A CONDOMINIUM CORPORATION, NOT BEING ENGAGED IN BUSINESS, IS NOT SUBJECT TO LOCAL BUSINESS TAXES

Petitioner City Treasurer of Taguig City filed a Motion for Reconsideration (MR) against the decision of the Court of Tax Appeals (CTA) En Banc which dismissed its Petition for Review due to lack of jurisdiction. The Petitioner argues, among others, that the Respondent, Bellagio Two Condominium Association, Inc., is not exempt from Local Business Taxes (LBT), emphasizing that tax exemptions must be strictly construed against the taxpayers. In ruling, the Court held that condominium corporations are not subject to LBT. It clarifies that being exempt from LBT differs from not being liable to pay or not subject to LBT, and that the Respondent does not invoke tax exemption from LBT but rather asserts that it is not one of those entities that can be taxed with LBT. The Court further states that the Respondent is not engaged in business. It clarifies that condominium corporations are not subject to LBT unless they are engaged in profit-oriented activities. Consequently, a condominium corporation that engages in profit-oriented activities is subject to LBT. To controvert the findings of the lower courts, the Petitioners must show that the Respondent is engaged in activities beyond the scope of those allowed by the Condominium Corporation. First, the collection of membership or association dues was found to be within those allowed by the Corporation Code. Second, the Petitioners failed to provide evidence substantiating its claim that the Respondent collects rental fees for the use of its amenities. Third, it did not sufficiently establish that the Respondent is akin to recreational clubs offering luxury features and social amenities which could classify it as a business enterprise. Given the absence of sufficient evidence that the Respondent is engaged in business, the Court found no basis for subjecting it to LBT. As to the issue of jurisdiction, the Court held that Environmental Impact Fees (EIF) and Business Plate/Sticker Fees (BPF) are regulatory fees, not taxes, and therefore, the Court has no jurisdiction over issues involving them. Thus, the MR is PARTIALLY DENIED for lack of merit and PARTIALLY DISMISSED for lack of jurisdiction.  [THE CITY TREASURER & THE CITY GOVERNMENT OF TAGUIG CITY VS. BELLAGIO TWO CONDOMINIUM ASSOCIATION, INC., CTA EN BANC CASE. NO. 2843, APRIL 7, 2025]

[THE WARRANT, BY ITSELF, IS NOT EQUIVALENT TO THE CIR’S FINAL DECISION UNLESS IT CATEGORICALLY STATES THAT THE TAXPAYER’S PROTEST IS DENIED] [IF THE TAXPAYER OPTED TO WAIT FOR THE CIR’S FINAL DECISION AFTER THE LAPSE OF THE 180-DAY PERIOD, THE WARRANT OF DISTRAINT AND/OR LEVY (WDL) CANNOT BE CONSTRUED AS DENIAL OF THE PROTEST. OTHERWISE, IT WILL NEGATE THE TAXPAYER’S OPTION TO WAIT]

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review praying for the Court of Tax Appeals (CTA) En Banc to reverse the Resolution setting aside the Warrant of Distraint and/or Levy (WDL) and the Warrant of Garnishment (WOG) issued to the Respondent Opal Portfolio Investments (FISTC-AMC Asset Management Company), Inc.  The Petitioner argued that the assessment had already become final and executory due to the Respondent’s failure to file a valid protest.  Specifically, the Petitioner claimed that the Respondent erroneously filed its protest with the Assistant Commissioner for Large Taxpayers Service (ACIR-LTS) instead of the Deputy Commissioner for Operations (DCIR-Operations), thereby rendering the protest invalid, and that the issuance of the warrants to collect the delinquent taxes is proper. It points out that the assailed warrants constituted the final decision of the BIR on the assessment, with the distraint or levy serving as an implied denial. On the other hand, the Respondent argues that the warrants were issued in violation of due process, arguing that the Petitioner has yet to render its decision on the protest to the Formal Letter of Demand (FLD). It states that without a decision on the protest, the assessment is not yet final and executory to warrant the institution of collection remedies. The issue for the Court to resolve is whether the assessments have already become final and executory. In ruling, the Court held that the assessment is not final and executory pending administrative appeal. It states that the guidelines prescribing the venue of the protest are not jurisdictional and failure to comply should not deprive the taxpayer of its right to appeal. It also clarified that the rule that the WDL or other act of collection shall be considered as the CIR’s final decision does not apply where it disregards a valid protest lodged by the taxpayer, and it does not indicate in clear and unequivocal terms that it is the final decision. The Court also points out the need to distinguish between a WDL which constitutes a final denial of the taxpayer’s protest to the assessment, and a WDL which does not. A WDL which constitutes the CIR’s final decision is one which properly considered and categorically denied the taxpayer’s protest pursuant to Algue, Union Shipping, and Isabela Culture cases, and is reviewable by appeal to the CTA. On the other hand, a WDL does not constitute a constructive denial of the protest to the assessment when the taxpayer opted to await the CIR’s final decision after the lapse of the 180-day period, and the WDL is not reviewable by ordinary appeal because there is no final decision yet to review. In this case, where the WDL is not the CIR’s final decision, the proper remedy is a Petition for Certiorari under Rule 65. And finally, the Court held that the issuance of WDL violates the Respondent’s right to due process. A WDL must be issued based on the existence of delinquent taxes. Since there was a pending appeal with the CIR when the warrants were issued, the WDL was considered as issued to collect taxes that are not yet delinquent and is therefore VOID. Thus, the Petition is DENIED for lack of merit. [COMMISSIONER OF INTERNAL REVENUE VS. OPAL PORTFOLIO INVESTMENTS (FISTC-AMC ASSET MANAGEMENT COMPANY), INC., CTA EN BANC CASE NO. 2868, MARCH 31, 2025]