THE CITY OF ANGELES & THE CITY TREASURER OF ANGELES, v. SUPER SHOPPING MARKET, INC. & SANFORD MARKETING CORPORATION (Formerly UDK-SP 033)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL THIRD DIVISION ********* THE CITY OF ANGELES & TH E CTA AC No. 237 CITY TREASURER OF ANG ELES , Petitioners, Members: -versus- UY, Chairperson, RINGPIS-LI BAN, and MODESTO-SAN PEDRO, JJ. SUPER SHOPPING MARKET, INC. & SANFORD MARKETING Promulgated: CORPORATION, ill2 8 2022 Respondents. ? - - - - - - I~ ot� "'-' � X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION UY, J.: Before this Court is a Petition for Review filed on February 20, 2020, via courier by petitioners, the City of Angeles and the City Treasurer of Angeles against respondents, Super Shopping Market, Inc. & Sanford Marketing Corporation , praying that the Decision1 dated December 27, 2018 , and Order dated September 9, 2019 rendered by the Regional Trial Court (RTC) - Branch 58, Angeles City, in Civil Case R-ANG-16-01034-CV, entitled "Super Shopping Market, Inc. & Sanford Marketing Corporation vs. The City of Angeles & The City Treasurer of Angeles," be reversed and set aside. The dispositive portion thereof reads : DECISION dated December 27, 2018: "WHEREFORE , judgment is rendered ORDERING defendant Angeles City through the City Treasurerrl 1 Docket, pp. 55 to 66. 2 Docket, pp. 23 to 32.

DECISION CTA AC No. 237 Page2of21 1) To refund/issue Tax Credit Certificate in favor of plaintiff SUPER SHOPPING MARKET, INC. in the amount of P18,586.05; and 2) To refund/issue Tax Credit Certificates in favor of plaintiff SANFORD MARKETING CORP. in the amount of P609.42. SO ORDERED." ORDER dated September 9, 2019: "WHEREFORE, the Court PARTLY GRANTS the plaintiffs' instant Motion for Reconsideration. Accordingly, the assailed Decision is modified as to the entitlement of plaintiff SSMI and SMC's tax refund of the reduced amount as follows: Defendant Angeles City through its City Treasurer is hereby ORDERED: 1) To refund/issue Tax Credit Certificate in favor of plaintiff SUPER SHOPPING MARKET, INCORPORATED in the amount of P10,487,314.98; and 2) To refund/issue Tax Credit Certificate in favor of plaintiff SANFORD MARKETING CORPORATION in the amount of P300,774.97. SO ORDERED." THE PARTIES Petitioner City of Angeles ("City") is a local government unit created by virtue of Republic Act No. 3400 and holds office at Angeles City Hall, Barangay Pulung Maragul, Angeles City where it may be served with orders and processes of the Honorable Court. 3 Co-petitioner City Treasurer of Angeles City ("City Treasurer") is the office tasked and empowered to collect all local taxes, fees, and charges and the power to decide, approve, and grant refunds or ta~ 3 Petition for Review, Docket, p. 7.

