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Light in Manila

(Article published in the Apr 25, 2007 issue of Manila Standard Today)    

There is light for Manila business owners at the end of their dark tax tunnel.  Since 27 June 2006, business taxpayers in Manila who want to get back taxes illegally collected by the city for the last seven years, had no recourse but to go to court.  On 14 May, this coming elections, they have a simpler and more effective alternative, i.e. to vote Alfredo S. Lim for mayor. 

 Lim rightfully maintains that the collection of the tax increases from Manila’s businesses under the city’s Tax Ordinance No. 7988 is in effect “extortion, daylight robbery and unjust confiscation of private resources that must be stopped…”  Lim has the decision of the Supreme Court dated 27 June 2006 in the case of Coca-Cola Philippines, Inc. v. City of Manila, et al, backing him up.

 Tax Ordinance No. 7988 was approved by third-termer and thus ineligible for re-election Mayor Lito Atienza on 25 February 2000 to amend certain section of the previous tax ordinance of Manila.  The amendment consisted in increasing the cost of doing business in Manila by raising the tax rates applicable to certain business establishments operating within the city.

 Right from the start, the tax ordinance met resistance, not just the usual screaming that routinely follows increases in tax burden, but formidable legal challenge alleging the taxing authority’s disregard of the taxpayers’ rights.  Its constitutionality was challenged by Coca-Cola at the Department of Justice.  On 17 August 2000, the tax ordinance, like Mexican boxer Solis getting very acquainted with Manny Pacquiao’s gloves during the 6th round of last Sunday’s fight, hit the canvas. The then DOJ secretary Artemio G. Toquero ruled that the ordinance was indeed null and void and without legal effect. 

The sponsors of the tax authorities of Manila, for reasons of, one could only guess, either pure negligence or arrogant defiance, did not file a motion for reconsideration.  Hence the DOJ order declaring Tax Ordinance No. 7988 became final.

 Instead of going back to the drawing boards to address the infirmity cited by the good secretary of justice, the tax collectors of Manila apparently continued to enforce Tax Ordinance No. 7988.  Thus, on 16 November 2000, another taxpayer, Singer Sewing Machine Company, through its lawyer Leonardo A. Aurelio, asked the national government’s Department of Finance, Bureau of Local Government Finance, whether Manila can rightfully continue to collect taxes on the authority of Tax Ordinance No. 7988 despite the justice secretary’s clear statement that it was null and void.  The BLGF, expectedly, on 20 November 2006 ordered the City Treasurer of Manila to cease and desist from enforcing it.  The order ended with the usual, “be guided accordingly.”

 But it looked liked Manila’s tax collectors did not want to “be guided accordingly.” Like Solis, on the seventh round, Tax Ordinance No. 7988 was still on its feet, continuing to do some damage.  Coca-Cola, like Manny Pacquiao, had no choice but to unleash its heavy punches.  On 17 January 2001, it went to court and filed a complaint with the Regional Trial Court of Manila, Branch 21, to stop the continued enforcement of the ordinance declared void.

 Trying to appear unfazed by the impact of his loss at the DOJ, and during the pendency of the case in the lower court, Mayor Atienza on 22 February 2001 approved Tax Ordinance No. 8011, amending certain sections of Tax Ordinance No. 7988.  The purpose of the maneuver was obvious, it was to validate by amendment what was declared invalid.

 Predictably, when this new development was raised at the Department of Justice by Coca-Cola, then Secretary Hernando Perez likewise declared the amendatory ordinance void.  Perez, acting like the veteran teacher that he was at the Ateneo Law School, ruled on 05 July 2001: “Instead of amending Ordinance No. 7988, herein respondent should have enacted another tax measure which strictly complies with the requirements of law, both procedural and substantive.  The passage of the assailed ordinance did not have the effect of curing the defects of Ordinance No. 7988 which, any way, does not legally exist.”

 Manila, learning from its failure to do so in the case of the DOJ pronouncement on Tax Ordinance No. 7988, filed its motion for reconsideration. But it was denied on 12 March 2002.  It was Manila’s turn to go court; the case landed in the Regional Trial Court, Branch 17.

 But by then, the taxpayer’s heavy blows, landing where they counted, had started taking effect.  Just three months earlier, on 28 November 2001, the Regional Trial Court, Branch 21, agreed with the Toquero declaration that Tax Ordinance No. 7988 was a nullity and enjoined the city treasurer from implementing it.

 For its part, Regional Trial Court No. 17, to which the nullity of Tax Ordinance No. 8011 was appealed, dismissed the case on 02 December 2002 for lack of jurisdiction.  Manila appealed the dismissal with the Supreme Court.  The case was docketed there as case No. 157490, but the appeal was dismissed on 23 July 2003.  Motion for reconsideration was denied with finality on 11 August 2003.

 But Manila, like Solis, was not without its fighting spirit.  At the Regional Trial Court, Branch 21, its motion for reconsideration seemed to gain some headway.  The court, unlike Perez, fell for the ruse behind Tax Ordinance No. 8011, and granted Manila’s motion for reconsideration, noting that the assailed ordinance, Tax Ordinance No. 7988, had already been amended by Tax Ordinance N. 8011. Coca-Cola’s motion for reconsideration of the reconsideration was denied; hence, its appeal to the Supreme Court, this case docketed as No. 156252.

 Naturally, all that the Supreme Court had to do, after having earlier affirmed the Perez pronouncement that Tax Ordinance No. 8011 invalidly amended an invalid ordinance, namely Tax Ordinance No. 7988, was to restate and affirm the Toquero ruling that the latter ordinance was a nullity.  It was thus a Manny Pacquiao-like two fisted attack, coming from the Supreme Court, one, in G.R. No. 157490, and this case, earlier filed but later decided, G.R. No. 156252. 

 But the business owners in Manila, like Manny Pacquiao, could not, at this time, consider the sponsors completely out.  Like Solis in a post-fight media interview seeking to retrieve by lip what he lost by fist, those behind Tax Ordinances Nos. 7988 and 8011 could still come back to pursue their intentions by getting themselves elected to the seats of power up for grabs on 14 May.  Unless, of course, they heed the call for their former mayor and vote Alfredo S. Lim back to Manila’s City Hall.