1.

College of Oral and Dental Surgery v. CTA and the CIR G.R. L-10446 January 28, 1958 Republic Act No. 1125 creating the Court of Tax Appeals took effect only on June 16, 1954. Considering that the taxes involved herein were paid on May 15, 1951, September 15, 1951 and May 15, 1952, said legislative enactment (Rep. Act No. 1125) cannot be invoked as the action for recovery of the taxes paid in this case must be governed by the pertinent law then enforced. And pursuant to the existing law on the matter, which undoubtedly is Section 306 of the Tax Code and the jurisprudence obtaining in connection therewith, as petitioner failed to institute the corresponding judicial proceeding within the 2-year prescriptive period, his right to recover the taxes claimed to have been erroneously paid had prescribed even before the enactment of Republic Act No. 1125, and there is no reason to construe R, A. 1125 as reviving actions that have already prescribed on the date of its enactment.

2. CIR v. Prieto

G.R. L-11976 August 29, 1961 The defunct Board of Tax Appeals in the case of RCA Communications, Inc. vs. David (B.T.A. Case No. 116, Resolution, June 18, 1953) held that when the tax is paid in installments, the prescriptive period of two years provided in section 306 of the Revenue Code should be counted from the date of the final payment. We agree with this view as being reasonable and which appears to be the uniform doctrine in American jurisdiction. This rule proceeds from the theory that, in contemplation of tax laws, there is no payment until the whole or entire tax liability is completely paid. Thus, a payment of a part or portion thereof, can not operate to start the commencement of the statute of limitations. In this regard the word "Tax," or words "the tax" in statutory provisions comparable to section 306 of our Revenue Code have been uniformly held to refer to the entire tax and not a portion thereof (Clark vs. U.S. 69 F. 2d 748; A.S. Kriedner Co. vs. U.S. 30 F Supp. 742; Hills vs. U.S. 50 F 2d 302, 55 F 2d 1001), and the vocables "payment of tax" within statutes requiring refund claim, refer to the date when all the tax was paid, not when a portion was paid (Braun vs. U.S. 8 F Supp. 860, 863). Hence, applying the foregoing rule to the instance case, the filing of the claim for refund of the inheritance tax on January 12, 1955 and the filing of the instant petition for review on February 14, 1955 were well within the two-year period counted from March 11, 1953 and December 9, 1954 when the final payment of the tax liability was made. We are therefore of the opinion and so hold that the present action was filed seasonably within the purview of section 306 of the Tax Code.
3. Gibbs v. CIR and CTA

G.R. L-13453 February 29, 1960 It is clear that Section 306 of the National Internal Revenue Code should be construed together with Section 11 of Republic Act No. 1125. In fine, a taxpayer who has paid the tax, whether under protest or not, and who is claiming a refund of the same, must comply with the requirements of both sections, that is, he must file a claim for refund with the Collector of Internal Revenue within 2 years from the date of his payment of the tax, as required by said Section 306 of the National Internal Revenue Code, and appeal to the Court of Tax Appeals within 30 days from receipt of the Collector's decision or ruling denying his claim for refund, as required by said Section 11 of Republic Act No. 1125. If, however, the Collector takes time in

deciding the claim, and the period of two years is about to end, the suit or proceeding must be started in the Court of Tax Appeals before the end of the two-year period without awaiting the decision of the Collector. This is so because of the positive requirement of Section 306 and the doctrine that delay of the Collector in rendering decision does not extend the peremptory period fixed by the statute. In the case of a taxpayer who has not yet paid the tax and who is protesting the assessment made by the Collector of Internal Revenue, he must file his appeal with the Court of Tax Appeals within 30 days from his receipt of the Collector's assessment, as required by said Section 11 of Republic Act No. 1125. Otherwise, his failure to comply with said statutory requirement would bar his appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain or determine the same.
4. CIR v. CTA and Hume Pipe and Abestos