DECISION CTA AC No. 237 Page 3 of21 credits erroneously or excessively paid, and is holding office at Ground Floor, Angeles City Hall, Barangay Pulung Maragul, Angeles City where he may be served with orders and processes of the Honorable Court.4 Respondent Super Shopping Market, Inc. ("SSMI") is a corporation duly organized and existing under Philippine Laws with principal place of business at SM Corporate Offices, Building E, J.W. Diokno Boulevard, Mall of Asia Complex, Pasay City where it may be served with orders and processes of the Honorable Court. 5 Co-respondent Sanford Marketing Corporation, ("SMC") is a corporation duly organized and existing under Philippine Laws with principal place of business at SM City Sucat, Dr. A. Santos Avenue, Barangay San Dionisio, Paranaque City where it may be served with orders and processes of the Honorable Court.6 THEPROCEEDINGSATTHE REGIONAL TRIAL COURT On April 15, 2016, SSMI and SMC, as plaintiffs, filed a verified Complaint (for Refund of Excess Local Business Taxes Paid/ before Branch 58 of the Regional Trial Court of Angeles City, against the City of Angeles and the City Treasurer of Angeles, as defendants, docketed as R-ANG-16-01034-CV. In their Complaint, plaintiffs SSMI and SMC, claim that Sec. 3.H.02(d) of the Revenue Code of Angeles City exceeds the maximum allowable taxes that a city may impose upon businesses within its jurisdiction under Section 143(c) of the Local Government Code (LGC) of 1991, as amended. Thus, plaintiffs pray for the refund or issuance of tax credit certificates in the amount of P11 ,074,280.22, representing payment of excess taxes paid for the 2"d quarter of 2014 to the 151 quarter of 2016. In their Answe(3 filed on May 27, 2016, defendants, the City of Angeles and the City Treasurer of Angeles raised the following Special and Affirmative Defenses, to wit/~'( 4 Petition for Review, Docket, p. 7. 5 Petition for Review, Docket, pp. 7 to 8. 6 Petition for Review, Docket, p. 8. 7 RTC Docket (R-ANG-16-01034-CV), Vol. I, pp. 2 to 19. 8 RTC Docket (R-ANG-16-01034-CV), Vol. I, pp. 50 to 53.

DECISION CTA AC No. 237 Page4of21 1) The exhaustion of remedies under Section 187 of the LGC is mandatory and non-compliance thereof is fatal to SSMI and SMC's cause; 2) There were no excessive taxes collected invoking Section 151 of the LGC, in relation to Section 191 of the same law. At the rate of 10% upward adjustment every five (5) years, it is not impossible, scandalous and illegal for Local Business Taxes (LBT) rates of the LGU to reach the point they are now. In their Reply (To Defendants' Answer dated 27 May 2016)9, SSM I and SMC maintain that non-exhaustion of the remedy provided under Section 187 of the LGC is not fatal to their case. According to them, defendants collected excess LBT, by imposing LBT on sale of essential goods at 3/4 of the rate imposed on non-essential goods. In view of the on-going settlement negotiation between the parties, they moved to reschedule the Pre-Trial Conference several times. However, settlement did not materialize, thus the case was referred to the Philippine Mediation Center for proper mediation proceedings. 10 In view of the Mediator's Report dated June 13, 2017, stating that there was failed mediation between the parties, the case was referred back to court. 11 When the case was called for Judicial Dispute Resolution (JDR) proceedings on June 28, 2017, neither the parties nor their counsel appeared, which constrained the Court to dismiss the case without prejudice to its re-filing. On July 14, 2017, SSMI and SMC filed a Motion for Reconsideration (of the Order dated June 28, 2017), 12 stating that they only received the Order of the Court setting the case for JDR on June 30, 2017, or two (2) days after the scheduled JDR proceedings on June 28, 2017. Finding the subject Motion meritorious, the Court granted said motion and set the case for another Judicial Dispute Resolution proceeding on August 9, 2017. 13 During the JDR proceedings on August 9, 2017, the parties manifested that they cannot agree on a settlement since the issue being raised by then plaintiffs was purely a question of lawt"/ 9 RTC Docket (R-ANG-16-01034-CV), Vol. 1, pp. 54 to 60. 10 RTC Docket (R-ANG-16-01034-CV), Vol. I, p. 76. 11 RTC Docket (R-ANG-16-01034-CY). Vol. I. p. 191. 12 RTC Docket (R-ANG-16-01 034-CV). Vol. I. pp. 194 to 198. 13 RTC Docket (R-ANG-16-01034-CYi. Vol. I. p. 202.

