City Treasurer of Manila vs. Philippine Beverage Partners, Inc.

 G.R. No. 233556, September 11, 2019

CITY TREASURER OF MANILA, PETITIONER, v. PHILIPPINE BEVERAGE PARTNERS, INC., SUBSTITUTED BY COCA-COLA BOTTLERS PHILIPPINES, RESPONDENT.

FACTS:

Petitioner City Treasurer of Manila issued SOA to Philippine Beverage Partners, Inc. (respondent). The SOA showed that respondent is liable to pay petitioner local business taxes and regulatory fees.

Respondent protested the assessment arguing that Tax Ordinance Nos. 7988 and 8011, amending the Revenue Code of Manila (RCM), have been declared null and void. Respondent also argued that the collection of local business tax under Section 21 of the RCM in addition to Section 14 of the same code constitutes double taxation.

Petitioner issued a letter to respondent denying the latter's protest which respondent. Thus respondent paid the total amount stated in the SOA. Then, respondent filed a written claim for refund of erroneously/illegally collected tax with petitioner in the same amount paid. Further, respondent filed a Complaint for the Revision of SOA and for Refund or Credit of LBT Erroneously/Illegally Collected with the RTC of Manila.

RTC ordered the refund of the overpayment made by respondent. It held that respondent is already taxed under Section 14 of the RCM, thus, it should no longer be subjected to tax under Section 21 of the same Code.

Petitioner moved for reconsideration but the same was denied by the RTC.

Aggrieved, petitioner filed a Petition for Review with the CTA Second Division.

CTA Second Division affirmed the RTC ruling. 

Petitioner moved for reconsideration, but the same was denied by the CTA Second Division.

Undaunted, petitioner filed a Petition for Review before the CTA En Banc which was DENIED for lack of merit. Petitioner moved for reconsideration, but the same was denied by the CTA En Banc.

Hence, this Petition for Review on Certiorari.

ISSUE:

WHETHER A TAXPAYER  WHO  PROTESTED  AN ASSESSMENT MAY  LATER  ON  INSTITUTE  A  JUDICIAL ACTION FOR REFUND.

RULING:

YES. There are two conditions that must be satisfied in order to successfully prosecute an action for refund in case the taxpayer had received an assessment. One, pay the tax and administratively assail within 60 days the assessment before the local treasurer, whether in a letter-protest or in a claim for refund. Two, bring an action in court within thirty (30) days from decision or inaction by the local treasurer, whether such action is denominated as an appeal from assessment and/or claim for refund of erroneously or illegally collected tax.12 (Emphases supplied and citations omitted)

In this case, after respondent received the assessment on January 17, 2007, it protested such assessment on January 19, 2007. After payment of the assessed taxes and charges, respondent wrote petitioner another letter asking for the refund and reiterating the grounds raised in the protest letter. Then, on February 6, 2007, respondent received the letter denying its protest.

Thus, on March 8, 2007, or exactly thirty (30) days from its receipt of the denial, respondent brought the action before the RTC of Manila. Hence, respondent was justified in filing a claim for refund after timely protesting and paying the assessment.

To reiterate, respondent, after it had protested and paid the assessed tax, is permitted by law to seek a refund having fully satisfied the twin conditions for prosecuting an action for refund before the court.

Consequently, the CTA did not commit a reversible error when it allowed the refund in favor of respondent.

WHEREFORE, the petition is DENIED for lack of merit. 

NOTE:

Application of Section 195 is triggered by an assessment made by the local treasurer or his duly authorized representative for nonpayment of the correct taxes, fees or charges. Should the taxpayer find the assessment to be erroneous or excessive, he may contest it by filing a written protest before the local treasurer within the reglementary period of sixty (60) days from receipt of the notice; otherwise, the assessment shall become conclusive. The local treasurer has sixty (60) days to decide said protest. In case of denial of the protest or inaction by the local treasurer, the taxpayer may appeal with the court of competent jurisdiction; otherwise, the assessment becomes conclusive and unappealable. 

On the other hand, Section 196 may be invoked by a taxpayer who claims to have erroneously paid a tax, fee or charge, or that such tax, fee or charge had been illegally collected from him. The provision requires the taxpayer to first file a written claim for refund before bringing a suit in court which must be initiated within two years from the date of payment. By necessary implication, the administrative remedy of claim for refund with the local treasurer must be initiated also within such two-year prescriptive period but before the judicial action.

Unlike Section 195, however, Section 196 does not expressly provide a specific period within which the local treasurer must decide the written claim for refund or credit. It is, therefore, possible for a taxpayer to submit an administrative claim for refund very early in the two-year period and initiate the judicial claim already near the end of such two-year period due to an extended inaction by the local treasurer. In this instance, the taxpayer cannot be required to await the decision of the local treasurer any longer, otherwise, his judicial action shall be barred by prescription.