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G.R. No. 251065, 30 June 2021 Makati City and The City Treasurer of Makati City, Petitioner Vs Metro Pacific RESOURCES INC. (MPRI), Respondent

The court ruled that Makati City erroneously collected local business tax from MPRI, a holding company. MPRI's dividend and interest income do not constitute 'gross receipts' under the law. As MPRI is not an investment company, bank, or financial intermediary, it is not liable for the tax imposed on those entities. The court ordered Makati City to refund the erroneously collected tax amount to MPRI.

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58 views2 pages

G.R. No. 251065, 30 June 2021 Makati City and The City Treasurer of Makati City, Petitioner Vs Metro Pacific RESOURCES INC. (MPRI), Respondent

The court ruled that Makati City erroneously collected local business tax from MPRI, a holding company. MPRI's dividend and interest income do not constitute 'gross receipts' under the law. As MPRI is not an investment company, bank, or financial intermediary, it is not liable for the tax imposed on those entities. The court ordered Makati City to refund the erroneously collected tax amount to MPRI.

Uploaded by

KateDeseo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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G.R. No.

251065, 30 June 2021


MAKATI CITY and the CITY TREASURER OF MAKATI CITY, petitioner vs METRO PACIFIC
RESOURCES INC. (MPRI), respondent

Facts:
MPRI is a holding company duly organized under Philippine laws. On January 21, 2011, the City
of Makati issued Billing Assessment Form, assessing MPRI for LBT in the amount of Php
6,896,385.34. The assessment was computed based on the dividend and the interest income
reported in MPRI's financial statements in 2010. MPRI paid the total assessed amount on
January 31, 2011.
Subsequently, on January 25, 2013, MPRI filed an administrative claim before the City
Treasurer of Makati City, for the refund of allegedly erroneously collected LBT. MPRI argued
that the dividend and interest income reported in the FS do not constitute 'gross receipts,' as
defined in Section 131 (n) of the Local Government Code (LGC) and Section IB.01 (g) of the
Revised Makati Revenue Code. On January 29, 2013, MPRI filed a complaint before the
Regional Trial Court (R TC) requesting the refund of the amount of Php 6,896,385.34.
Decision of the RTC
The RTC denied MPRI’s claim. It ruled that MPRI is a holding company taxed as a specific class
of its own under Section 3A.02 (p) of the Makati Revenue Code.
Decision of the CTA Division
The CTA Division reversed the RTC Decision and ordered the City of Makati to refund MPRI the
Php 6,896,385.34 erroneously collected LBT. It ruled that MPRI is not a non-bank financial
institution taxable under Section 3A.02 (p) in relation to subsection (h) of the Makati Revenue
Code. Further, MPRI had the option to ask for a cash refund, or the issuance of a tax credit
certificate of erroneously or illegally collected tax. MPRI opted for the refund.
Decision of the CTA En Banc
The CTA En Banc affirmed the CT A Division and held that MPRJ could not be considered a
non-bank financial institution because it is not primarily engaged in investment activities; it does
not source its revenue exclusively from dividend and interest income.
Issue/s:
Whether or not the City of Makati is correct in collecting the subject local business tax.
Ruling:
The Court ruled in negative. The Court did not agree that MPRI should be taxed like a non-bank
financial institution under subsection (h). The CTA found that MPRI is not an entity authorized
by the BSP to perform quasi-banking functions. MPRl did not advertise itself as lending,
investing, or financing company. To be exact, there is no proof that MPRl is principally engaged
in investment activities. The Court agreed with the CTA that although MPRI's Articles of
Incorporation may involve one of the activities enumerated in the BSP Manual of Regulations for
Non-Bank Financial Institutions, the primary purpose, standing alone, is inadequate to justify the
conclusion that MPRI is performing functions of a financial intermediary.
The Court ruled that since MPRI is not an investment company, a bank, or other financial
intermediary, it is not liable for LBT at the rate imposed under Section 3A.02 (h) of the Makati
Revenue Code. Therefore, the Php 6,896,385.34 LBT paid to the City of Makati is an erroneous
or illegally collected tax that may be refunded.
Lastly, Section 7B.14 (d) of the Makati Revenue Code allows taxpayers to either claim for a
refund or credit of erroneously or illegally collected tax. The option is upon the taxpayer. And, if
the taxpayer opted for a tax credit, the amount may not be recovered in the form of cash. Here,
MPRl had consistently applied for the refund of erroneously paid LBT when it filed the claim with
the City Treasurer of Makati City, the complaint with the RTC, and thereafter, with the CTA.
There is no basis for the City of Makati's argument that MPRl's claim may only be granted in the
form of a tax credit.

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