DECISION CIA AC No. 237 Page 5 of21 Thereafter, the JDR proceeding was terminated and the records of the case was forwarded to the Office of the Clerk of Court of the Regional Trial Court for immediate re-raffle. 14 The case was then re- raffled to the Regional Trial Court of Angeles City, Branch 58, and the Pre-Trial Conference of the said case was scheduled on January 11, 2018. 15 During the Pre-Trial Conference, the parties entered into the following stipulation of facts: "1. Sec. 143 (c) of the LGC allows the imposition of LBT on manufacturers, millers, producers, wholesalers, discributors (sic}, dealers or retailers of essential commodities at a reate (sic) not exceeding one-half of the rates prescribed for manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities, 2. Sec. 3.H.02 (c) of the Revenue Code allows the imposition of LB T on exporters, and on manufacturers, millers, producers, wholesalers, discributors (sic), dealers or retailers of essential commoditie (sic) at a rate no (sic) exceeding three-fourths of the rates prescribed for exporters and on manufacturers, millers, producers, wholesalers, discributors (sic}, dealers or retailers of essential commodities; 3. The defendants assessed and collected LBT on the plaintiffs' gross sates as retailers of essentials commodities at the rate of three-fourths of the rate prescribed under Sec. 3H02(d) ofthe Revenue Code. 4. The plaintiffs filed the Complaint with the Regional Trial Court of Angeles City on April 14, 2016; and 5. The existence and genuineness, due execution, and contents of documents marked as Exhibits A to H and series.""" 14 RIC Docket (R-ANG-16-01034-CV), Vol. I, p. 204. 15 RIC Docket (R-ANG-16-01034-CV), Vol. I, p. 206. 16 RIC Docket (R-ANG-16-01034-CV). Vol. 2, pp. 424 to 426.

DECISION CTA AC No. 237 Page6of21 In view of the foregoing stipulations of facts and admission of exhibits, the case was submitted for decision based on the said documents. On December 27, 2018, the Regional Trial Court rendered a Decision17 in favor of SSMI and SMC, the dispositive portion states as follows: "WHEREFORE, judgment is rendered ORDERING defendant Angeles City through the City Treasurer: (1) To refund/issue Tax Credit Certificate in favor of plaintiff SUPER SHOPPING MARKET INC. in the amount of P18,586.05, and (2) To refund/issue Tax Credit Certificate in favor of plaintiff SANFORD MARKETING CORP. in the amount ofP609.42. SO ORDERED." Aggrieved, SSMI and SMC filed a Motion for Partial Reconsideration (of the Decision dated December 27, 2018)18 on February 19, 2019, praying that the Court partially set aside its Decision dated December 27, 2018, and order the refund or issuance of a Tax Credit Certificate in favor of: (a) SSMI in the amount ofP12,077,124.39; and (b) SMC in the amount ofP367,394.78. On September 9, 2019, the RTC issued an Order19 partially granting the Motion for Partial Reconsideration of SSMI and SMC, and ruled as follows: "WHEREFORE, the Court PARTLY GRANTS the plaintiffs' instant Motion for Reconsideration. Accordingly, the assailed decision is modified as to the entitlement of plaintiff SSM/ and SMC's tax refund of the reduced amount as follows:~ 17 RTC Docket (R-ANG-16-01034-CV). Vol. 2, pp. 428 to 439. 18 RTC Docket (R-ANG-16-01034-CV), Vol. 2, pp. 440 to 451. 19 RTC Docket (R-ANG-16-01034-CV), Vol. 2, pp. 469 to 478.

DECISION CTA AC No. 237 Page7of21 Defendant Angeles City through its City Treasurer is hereby ORDERED: (1)To refund/issue Tax Credit Certificate in favor of the plaintiff SUPER SHOPPING MARKET, INCORPORATED in the amounted of P10,487,314.98; and (2) To refund/issue Tax Credit Certificates in favor of the plaintiff SANFORD MARKETING CORPORATION in the amount of P300, 774.97. SO ORDERED." PROCEEDINGS BEFORE THE COURT OF TAX APPEALS On February 20, 2020, petitioners filed the instant Petition for RevievV-0 docketed as CTA AC No. 237. On February 16, 2021, respondents were ordered to file their Comment, not a Motion to Dismiss, within 10 days from notice?1 Respondents filed their Comment (on the Petition for Review dated February 20, 2020/2 on March 3, 2021, praying for the dismissal of the Petition for Review for lack of merit. As directed by the Court in the Resolution dated March 10, 2021, respondents filed their Memorandum23 on July 7, 2021, while petitioners filed their Memorandum on Appeat24 on October 4, 2021. Thus, this case was submitted for Decision on October 28, 2021 25 Hence, this Decision. THE ISSUES Petitioners raise the following issues for the Court's resolution to wit/!!(_ 20 Docket, pp. 6 to 22. 21 Docket, p. 140. 22 Docket, pp. 141 to 172. 23 Docket, pp. 204 to 237. 24 Docket, pp. 249 to 266. 25 Docket, p. 277.

