Nursery Care Corporation vs. Acevedo, GR No.

180651 dated July 30, 2014

Facts: The City of Manila assessed and collected taxes from the individual petitioners pursuant to Section
15 (Tax on Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the Revenue Code
of Manila. At the same time, the City of Manila imposed additional taxes upon the petitioners pursuant to
Section 21 ofthe Revenue Code of Manila, as amended, as a condition for the renewal of their respective
business licenses for the year 1999. Section 21 of the Revenue Code of Manila stated:

Section 21. Tax on Business 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 National Internal Revenue Code, hereinafter referred 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 calendar year is hereby imposed:

A) On person who sells goods and services in the course of trade or businesses; x x x
PROVIDED, that all registered businesses in the City of Manila already paying the
aforementioned tax shall be exempted from payment thereof.

To comply with the City of Manila’s assessment of taxes under Section 21, the petitioners paid
under protest.

Later, the petitioners formally requested the Office of the City Treasurer for the tax credit or
refund of the local business taxes paid under protest, to which the City Treasurer denied.

The petitioners pointed out that although Section 21 of the Revenue Code of Manila was not itself
unconstitutional or invalid, its enforcement against the petitioners constituted double taxation because
the local business taxes under Section 15 and Section 17 of the Revenue Code of Manila were already
being paid by them. They contended that the proviso in Section 21 exempted all registered businesses in
the City of Manila from paying the tax imposed under Section 21; and that the exemption was more in
accord with Section 143 of the Local Government Code, the law that vested in the municipal and city
governments the power to impose business taxes.

The respondents counter, however, that double taxation did not occur from the imposition and
collection of the tax pursuant to Section 21 of the Revenue Code of Manila; that the taxes imposed
pursuant to Section 21 were in the concept of indirect taxes upon the consumers of the goods and
services sold by a business establishment; and that the petitioners did not exhaust their administrative
remedies by first appealing to the Secretary of Justice to challenge the constitutionality or legality of the
tax ordinance.

When the matter was elevated to the RTC, the trial court rendered judgment against petitioners.
The CA affirmed the trial’s court decision.

Issue: Whether the collection of taxes under Section 21 of Ordinance No. 7794, as amended, constitutes
double taxation.

Held: Yes. All the elements of double taxation concurred upon the City of Manila’s assessment on and
collection from the petitioners of taxes for the first quarter of 1999 pursuant to Section 21 of the Revenue
Code of Manila.

Firstly, because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold
goods and services in the course of trade or business based on a certain percentage of his gross sales or
receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed the tax on a
person who sold goods and services in the course of trade or business but only identified such person
with particularity, namely, the wholesaler, distributor or dealer (Section 15), and the retailer (Section
17), all the taxes – being imposed on the privilege of doing business in the City of Manila in order to make
the taxpayers contribute to the city’s revenues – were imposed on the same subject matter and for the
same purpose.

Secondly, the taxes were imposed by the same taxing authority (the City of Manila) and within the
same jurisdiction in the same taxing period (i.e., per calendar year).

Thirdly, the taxes were all in the nature of local business taxes.
City of Davao vs. Randy Allied Ventures, Inc., GR No. 241697 dated July 29, 2019

Facts: RAVI is one of the Coconut Industry Investment Fund (CIIF) holding companies established to own
and hold the shares of stock of San Miguel Corporation (SMC).

On January 24, 2012, the Supreme Court rendered its decision in Philippine Coconut Producers
Federation, Inc. v. Republic (COCOFED), docketed as G.R. Nos. 177857-58 and 178793, declaring the CIIF
companies, including RAVI, and the CIIF block of SMC shares as "public funds necessarily owned by the
Government." 

On January 17, 2013, RAVI filed with the RTC, a claim for refund or credit of erroneously and
illegally collected LBT for the taxable year 2010. RAVI claimed that petitioners erroneously and illegally
collected LBT in the amount of ₱503,346.00, corresponding to its dividends from its SMC preferred
shares, on the mistaken assumption that it is a non-bank financial intermediary (NBFI).

For their part, petitioners maintained that RAVI's activities in owning shares and receiving
dividends and interest income constitute investing or doing business as an NBFI.

RTC denied the claim for refund or credit. The CTA reversed the trial court’s decision. It held that
RAVI cannot be considered an NBFI for failing to meet the requisites provided under the General Banking
Law, Manual of Regulations for Non-Bank Financial Institutions, and the National Internal Revenue
Code, i.e., it is not authorized to act as an NBFI by the BSP; its principal function does not relate to NBFI
activities; and that while its primary purpose may involve one of the activities enumerated in the BSP
Manual, there was no proof that it performed such activities as its principal function and on a regular and
recurring basis

Issue: Whether RAVI is liable to pay local business tax.

Held: No. Since RAVI is not a bank or other financial institution, i.e., an NBFI, it cannot be held liable for
LBT under Section 143 (f) of the LGC.

Essentially, LBT are taxes imposed by local government units on the privilege of doing business
within their jurisdictions. To be sure, the phrase "doing business" means some "trade or commercial
activity regularly engaged in as a means of livelihood or with a view to profit." Particularly, the LBT
imposed pursuant to Section 143 (f) is premised on the fact that the persons made liable for such tax are
banks or other financial institutions by virtue of their being engaged in the business as such. This is why
the LBT are imposed on their gross receipts from "interest, commissions and discounts from lending
activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale
of property, insurance premium."

In this case, it is clear that RAVI is neither a bank nor other financial institution, i.e., an NBFI. In
order to be considered as an NBFI under the National Internal Revenue Code, banking laws, and pertinent
regulations, the following must concur:

a. The person or entity is authorized by the BSP to perform quasi-banking functions;

b. The principal functions of said person or entity include the lending, investing or placement of
funds or evidences of indebtedness or equity deposited to them, acquired by them, or otherwise
coursed through them, either for their own account or for the account of others; and
c. The person or entity must perform any of the following functions on a regular and recurring, not
on an isolated basis, to wit:
1. Receive funds from one (1) group of persons, irrespective of number, through traditional
deposits, or issuance of debt or equity securities; and make available/lend these funds to
another person or entity, and in the process acquire debt or equity securities;
2. Use principally the funds received for acquiring various types of debt or equity
securities;
3. Borrow against, or lend on, or buy or sell debt or equity securities.