Bank wins refund case vs Manila gov’t

MANILA, Philippines—The Court of Tax Appeals affirmed the decision of the Manila City Regional Trial Court ordering the City Government of Manila to refund to Metropolitan Bank and Trust Company some P10.8 million worth of unlawfully collected business taxes.

In a 19-page decision made public Monday, the Tax Court second division called as untenable the argument made by the City Treasurer of Manila that another claim for tax refund should have been filed because of the discrepancy between its claim of P10.771 million and the amount which the Manila Court awarded of P10.870 million.

“Nowhere does the Local Government Code of 1991 provide that the demand for refund has to be the exact amount claimed to the last decimal point or else consider one’s claim for naught,” the tax court said.

“This is too literal reading of the law that tends to frustrate the fundamental principle of equity, that those who erroneously paid in good faith must be given back what is his, as no man should unjustly enrich himself at the expense of another,” it added.

The tax court added that the Manila Court did not err when it allowed the bank to amend its petition for refund because it is upon the discretion of the court. Besides, the tax court added that the City Treasurer of Manila was given an opportunity to be heard.

It added that contrary to the claims of the City of Manila that the lower court merely relied its ruling on a witness, there are other documentary evidence that the court relied on for its ruling.

“Based on the documentary evidence submitted by respondent, borrowing the words of the court a quo, respondent has sufficiently established its entitlement for the refund of the taxes it previously paid with the City Treasurer’s Office of Manila,” the tax court said.

The tax court added that there is no need to file another tax refund claim upon the assumption of Manila Mayor Alfredo Lim in office.

The case stemmed in 2007 when the bank protested the tax assessment made by the City of Manila. The city of Manila denied the protest and ordered the bank to submit audited financial statements of its branches to which it complied at the same time paid the business taxes.

That same year, the bank filed a claim for refund for excess payment of business taxes for 2007 on the basis that the City Government unlawfully collected business taxes under the Manila Revenue Code.

After the City of Manila failed to reply on the claim, the bank filed a case with the Manila Court which ruled in favor of the bank. The City of Manila filed a motion for reconsideration but was also denied prompting them to take the case to the Tax Court.