DECISION CTA AC No. 237 Page8of21 "Whether or not the Honorable Trial Court erred in declaring as void the imposition of a tax rate of three point three percent (3.3%) for retailers with gross sales receipt of not exceeding four hundred thousand pesos P400, 000. 00 during the preceding calendar year and one point sixty five percent (1. 65%) for retailers with gross sales receipts exceeding four hundred thousand pesos P400, 000.00 during the preceding calendar year; and Whether or not the Honorable Trial Court erred in computing the tax refund due to SSM/ and SMC void (sic) for lack of basis in violation of the constitution. "26 Petitioners' arguments: Petitioners argue that the three point three percent (3.3%) and one point sixty five percent (1.65%) tax rate imposed by the petitioner is valid pursuant to Section 191 of the Local Government Code. Petitioners also claim that the computation of the Regional Trial Court is invalid as it is without basis and is violative of Section 14 of the 1987 Constitution. Respondents' counter-arguments: Respondents counter that Angeles City cannot impose LBT on retailers of non-essential commodities at a rate exceeding the adjustment allowed by Section 151 in relation to Section 143(d) of the LGC. The allowable increase for cities under Section 191 is subject to the limitation under Section 151 of the LGC. Respondents likewise assert that Section 3.H.02(c) of the Revenue Code, which allows the imposition on retailers of essential commodities of rates not exceeding three-fourths (3/4) of the rate prescribed for retailers of non-essential commodities under Section 3.H.02(d), contravenes Section 143(c) of the LGC, which limits the rate of LBT on retailers of essential commodities to a rate not exceeding one-half (1/2) of the rates prescribed under subsection (d) of this Section on retailers of non-essential commodities-r[ 26 Issues, Memorandum on AppeaL Docket. p. 258.

DECISION CTA AC No. 237 Page 9 of21 Finally, respondents maintain that the assailed Order, including the lower court's re-computation of the amounts to be refunded to the respondents, complies with Section 14, Article VIII of the Constitution. THE COURT'S RULING The tax rates imposed by the Revenue Code of Angeles City exceed the allowable rates provided for in the LGC of 1991, as amended. Moreover, Section 191 of the LGC of 1991, as amended, finds no application in the instant case. Petitioners contend that rates of tax imposed under Sections 3.H.02 (c) and (d) of the Angeles City Revenue Code are valid. Moreover, petitioners argue that the limitations found in Sections 143 (c) in relation to 143 (d), and 151, are not absolute in character, and must be read in conjunction with Section 191 of the LGC of 1991, as amended. We are not convinced. In this case, petitioners assessed and collected LBT on the respondents' gross sales as retailers of essential commodities at the rate of three-fourths of the rate prescribed under Sec. 3.H.02 (d) of the Revenue Code 27 Sections 3.H.02 (c) and (d) of the Angeles City Revenue Code, 28 imposes the following rates of local business tax on retailers of essential commodities, to wit: "Chapter Ill -Other City Taxes (Except Real Property Tax) r l XXX XXX XXX 27 Pre-Trial Order dated January II, 2018. RTC Docket (R-ANG-16-01034-CV), Vol. II, ff' 424 to 426. Tax Ordinance No. 61. Series or 2011 (P0-667-12-11 ). RTC Docket (R-ANG-16- 0 I 034-CV). Vol. L pp. 28S to 315: RIC Docket (R-ANG-16-0 I 034-CV), Vol. II, pp. 316 to 398.