G.R. L-11494 January 28, 1961 Citing Manila Electric Co. v. CIR (CTA Case No. 83, Resolution of Mar. 30, 1955) Before the passage of Republic Act No. 1125, the remedy provided by section 306 that the taxpayer should pay the tax first before he can sue the Collector of Internal Revenue was exclusive, and no other remedy would be substituted for it (Sarasola vs. Trinidad, 40 Phil. 257). With the approval of said Republic Act No. 1125, a new remedy was given to the taxpayer, in addition to that already provided for by section 306, in the sense that he can question the assessment of the Collector of Internal Revenue before paying the tax by appealing to the Court of Tax Appeals within thirty days from receipt thereof. However, in case he should pay the tax first and later on bring an action for its refund, section 306 still applies and the taxpayer must comply with the requirements therein provided. Having filed his request for refund and the Collector of Internal Revenue having had ample time to study it, the taxpayer should, within the statutory period of two years proceed with his suit without waiting for the Collector's decision. However, should the Collector, within the statutory period of two years, deny the claim, the taxpayer is given thirty days from receipt of the decision within which to file his appeal under section 11 of Republic Act No. 1125. In order to confer jurisdiction upon the court, it is necessary, however, that in all cases the suit must be brought within the statutory period of two years and the requirements provided for in section 306 must have been duly complied with." Citing Paracale-Garmaus Co. vs. Blaquera (C.T.A. No. 211, Resolution of August 22, 1956) . . . The latter (Collector of Internal Revenue), for one reason or another, as had happened in the present case as in the Kiener case, failed to comply to the claim for refund within two (2) years from the date of payment. Under the circumstances, as was held in the Kiener case, the taxpayer 'having filed his claim and the Collector of Internal Revenue having had ample time to study it, the claimant may, indeed should, within the statutory period of two years proceed with his suit without waiting for the Collector's decision.' In other words, in fairness to the taxpayer so as not to deprive him of his day in court and the prompt adjudication of his case, he is left by necessity to presume and conclude before the expiration of the two-year prescriptive period, that his claim for refund has been denied by the Collector of Internal Revenue if no action was taken thereon by the latter during the said period. The taxpayer need not wait indefinitely for a decision or ruling which may or may not be forthcoming and which he has no legal right to expect. As the Supreme Court said in the Kiener case, 'Nowhere and in no wise does the law imply that the Collector of Internal Revenue must act upon the claim, or that the taxpayer should not go to court before he is notified of the Collector's action.' The taxpayer may, indeed should, proceed without waiting for the decision of the Collector of Internal Revenue, to file his petition for review before this Court

on or within a reasonable time before the expiry date of the statutory period of two years prescribed in section 306 of the National Internal Revenue Code. It might be argued that without the reply of the Collector of Internal Revenue denying the taxpayer's claim for refund, there would be actually no decision, order or ruling that this Court may pass upon in review under sections 7 and 11 of Republic Act No. 1125. Indeed, that would be the case if we were to interpret the two last cited provisions of Republic Act No. 1125 in their strict literal sense. However we realize that by following such an unreasonable interpretation the taxpayer would be left at the mercy of the Collector of Internal Revenue, without any positive and expedient relief from the courts. It is disheartening enough to a taxpayer to keep him waiting for an indefinite period of time for a ruling or decision of the Collector of Internal Revenue on his claim for refund. It would make matters more exasperating for the taxpayer if we were to close the doors of the courts of justice for such a relief until after the Collector of Internal Revenue would have, at his personal convenience, given the go signal. In effect, that could be the ultimate result, if we were to interpret sections 7 and 11 of Republic Act No. 1125 strictly and literally by requiring the taxpayer in all instances to produce in black and white the ruling, decision or order of the Collector of Internal Revenue denying his claim for refund before assuming jurisdiction over his petition for review filed with this Court."
5.

