Pharmaceutical firm confident to win tax case vs. city gov’t

International Pharmaceuticals Incorporated was confident it would get a favorable ruling from the court when it sought legal refuge on the move of the city government to tax its branches outside Cebu City.

“Personally, I believed it was going to be favorable to us because the law is very clear,” said IPI lawyer Manuel Espina.

Espina said IPI is also confident that its stand would be upheld by the Court of Tax Appeals with whom the city can question the earlier ruling of the Regional Trial Court.

IPI earlier filed the civil action against the city when the latter insisted that IPI should pay business taxes, computed at 70 percent of all sales and transactions of its branches outside Cebu that have been recorded in the company’s lone factory and principal office in barangay Mabolo.

Judge Sylva Paderanga of RTC Branch 16 however ruled that the city cannot do it, even if IPI’s principal office is in the city. He said that the 30-70 percent allocation applies only when the company does not have branches or sales outlets outside the city or municipality where its principal office or factory is located.

The court agreed with the opinion of the Bureau of Local Government Finance of the Department and Finance, which states that “taxing jurisdiction is on the municipality where the selling activity took place.”

The city, for its part, has 15 days upon receipt to appeal the RTC ruling, and Vice Mayor Michael Rama said the city’s lawyers should be extra cautious in determining the necessity of an appeal.

“I would wish they would look into it deeply…they should be extra cautious…it should be handled intelligently…there should be an element of deliberation and circumspection in handling cases,” Rama said.

The city earlier argued that as stipulated in the Implementing Rules and Regulations of the Local Government Code, “30 percent of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located and 70 percent of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant or plantation is located.”  — Joeberth M. Ocao/RAE