DECISION CTA AC No. 237 Page 10 of21 ARTICLE H.- BUSINESS TAXES XXX XXX XXX Section 3.H.02. Imposition of Taxes. - Every person who operates in the City of Angeles, any of the businesses mentioned in this Article shall pay a business tax in the amount prescribed thereof. The tax payable for every distinct establishment and one line of business activity does not become exempt by being conducted with some other businesses for which such tax has been paid. 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 three fourths (3/4) of the rates prescribed under subsections (a), (b), and (d) of this section x x x XXX XXX XXX (d) On retailers With gross sales of receipts Rates of Tax Per for the preceding calendar Annum year of 3.3% More than P50,000.00 but not over P400,000.00 Over Php400,000.00 1.65% Provided, however that barangays shall have exclusive power to levy taxes, as provided under Section 152 of Republic Act No. 7160, otherwise known as Local Government Code of 1991, on gross sales or receipts of the preceding calendar year of Fifty Thousand Pesos (P50,000.00) or less.''29 (Emphasis supplied.) J In order to determine whether the foregoing imposition of local. . business taxes by the City of Angeles is valid, reference must ber" 29 RTC Docket (R-ANG-16-01034-CV), Vol. II, p. 320.

DECISION CTA AC No. 237 Page II of21 made to the allowable rates of tax, as stated in Sections 143 (c) and (d), in relation to Section 151 of the LGC of 1991, as amended, to wit: "BOOK II Local Taxation and Fiscal Matters TITLE I Local Government Taxation CHAPTER II Specific Provisions on the Taxing and Other Revenue- Raising Powers of Local Government Units ARTICLE II Municipalities SECTION 143. Tax on Business. - The municipality may impose taxes on the following businesses: 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 (%) of the rates prescribed under subsection (a), (b) and (d) of this Section: XXX XXX XXX (d) On retailers. With gross sales or receipts Rate of Tax for the preceding calendar year of: Per Annum P400,000.00 or less 2% more than P400,000.00 1% Provided, however, That barangays shall have the exclusive power to levy taxes, as provided under Section 152 hereof, on gross sales or receipts of the preceding calendar year of Fifty thousand pesos (P50,000.00) or less, in the case of cities, and Thirty thousand pesos (P30,000.00) or less, in the case of municipalities. XXX XXX XXX~

DECISION CTA AC No. 237 Page 12 of21 ARTICLE Ill Cities SECTION 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes." For easy reference, the foregoing provisions are summarized in the table below, to wit: MUNICIPALITY CITY CITY OF ANGELES ! MAXIMUM Tax Rates MAXIMUM Tax Rates Tax Rates Imposed on~ lmposable on Retailers as lmposable on Retailers as stated under Section 151 of Retailers as stated under the LGC of 1991, as amended stated under Section 143 Section 3 H 02 (d) of the (d) of the LGC of 1991. as Angeles City Revenue amended Code With gross Rates of With gross With gross Rates of sales or Tax Per sales or sales or Tax Per receipts for Annum receipts for the Rates of Tax receipts for the Annum Per Annum the preceding preceding preceding calendar year calendar year calendar year of: of: of: More than P400,000.00 2% P400,000.00 3% P50,000.00 but 3.3% or less or less (2% + 1%) not over P400,000.00 more than more than 1.5% over P400,000.00 1% P400,000.00 (1% + 0.5%) P400,000.00 1.65% MAXIMUM Tax Rates MAXIMUM Tax Rates Tax Rates Imposed on 1mposable on Retailers of lmposable on Retailers of Essential Commodities as Retailers of Essential stated under Section 151 of Essential Commodities the LGC of 1991, as amended Commodities under as stated under Section Section 3.H.02 (c) of the 143 (c) of the LGC of Angeles City Revenue 1991, as amended Code With gross With gross With gross sales or Rates of sales or Rates of Tax sales or Rates of Per Annum receipts for Tax Per receipts for receipts for the Tax Per the preceding Annum the preceding Annum calendar year preceding calendar year w of: of: calendar year of:

DECISION CTA AC No. 237 P400,000.00 1% P400,000.00 1.5% More than 2.475% or less or less (1% + 0.5%) P50,000.00 but (1/2 of (3/4 of 2%) not over 3.3%) P400,000.00 more than 0.5% more than 0.75% over 1.2375% P400,000.00 P400,000.00 (1/2 of P400,000.00 (3/4 of 1%) 1.65%) (0.5% + 0.25%)) ���--��--�- ��------ Based on the subject provisions, the maximum tax rates that can be imposed by municipalities for retailers of essential commodities as stated under Section 143 (c) of the LGC of 1991, as amended, are as follows: With gross sales or receipts for the Rates of Tax Per Annum preceding calendar year of: P400,000.00 or less 1% (1/2 of 2%) more than P400,000.00 0.5% (1/2of1%) ~-------------------- Meanwhile, based on Section 151 of the LGC of 1991, as amended, the maximum tax rates that a city may impose "may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%)." Thus, in the case of retailers of essential commodities, the maximum tax rates imposable are as follows: With gross sales or receipts for the Rates of Tax Per Annum preceding calendar year of: P400,000.00 or less 1.5% ------- 0.75% more than P400,000.00 11 I

