But the CTA Special Second Division rejected FEU’s appeal for a refund as it upheld the Manila Regional Trial Court’s decision backing Manila’s imposition of business taxes and mayor’s permit fees on the Recto-based school.
“Petitioner (failed to raise meritorious arguments to justify the reversal of the assailed Decision and Resolution. Hence, the denial of the instant Petition for Review is in order. Wherefore, the instant Petition for Review filed by Far Eastern University is denied, for lack of merit,” wrote Associate Justice Juanito C. Castaneda Jr. in his 32-page decision.
The decision was fully concurred by Associate Justices Catherin T. Manahan while Associate Justice Jean Marie Bacorro-Villena inhibited from the case.
Associate Justice Maria Rowena Modesto-San Pedro gave a partial dissent on the CTA decision as she believed that FEU was entitled to refunds.
“The courts in the present petition already obtained jurisdiction over the issue on the disputed local tax assessment, it can grant a refund in favor of the taxpayer when it finds that the disputed local tax assessment (which was paid under protest) is void or has no basis in fact or law,” Modesto-San Pedro said.
“To require the taxpayer who obtained a favorable ruling (to the effect that the local tax assessment which he paid is void) to comply first with Section 196 of the LGC (Local Government code) before the amount which he erroneously or illegally paid to the local government unit can be recovered is a heedless exercise to the detriment of the taxpayer,” she said.
“In this case, the law promotes unjust enrichment in the LGU’s favor as the latter is given the free use of the amount due the taxpayer while the claim for refund or credit of the same is pending before the local treasurer or the courts although the invalidity of the local tax assessment paid by the taxpayer has already been ruled upon,” she added.
The CTA sided with FEU’s stand that Manila’s 2015 tax assessment of the school’s dues in 2009 and 2010 was beyond the five-year assessment period of local taxes.
Manila argued that the period could be extended to 10 years “from discovery of fraud or intent to evade payment” as it accused FEU of making a substantial amount of “under declared income and paying only P1,320.00.”
The CTA, however, said Manila failed to substantiate its fraud allegations against FEU.
“There being no fraud or intention to evade payment, and considering that the assessment of business taxes issued on 18 June 2015 was disputed on 22 July 2015, only the assessment for the years 2011, 2012, and 2013 would remain,” said CTA.
Despite being void, CTA did not order Manila to return FEU’s money for the 2009 and 2010 tax payments because the Montinolas did not file a written claim to get back their money.