City of Manila vs Cosmos Bottling Corp

G.R. No. 196681, June 27, 2018

FACTS:
For the first quarter of 2007, the City of Manila assessed Cosmos local business taxes and regulatory fees.
Cosmos protested the assessment arguing that Tax Ordinance have been declared null and void. It 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.

Cosmos tendered payment of only P131,994.23 which they posit is the correct computation of their local
business tax for the first quarter of 2007. This payment was refused by the City Treasurer. Cosmos also received a
letter from the City Treasurer denying their protest and was constrained to pay the assessment of P1,226,78,1.05.
Cosmos filed its complaint with the RTC of Manila praying for the refund or issuance of a tax credit certificate in the
amount of P1,094,786.82.

RTC Manila: Ruled in favor of Cosmos but denied claim for refund
CTA 1st Division: City of Manila is ordered to refund or issue a tax credit certificate

Instead of filing a Motion for Reconsideration or new trial, directly filed with the CTA En Banc a petition for
review. CTA En Banc ruled that the direct resort to it without a prior motion for reconsideration or new trial before
the CTA Division violated Revised Rules of the CTA.

ISSUE:
1. WON the CTA En Banc correctly dismissed the petition for review before it for failure of the petitioners to file
a motion for reconsideration or new trial with the CTA Division? YES
2. WON a taxpayer who had initially protested and paid the assessment may shift its remedy to one of refund?
YES

HELD:
1. Section 18 of R.A. No. 1125, as amended by R.A. 9282 and R.A. No. 9503, states that filing of a motion for
reconsideration or new trial before the CTA Division is an indispensable requirement for filing an appeal
before the CTA En Banc. Failure to file such motion for reconsideration or new trial is cause for dismissal of
the appeal before the CTA En Banc.

2. A taxpayer who had protested and paid an assessment may later on institute an action for refund.

The taxpayers' remedies of protesting an assessment and refund of taxes are stated in Sections 195 and
196 of the LGC. The first provides the procedure for contesting an assessment issued by the local treasurer;
whereas, the second provides the procedure for the recovery of an erroneously paid or illegally collected
tax, fee or charge. The foregoing clearly shows that a taxpayer facing an assessment may protest it and
alternatively: (1) appeal the assessment in court, or (2) pay the tax and thereafter seek a refund.

Simply put, 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.
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