Swedish Match Philippines, Inc. v. The Treasurer of City of Manila G.R. No. 181277, July 3, 2013

"What constitutes double taxation"

FACTS:

This is a case filed by the petitioner for Refund of Taxes. In its letter to the City of Manila Treasurer, the petitioner claimed double taxation when it paid business taxes under Sections 14 and 21 of Ordinance No. 7794 which is the Manila Revenue Code. The respondent contends that both sections refer to two distinct objects of tax, hence they are not the same in character and kind that will result in double taxation. The RTC, CTA division and CTA en banc denied the petition for a tax refund filed by the petitioner.

ISSUE:

Whether or not both sections of the Manila Revenue Code constitute double taxation

RULING:

Yes, there is double taxation.

The ELEMENTS OF DOUBLE TAXATION ARE:

The taxes are imposed on
1. The same subject matter
2. For the same purpose
3. By the same taxing authority
4. Within the same taxing jurisdiction
5. For the same taxing period
6. The same kind of character

While the petitioner is liable for the payment of business taxes to the City of Manila, the fact that it already paid under section 14 of the Manila Revenue Code, it is already precluded from paying the tax imposed under section 21 of the same code.

As has been noted by the court, both sections are imposed for the following:
1. for the same subject matter,  which is for doing business in the City of Manila
2. for the same purpose, which his to contribute to the city revenues
3. By the same taxing authority, which is the City of Manila
4. Within the same taxing jurisdiction, which is the territory of City of Manila
5. For the same taxing period, which is the same calendar year when both taxes were paid
6. For the same kind of character, which is a local business tax

Considering these nature of taxes paid by the petitioner under both sections of the Code, the court held that the petitioner is entitled to a tax refund for the tax it paid under Section 21.