . Associate Justice WE CONCUR: ~ t.. 'a. ~'-- ERNESTO D. ACOSTA Presiding Justice ~ AEsR~~~s.tiUcYe I dILGtJAjft..P.-AcLtA~NeCwhA~-1ENoRp;I(\Q,(U�(JE)'~l) ?) CAES<... A~/S/ ANOVA Associate Justice Associate Justice

DECISION C.T.A. EB. No. 261 (C.T.A . AC No. 17) CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before lhe case was assigned to the writer of the opinion of the Court. ~l9� c~ ERNESTO D. ACOSTA Presiding Justice

REPUBLIC OF THE PHILIPPINES Court Of Tax Appeals QUEZON CITY ENBANC THE TREASURER OF THE CITY C.T.A. EB NO. 261 OF MANILA, (C.T.A. AC NO. 17) Petitioner, Members: -versus- ACOSTA, Presiding Justice, CASTANEDA, JR., ALCAN PACKAGING BAUTISTA, UY, STARPACK CORPORATION CASANOVA, and PALANCA-ENRIQUEZ, JJ. (formerly STARP ACK Promulgated: PHILIPPINES CORPORATION), Re!!lpondent. JUL 3 0 2007~kJ/I_7J t�~-J~v:-'-. i-t~P-�-: X ------------------------------------------------------------------------------------ X DISSENTING AND CONCURRING OPINION PALANCA-ENRIQlJEZ, J.: Dissenting With due respect to the Majority Opinion, conformably with my Dissenting Opinions in the cases of Liberty M Toledo, in her Capacity as The Treasurer of the City ofManila vs. Unilever Philippines, Inc., C. TA . AC No. 21, promulgated on May 10, 2007, and Unilever Philippines, Inc. vs. The Treasurer of the City of Jvfanila, C. TA . AC No. 25, promulgated ~

C.T.A. EB NO. 261 2 (C.T.A. AC NO. 17) Dissenling and Concurring Opinion on June 18, 2007, I cannot agree that there is direct double taxation in the case at bench on the following ratiocil)ations: The Taxes Imposed By Sections 14 and 21 o{ the Revenue Code o[ Manila are Two Different and Distinct Taxes Section 14 ofthe Revenue Code ofManila provides: "SEC. 14. Tax on Manufacturers, Assemblers and other Processors. - There is hereby imposed a graduated tax on manufacturers, assemblers, rcpackers, 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 XXX." The above provision imposes a percentage 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 with the gross sales or receipts for the preceding calendar year in the schedule provided therein. In other words, in Section 14 the tax is imposed on the business establishment itself. On the other hand, Section 21 of the Revenue Code of Manila, as amended by City Ordinance Nos. 7807, 7988 and 8011, provides: fUJi

C.T.A. EB NO. 261 3 (C.T. A. AC NO. 17) Dissenling and Concurring Opinion "SEC. 21. - Tax on Businesses 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 Nationallnternal Revenue Code hereinafter referred to as the 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 persons who sell goods and services in the course of trade or business; and those who import goods whether for business or otherwise, as provided for in Sections 100 to 103 of the NlRC as administered and determined by the Bureau of Internal Revenue pursuant to the pertinent provisions of the said code. B) On the gross receipts of keepers of garages, cars for rent or hire driven by � the lessee, transportation contractors, persons who transport passengers or freight for hire, and common carriers by land, air or water, except owners of bancas and owners of animal-drawn two-wheel vehicle. C) On the amount paid on every overseas dispatch, message or conversation transmitted from the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication equipment services, except amounts paid by the government, its political subdivisions or instrumentalities; diplomatic services; public international organizations or any of their agencies based in the Philippines; and news services. 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. D) Excisable goods subject to VAT

