nullification of an interlocutory order issued in the
said case should, likewise, be filed with the CTA.
E. Tax Refund and Tax credit
GR No. 175723, 04 February 2014
CITY OF MANILA v. HON. GRECIA-CUERDO,
SM, STAR APPLIANCE CENTER, SUPERVALUE,
INC., ACE HARDWARE, WATSON, JOLLIMART,
SURPLUS
FACTS:
Petitioner City of Manila, through its treasurer,
petitioner Liberty Toledo, assessed taxes for the
taxable period from January to December 2002
against private. respondents. In addition to the
taxes purportedly due from private respondents,
pursuant to Sections 14, 15, 16, 17 of the Revised
Revenue Code of Manila (RRCM), said
assessment covered the local business taxes
petitioners were authorized to collect under Section
21 of the same Code. Because payment of the
taxes assessed was a precondition for the issuance
of their business permits, private respondents were
constrained to pay the P19,316,458.77 assessment
under protest.
On January 24, 2004, private respondents filed with
the RTC of Pasay City the complaint denominated
as one for "Refund or Recovery of Illegally
and/or Erroneously-Collected Local Business
Tax, Prohibition with Prayer to Issue TRO and
Writ of Preliminary Injunction" which was
docketed as Civil Case No. 040019-CFM before
public respondent's sala. In the amended
complaint, private respondents alleged that the
provisions of the RRCM were violative of the
limitations and guidelines under Section 143 (h) of
Republic Act No. 7160 [Local Government Code]
on double taxation. They further averred that
petitioner city's Ordinance No. 8011 which
amended pertinent portions of the RRCM had
already been declared to be illegal and
unconstitutional by the Department of Justice.
RTC granted private respondent’s application for a
writ of preliminary injunction and denied the latter’s
Motion for Reconsideration. CA dismissed
petitioners' petition for certiorari holding that it
has no jurisdiction over the said petition. The CA
ruled that since appellate jurisdiction over private
respondents' complaint for tax refund, which was
filed with the RTC, is vested in the Court of Tax
Appeals (CTA), pursuant to its expanded
jurisdiction under Republic Act No. 9282 (RA 9282),
it follows that a petition for certiorari seeking
Ca likewise denied petitioner’s Motion for
Reconsideration.
ISSUE: Whether or not the CTA has jurisdiction
over a special civil action for certiorari assailing an
interlocutory order issued by the RTC in a local tax
case.
HELD: YES.
On March 30, 2004, the Legislature passed into law
Republic Act No. 9282 (RA 9282) amending RA
1125 by expanding the jurisdiction of the CTA,
enlarging its membership and elevating its rank to
the level of a collegiate court with special
jurisdiction. Pertinent portions of the amendatory
act provides thus:
Sec. 7. Jurisdiction — The CTA shall
exercise:
Exclusive appellate jurisdiction to review by
appeal, as herein provided:
Xxx
3. Decisions, orders or resolutions of the
Regional Trial Courts in local tax cases
originally decided or resolved by them in the
exercise of their original or jurisdiction;
Xxx
The prevailing doctrine is that the authority to issue
writs of certiorari involves the exercise of original
jurisdiction which must be expressly conferred by
the Constitution or by law and cannot be implied
from the mere existence of appellate jurisdiction.
While there is no express grant of such power, with
respect to the CTA, Section 1, Article VIII of the
1987 Constitution provides, nonetheless, that
judicial power shall be vested in one Supreme
Court and in such lower courts as may be
established by law and that judicial power includes
the duty of the courts of justice to settle actual
controversies involving rights which are legally
demandable and enforceable, and to determine
whether or not there has been a grave abuse of
discretion amounting to lack or excess of
jurisdiction on the part of any branch or
instrumentality of the Government.
Indeed, in order for any appellate court, to
effectively exercise its appellate jurisdiction, it
must have the authority to issue, among others,
a writ of certiorari. In transferring exclusive
jurisdiction over appealed tax cases to the CTA,
it can reasonably be assumed that the law
intended to transfer also such power as is
deemed necessary, if not indispensable, in aid
of such appellate jurisdiction. This Court has
held as early as the case of JM Tuason v Jaramillo
et al that "if a case may be appealed to a
particular court or judicial tribunal or body,
then said court or judicial tribunal or body has
jurisdiction to issue the extraordinary writ of
certiorari, in aid of its appellate jurisdiction."
This principle was affirmed in De Jesus v CA where
the Court stated that "a court may issue a writ of
certiorari in aid of its appellate jurisdiction if
said court has jurisdiction to review, by appeal
or writ of error, the final orders or decisions of
the lower court."
If this Court were to sustain petitioners' contention
that jurisdiction over their certiorari petition lies with
the CA, this Court would be confirming the exercise
by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter
— precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice.
Thus, the Court agrees with the ruling of the CA
that since appellate jurisdiction over private
respondents' complaint for tax refund is vested
in the CTA, it follows that a petition for
certiorari seeking nullification of an