DECISION CTA AC No. 237 Page 14 of21 However, as stipulated30 by the parties, respondents, as retailers of essential commodities, were assessed and subsequently paid for local business taxes at the rate of three-fourths of the rate prescribed under Sec. 3.H.02 (d) of the Revenue Code, summarized as follows: With gross sales or receipts for the Rates of Tax Per Annum preceding calendar year of: More than P50,000.00 2.475% but not over P400,000.00 (3/4 of 3.3%) over P400,000.00 1.2375% (3/4 of 1.65%) �-- ---- A perusal of the foregoing shows that the tax rates imposed by the Angeles City Revenue Code on retailers of essential commodities exceeded the maximum allowable rates of tax prescribed by statute. To be specific, the rates of 2.475% and 1.2375%, exceeded the statutory maximum of 1.5% and 0. 75%, respectively. The imposition of tax rates, over and above the ceiling rates imposed by statute is beyond the scope of corporate powers of the local government unit. It is clearly ultra vires, for being contrary to Section 151 of the LGC of 1991, as amended. To stress, an ordinance which is incompatible with any existing law or statute is ultra vires, hence, null and void 31 It produces no legal effect from its inception. 32 Accordingly, the court a quo did not err in ruling that the imposition by the City of Angeles of tax rates greater than that allowed by law is prohibited, and is considered ultra vires. Petitioners insist, however, that Section 191 of the LGC of 1991, as amended, should be read in conjunction with Sections 143 (c) and (d), in relation to Section 151 of the LGC of 1991, as amended. Thus, the imposition of local business tax rates that are higher than those prescribed by the LGC of 1991, as amended, is allowed, on the basis of the subject provision.rl 30 Order dated January II, 2018, RTC Docket (R-ANG-16-01034-CV), Vol. II, pp. 424 to 426. 31 Manila Electric Company vs. City of Muntinlupa and Nelia A. Bar/is, G.R. No. 198529, February 9, 2021. 32 /d.

DECISION CTA AC No. 237 Page 15 of21 We are not swayed. Section 191 of the LGC of 1991, as amended, reads as follows: "SECTION 191. Authority of Local Government Units to Adjust Rates of Tax Ordinances. - Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code" Based on the foregoing prov1s1on, a local government unit is authorized to adjust the tax rates as prescribed in the local government code, for a maximum of once every five (5) years, but in no case shall it exceed ten percent (10%) of the rates fixed under the LGC. In other words, a local government unit may impose taxes, provided that the same is less than, or equal to, the rates therein provided. Any corresponding increase thereafter would have to comply with the frequency and rate of adjustment provided for under Section 191 of the LGC, as amended 33 In the case of Mindanao Shopping Destination Corporation, et a/., vs. Hon. Rodrigo R. Duterte, etc., et a/., 34 it was held that the application of Section 191 of the LGC of 1991, as amended, presupposes that presence of two (2) requirements, for it to apply, to wit: "Section 191 of the LGC presupposes that the following requirements are present for it to apply, to wit: (i) there is a tax ordinance that already imposes a tax in accordance with the provisions of the LGC; and (ii) there is a second tax ordinance that made adjustment on the tax rate fixed by the first tax ordinancept{ 33 Honorable Leila M De Lima. vs. City ofManila. G.R. No. 222886, October 17, 2018. 34 G.R. No. 211093, June 6, 2017.

