G.R. No. L-24663 March 31, 1971
SPOUSES RAMON A. GONZALES and LILIA YUSAY, plaintiffs-appellants, vs. PROVINCE OF ILOILO, defendant-appellee.

FACTS

The spouses Ramon A. Gonzales and Lilia Yusay filed a complaint in the Court of First Instance of Iloilo seeking a refund of real estate taxes they paid under protest for several lots in the municipalities of Pototan and Dingle for the years 1963 and 1964. They contested the legality of a revised assessment that increased their property taxes by 100%, arguing it violated constitutional mandates of uniformity and equal protection because only 21 of the province’s 43 municipalities were reassessed. They also claimed exemption from taxes for a lot acquired from the Development Bank of the Philippines (DBP), citing the DBP’s statutory tax exemption.
The Province of Iloilo moved to dismiss the complaint, asserting the lower court lacked jurisdiction. It argued that the core issue was the legality of the real property assessment, a matter falling under the exclusive appellate jurisdiction of the Court of Tax Appeals (CTA) pursuant to Republic Act No. 1125 . The lower court agreed and dismissed the case, noting the plaintiffs had a pending appeal on the same assessment before the CTA. The court held that while the action was styled as one for refund, the fundamental question was the assessment’s validity, which the CTA was empowered to resolve.

ISSUE

Whether the Court of First Instance had jurisdiction over the plaintiffs’ action for refund of real estate taxes paid under protest, or whether exclusive jurisdiction resided in the Court of Tax Appeals.

RULING

The Supreme Court affirmed the dismissal, ruling that the Court of Tax Appeals possessed exclusive appellate jurisdiction. The legal logic hinges on the nature of the action and the specific grant of jurisdiction under Republic Act No. 1125 . The Court clarified that jurisdiction is determined by the allegations in the complaint and the relief sought. While the action was formally for a refund, its foundation was a direct challenge to the “legality or validity of any tax assessment” on real property. Section 7 of R.A. 1125 explicitly confers upon the CTA exclusive appellate jurisdiction to review such matters arising under the Assessment Law ( Commonwealth Act No. 470 ).
The Court rejected the appellants’ reliance on the Cabanatuan case, which suggested a court of first instance could entertain a refund suit if the tax was paid under protest. It distinguished Cabanatuan as involving a simple question of a taxpayer’s exemption status, not a direct attack on the assessment’s validity. Here, the Gonzales spouses were not merely claiming exemption for one property; they were fundamentally contesting the reassessment process itself as unconstitutional. This dispute over the assessment’s legality falls squarely within the CTA’s special competence. The pendency of their appeal before the CTA on the identical issue further justified the dismissal to avoid multiplicity of suits and conflicting decisions. The proper recourse was to pursue the challenge exclusively through the appellate machinery provided by law, culminating in a review by the CTA.