CIR v. Victorias Milling Co. GR L-24108 January 3, 1968 The intention is clear that refunds of internal revenue taxes are generally governed by Sections 306 and 309 of the Tax Code. Since in those cases the tax sought to be refunded was collected legally, the running of the two-year prescriptive period provided for in Section 306 should commence, not from the date the tax was paid, but from the happening of the supervening cause which entitled the taxpayer to a tax refund. And the claim for refund should be filed with the Commissioner of Internal Revenue, and the subsequent appeal to the Court of Tax Appeals must be instituted, within the said two- year period. The claim for refund with the Bureau of Internal Revenue and the subsequent appeal to the Court of Tax Appeals must be filed within the two-year period. If, however, the Collector takes time in deciding the claim, and the period of two years is about to end, the suit or proceeding must be started in the Court of Tax Appeals before the end of the two-year period without awaiting the decision of the Collector. In the light of the ruling in CIR vs. Insular Lumber Co., the right of Victorias Milling Co,, Inc. to claim refund of P2,817.08 has prescribed.

6. CIR v. Concepcion

G.R. L-23912 March 15, 1968 Concepcion already requested for refund of estate and inheritance taxes at the BIR. His request denied, he appealed to the CTA but was dismissed for having been filed beyond the reglementary period. After paying under protest, he sued again, this time for recovery. The Court said he cant do this because the remedy of contesting the validity of an assessment cannot be revived when there is already a final prior judgment dismissing the same on the ground of prescription. Where a taxpayer seeking a refund of estate and inheritance taxes whose request is denied and whose appeal to the CTA was dismissed for being filed out of time, sues anew to recover such

taxes already paid under protest, his action is devoid of merit. For in the same way that the expedient of an appeal from a denial of a tax request for cancellation of warrant of distraint and levy cannot be utilized to test the legality of an assessment which is Sec. 360 of the Tax Code not available to revive the right to contest the validity of an assessment which had become final for failure to appeal the same on time.
7.

Ramie Textiles v. Mathay April 30, 1979 Provincial Treasurer denied Ramie Textiles the chum for refund on the ground that under Section 359 of the Revised Manual of Instructions to Treasurers, a claim for refund of taxes erroneously paid or illegally collected or assessed should be presented within two (2) years from date of payment. Ramie Textiles alleged that Sec. 359 is inapplicable because said provision refers specifically to municipal ordinances which were subsequently declared illegal and taxes illegally assessed and collected under such ordinances. Theirs, according to them, are neither considered as tax collected through the municipal ordinance nor a tax assessed and collected BUT real estate taxes voluntarily paid by them. Protest is not a requirement in order that a taxpayer who paid under a mistaken belief that it is required by law, may claim for a refund. Section 54 of Commonwealth Act No. 470 does not apply to petitioner which could conceivably not have been expected to protest a payment it honestly believed to be due. The same refers only to the case where the taxpayer, despite his knowledge of the erroneous or illegal assessment, still pays and fails to make the proper protest, for in such case, he should manifest an unwillingness to pay, and failing so, the taxpayer is deemed to have waived his right to claim a refund. Solutio indebiti is a quasi-contract, and the instant case being in the nature of solutio indebiti the claim for refund must be commenced within six (6) years from date of payment pursuant to Article 1145(2) of the New Civil Code.

8. CIR v. CTA and Insular Lumbar Company

May 29, 1981 But when the tax is legally collected, as in the present case, the 2-year prescriptive period commences from the date the occurrence of the supervening cause which gave rise to the right of refund. The supervening cause in cases of this nature is the date of use of manufactured oils and fuels. Thus, the Court said that when the supervening cause happened in 1958 but the claim for refund was filed with the Commissioner on Feb. 23, 1961 and the petition for review was filed in the CTA on Feb. 17, 1962, both later dates being more than two years after 1958, the right to claim refund of the tax paid has prescribed. The Court has consistently adhered to the rule that the claim for refund should first be filed with the CIR, and the subsequent appeal to the CTA must be instituted, within the said 2-year period. If, however, the CIR takes time in deciding the claim, and the period of 2 years is about to end, the suit or proceeding must be started in the CTA before the end of the 2-year period without awaiting the decision of the CTA.
9. Commissioner of Customs and CIR v. CTA and Planters Products

