Manila ordered to pay Metrobank P10.8 M in tax refund

MANILA, Philippines - The City of Manila is ordered to pay P10.8 million worth of tax refund to the Metropolitan Bank and Trust Company after the Court of Tax Appeals (CTA) upheld a ruling of the Manila Regional Court which found the local government guilty of unlawfully collecting business taxes from the bank.

In its 19-page ruling released on Monday, the CTA rejected the argument of the City Treasurer of Manila when it said that another claim for tax refund should have been filed because of the discrepancy between Metrobank's claim of P10.771 million and the P10.87 million awarded by the Manila RTC.

"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 CTA 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 case started in 2007 when Metrobank protested the tax assessment made by the City of Manila. The local government ordered the bank to submit audited financial statements of its branches, which the bank followed along with the payment of its taxes. The same year, the bank filed a claim for excess payment of taxes on the basis of Manila city government's violation of its revenue code.

After the City of Manila failed to respond to the claim, the bank elevated the case to the Manila RTC which ruled in favor of Metrobank.

The City of Manila, in turn, filed for a motion for reconsideration but it was denied, prompting it to bring the case to the CTA.