CTA Case No. 2093 (Decision)

t.t<:rUSLIC OF THE PBILIPPINF.I COURT OF TAX APPE.lLI ' QUEZON CITY BINALBAGAN-ISABF.LA C ~ ~~ . A .. CASE NO . 2093 SUGAR CONPANY , I l~c-. , � Petitioner, versu.s C 01-1NISSIONF�~R OF' II\ffERNAL REVE~KE and SECRETARY OF FINANCE, Resn.. ondent!i � X - - ----- �-X DE C I S I 0 N � This is a petition to review the decision of respondent denyi:ng petitioner ' s claim for tax . credit in the an10unt of �20,309 .. 00 , re prese nting compensating tax paid on its importation of ma- chineries ,- equipment and spare parts . Petj_tioner is a corporation engaged ~in the manufacture of raw ce-ntrifugal sugar and molasses. at Binalbagan, Negros ncc :1.dental . On February 4, �t_~64~ petitioner applied for tax exemptt on under Republic Act No . 3127, as am_e.nded , otherwise known as the Basic Industries La1.-1, \-Jhich anthorized the exemption of basic industr ie s from payme nt , among others , of com:ten sating tax in connection with the importations of machine rj_es , equtpment and spare parts ne cessary in the operation of its industry . The Board of Indus t ries a.pproved petitioner ' s ap- � pltcations on June 14, 1965 and December 22 , 1967 , respect:t.vely , under Certificates of Tax Exemption

DECISION CTA CASE No . 2093 2 Nos . 101 and 4-53, effective on February 4-, 1964-, the date of the filing of the q.pplications for tax exemption. Petitioner received the notice of approval of Certificate of Tax Exemption No . 101 on June 16, 196_5 qnd that of Certificate of Tax Exemption No . 4-53 on December 26, 1967. Upon receipt of Certificate of Tax Exemption No . �101 , petitioner filed a claim for tax credit for �114-,697 . 00 on June 16 , 1965 , and upon receipt of Certificate of Tax Exemption Nog 4-53 on Decem- ber 26 , 1967 , petitioner filed a claim for tax credit for ~28 , 927 . 00 on December 29 , 1967 . In line with the recommendation of the Secretary of Finance , r espondent Coiwnissioner of Internal Re- venue , in a letter dated March 17 , 1970 whi ch was received by petitioner on March 1 9 , 1970 , informed the latter that its claim for tax credit for ~114- ,- 697 . 00, and �28 , 927 . 00 had been approved in the sums of ~ll , 500 . 00 . and ~8,618 .~0 , respectively . Not sa- _tisfied with this ruling of the Co~~issioner , peti- tioner instituted the instant petition for review on April 18, 1970. This appeal i nvolves only the grant of �8 , 618 . 00 as tax credit in the claim for �28 , 927oOO . Respondent 1 s position is that the� payments aggre- gating ~28 , 927 . 00 in question we�re paid from November 4- , 1964 t o De cember� 16 , 1966; that ot:: this.o amlbunt ;;' c~gO)J09 . oo �

D'8CISION CTA CASB NO . 2093 3 .. 'I paio. before October 1 o, 1965 and the right to was.; claim it had_ pres cribed_on De cember 29, 1967 whe n petitioner filed its claim because the two-year period for the filing c;f c'Laims for refund or tax credit provided in Section 309 of the Pational In- ternal Reven~e Code had already lapsed; that at any / v rate, under the same urov:t.sion, judicial action: for refund or tax credit should be filed within two years from the paymer�t of t he tax and hence the j nst:i.tutj_on of the petition for review on Apr il 18 , 1970 is ou.t of time. Petitioner's position, on the other . hand, is that it could not file a claim or sue for refund or tax credit until lt.s application for a tax exemption umler the Basic Industr-T.es Law had been ap�proved by the Board of Industries with the issuance of Certifj_cate -of Tax Exemption No. 453. In other words, its right to make such a claim or file such a suit was dependent on the happening of a super- vani ng event which was the approval of his applica- tion for tax exemption: (Central Azucar era Don Pedro v. Commissioner of Internal Revenue, C. T.A. Case I'To. 1768, November 8 , 1967.) The two-year perj_od provided in Section 309 of the Tax Code should thP.refor~ - be counted, not from the payment It of the tax, but from the happening o_f the supPrvening event as held in Commiss:toner of Internal Revenue

DECISION - CTA CASE NO. 2093 4 v. Insular Lumber Co. and Court of Tax Appeals, G. R. No. L-24221, December 11, 196?; and in Com- missioner of Internal Revenue v. Victorias Milling Co., G.R. No. L-24108, March 15, 1968. We agree with petitioner that this is not a case of taxes illegally or erroneously collected but one �for refund or claim of tax credit because of a ~upervening event and the two-year period in Section 309 aforesaid should be counted from the happening of the supervening event. Even on this assumption, however, his petition is out of time. ~fuile it is true that petitioner filed its claim for tax credit within two years from the happening of the supervening event and instituted this peti- tion for review within 30 days from receipt of . the partial den.ial of its claim, this petition was filed only on April 18, 19?0, more than ~wo years after the happening of the supervening event. It should be recalled that the certificate of tax exemption was issued on December ~2, 1967 and received by petitioner on December. 26, 196?. Petitioner should not have waited for the decision of respondent on its claim for tax credit but should have appealed to this Court before the lapse of the statutory two years for the. filing of judicial action for refund or tax credit. Said the Supreme Court in the Victorias Milling Co. case:

DECISION- CTA CASE NO. 2093 5 � � � the intention is clear - that refunds of internal revenue taxes are generally governed by Sections )06 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 shtaoxuldwaScompamiedn,ceb, unt ot frQm the date tbe from the haDpening of tbe supervening cause which entitled the taxpayer to A tax refund. And t he claim for refund should be filed with the Commissioner of Internal Revenue , and the subse- QYent appeal to the Court of Tax Ap- peals must be instituted, within the said two-year period. X X X X X In fine, when the tax sought to be refunded is illegally or erroneous- ly collected, the period of prescrip- tion starts from the date the tax was paid; but when the tax is legally collected, the prescriptive period commences to run from the date of occurrence of the supervening cause which gave rise to the right of refund. The ruling in Mullzr & Phipps is accor- dingly mOdified. Italics supplied) WHEREFORE, this petition is hereby dismissed for having been filed out of time and hence, the Court has no jurisdiction to take cognizance thereof. SO ORDERED. Quezon City, December 17, 1971. l~i~ � RAMON L. AVANCENA Associate Judge