Commissioner of Internal Revenue vs. Philippine American Life Insurance Co. (GR 105208, 29 May 1995)
Third Division, Romero (J): 2 concur, 1 took no part.
Facts: On 30 May 1983, the Philippine American Life Insurance Co. (Philamlife) paid to the Bureau of Internal Revenue (BIR) its first quarterly corporate income tax for Calendar Year (CY) 1983 amounting to P3,246,141.00. On 29 August 1983, it paid P396,874.00 for the Second Quarter of 1983. For the Third Quarter of 1983, it declared a net taxable income of P2,515,671.00 and a tax due of P708,464.00. After crediting the amount of P3,899,525.00 it declared a refundable amount of P3,158,061.00. For its Fourth and Final quarter ending 31 December, Philamlife suffered a loss and thereby had no income tax liability. In return for that Quarter, it declared a refund of P3,991,841.00 as withholding taxes on rental income for 1983 and P133,084.00 representing 1982 income tax refund applied as 1983 tax credit. In 1984, Philamlife again suffered a loss and declared no income tax liability. However, it applied as tax credit for 1984, the amount of P3,991,841.00 representing its 1982 and 1983 overpaid income taxes and the amount of P250,867.00 as withholding tax on rental income for 1984. On 26 September 1984, Philamlife filed a claim for its 1982 income tax refund of P133,084.00. On 22 November 1984, it filed a petition for review with the Court of Tax Appeals (CTA Case 3868) with respect to its 1982 claim for refund of P133,084.00. On 16 December 1985, it filed another claim for refund with the Commissioner’s appellate division in the aggregate amount of P4,109,624.00 for the period of 1982 to 1984 less the amount claimed in CTA Case 3868.
On 2 January 1986 Philamlife filed a petition for review with the CTA (CTA Case 4018 regarding its 1983 and 1984 claims for refund) Later, it amended its petition by limiting its claim for refund to only P3,858,757.00. On 16 September 1991, the CTA rendered a decision, granting Philamlife’s claim for refund for P3,246,141.00 and P396,874.00 representing excess corporated income tax payments for the first and second quarters of 1983, respectively, or a total of P3,643,015.00. The Commissioner appealed.
The Court of Appeals affirmed the decision of the Court of Tax Appeals on 26 March 1992 (CA-GR 26598). The Commissioner filed a petition for review on certiorari.
The Supreme Court dismissed the petition and affirmed the decision of the Court of Appeals in toto; without costs.
1. Section 230 NIRC; Recovery of tax erroneously or illegally collected
Section 230 of the National Internal Revenue Code (formerly Section 292) provides that “No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.”
2. Section 230 NIRC; Forfeiture of refund
Section 230 of the National Internal Revenue Code (formerly Section 292) further provides that “. — A refund check or warrant issued in accordance with the pertinent provisions of this Code which shall remain unclaimed or uncashed within five (5) years from the date said warrant or check was mailed or delivered shall be forfeited in favor of the government and the amount thereof shall revert to the General Fund.”
3. Pacific Procon Ltd. vs. Court of Tax Appeals overturned by CIR vs. TMX Sales
Although it is true that in the Pacific Procon case, the Court held that the right to bring and action for refund had prescribed, the tax having been found to have paid at the end of the first quarter when the withholding tax corresponding thereto was remitted to the Bureau of Internal Revenue, not at the time of filing of the Final Adjustment return in April of the following year; said case was overturned by the Court in Commissioner of Internal Revenue v. TMX Sales Incorporated and the Court of Tax Appeals, where the Court held that “it is necessary to consider not only Section 292 (now Section 230) of the National Internal Revenue Code but also the other provisions of the Tax Code, particularly Sections 84, 85 (now both incorporated as Section 68), Section 86 (now Section 70) and Section 87 (now Section 69) on Quarterly Corporate Income Tax Payment and Section 321 (now Section 232) on keeping of books of accounts; and that all these provisions of the Tax Code should be harmonized with each other.”
4. Section 292 (now Section 230) NIRC qualified by Sections 68 and 69 of present Tax Code
Section 292 (now Section 230) stipulates that the two-year prescriptive period to claim refunds should be counted from date of payment of the tax sought to be refunded. When applied to tax payers filing income tax returns on a quarterly basis, the date of payment mentioned in Section 292 (now Section 230) must be deemed to be qualified by Sections 68 and 69 of the present Tax Code.
5. Section 68 NIRC; Declaration of Quarterly Income Tax
Section 68 of the Tax Code provides that “Every corporation shall file in duplicate a quarterly summary declaration of its gross income and deductions on a cumulative basis for the preceding quarter or quarters upon which the income tax, as provided in Title II of this Code shall be levied, collected and paid. The Tax so computed shall be decreased by the amount of tax previously paid or assessed during the preceding quarters and shall be paid not later than sixty (60) days from the close of each of the first three (3) quarters of the taxable year.
6. Section 69 NIRC; Final Adjustment Return
Section 69 of the Tax Code provides that “Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either: (a) Pay the excess still due; or (b) Be refunded the excess amount paid, as the case may be. In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year.”
7. Refund due is amount shown in final adjustment return and not on its quarterly returns
The last paragraph of Section 69 of the Tax Code provides that the refundable amount, in case a refund is due a corporation, is that amount which is shown on its final adjustment return and not on its quarterly returns. This is in light of the fact that although quarterly taxes due on are required to be paid within sixty days from the close of each quarter, the fact that the amount shall be deducted from the tax due for the succeeding quarter shows that until a final adjustment return shall have been filed, the taxes paid in the preceding quarters are merely partial taxes due from a corporation. Neither amount can serve as the final figure to quantify what is due the government nor what should be refunded to the corporation.
8. Reckoning date determined after a final adjustment return is accomplished
The prescriptive period of two years should commence to run only from the time that the refund is ascertained, which can only be determined after a final adjustment return is accomplished. In the present case, this date is 16 April 1984, and two years from this date would be 16 April 1986. The record shows that the claim for refund was filed on 10 December 1985 and the petition for review as brought before the CTA on 2 January 1986. Both dates are within the two-year reglementary period. Philamlife being a corporation, Section 292 (now Section 230) cannot serve as the sole basis for determining the two-year prescriptive period for refunds. As earlier said in the TMX Sales case, Sections 68, 69, and 70 on Quarterly Corporate Income Tax Payment and Section 321 should be considered in conjunction with it.
9. Two-year period not jurisdictional
Even if the two-year period had already lapsed, the same is not jurisdictional and may be suspended for reasons of equity and other special circumstances.