March 16, 1989

Planter's petition for review was filed under Section 230 of the National Internal Revenue Code as amended by EO 273. If the taxpayer, Planters, had waited longer for the decision of the Collector or Commissioner on its claim before filing suit in the Tax Court, its right of action would have prescribed. It might be argued that without the reply of the Collector of Internal Revenue denying the taxpayer's claim for refund, there would be actually no decision, order or ruling that this Court (Court of Tax Appeals) may pass in review under Sections 7 and 11 of Republic Act 1125. Indeed, that would be the case if he were to interpret the two last cited provisions of Republic Act 1125 in their strict literal sense. However, we realize that by following such an unreasonable interpretation, the taxpayer would be left at the mercy of the Collector of Internal Revenue, without any positive and expedient relief from the courts.
10. ACCRA Investments v. CA, CIR, and CTA

December 20, 1991 There is the need to file a return first before a claim for refund can prosper inasmuch as the respondent Commissioner by his own rules and regulations mandates that the corporate taxpayer opting to ask for a refund must show in its final adjustment return the income it received from all sources and the amount of withholding taxes remitted by its withholding agents to the Bureau of Internal Revenue. The petitioner corporation filed its final adjustment return for its 1981 taxable year on April 15, 1982. In our Resolution dated April 10, 1989 in the case of Commissioner of Internal Revenue v. Asia Australia Express, Ltd. (G. R. No. 85956), we ruled that the two-year prescriptive period within which to claim a refund commences to run, at the earliest, on the date of the filing of the adjusted final tax return. Hence, the petitioner corporation had until April 15, 1984 within which to file its claim for refund. Considering that ACCRAIN filed its claim for refund as early as December 29, 1983 with the respondent Commissioner who failed to take any action thereon and considering further that the non-resolution of its claim for refund with the said Commissioner prompted ACCRAIN to reiterate its claim before the Court of Tax Appeals through a petition for review on April 13, 1984, the respondent appellate court manifestly committed a reversible error in affirming the holding of the tax court that ACCRAIN's claim for refund was barred by prescription. It bears emphasis at this point that the rationale in computing the two-year prescriptive period with respect to the petitioner corporation's claim for refund from the time it filed its final adjustment return is the fact that it was only then that ACCRAIN could ascertain whether it made profits or incurred losses in its business operations. The "date of payment", therefore, in ACCRAIN's case was when its tax liability, if any, fell due upon its filing of its final adjustment return on April 15, 1982. The respondent Commissioner of Internal Revenue is directed to refund to the petitioner corporation the amount of P82,751.91
11. CIR v. TMX Sales and CTA

January 15, 1992 The filing of quarterly income tax returns required in Section 85 (now Section 68) and implemented per BIR Form 1702-Q and payment of quarterly income tax should only be considered mere installments of the annual tax due. The two-year prescriptive period provided in Section 292 (now Section 230) of the Tax Code should be computed from the time of filing the Adjustment Return or Annual Income Tax Return and final payment of income tax. Where the tax account was paid on installment, the computation of the two-year prescriptive period under Section 306 (Section 292) of the Tax Code, should be from the date of the last installment.
12. CIR v. Philippine American Life Insurance

May 29, 1995 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. It may be observed that although quarterly taxes due 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 quantity what is due the government nor what should be refunded to the corporation. This interpretation may be gleaned from the last paragraph of Section 69 of the Tax Code which 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. Private respondent being a corporation, Section 292 (now Section 230) cannot serve as the sole basis for determining the two-year prescriptive period for refunds. As we have 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. Moreover, 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.
13. Philex Mining Corporation v. CIR, CA, and CTA