interlocutory order issued in the said case
should, likewise, be filed with the same court.
To rule otherwise would lead to an absurd situation
where one court decides an appeal in the main
case while another court rules on an incident in the
very same case.
FALLO: Petition is DENIED.
Take Note:
1. The case was moot and academic. Court
discovered that a Decision in the main case
had already been rendered by the RTC on
August 13, 2007 which ordered the
defendant to grant tax refund or credit and
enjoined it from collecting taxes under Sec.
21 of the RRCM. The decision was already
final and executory. Nevertheless, the Court
found it necessary to resolve the issue on
jurisdiction.
2. Petitioners availed of the wrong remedy when
they filed the instant special civil action for
certiorari under Rule 65 of the Rules of
Court in assailing the Resolutions of the CA
which dismissed their petition filed with the
said court and their motion for
reconsideration of such dismissal. The
assailed Resolutions of the CA are in the
nature of a final order as they disposed of
the petition completely. It is settled that in
cases where an assailed judgment or order
is considered final, the remedy of the
aggrieved party is appeal. Hence, in the
instant case, petitioner should have filed
a petition for review on certiorari under
Rule 45, which is a continuation of the
appellate process over the original case.
Considering that the present petition was filed
within the 15-day reglementary period for filing a
petition for review on certiorari under Rule 45, that
an error of judgment is averred, and because of the
significance of the issue on jurisdiction, the Court
deems it proper and justified to relax the rules and,
thus, treat the instant petition for certiorari as a
petition for review on certiorari.
MS. LIBERTY M. TOLEDO, in her official
capacity as the City Treasurer of Manila and the
City of Manila, petitioners, vs. METRO MANILA
SHOPPING MECCA CORP., SHOEMART INC.,
SM PRIME HOLDINGS INC., STAR APPLIANCES
CENTER, SUPERVALUE, INC., ACE
HARDWARE PHILIPPINES, INC., HEALTH AND
BEAUTY, INC., JOLLIMART PHILS., CORP., AND
SURPLUS MARKETING CORPORATION,
respondents.
FACTS:
The SM Group of Companies (SM Group, for
brevity) comprises of the respondents in this case.
The City treasurer made assessments of local
business taxes for the 4th quarter of year 2001
under section 21 (Tax on Business Subject to
Excise Tax, VAT or Percentage Taxes under NIRC)
of the City Ordinance which SM Group paid
accordingly amounting to 5M plus. However,
independently of amounts collected under section
21, the City treasurer assessed the SM groups of
local taxes imposed upon retailers, wholesalers,
exporters and importers pursuant to section 17
(Tax on Retailers) of the City Ordinance.
Hence SM Group filed a judicial action for a TRO
and for a refund of the taxes they paid under
protest against Toledo, the City Treasurer of Manila
and City of Manila (petitioners, for brevity) with the
RTC Manila.
RTC Manila declared the assessments made on
taxes paid under section 21 are null and void
ordering refund or alternatively, to issue tax credits
for the amount. Hence, this petition for review by
the City treasurer.
1st ISSUE: WON THE ASSESSMENTS OF LOCAL
BUSINESS TAXES FOR THE FOURTH (4th)
QUARTER OF YEAR 2001 UNDER SECTION 21,
ARE FINAL AND COLLECTIBLE, AND
THEREFORE, VALID - Yes
RULING:
Petitioners are correct in contending that that the
RTC did not acquire jurisdiction due to respondents'
failure to file the Amended Complaint within the
prescribed period, including the failure to file a
written claim for refund or credit, in violation of R.A.
No. 7160.
At the outset, it must be pointed out that the nature,
applicable statutory provisions and requirements of
an assessment and a claim for refund differ. In local
taxation, Section 195 of R.A. No. 7160 provides for
the remedies available to taxpayers in case of
assessment; while Section 196 of the same Code
refers to the requirements for refund.
In the CAB, SM Group of companies submitted a
letter of protest dated October 19, 2001 addressed
to the City treasurer. The City treasurer
responded, denying the letter of protest which was
received by SM Group on November 22, 2001.
Records indicate that although respondents filed a
protest on the assessments on October 19, 2001,
the Petition filed before the RTC was filed beyond
the reglementary period. Section 195 of R.A. No.
7160 categorically states that "the taxpayer
shall have thirty (30) days from the receipt of
the denial of the protest or from the lapse of the
sixty (60)-day period prescribed herein within
which to appeal with the court of competent
jurisdiction otherwise the assessment becomes
conclusive and unappealable". The denial of the
protest was received by respondents on November
22, 2001; however, they failed to contest the same
before a court of competent jurisdiction within the
allowable period, viz., thirty (30) days from receipt
of the denial of the protest. In fact, respondents
only filed their Petition and the Amended Complaint
on October 20, 2003 and November 14, 2003,
respectively. It took them almost two (2) years
from the date of receipt of the denial of the protest
on November 22, 2001 to seek judicial recourse;
way more than the legally prescribed thirty (30) day
period.
Accordingly, the subject assessments became
conclusive and unappealable when respondents
failed to question the same before a competent
