CTA Case No. 3808 (Decision)

oauc o rr rHf! truUPPtN'r" COURT OF TAX APPEAl-'ll QUBZO~ C I'Y'? MONTE DE PIEDAD AND C.T.A. CASE NO. 3808 SAVINGS BA NK , Petitioner, - versus - COMMIS SIONER OF I NTERNAL REVEf'-JUE, Respondent. X- - - - - - - - - - - X DECISION At bar is a simple case raisjng the basic issue f / whether or not the petitioner 1 s appeal is time barred. It appears that the petitioner, a domestic corpo - ration organized and . existing under Philippine laws is engaged in the busin ess of banking; that on April 15, 1982, f"i.Jcd its income tax return for the taxable year 1981 showing a refundable tax in the sum of Pl94,74 2 . 57 after having incurred losses (Annex "A" ) ; that on August l8J 1982, in compliance with Section 292 (formerly Sec. 306 .) of tHe National Internal Revenue Co de, file d a claim for the efund of the tax withheld on i ncomes from rental and interest paym e nts on bonds or similar indebtedne ss for the year 1981 with the respond~nt Commi ss ioner of Internal Revenue (An n ex "B"); that the r e s po n d e n t t h r u i t s Re g i o na 1 Di r e c to r ( ~1 a n i 1 a ) p e r letter dated September 6, 1983 required the petitioner

DECISION - CTA CASE NO. 3808 - 2- for addi t.ional documents (Annex "C 11 ) \"'hich were accord- ingly submitted (Annexes "D-1" to "D-10") under peti- tioner's letter dated November 28, 1983 (Annex "D"); but up to date of the filing of this petition with this Cour t on ~~ly 16, 1984 no action as yet has been taken by the respondent Commi ssioner of Internal Revenue on the sought fo r � refund. Respond e nt Commissioner of Internal Revenue has interpo sed ~escription on the right of the petitioner to the claim with respect to taxes withheld on rental .-; and interest incomes prior to July 16, 1982, invoking t he cav eat in Secti on 292 (formerly Section 306) of the Tax Code of 1977, as amended, providing, insofar a s. p e r t i n e n t , t h a t 1 " I n a n y c a s e , no s uc h s u i t or proceeding shall be begun after the expiration of tvw years from the date of payment of the tax ~r penalty regardless of any supervening cau s e that may arise after payment." All told, .petitioner's income tax return for t he year 1981 was filed on April 15..L.J.982 which may well be deemed the reckoning date in lieu of the "dat e of payment" for the commen cement of the tw o-year period of limitati on. "A ta xpayer 1-1hose income is withheld at the source will be deemed to have paid his tax liability when the same falls due at the end of the tax year. It is from thi s latter date t~en, or when

DECISION - CTA CASE NO. 3808 - 3- the tax liability falls ~ue, that the two-year pres- criptive period under Section 306 of the Revenue Code starts to run with respect to paym e nts effected through the withholding system." (Gibbs v. Commissioner of (' Internal Revenue and CTA, L-17406, November 29, 1965, I 15 SCRA 325). /-" Verily the action brought by the petitioner with this Court on -~ly 16, 1984 has already prescribed under the above-cited legal provision. It may be necessary to repeat what the Supreme Court said in the earlier case of Gibbs v. Collector o f I n t e r n a 1 Re ve n u e ., G�R� L -1 34 5 3 , Fe ~-r u a r y 29 , 19 60 , which so plainly apply to the case at bar, that - "x x x 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 requirement of both sections, that is, he must file a claim for refund with the Collector of Internal Revenue withLn 2 years from the date of ~his payment of the tax, as required by ~� Section 306 of the National Internal Re- venue 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 Section 11 of Republic Act No. 1125. f;. If , howev~ the. Colle�tor t akes 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 Appe~ls before the end of the two-year period without awaiting the decision of the Collector. This is so be- cause of the positive requirement of Section 306 and the doctrine that de_lay of the

- - - - - ------~ DECISION - CTA CASE NO. 3808 - 4- Collector in rendering decision does not extend the erem tor eriod fixed by the statute. U.S . v. Michel 282 U.S. 656, 51 S. Ct. 284; P.J. Kiener & Co., Ltd., v. David, L-5 163, April 22, 1953; College of Oral and Dental Surgery v. CTA, G.R. No . L-10446, Jan. 28, 1958. Italics supplied). / Suffice it to state that the two-year limitation within which to enforce such an action for a refund like petitioner's . is no niggling barrier for this Court's effective exercise of jurisdiction over the suit . WHEREFORE, the instant petition for review is hereby dismissed, with costs against the petitioner. SO ORDERED. Quezon City, Metro Manila, September 30, 1986. @f?V~, ~ / A~(~i~:R~~~ \~E CONCUR: 211