GR 190818; (June, 2013) (Digest)
G.R. No. 190818 ; June 5, 2013
METRO MANILA SHOPPING MECCA CORP., ET AL., Petitioners, vs. MS. LIBERTY M. TOLEDO, ET AL., Respondents.
FACTS
In October 2001, the City Treasurer of Manila assessed the petitioners for local business taxes under Section 21 of the Manila Revenue Code. The petitioners paid the assessed amount of ₱5,104,281.26 under protest on October 20, 2001, simultaneously filing a letter contesting the ordinance’s constitutionality. The City Treasurer denied the protest. On October 20, 2003, the petitioners filed a complaint with the Regional Trial Court (RTC) seeking a refund, arguing the tax assessment was void based on a prior Supreme Court ruling that nullified the amendatory ordinances. The RTC ruled in favor of the petitioners, ordering a refund.
The respondents appealed to the Court of Tax Appeals (CTA). The CTA Division reversed the RTC, holding the petitioners failed to file their judicial claim within the 60-day period from the denial of their protest as required by the Local Government Code, making the assessment final. It also ruled the petitioners did not file a proper written claim for a refund with the City Treasurer before going to court. The CTA En Banc affirmed this decision.
ISSUE
Whether the petitioners are entitled to a refund of the local business taxes they paid under protest.
RULING
No, the petitioners are not entitled to a refund. The Supreme Court affirmed the CTA En Banc’s decision, emphasizing strict adherence to statutory claim procedures under the Local Government Code. First, the petitioners failed to appeal the City Treasurer’s denial of their protest to a competent court within 60 days, as mandated by Section 195 of the Code. Consequently, the tax assessment became conclusive and unappealable. Their judicial action filed in 2003 was therefore filed out of time.
Second, the Court ruled that the petitioners did not comply with the mandatory condition precedent under Section 196 of the Local Government Code, which requires the filing of a written claim for refund or credit with the local treasurer before any judicial action can be maintained. The letter sent by the petitioners was a protest against the assessment’s validity, not a claim for refund of an erroneously or illegally collected tax. These are distinct remedies with different requirements. The failure to file the requisite written administrative claim for a refund is fatal to their judicial suit. The constitutional challenge to the ordinance does not excuse compliance with these procedural rules, which are jurisdictional.