501 Phil. 666
QUISUMBING, J.:
Upon evaluation of petitioner's application, then OIC of the License Division, Ms. Jesusa E. Cuneta, issued to petitioner, a billing slip[6] assessing the following taxes against petitioner:
Gross Sales Receipts for Calendar Year 1997 P 453,799,493.29 Gross Sales Receipts for Calendar Year 1998 267,952,766.67[5] January to August
On September 11, 1998, petitioner paid the assessed amount of P1,898,106.96 under protest. The City Treasurer issued therefor Official Receipt No. 9065025C[8] and approved the petitioner's application for retirement of business from Makati to Pasig City.
For the 4th Quarter of 1998 (based on 1997 gross sales) As ManufacturerP 14,439.54 As Wholesaler550,778.58 Garbage Fee1,250.00 Sub-TotalP 566,468.12 For the Gross Sales made in 1998 As ManufacturerP 40,008.33 As Wholesaler1,291,630.51 Sub-Total1,331,638.84 TOTAL ASSESSED BUSINESS TAXESP 1,898,106.96[7]
In summary, the pertinent law provides that a person or entity doing business in the Municipality shall be subject to business tax. The tax shall be fixed by the quarter. The initial tax for the quarter in which a business starts to operate shall be two and one-half percent (2½%) of one percent (1%) of its capital investment. Thereafter, the tax shall be computed based on the gross sales or receipts of the preceding quarter. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross sales or receipts for the preceding calendar year. That tax shall accrue on the first day of January of each year and payment shall be made within the first 20 days of January or of each subsequent quarter as the case may be.Petitioner filed a Motion for Reconsideration[13] which was denied in an Order dated May 15, 2002, hence this appeal.
Considering therefore that the business tax accrues only on the first day of January as provided in Sec. 3A.07 and becomes payable within the first 20 days thereof or of each subsequent quarter, the payments made by Mobil in the year 1998 are therefore payments for the business tax for 1997 which accrued in January of 1998 and became payable within the first 20 days of January or of each subsequent quarter. Thus, upon retirement in August 1998, the taxes for said year which should accrue in January 1999 [become] immediately payable before the application for retirement can be approved (Ibid, (g), Sec. 3A.08). The assessment of the Chief of the License Division of Makati is therefore with legal basis and does not constitute double taxation.
WHEREFORE, premises considered, the instant petition for refund is hereby DENIED and the case is dismissed for lack of merit.
SO ORDERED.[12]
THE TRIAL COURT ERRED IN HOLDING THAT PETITIONER'S BUSINESS TAX PAYMENTS MADE IN 1998 ARE ACTUALLY PAYMENTS FOR BUSINESS TAXES IN 1997. THIS CONCLUSION IS CONTROVERTED BY MAKATI CITY'S REVENUE CODE, AND, IN FACT, CONSTITUTES DOUBLE TAXATION.[14]Simply stated, the issue is: Are the business taxes paid by petitioner in 1998, business taxes for 1997 or 1998?
Sec.3A.04. Computation of tax for newly-started business. In the case of newly-started business under Sec. 3A.02, (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), and (m) above, the tax shall be fixed by the quarter. The initial tax of the quarter in which the business starts to operate shall be two and one half percent (2 ½ %) of one percent (1%) of the capital investment.Under the Makati Revenue Code, it appears that the business tax, like income tax, is computed based on the previous year's figures. This is the reason for the confusion. A newly-started business is already liable for business taxes (i.e. license fees) at the start of the quarter when it commences operations. In computing the amount of tax due for the first quarter of operations, the business' capital investment is used as the basis. For the subsequent quarters of the first year, the tax is based on the gross sales/receipts for the previous quarter. In the following year(s), the business is then taxed based on the gross sales or receipts of the previous year. The business taxes paid in the year 1998 is for the privilege of engaging in business for the same year, and not for having engaged in business for 1997.
In the succeeding quarter or quarters, in cases where the business opens before the last quarter of the year, the tax shall be based on the gross sales or receipt for the preceding quarter at one-half ( ½ ) of the rates fixed therefor by the pertinent schedule in Section 3A.02, (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), and (m).
In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross sales or receipts for the preceding calendar year, or any fraction thereof as provided in the same pertinent schedules.[16]
Based on this foregoing provision, on the year an establishment retires or terminates its business within the municipality, it would be required to pay the difference in the amount if the tax collected, based on the previous year's gross sales or receipts, is less than the actual tax due based on the current year's gross sales or receipts.. . .
(g) Retirement of business.. . .
For purposes thereof, termination shall mean that business operation are stopped completely.. . .
(2) If it is found that the retirement or termination of the business is legitimate, [a]nd the tax due therefrom be less than the tax due for the current year based on the gross sales or receipts, the difference in the amount of the tax shall be paid before the business is considered officially retired or terminated.[17]