C.T.A. EB NO. 261 4 (C.T.A. AC NO . 17) Dissenling and Concurring Upinion ( 1) Distilled spirits (2) Wines (3) Tobacco products (other than cigarettes, cigars and chewing tobacco) (4) Tobacco specially prepared for chewing (5) Fireworks (6) Cinematographic lilms (7) Saccharine (8) Coal and coke (9) Fermented liquor, brewers' wholesale price, excluding the ad valorem tax (1 0) Automobiles, manufacturers or importers selling price ( 11) Non-essential goods based on wholesale price, net of excise tax and VAT (a) Jewelry, whether real and imitation, pearls, precious and semi-precious stones and imitations thereof; goods made of, or ornamented, mounted or fitted with precious metals or imitations thereof or ivory (not including surgical and dental instruments, silver-plated wares, frames or mountings for spectacles or eyeglasses and dental go ld or gold alloys and other precious metals used in filling, mounting or fitting of the teeth.) (b) Perfumes and toilet waters. (c) Yachts and other vessels intended for pleasure sports. (12) Mineral products, based on actual market value of the annual gross output at the time of removal. E) Excisable goods not subject to VAT. ( 1) Naptha when used as raw materials for production of petro-chemical products.

C.T.A. EB NO. 261 5 (C.T.A. AC NO. 17) Dissenting and Con...:urring Opinion (2) Asphalt XXX XXX." Pursuant to the above provision, the tax under Section 21 is not a direct tax on manufacturers, assemblers, and other processors, but a tax payable by the consumers of the respondent in view of the modifYing paragraph of Section 21 which states that "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". Respondent merely acts as the withholding or coll ecting agent of the tax paid by the persons paying for or availing of the manufacturing services of the respondent. It bears stressing that the qua lifying provision in Section 21 applies to subsections A, B, and C, as shown by the fact that subsections A, B, and C enumerate business establishments that are subject to tax. The succeeding subsections D and E already classify the goods that are subject and not subject to Value Added Tax. The qualifying provision therefore was incorporated as a separate and concluding paragraph for business establishments enumerated in subsections A, B, and C ofSection 21.

C.T.A. EB NO. 261 6 (C.T.A . AC NO. 17) Dissenliog and Concurring Opinion Moreover, the modifying provision provides a period when to pay the tax, to wit, "within twenty (20) days after the end of each quarter". It is clear that the period provided in the modifying provision is applicable to all business establishments enumerated in subsections A, B, and C of Section 21 who have collected the taxes imposed therein from the persons availing of the services rendered by said establishments. Clearly, respondent is obliged to pay the taxes it collected and withheld from its consumers under Section 21. Basic is the rule in statutory construction that if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. Verba legis non est recedendum. From the words of a statute, there should be no departure (Del Mar vs. Philippine Amusement and Gaming Cotp. , 358 SCRA 78 1). Elements of Double Taxation Double taxation 1s sometimes known as "duplicate" taxation. Duplicate taxation may be direct or indirect. Direct duplicate taxation or double taxation in the objectionable or prohibited sense (also known as obnoxious) means that the same property is taxed twi ce when it sho uld be taxed only once; and that both taxes are imposed on the same property or subject matter for the same purpose, by the same State, Government, or ()Ad

C.T.A . El3 NO. 261 7 (C.T .A . AC NO. 17) Dissculing and Concurring Opinion taxing authority within the same jurisdiction or taxing district during the same taxing period and covering the same kind or character of tax (Villanueva vs. City ofllvi/v, 26 SCRA 594). On the other hand, indirect duplicate taxation is permissible double taxation. This is allowed if the taxes are of different nature or character, imposed by different laxing authorities (Tax Principles and Remedies by Japar B. Dimawupao, Seconded., p. 122). The elements of direct double taxati on are as follows: 1) taxing twice; 2) same person/property or subject matter; 3) by the same taxing authority; 4) within the same jurisdiction or taxing district; 5) for the same purpose; and 6) in the same year or taxing period. No Double Taxation These elements do not obtain in the case of Sections 14 and 21 (A) ofthe Revenue Code ofManila. First, these two taxes are of two ditferent kinds or characters. The tax imposed upon respondent under Section 14 is a tax on manufacturers, assemblers and other processors, or a tax on business establishments. It is .. ) ~:

C .T.A . EB NO. 261 8 (C.T.A . AC NO . 17) Diss~::uting and Conc urring Op ini on classified as a direct tax which IS demanded from the respondent primarily burdened to pay the same, in contrast to Section 21 which is imposed not on the respondent, but on persons availing of the manufacturing services of the respondent. Second, the taxes in Sections 14 and 21 are imposed on two entirely different and distinct entiti es. Section 14 is assessed on the respondent by reason of engaging in business; on the other hand, Section 21 is imposed on its customers. Third, although the two taxes deal on one activity, the manufacturing ac ti vity, Sections 14 and 21 are imposed on two different subj ect matters. The subj ect matter of Section 14 is the priv ilege on engaging in the manufacturing business. The tax is imposed for the business of operating a manufacturing establishment. On the other hand, Section 21 is imposed not on the establishment, but on its consumers and/or end-users. Fourth, the element of tax ing twi ce for the same purpose is not present. Sections 14 and 21 are not for the same taxing purpose. Respondent, as manufacturer, is made liable to pay the business tax under Section 14, whil e it is the end-users of the es tablishment w ho are liable lo pay the taxes under Section 21. Evidently, a tax on the establishment is ~

C.T.A. EB NO. 261 9 (C.T.A. AC NO. 17) Dissenliug and Concurring Opinion different from the tax imposed on its customers. The lower court, therefore, correctly ruled that "the petitioner City Treasurer of Manila merely acts as withholding or collecting agent for the City", while the ones actually paying the tax are its customers/end-users. It is actually not a tax on the business of the respondent, but a tax on its consumers. In sum, there is no double taxation, because there is no taxing twice, on the same person (Procter & Gamble Philippines Manufacturing Corp., vs. Municipality of Jagna, 9-J SCRA 903), or the same subject matter, by the same taxing authority, within the same jurisdiction, for the same purpose, in different taxing periods, some of the property in the territory (Commissioner ofInterned Revenue vs. Solidbank Corporation, 416 SCRA 464). Concurring However, to the extent that the ponencia rules that there is a flaw in the publication of Tax Ordinance Nos. 7988 and 8011 , and finds that Section 188 ofR.A. No. 7160, otherwise known as the Local Government Code, prevails over Section 17 of R.A. No. 409, otherwise known as the City Charter of Manila, I fully concur. In fact, in the case of Coca-Cola Bottlers Phils., Inc. vs. City of Manila, et a!., 493 SCRA 291, the Supreme Court ruled that the (JtVL

C.T.A . EB NO. 261 10 (C .T.A. AC NO. 17) Oisstnling and Conl:urring Opiniun amendatory Tax Ordinance Nos. 7988 and 8011 are null and void for lack of publication. Ifowev er, although the Supreme Court has already nullified the amendatory Tax Ordinance Nos. 7988 and 801 1 for lack of publication, it must be noted that the original ordinance, llle Revenue Code of the City of Manila, otherwise known as "Ordinwu;e No. 7794" and the first amendatory ordinance, Ordinance No. 7807, both containing Sections 14 and 21, subject of the present petition, still s ubsist. The City of Manila, therefore, has a legal basis to collect the taxes under Se ctions 14 and 21 of the original Ordinance No. 7794 and the first amendatory ordinance, Ordinance No. 7807. IN VIEW OF THE FOREGOING, l concur with the Majority ' s Ruling nullifying Tax Ordinance Nos. 7988 and 8011 for lack of publication, but I dissent with the Majority ' s Ruling that Sections 14 and 21 constitute double taxation. . ~~~~ OLGA Pf\.LANCA-ENRIQUEZ Court ofTax Appe C:Ws'iociate Justice Library