court within thirty (30) days from receipt of the
denial of their protest under the rules.
2nd ISSUE: WON SM Group can CLAIM FOR
REFUND – No.
RULING:
Based on Section 196 of R.A. No. 7160, there
are two requisites for a refund claim or tax
credit of local taxes, namely:
(1) a written claim for refund or credit must be
filed with the local treasurer before filing an
action for refund with the appropriate court;
(2) the refund claim or tax credit must be filed
before the court within two (2) years from the
date of payment of the tax, fee or charge.
Although SM Group satisfied the second requisite
(filing claim of refund before the court) as
prescribed in Section 196 of R.A. No. 7160, they
had failed to file a written claim for refund or
credit with the petitioner local treasurer, under
the first requisite, in violation of the same provision.
Compliance with the two requisites is
mandatory.
Letter of protest dated October 19, 2001 is not
treated as a written claim for refund as settled in
China Banking Corporation vs. City Treasurer of
Manila. this Court declared that a written protest
cannot be considered as a written claim for refund,
and ruled that: The above letter (of protest)
speaks for itself. The wordings of the letter are
explicit and unequivocal that petitioner merely
notified the respondent that it is paying under
protest the amount representing the alleged local
government tax and that they are presently
instituting the appropriate legal actions to effect
refund of any erroneous/excessive payment made.
It is not the written claim for refund as
contemplated under Section 196 of the Local
Government Code.
Having failed to comply with the requirements
prescribed by Section 196, the complaint for refund
was prematurely filed for failure to exhaust
administrative remedies. Where the enabling
statute indicates a procedure for administrative
review, and provides a system of administrative
appeal, or reconsideration, the courts, for reason of
law, comity, and convenience, will not entertain a
case unless the available remedies have been
resorted to and the appropriate authorities have
been given an opportunity to act and correct the
errors committed in the administrative forum.
The afore-quoted case squarely applies in the
instant case. Respondents' letter dated October
19, 2001 disputing petitioners' assessments of
local business taxes for the fourth (4th) quarter
of year 2001, is merely a protest-letter, and
should not be treated as a written claim for
refund. In said letter, respondents did not
categorically request for the refund of the
amount they paid as local business taxes.
Hence, respondents failed to comply with the
requirements of Section 196 of R.A. No. 7160.
There being no written claim for refund or credit
filed with the petitioner local treasurer, the RTC
did not acquire jurisdiction over respondents'
refund claim. Thus, the RTC's decision granting
respondents' claim for refund is void. A void
judgment for want of jurisdiction is no
judgment at all.
F. Challenging Tax Ordinance
Section 187. Procedure for Approval and Effectivity
of Tax, Ordinances and Revenue Measures;
Mandatory Public Hearings. –
The procedure for approval of local tax ordinances
and revenue measures shall be in accordance with
the provisions of this Code:
Provided, That public hearings shall be conducted
for the purpose prior to the enactment thereof:
Provided, further, That any question on the
constitutionality or legality of tax ordinances or
revenue measures may be raised on appeal within
thirty (30) days from the effectivity thereof to the
Secretary of Justice who shall render a decision
within sixty (60) days from the date of receipt of the
appeal:
Provided, however, That such appeal shall not
have the effect of suspending the effectivity of the
ordinance and the accrual and payment of the tax,
fee, or charge levied therein:
Provided, finally, That within thirty (30) days after
receipt of the decision or the lapse of the sixty-day
period without the Secretary of Justice acting upon
the appeal, the aggrieved party may file appropriate
proceedings with a court of competent jurisdiction.
Pelizloy Realty Corporation vs. Province of
Benguet
FACTS:
Petitioner Pelizloy Realty Corporation ("Pelizloy")
owns Palm Grove Resort, which is designed for
recreation and which has facilities like swimming
pools, a spa and function halls. It is located at Asin,
Angalisan, Municipality of Tuba, Province of
Benguet.
On December 8, 2005, the Provincial Board of the
Province of Benguet approved Provincial Tax
Ordinance No. 05-107, otherwise known as the
Benguet Revenue Code of 2005 ("Tax Ordinance").
Section 59, Article X of the Tax Ordinance levied a
ten percent (10%) amusement tax on gross
receipts from admissions to "resorts, swimming
pools, bath houses, hot springs and tourist spots."
Section 162 of the Tax Ordinance provided that the
Tax Ordinance shall take effect on January 1, 2006.
It was Pelizloy's position that the Tax Ordinance's
imposition of a 10% amusement tax on gross
receipts from admission fees for resorts, swimming
pools, bath houses, hot springs, and tourist spots is
an ultra vires act on the part of the Province of
Benguet. Thus, it filed an appeal/petition before the
Secretary of Justice on January 27, 2006.
The appeal/petition was filed within the thirty
(30)-day period from the effectivity of a tax
ordinance allowed by Section 187 of Republic
Act No. 7160, otherwise known as the Local