August 28, 1998 Philex asserts that the BIR violated Section 106 (e) 30 of the National Internal Revenue Code of 1977, which requires the refund of input taxes within 60 days, when it took five years for the latter to grant its tax claim for VAT input credit/refund. In this regard, the Court agrees with Philex. While there is no dispute that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund, however, once the claimant has submitted all the required documents it is the function of the BIR to assess these documents with purposeful dispatch. After all, since taxpayers owe honestly to government it is but just that government render fair service to the taxpayers. In the instant case, the VAT input taxes were paid between 1989 to 1991 but the refund of these erroneously paid taxes was only granted in 1996. Obviously, had the BIR been more diligent and judicious with their duty, it could have granted the refund earlier. We need not remind the BIR that simple justice requires the speedy refund of wrongly-held taxes. Fair dealing and nothing less, is expected by the taxpayer from the BIR in the latter's discharge of its function. Despite our concern with the lethargic manner by which the BIR handled Philex's tax claim, it is a settled rule that in the performance of governmental function, the State is not bound by the neglect of its agents and officers. Nowhere is this more true than in the field of taxation. Again, while we understand Philex's predicament, it must be stressed that the same is not a valid reason for the non-payment of its tax liabilities.

To be sure, this is not to state that the taxpayer is devoid of remedy against public servants or employees, especially BIR examiners who, in investigating tax claims are seen to drag their feet needlessly. First, if the BIR takes time in acting upon the taxpayer's claim for refund, the latter can seek judicial remedy before the Court of Tax Appeals in the manner prescribed by law. Second, if the inaction can be characterized as willful neglect of duty, then recourse under the Civil Code and the Tax Code can also be availed of. Art. 27 of the Civil Code provides: Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary action that may be taken. More importantly, Section 269 (c) of the National Internal Revenue Act of 1997 states: xxx xxx xxx (c) Wilfully neglecting to give receipts, as by law required for any sum collected in the performance of duty or wilfully neglecting to perform, any other duties enjoyed by law. Simply put, both provisions abhor official inaction, willful neglect and unreasonable delay in the performance of official duties.
14. Atlas Consolidated v. CIR

June 8, 2007 The prescriptive period for filing an application for tax refund/credit of input VAT on zero-rated sales made in 1990 and 1992 was governed by Section 106(b) and (c) of the Tax Code of 1977, as amended. By a plain reading of the foregoing provision, the two-year prescriptive period for filing the application for refund/credit of input VAT on zero-rated sales shall be determined from the close of the quarter when such sales were made. Petitioner contends, however, that the said two-year prescriptive period should be counted, not from the close of the quarter when the zero-rated sales were made, but from the date of filing of the quarterly VAT return and payment of the tax due 20 days thereafter, in accordance with Section 110(b) of the Tax Code of 1977, as amended. It is already well-settled that the two-year prescriptive period for instituting a suit or proceeding for recovery of corporate income tax erroneously or illegally paid under Section 23013 of the Tax Code of 1977, as amended, was to be counted from the filing of the final adjustment return. For the foregoing reasons, it is more practical and reasonable to count the two-year prescriptive period for filing a claim for refund/credit of input VAT on zero-rated sales from the date of filing of the return and payment of the tax due which, according to the law then existing, should be made within 20 days from the end of each quarter. The administrative and judicial claims of petitioner corporation for refund of its input VAT on its zero-rated sales for the last three quarters of 1990 were all filed within the prescriptive period. However, the same cannot be said for the claim of petitioner corporation for refund of its input VAT on its zero-rated sales for the first quarter of 1992. Even though it may seem that petitioner corporation filed in time its judicial claim with the CTA, there is no showing that it had

previously filed an administrative claim with the BIR. As pointed out by the CTA, in serious doubt is not only the fact of whether petitioner corporation timely filed its administrative claim for refund of its input VAT for the first quarter of 1992, but also whether petitioner corporation actually filed such administrative claim in the first place. For failing to prove that it had earlier filed with the BIR an application for refund/credit of its input VAT for the first quarter of 1992, within the period prescribed by law, then the case instituted by petitioner corporation with the CTA for the refund/credit of the very same tax cannot prosper.