CTA Case No. 3985 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY MAKATI SUPERMART CORPORATION, Petitioner, -- ver-sus - C.T.A. CASE NO. 3985 COMMISSIONER OF INTERNAL REVENUE, F~e sponde nt. - - - - - >: DEC I s I 0 N Thi s is an action to enforce a claim for ,�-e fund or ta:-: cr-edit a 11 eged as erToneous 1 y paid corporate development tax imposed under Section 24 (e) of the 1977 Tax Code. Pet.i tioneJ�- �f i 1 ed its annua 1 col'�pora te income tax return for its fiscal year ended June 30~ 1983 with the revenue di strict office of Makati showi ng a net income o �f P2, 812,410 and a t.ota 1 ta>: due ther-ein of P1,222~451 broken down into P974~343 as regu lar corporate income tax~ and P248~108 as cor-por-ate development ta>: (E:-:h. B). Petitioner paid its income liability in quarterly .ins t a 1 1 mE' n t s ~ the 1 as t. pay men t be in r:J on Q.~.J:.P.P-~.L._.!.?_._. !.9.�~;;. , the day i t f i 1ed its income tax r-eturn. (E xh. A- 1, D- 1, F - 1 and H- 1.)

DECISION CTA CASE NO. 3985 2- On t-1ay .19 ~ 1983, Ba tas F'ambansa B1g. 399 was approved ~ effective immediately, repealing the cot-por-ate d eve 1opment t.:n: under- Section 24 (e) of the 1977 Tax Code. The respondent, in implementing sai d law~ iss ued Revenue Memorandum Circular No. 1- 84 dated 1984, ~-.~hic:h pr-ovides as follov1s: 11 Ac:co r�d ing 1 y ~ corporations other-wise qualifying as 'close ly held corporations' who s e ta xa ble year ends after May 19~ .1.983 arc;> no 1 anger subject to the prrw i sio n s of Section 24(e) of the Ta :-: Code. Corpm- ations otherwise qualifying as ' c los ely held cor-porations' whose fi sca l year ends before May 19~ 1983 are stil l liable to pay the corporate dev e l o pment ta>:. 11 On October 16, 1985, pursuant to the above petitioner filed in the respondent's office , a formal claim for refund or tax credit in the amount of P248,108 repres enting the erroneously pa id cor porate development tax, and, simultaneousl y instit ute d this petition �for� review to stop the r�unning of the two year� pres criptive period under Section 292 of the 1977 Tax Code. Res pondent anchors his argument on two t;.Jrounds: (1) That the petitioner's c l aim for refund is time barred; and, ( 2) Peti tionet�� has not satisfactorily

DECISION CTA CASE NO. 3985 established a valid claim to the refund or tax credit . A suit or proceeding to enforce a claim for a refund mu s t comply with Section 292 of the Tax Code ~-\lhich requir-es that a formal written claim for a r�efund must first be filed in the Revenue Office and that in no case may such suit or proceeding be filed beyond two ( 2 ) years from date of payment of This two-year period is mandatory. The Tax Code~ however~ does not prescribe how said p et- iod c.;ha ll be computed. Conc.; istent with prior ru ling s of this Court~ for failure of the Tax Code to pr-rJv .ide for� a mode of computing a period, the Civil Code will govern. Following the prescript of Article 18 of the said Code, in matters which are governed by special law, their deficiency shall be supplied by the pr�� ovisicms of the Ci.vil Code~ In relation ther�eto~ Arti c le 13 states that "~'lhen the law speaks of yeat- s, it shall be under�s tood that yeat- s an~ t)f 365 days," and that "in computing a pet-iod, the fit- st day shall be e>:cluded and the last day included." The two-year period then consists of 730 days such that any suit or proceeding begun ~.f:...t. ~.r.::. the e>:piration of this 730 day period shall no longer prosper. T a~ing note of the rulings of the Supreme

DECISION CTA CASE NO. 3985 - 4- Court in Prieto v. Collector, L-11976, August 29, 1961, 2 SCRA 1007, and Coaaissi(Jner of Internal Revenue v. Asia Australia Express , G.R. Ho. 85956, April 10 , 1989, if the tax is paid i n install me nts the ba.~o year p e riod is counted from t h e date of final payment. According l y, from the time petition er paid its last installment on Octobe r 17~ 1 983 unt i 1 tt1e time the r: 1 ai m for r�ef und and this petition was f" . l d on Oc tober 16 , 1985, e>:actly 730 days have elap s ed~ which is within the 2-year period con t emplated by the Tax Code . Hence~ petitionpr�'s r� i <Jht to file c.~ claim fot- refund has not yet prescribe d. Reg;:wcling the validity of the clai m itself, thi s Cour�t. �f inds that the petition er ha s satis f acto r-ily es; 0:\blis h ed its right to a refund. Petitioner had been paying the corporate deve 1opment ta>: since 1979. Batas Pambansa Big. 399 repealed Sec:t ' cm 24 ( e ) of the T a>: Code which pr�ovided for the p ayment of the corpo rate deve l opment tc:nt for c lose ly held corporations not later than Ma y 19, 1983 . Thi s repea ling law is un a mbiguou s~ Th e last install ment payment having been made on October 17~ 1983~ or later than May .19, 1 983, ~"'lhen i t is no long er liable to pay the corpor ate development tax, petitioner is therefore I' -~

DEC ISION CTA CASE NO. 398 5 - 5- e ntit l ed to t he ref und o f th e s um of P2 48~1 0 8. 00 as er-n:meousl y pai d c:o r� por�a te d e ve l o pmen t t i:\ }t. 1'1or-eover� ~ petitio n er� s f i sea 1 yea r en ded June 30 ~ 1983 ~ it is t hu s c l ea r- th at BP Bl g . 3 9 9 c oven; petitioner. (Uniaart, Inc. vs. Co��� of Int. Rev., C.T.A. Ca s e No. 3986, Sept. 28, 1990; Unibake, Inc. vs . Co a ~. o f Int. Rev., C.T.A. Case No. 3987, July 31, 1989. ) WHEREFORE, respondent Commissioner of Internal Revenue i s hereby ordered to refund or credit to petitione r- the amount of P248, 108.00 representing err oneousl y paid corporate development tax for the fisc al year ende d June 30, 1983. SO ORDERED . Qu ~~o n City ~ Metro M a nil a~ J anu ary 1 1 9 91. Judge I CONCUR: r

DECISION CTA CASE NO. 3985 �-- 6 -� CERTIFICATION I certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Cons titution. -~~ Court of Tax Appeals