b. Refund or Credit

Local Tax Refunds and Tax Credits

Under Section 196 of Republic Act No. 7160, no court case or proceeding may be maintained for the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim for refund or credit has first been filed with the local treasurer¹. Furthermore, no court shall entertain any such proceeding after the expiration of two years from the date of payment of the tax, fee, or charge, or from the date the taxpayer is entitled to a refund or credit¹.

Where a taxpayer seeks a refund after receiving an assessment, two conditions must be satisfied: the taxpayer must pay the tax and administratively assail the assessment before the local treasurer within sixty days, and thereafter file an action in court within thirty days from the local treasurer's decision or inaction, as explained in City Treasurer of Manila v. Philippine Beverage Partners, Inc., G.R. No. 233556, 7 December 2020². Additionally, City Treasurer of Manila rules that the issuance of a notice of assessment is mandatory and a requirement of due process; hence, a local treasurer cannot collect alleged deficiency taxes for a different taxing period by merely raising them as a defense to offset a taxpayer's refund claim².

For real property taxes, Section 252 provides that no protest shall be entertained unless the taxpayer first pays the tax, with the words "paid under protest" annotated on the tax receipt, and files a written protest within thirty days from payment³. If the protest is finally decided in favor of the taxpayer, the protested amount shall be refunded or applied as a tax credit³. Where an assessment of basic real property tax is found illegal or erroneous and is reduced or adjusted, Section 253 allows the taxpayer to file a written claim for refund or credit for taxes and interests within two years from the date of entitlement to such reduction or adjustment, which the provincial or city treasurer must decide within sixty days from receipt⁴.