SC orders Makati City to refund Mobil Phils P1.3M

The Supreme Court (SC) has ordered the Makati City government to refund Mobil Philippines, Inc., over P1.3 million business taxes which it wrongly collected from the oil company in 1998.

In an eight-page decision penned by Justice Leonardo Quisumbing, the SC’s first division reversed the decision of the Pasig City Regional Trial Court (RTC) branch 268 which denied the claims for refund of Mobil Philippines.

The High Court said the Makati City government erroneously treated the assessment and collection of Mobil’s business tax as if it were income tax, by rendering an additional assessment of P1.331 million for the revenue generated by Mobil for the year 1998 when it moved its place of business from Makati to Pasig City.

The High Court said a business tax imposed is paid for the privilege of carrying on a business in the year the tax was paid.

The High Court said as a prerequisite to the conduct of business, the business tax is paid at the beginning of the year as a fee to allow the business to operate for the rest of the year.

On the other hand, the High Court said an income tax is a tax on all yearly profits arising from property, professions, trades or offices, or as a tax on a person’s income, emoluments, profits and the like and it is due on or before the 15th day of the fourth month following the close of the taxable year.

"For the year 1998, petitioner (Mobil) paid a total of P2,262,122.48 to the City as business taxes for the year 1998. The amount of tax as computed based on petitioner’s gross sales for 1998 is only P1,331,638.84. Since the amount paid is more than the amount computed based on petitioner’s actual gross sales for 1998, petitioner, upon retirement of its business in Makati City, is not liable for additional taxes to the City of Makati" the High Court said.