DECISION CTA AC No. 237 Page 16 of21 In other words, Section 191 contemplates a situation where there is already an existing tax as authorized under the LGC and only a change in the tax rate would be effected. 35 In this case, records show that both elements are absent. First, there is no showing that there is a tax ordinance that already imposes a tax in accordance with the provisions of the LGC. Second, there is no second tax ordinance that made an adjustment on the tax rate fixed by the first tax ordinance. Considering that petitioners never presented a second tax ordinance before the court a quo, Section 191 of the LGC of 1991, as amended, finds no application in this case. Assuming arguendo, that there exists a prior tax ordinance, and the subject tax ordinance, Tax Ordinance No. 61, Series of 2011 (P0- 667-12-11), is merely one that makes an adjustment on the tax rate fixed by a prior ordinance, it is incumbent upon the petitioners to prove the existence thereof. As a rule, while courts are required to take judicial notice of the laws enacted by Congress, the rule with respect to local ordinances is different. Ordinances are not included in the enumeration of matters covered by mandatory judicial notice36 under Section 1, Rule 129 of the Rules on Evidence. 37 Thus, in the absence of proof of a second ordinance, Section 191 of the LGC of 1991, as amended, cannot be invoked in this case. The court a quo's computation of tax refund is supported by law and jurisprudence, and therefore valid, albeit with slight modifications-A 35 !d. 36 Social Justice Society (SJS), eta/., vs. Han. Jose L. Atienza, Jr., etc., G.R. No. 156052, February 13, 2008. 37 Rule 129, Section 1. Judicial notice, when mandatory. - A court shall take judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines. ofticial acts of the legislative. executive and judicial departments of the National Government of the Philippines, the laws of nature, the measure of time. and the geographical divisions.

DECISION CTA AC No. 237 Page 17 of21 Petitioners argue that the court a quo erred in computing the amount of respondents' tax refund, as it was without basis and is violative of Section 14, Article VIII of the 1987 Constitution. We disagree. Section 14, Article VIII of the 1987 Constitution, reads as follows: "Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. No petition for review or motion for reconsideration of a decision of the court shall be refused due course or denied without stating the legal basis therefor." The purpose of Article VIII, Section 14 of the Constitution is to inform the person reading the decision, and especially the parties involved in the case, of how the decision was reached by the court after consideration of the pertinent facts and examination of the applicable laws. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached. It is especially prejudicial to the losing party who is unable to pinpoint the possible errors of the court for review by a higher tribunal. 38 In this case, a review of assailed Order dated September 9, 2019, specifically with regard to the court a quo's computation of the amount of tax refund, shows that it is consistent with the purpose of Section 14, Article VIII of the 1987 Constitution. The assailed computation in the subject Order, particularly with regard to the items in "Column F," are clearly supported by the factual findings and legal basis, especially if it is read in conjunction with the assailed Decision dated December 27, 2018. As discussed in the assailed Decision, the imposition of local ol'{ business taxes by the City of Angeles on the retailers of essential commodities, exceed the allowable rates provided for in the LGC 38 Domilos v. Spouses Pastor. G.R. No. 207887, March 14.2022.

DECISION CTA AC No. 237 Page 18 of21 1991, as amended. Accordingly, it follows that the same must be reduced to the correct percentage. Thus, in the assailed Order, the court a quo recomputed the tax refund due, and explained the basis of its computation, step by step, as follows: Column Item Formula a Gross sales per assessment per year b Amount of Taxes paid with O.R. Nos. (400,000 X 3%) c Under 3% [(b-400,000) X 1.5%) d Under 1.5% (c +d) e Total ex Y, f Y, Rate b- f Tax Refund Q The foregoing table used by the court a quo clearly explains the basis of its computation. First, columns A and B indicate the amounts of sales per year and amount of taxes paid, in accordance with the evidence presented by the respondents. Second, columns C and D provide for the correct computation of taxes due, based on the maximum tax rates imposable on retailers stated in Section 143 (d), in relation to Section 151 LGC of 1991, as amended. To be specific, the court a quo used the 3% and 1.5% maximum tax rates for retailers, instead of the 3.3% and 1.65% imposed under Sections 3.H.02 (c) and (d) of the Angeles City Revenue Code. Meanwhile, column E is merely the sum of the total tax due for retailers, by adding columns C and D. Meanwhile, in column F, the court a quo used the maximum correct rate for retailers of essential commodities, which is one half (1/2) of the rates prescribed for retailers, as stated in Section 143 (c), in relation to Section 151 LGC of 1991, as amended. As earlier discussed, the rate that the petitioners insist on, i.e., three fourths (3/4) of the rate prescribed under Sec. 3.H.02 (d) of the Revenue Code, is ultra vires and cannot be upheld. Finally, column G contains the amount of tax refund due to the respondents, by subtracting the correct amount of tax due for retailers of essential commodities, from the amount of taxes paid by the respondents. Clearly, the assailed Order is not wanting in stating the basis for the court a quo's computation. Considering that the foregoin~

