Tuesday, April 04, 2006
IPI asks the court: Stop City
With no relief found in other so-called “administrative remedies,” a pharmaceutical firm yesterday asked the court to stop Cebu City Hall from collecting what it said were unwarranted business taxes.
According to the Cebu-based International Pharmaceutical Incorporated (IPI), City Hall has already threatened them with closure unless they pay the taxes.
In the suit, the firm said the tax City Hall wants to be drawn against 70 percent of the firm’s sales from branches outside Cebu City is unwarranted because they’ve already been taxed by the local government units (LGUs) where the branches are located.
The firm impleaded the LGUs of Las Piñas, Davao, Bacolod, Ozamis, Tuguegarao, Zamboanga, Iloilo, Butuan, Ormoc, Opol in Misamis Oriental, Villasis in Pangasinan, and Mag—rao in Camarines Sur.
“We’re happy that this thing is being done. It’s good to get this is cleared once and for all. Not only for IPI but for everyone,” said Bimbo Fernandez, Cebu City Administrator, in reaction.
According to the complaint filed for IPI by lawyers Manuel Espina and Reynaldo Mayol, City Hall refused to renew the company’s business permit.
IPI, Cebu’s largest pharmaceutical company with some 1,500 employees, said the City Government has demanded payment for the tax since July 2000.
The firm obtained the opinion of the Bureau of Local Government Finance that, in January 2004 and again in September 2005, issued findings that invalidated the City Government’s claim.
City Hall, however, ignored the bureau’s findings and, in January 2006, gave the firm five days to pay up.
IPI, in the suit for declaratory relief, interpleader, mandamus, and injunction, wants the court to rule on the validity of the Cebu City government’s tax claim.
It also wants the court to declare which between the Cebu City government and the other LGUs have a valid claim and over what percent of the company’s total sales.
Until then, it wants the court to ensure that it won’t be ordered to stop operating.
“In order to force petition to pay a clearly illegal assessment, respondent City of Cebu has (already) resorted to the coercive tactic of refusing to issue business permit to petitioner IPI,” the firm said.
“Petitioner has paid to respondent City of Cebu the business taxes legally due to the said City,” it said, adding that the City is now obliged to issue them with a business permit.
According to IPI, since the LGUs are exercising conflicting claims, they should interplead and litigate among themselves and determine which taxes they should get.
Section 150 of the Local Government Code of 1991 provides that manufacturers, assemblers, repackers, brewers, distillers, rectifiers and compounders of liquor, distilled spirits and wines, millers, producers, exporters, wholesalers, distributors, dealers, contractors, banks and other financial institutions, and other businesses maintaining or operating branches or sales outlets elsewhere should pay taxes to the city or municipality “where such branch or sales outlet is located.”
But a subparagraph of the provision states that manufacturers, assemblers, contractors, producers and exporters with factories, project officers, plants and plantations in the pursuit of their businesses should pay taxes for 30 percent of all sales in the principal office to the municipality where the principal office is located and pay taxes for 70 percent of its total sales to the city or municipality where the factory, project office, plant or plantation is located.
With this, IPI questioned Cebu City’s tax demands.
“If the City of Cebu insists on taxing 70 percent of the sales at the branches which are already taxed by the LGUs where the branches are located, IPI would be paying 170 percent business tax on the same sales. If IPI pays taxes to Cebu City on 70 percent of the sales and pays taxes on 30 percent to the LGUs where the sales were made, its branch offices will not be issued any business permits by the LGUs,” it said. KNR with a report form GAC)
For Bisaya stories from Cebu. Click here. (April 4, 2006 issue)
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