Government Code (LGC). Under Section 187 of
the LGC, the Secretary of Justice has sixty (60)
days from receipt of the appeal to render a
decision. After the lapse of which, the
aggrieved party may file appropriate
proceedings with a court of competent
jurisdiction.
Treating the Secretary of Justice's failure to
decide on its appeal/petition within the sixty
(60) days provided by Section 187 of the LGC as
an implied denial of such appeal/petition,
Pelizloy filed a Petition for Declaratory Relief
and Injunction before the Regional Trial Court,
Branch 62, La Trinidad, Benguet.
Petitioner Pelizloy argued that Section 59, Article X
of the Tax Ordinance imposed a percentage tax in
violation of the limitation on the taxing powers of
local government units (LGUs) under Section 133
(i) of the LGC. Thus, it was null and void ab initio.
Respondent, The Province of Benguet assailed the
Petition for Declaratory Relief and Injunction as an
improper remedy. It alleged that once a tax liability
has attached, the only remedy of a taxpayer is to
pay the tax and to sue for recovery after exhausting
administrative remedies. On substantive grounds,
the Province of Benguet argued that the phrase
‘other places of amusement’ in Section 140 (a) of
the LGC encompasses resorts, swimming pools,
bath houses, hot springs, and tourist spots since
"Article 220 (b) (sic)" of the LGC defines
"amusement" as "pleasurable diversion and
entertainment x x x synonymous to relaxation,
avocation, pastime, or fun."
RTC Ruling:
Procedurally, the RTC ruled that Declaratory Relief
was a proper remedy. On the validity of Section 59,
Article X of the Tax Ordinance, the RTC noted that,
while Section 59, Article X imposes a percentage
tax, Section 133 (i) of the LGC itself allowed for
exceptions. It noted that what the LGC prohibits is
not the imposition by LGUs of percentage taxes in
general but the "imposition and levy of percentage
tax on sales, barters, etc., on goods and services
only." It further gave credence to the Province of
Benguet's assertion that resorts, swimming pools,
bath houses, hot springs, and tourist spots are
encompassed by the phrase ‘other places of
amusement’ in Section 140 of the LGC.
On May 21, 2008, the RTC denied Pelizloy’s
Motion for Reconsideration.
Aggrieved, Pelizloy filed the present petition on
June 10, 2008 on pure questions of law. It assailed
the legality of Section 59, Article X of the Tax
Ordinance as being a (supposedly) prohibited
percentage tax per Section 133 (i) of the LGC.
ISSUE: Whether or not the province may
impose amusement tax on resorts, swimming
pools, bath houses, hot springs, and tourist
spots.
Ruling: NO
Amusement taxes are fixed at a certain percentage
of the gross receipts incurred by certain specified
establishments.
However, provinces are not barred from levying
amusement taxes even if amusement taxes are a
form of percentage taxes. Section 133 (i) of the
LGC prohibits the levy of percentage taxes "except
as otherwise provided" by the LGC.
Section 140 of the LGC provides: Evidently,
Section 140 of the LGC carves a clear exception to
the general rule in Section 133 (i). Section 140
expressly allows for the imposition by provinces of
amusement taxes on "the proprietors, lessees, or
operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of
amusement."
However, resorts, swimming pools, bath houses,
hot springs, and tourist spots are not among those
places expressly mentioned by Section 140 of the
LGC as being subject to amusement taxes. Thus,
the determination of whether amusement taxes
may be levied on admissions to resorts, swimming
pools, bath houses, hot springs, and tourist spots
hinges on whether the phrase ‘other places of
amusement’ encompasses resorts, swimming
pools, bath houses, hot springs, and tourist spots.
Under the principle of ejusdem generis, "where a
general word or phrase follows an enumeration of
particular and specific words of the same class or
where the latter follow the former, the general word
or phrase is to be construed to include, or to be
restricted to persons, things or cases akin to,
resembling, or of the same kind or class as those
specifically mentioned."
In Philippine Basketball Association v. Court of
Appeals, the Supreme Court had an opportunity to
interpret a starkly similar provision or the
counterpart provision of Section 140 of the LGC in
the Local Tax Code then in effect. Petitioner
Philippine Basketball Association (PBA) contended
that it was subject to the imposition by LGUs of
amusement taxes (as opposed to amusement
taxes imposed by the national government). In
support of its contentions, it cited Section 13 of
Presidential Decree No. 231, otherwise known as
the Local Tax Code of 1973, (which is analogous to
Section 140 of the LGC) providing the following:
Section 13. Amusement tax on admission. - The
province shall impose a tax on admission to be
collected from the proprietors, lessees, or operators
of theaters, cinematographs, concert halls, circuses
and other places of amusement xxx.
Considering these, it is clear that resorts, swimming
pools, bath houses, hot springs and tourist spots
cannot be considered venues primarily "where one
seeks admission to entertain oneself by seeing or
viewing the show or performances". While it is true
that they may be venues where people are visually
engaged, they are not primarily venues for their
proprietors or operators to actively display, stage or
present shows and/or performances.