DECISION CTAACNo.237 Page 19 of21 computation allows petitioners to specifically pinpoint the errors of the court a quo for review by this Court, it is sufficiently compliant with Section 14, Article VIII of the 1987 Constitution. Upon further review and examination of the evidence adduced, however, this Court finds that while the computation of the lower court is mostly correct, a slight modification is in order. To be specific, the amounts for "column F" for the year 2016 should be modified to = conform to the formula used therein, i.e., [f (ex 1/2)], as follows: 2016 RTC Order Correct Amount 8,810,129.60 Super Shopping Market, Inc. 4,405,064.80 220,570.52 Sanford Marketing Corporation 55,142,63 Hence, the computation is hereby modified as follows: Year Qtr Date Total Sec 3. H 02 c Tax Refund (e) (f) (g) e= (c+d) 1/2 Rate g_=b-f f=(ex1/2) SUPER SHOPPING MARKET INC. 2014 1st 4/15/14 16,070.062.28 8,035,031.14 5,222, 770.24 2nd 7/21/14 17,550,952.51 3rd 10/20/14 8,775,476.25 5,704.059.57 4th 17,620,259.19 1/22/15 51.241,273.98 Total 4/20/15 7/16/15 2015 1" 10/13/15 2"' 3" 1/18/16 4m 1/18/16 Total 2016 1" 2"' 3" 4'" 8,810,129.60 (1,541,772.68) Total 25,620,636.99 9,385,057.13 Total for 3 years 3,302,806.95 6,082,250.18 Less: 2014 1st Qtr Non-Refundable TOTAL SSM I SANFORD MARKETING CORPORATION 2014 1" fl'( 2"' 4/15/14

DECISION CTA AC No. 237 Page 20 of21 3" 7/21/14 639,675.92 319,837.96 207,894.70 4'" 10/20/14 607,927.71 Total 1/22/15 441 '141.03 2015 1" 4/13/15 1,688,744 66 2"' 3" 7/20/15 303,963.86 197,576.50 4'" 1/19/16 Total 2016 1" 2nd 3'd 4'" 220,570.52 129,585.18 Total 844,372.33 275,886.03 Total for 3 years Less: 2014 1st Qtr Non-Refundable ~538.95 TOTAL SMCo 135,347.08 6,217,597.26 GRAND TOTAL In light of the foregoing considerations, the assailed Order dated September 9, 2019 by the Regional Trial Court Branch 58 is modified as to entitlement of respondents' claim for tax refund of excess Local Business Taxes in the aggregate amount of P6,217,597.26. WHEREFORE, the instant Petition for Review is hereby DENIED for lack of merit The assailed Decision dated December 27, 2018, and Order dated September 9, 2019 rendered by the Regional Trial Court (RTC) - Branch 58, Angeles City, in Civil Case R-ANG-16-01034-CV, is hereby AFFIRMED with MODIFICATION as follows: judgment is hereby rendered ORDERING petitioner Angeles City through the City Treasurer: 1. To issue Tax Credit Certificate in favor of Super Shopping Market, Inc. in the amount of P6,082,250.18. 2. To issue Tax Credit Certificate in favor of Sanford Marketing Corporation in the amount of P135,347.08.tJ'i

DECISION CTA AC No. 237 Page 21 of21 SO ORDERED. ER~.UY WE CONCUR: Associate Justice ~-~~~ MA. BELEN M. RINGPIS-LIBAN Associate Justice MARIA R9WEN STO-SAN PEDRO Ass ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ERL~UY Associate Justice Chairperson, Special 3'ct Division CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice