The Court of Tax Appeals (CTA) has stopped the Caloocan City government from imposing percentage or common carriers tax on the Light Rail Transit (LRT).
The court's Second Division said the collection of the business tax by the LGU is tantamount to double taxation as transport companies are already remitting this tax to the national government.
The LGU started imposing the tax when the Light Rail Transit Administration transferred the ownership of the railway system to a private company, the Light Rail Manila Corp. (LRMC).
It insisted that the new owner has lost the legislative or operational franchise and became a mere transport contractor.
The LRMC elevated the case to the tax court after the Caloocan Regional Trial Court did not stop the LGU from imposing the business tax.
In 20-page decision, the court said LRMC is a common carrier as defined under Article 1732 of the Civil Code, engaged in the transport of passengers and goods.
"The Court finds the petitioner to have satisfied all the requirements for it to be considered a common carrier, thus, it is exempt from the payment of local business tax under Section 113 (j) of the Local Government Code," it added.
The court said the position of the petitioner is further bolstered by its continues filing of the common carriers tax to the Bureau of Internal Revenue as prescribed under Section 117 of the Tax Code.
The 31-page resolution was penned by Associate Justice Jean Marie Bacorro-Villena and concurred in by Second Division Chairman Juanito Castaneda Jr.