PUYAT & SONS INC vs CITY OF MANILA G.R. No. L-17447 April 30, 1963

FACTS:

Plaintiff Gonzalo Puyat & Sons Inc is engaged in the business of manufacturing and selling all kinds of furniture.

Acting pursuant to an ordinance, the defendant City Treasurer of Manila assessed from plaintiff retail dealer’s tax the sales of furniture manufactured and sold by it and its factory site.

All assessments were paid by plaintiff without protest in the erroneous belief that it was liable thereof not knowing that pursuant to an ordinance, it is exempt from the payment of taxes being a manufacturer of various kinds of furniture.

After learning about the ordinance, plaintiff filed with defendant City Treasurer of Manila a formal request for refund of the retail dealer’s taxes unduly paid.

The City Treasurer, however, denied the said request for refund.

ISSUE: Whether or not the defendant is obliged to refund the amount which the plaintiff paid

HELD: Yes. The plaintiff was actually exempted from paying the tax assessed, hence, it was clearly an error or mistake which makes it fall under Art 2154 of solution indebiti. Art 2154 provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.

Alongside with this, Art 2156 is also applicable which states that if the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. Plaintiff had duly proved that taxes were not lawfully due. Therefore, there is no doubt that the provisions of solution indebiti apply in this case.