G.R. No. 247331 - Hon. Lourdes R. Jose, in her capacity as City Treasurer of Caloocan vs. Tigerway Facilities and Resources, Inc.

In 2005, Tigerway Facilities and Resources, Inc. applied for the renewal of its mayor’s permit.
The Caloocan City Business Permit and Licensing Office (BPLO) issued an initial Order of Payment on January 21, 2005, requiring payment of PHP 219,429.80 for local business tax and fees.
After the payment of the assessed amount, the mayor’s permit was issued; however, the BPLO later issued additional demands.
A Final Demand followed by a Notice of Deficiency (dated July 15, 2005) and a subsequent Last and Final Demand (dated December 2, 2005) were issued, all alleging additional deficiencies based on ocular inspections (on May 27, 2005 and June 10, 2005) and purported misrepresentations concerning the nature of Tigerway’s business, number of employees, and the size of its business area.
Additional Orders of Payment were issued on December 8, 2005 and December 29, 2005; the latter reflected a reduced amount of PHP 500,000.00, which was paid by Tigerway on the same day.

On December 27, 2007, Tigerway filed a written claim for refund or credit with the City Treasurer, arguing that the additional assessments lacked both factual and legal basis and asserting that its real liability for business taxes for 2005 was only PHP 234,234.79.
On the following day, Tigerway initiated a Complaint for Refund or Credit of Local Tax before the Regional Trial Court (RTC) under Section 196 of the Local Government Code (LGC), seeking a refund of PHP 485,195.01 (the difference between its total payments and the alleged correct liability).
The RTC ruled in favor of Tigerway, ordering the City Treasurer to refund or credit the disputed amount and denying the Treasurer’s counterclaim.
The City Treasurer moved for reconsideration, which was denied by the RTC. Dissatisfied, the Treasurer elevated the case to the Court of Tax Appeals (CTA).

The CTA Third Division denied the City Treasurer’s petition, basing its ruling on discrepancies in the inspection documents and the absence of adequate factual and legal basis in the notices of assessment.
The CTA Third Division confirmed that Tigerway had appropriately availed the remedy under Section 196 by timely filing both its written claim and subsequent judicial complaint.
The City Treasurer’s motion for reconsideration was denied by the CTA Third Division, prompting the Treasurer to elevate the case to the CTA En Banc.

The CTA En Banc, in its Decision, denied the City Treasurer’s Petition for Review, reiterating that the notices of assessment did not sufficiently specify the factual and legal basis for the tax due.
The En Banc opinion emphasized that Tigerway’s choice to invoke the remedy under Section 196, as evidenced by the title of its Complaint, was proper, and that all procedural requirements were met.
Additional administrative issues included the City Treasurer’s failure to prove that the supplementary documents (intended to substantiate the additional assessment) were received by Tigerway.
Subsequent resolutions, including orders for address update and disciplinary warnings against Tigerway’s counsel for noncompliance with the court’s directives, were issued.

Section 195 provides the avenue for contesting a tax assessment by filing a written protest within 60 days, thereby setting forth the factual and legal basis of the assessment.
Section 196 explicitly provides the remedy for the recovery (via refund or credit) of erroneously paid or illegally collected taxes, requiring a written claim and timely court action within two years from payment.

The contention focused on whether the proper administrative remedy in this case was a protest under Section 195 or a claim for refund under Section 196.

Whether the appropriate remedy for Tigerway was to invoke Section 196 of the Local Government Code, given the absence of a properly detailed notice of assessment required under Section 195.

Did the notice(s) issued by the City Treasurer contain the necessary factual and legal basis to trigger the protest remedy under Section 195?
Is it justified to apply Section 196 when the assessment’s basis is inadequate under the due process requirements?

Whether Tigerway’s failure to protest within the prescribed 60-day period (pertinent to Section 195) precludes it from claiming a refund under Section 196.

Can the taxpayer, after paying the assessed tax, timely pursue a refund by alleging that the additional assessments were void?
Were all procedural requisites under Section 196 properly observed in the filing of the written claim and the subsequent judicial action?

Whether the award of legal interest on the refund amount (PHP 485,195.01) is warranted in light of the absence of any arbitrariness or statutory authorization for such interest.