Applying the principle of ejusdem generis, the
Supreme Court rejected PBA's assertions and
noted that:
In determining the meaning of the phrase 'other
places of amusement', one must refer to the prior
enumeration of theaters, cinematographs, concert
halls and circuses with artistic expression as their
common characteristic. Professional basketball
games do not fall under the same category as
theaters, cinematographs, concert halls and
circuses as the latter basically belong to artistic
forms of entertainment while the former caters to
sports and gaming. [Underscoring supplied]
Thus, resorts, swimming pools, bath houses, hot
springs and tourist spots do not belong to the same
category or class as theaters, cinemas, concert
halls, circuses, and boxing stadia. It follows that
they cannot be considered as among the ‘other
places of amusement’ contemplated by Section 140
of the LGC and which may properly be subject to
amusement taxes.
WHEREFORE, the petition for review on certiorari
is GRANTED. SO ORDERED.

In the present case, the Court need not embark on

a laborious effort at statutory construction.

Section 131 (c) of the LGC already provides a clear

definition of ‘amusement places’: Section 131.
Definition of Terms. - When used in this Title, the
term:

xxx

(c) "Amusement Places" include theaters, cinemas,

concert halls, circuses and other places of
amusement where one seeks admission to
entertain oneself by seeing or viewing the show or
performances [Underscoring supplied]

Indeed, theaters, cinemas, concert halls, circuses,

and boxing stadia are bound by a common typifying
characteristic in that they are all venues primarily
for the staging of spectacles or the holding of public
shows, exhibitions, performances, and other events
meant to be viewed by an audience. Accordingly,
‘other places of amusement’ must be interpreted in
light of the typifying characteristic of being venues
"where one seeks admission to entertain oneself by
seeing or viewing the show or performances" or
being venues primarily used to stage spectacles or
hold public shows, exhibitions, performances, and
other events meant to be viewed by an audience.