View full case

CHINA BANKING CORPORATION v. CITY TREASURER OF MANILA

FACTS:

The petitioner, China Banking Corporation (CBC), filed a petition for review on certiorari before the Court of Tax Appeals (CTA) assailing the decisions of the CTA En Banc and the CTA Division. CBC sought the refund of P154,398.50 collected by the respondent City Treasurer of Manila under Section 21 of Ordinance Nos. 7988 and 8011. The facts of the case were undisputed. On January 2007, CBC was assessed by the City Treasurer of Manila for local business tax, business permits, and other fees for taxable year 2007. CBC paid the assessed amount but protested the imposition of business tax under Section 21, claiming it was not liable and that it constituted double taxation. CBC requested a refund but the City Treasurer did not resolve the protest. CBC filed a Petition for Review before the RTC, which granted the petition and ordered the refund. The City Treasurer filed a motion for reconsideration, but it was denied. The CTA Division reversed the RTC decision on the ground that the petition for review was filed out of time. CBC's motion for reconsideration was also denied by the CTA Division. The CTA En Banc affirmed the ruling of the CTA Division, stating that the petition for review was filed beyond the reglementary period allowed by law.

The case involves a dispute between Coca-Cola Bottlers Philippines, Inc. (CBC) and the City Treasurer of Manila regarding the imposition of additional tax by the City Treasurer under certain ordinances. CBC filed a written protest questioning the assessment and paid the assessed amount under protest. However, the City Treasurer did not take any action on the protest. CBC then filed a petition for review with the Regional Trial Court (RTC) to appeal the inaction of the City Treasurer. The CTA En Banc found that the petition was filed one day late, resulting in the loss of CBC's right to appeal. The CTA En Banc also ruled that CBC was precluded from raising the defense of the validity of the assessment. CBC filed a motion for reconsideration, which was denied. CBC then filed a petition for certiorari before the Supreme Court (SC), claiming that the CTA En Banc erred in reversing the ruling of the trial court solely based on the late filing of the original petition. CBC argued that the assessment was invalid due to the unconstitutionality of the ordinances on which it was based. The City Treasurer argued that CBC did not file a formal letter of protest, and therefore its claim for refund should be dismissed. The SC ruled that CBC's protest was validly filed and that the period for the City Treasurer to act on the protest and for CBC to appeal should be reckoned from the date of filing of the protest.

Section 196 of Republic Act No. 9646 provides that a taxpayer may file an appeal with the CTA within thirty days from the receipt of the denial of a claim for refund. In this case, CBC filed a claim for refund with the City Treasurer, but the latter failed to act on the claim within the prescribed period. Consequently, CBC filed an appeal with the CTA. The CTA En Banc ruled that CBC lost its right to challenge the City Treasurer's "denial due to inaction" since it failed to file the appeal within thirty days from the deemed denial. CBC argued that since the City Treasurer did not act on its claim, there was no actual denial, and thus no need to file an appeal within the prescribed period. However, the CTA En Banc disagreed and held that the failure to act within the prescribed period amounts to a denial by operation of law.

ISSUES:

  1. Did CBC properly file its protest against the assessment of the City Treasurer?

  2. When should the period to act on the protest and the period to appeal a "denial due to inaction" be reckoned?

  3. Was CBC's appeal filed on time?

  4. Did the RTC have jurisdiction over CBC's appeal?

  5. Whether the review taken by the Regional Trial Court (RTC) over the denial of the protest by the local treasurer falls under the court's original jurisdiction or appellate jurisdiction.

  6. Whether the proper remedy for the Corporation from the RTC judgment is an ordinary appeal under Rule 41 to the Court of Appeals.

  7. Whether the City Treasurer has the original jurisdiction to decide claims for tax refund.

  8. Whether the Metropolitan, Municipal, and Municipal Circuit Trial Courts have jurisdiction over claims for tax refund below the jurisdictional amount of the Regional Trial Courts (RTC).

RULING:

  1. The Court finds that CBC was able to properly file its protest against the assessment of the City Treasurer.

  2. The period to act on the protest and the period to appeal a "denial due to inaction" should be reckoned from the date CBC filed its protest, which is January 15, 2007.

  3. The Court agrees with the CTA En Banc that CBC lost its right to challenge the City Treasurer's "denial due to inaction" because it failed to file its appeal within the prescribed period.

  4. Even if CBC's appeal was considered timely filed, it must still be dismissed because it was not filed with a court of competent jurisdiction.

  5. The review taken by the RTC over the denial of the protest by the local treasurer falls within the court's original jurisdiction. The denial of the protest is not the judgment or order of a lower court, but of a local government official. The RTC exercises initial judicial cognizance of the matter and does not act as an appellate court.

  6. The proper remedy for the Corporation from the RTC judgment is an ordinary appeal under Rule 41 to the Court of Appeals. While the Court recognized that the RTC exercised its original jurisdiction over cases decided by a local treasurer, with the advent of Republic Act No. 9282, the jurisdiction of the RTC over such cases is no longer simply original and exclusive. Section 7(a)(3) of Republic Act No. 9282 provides that the Court of Tax Appeals (CTA) exercises exclusive appellate jurisdiction to review decisions of the RTC in local tax cases. However, Republic Act No. 9282 does not apply to this case as it arose prior to the effectivity of the said law.

  7. The City Treasurer does not have original jurisdiction to decide claims for tax refund because it is not a "court" within the context of Batas Pambansa (B.P.) Blg. 129. Moreover, B.P. 129 expressly delineates the appellate jurisdiction of the RTC, confining it to cases decided by Metropolitan, Municipal, and Municipal Circuit Trial Courts. Hence, the City Treasurer's authority is not equivalent to that of a court.

  8. The Metropolitan, Municipal, and Municipal Circuit Trial Courts have jurisdiction over claims for tax refund below the jurisdictional amount of the RTC. Section 33(1) of B.P. 129 provides that these lower courts have exclusive original jurisdiction over civil actions, including claims for tax refund, where the value of the personal property, estate, or amount of the demand does not exceed a certain amount.

PRINCIPLES:

  • The perfection of an appeal in the manner and within the period laid down by law is mandatory and jurisdictional.

  • The right to appeal is not a natural right nor a part of due process. It is merely a statutory privilege and may only be exercised in accordance with the provisions of the law.

  • The period to act on a protest and the period to appeal a "denial due to inaction" should be reckoned from the date of filing of the protest.

  • The RTC does not have jurisdiction over appeals from decisions of the city treasurer involving assessments imposed by the latter.

  • The review of the RTC over the denial of a protest by a local treasurer falls under the court's original jurisdiction.

  • The proper remedy from an RTC judgment in a local tax case is an ordinary appeal under Rule 41 to the Court of Appeals, unless the case arose after the effectivity of Republic Act No. 9282.

  • The City Treasurer does not have the authority of a court in deciding claims for tax refund.

  • Claims for tax refund must be filed before a court of competent jurisdiction.

  • The burden is on the taxpayer to show strict compliance with the conditions for the grant of a tax refund or credit.

  • The Metropolitan, Municipal, and Municipal Circuit Trial Courts have jurisdiction over claims for tax refund below the jurisdictional amount of the Regional Trial Courts.