TODA HOLDINGS, INC. v. CITY OF DAVAO and HON. RODRIGO S. RIOLA, in his official capacity as the City Treasurer of Davao City

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION ********* TODA HOLDINGS, INC., CTA AC Case No. 138 Petitioner, (Civil Case No. 35,680-14) -versus- Members: CITY OF DAVAO and HON. DEL ROSARIO, P.J., RODRIGO S. RIOLA, in his UY, and official capacity as the City MINDARO-GRULLA, JJ. Treasurer of Davao City, Promulgated: . Respondents. JUN 13 2011: : I i); t2 a~ X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RESOLUTION UY, J.: For resolution is respondents' "MOTION FOR RECONSIDERATION" filed on March 8, 2017, with petitioner's "COMMENT/OPPOSITION To Respondent's Motion for Reconsideration (Re: Decision Rendered 9 February 2017)" filed on April 17, 2017, praying for the reconsideration of this Court's Decision dated February 9, 2017, the dispositive portion of which reads: "WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is hereby GRANTED. Accordingly, the assailed Decision and Order of the Regional Trial Court Branch 17 of Davao City in Civil Case No. 35,680-14 are REVERSED AND SET ASIDE. The Business Tax Order of Payment dated January 20, 2014 issued by the City Treasurer of Davao City, assessing petitioner for local business tax in the amount of P3, 105,739.00, is SET ASIDE AND CANCELLED for lack of factual and legal basis. SO ORDERED. ~

RESOLUTION CTA AC No. 138 Page 2 of4 In the Motion, respondents cite the grounds therefor, to wit: "1. THE HONORABLE COURT ERRED IN HOLDING THAT PETITIONER IS NOT A 'NON-BANK FINANCIAL INTERMEDIARY' WHICH IS A CATEGORY OF A 'BANK AND OTHER FINANCIAL INSTITUTIONS', AS DEFINED UNDER SECTION 131 (E) OF R.A. 7160, OTHERWISE KNOWN AS THE 'LOCAL GOVERNMENT CODE OF 1991', SECTION 2.3 OF REVENUE REGULATIONS (RR) NO. 9-2004, ISSUED BY THE BUREAU OF INTERNAL REVENUE, AND SECTION 4101 Q.1 OF THE MANUAL OF REGULATIONS FOR NON-BANK FINANCIAL INSTITUTION. 2. THE COURT ERRED IN CONCLUDING THAT 'SINCE THERE IS NO SHOWING THAT PETITIONER WAS AUTHORIZED BY THE BANGKO SENTRAL NG PILIPINAS (BSP) TO PERFORM QUASI-BANKING ACTIVITIES, PETITIONER CANNOT BE TREATED AS NON-BANK FINANCIAL INTERMEDIARY'. 3. THE COURT ERRED IN HOLDING THAT PETITIONER'S ASSETS HAVING BEEN DECLARED AS BELONGING TO THE GOVERNMENT BY THE SUPREME COURT IN REPUBLIC V. COCOFED, G.R. NOS. 147062-64, DECEMBER 14, 2001 I IS EXEMPT FROM PAYMENT OF LOCAL BUSINESS TAX." In support thereof, respondents argue as follows: 1. By way of exception to Section 133 (a), limiting the taxing power of local government units to impose levy on income tax, respondents have the authority to impose taxes "on Banks and Other Financial Institutions" as provided for under Section 143(f) of Republic Act No. 7160, otherwise known as the "Local Government Code of 1991", in relation to Section 131 (E) of the same Code, which were merely reiterated in Section 69 (f), and Section 5 (b3) of Davao City Ordinance No. 158-05; 2. Since the said Section 131 (e) failed to define exactly what constitutes a "bank and other financial institutions" reference should be made to other provisions of law or rules and regulations covering such matter, i.e., Section 2.3 of Revenue Regulations No. 9-2004 issued on June 21, 2004 by the Bureau t

RESOLUTION CTA AC No. 138 Page 3 of4 of Internal Revenue, and Section 4101 Q.1 of the Manual of Regulations for Non-Bank Financial Institutions; 3. This Court failed to appreciate that petitioner's primary purpose for its incorporation as embodied in its Amended Articles of Incorporation and the nature of its business vis-a-vis with the definitions of Non-bank Financial Intermediaries show that its business, indeed, falls squarely within the purview of the term "Non-bank Financial Intermediaries"; 4. This Court failed to grasp that the act of petitioner in subscribing, purchasing and holding San Miguel Corporation (SMC) shares of stocks, and consequently receiving regularly an annual dividends and making money placements to maximize profits, are not isolated transactions, but are in themselves the continuing act of investing and placement of funds being contemplated for "Non-bank Financial Intermediaries"; 5. The non-issuance of license by the Bangko Sentral ng Pilipinas (BSP) does not ipso facto exclude petitioner from the definition of a "non-bank financial intermediary" as provided under the above-cited manual and regulations. What should prevail is not the fact of whether an authority was given by the BSP, as the petitioner could deliberately evade the same by not filing an application therein, but rather the real nature and substance of its business operation, which consists primarily and regularly of investments in shares of stocks in SMC and money placements; and 6. The ruling in Philippine Coconut Producers Federation, Inc. (COCOFED), et a/. vs. Republic of the Philippines, 1 does not delve on the taxability of the fund or on its income but solely on the public nature of the fund. The fact that this fund is still in the hands of a private petitioner clearly negates its claim that the fund belongs to the government. In its Opposition/Comment, petitioner contends the following: 1. As correctly held by the Court, there is no showing that petitioner is a non-bank financial intermediary; 2. In light of the ruling of the Supreme Court that petitioner and its SMC shares are government property, the respondent City Treasurer has no authority to impose local business taxes on the income thereof; and 1 G.R. Nos. 177857-58 and 178193, January 24, 2012. �t

RESOLUTION CTA AC No. 138 Page 4 of4 3. The income of petitioner is not subject to local business tax, considering that petitioner is a holding company. THE COURT'S RULING Respondents' Motion for Reconsideration lacks merit. After a careful examination and consideration of respondents' Motion for Reconsideration, it is noted that the arguments raised therein are mere reiterations of matters which have already been considered, weighed and resolved by this Court in the assailed Decision. Finding no compelling reason to reconsider, modify or reverse the assailed Decision, We shall no longer belabor in this Resolution, to repeat the disquisitions and rulings made therein. WHEREFORE, premises considered, the instant Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED. . ERL~.UY Associate Justice WE CONCUR: keuW.M~~-C~ ON LEAVE CIELITO N. MINDARO-GRULLA Associate Justice ROMAN G. DEL ROSARIO Presiding Justice