CTA Case No. 635 (Decision)

// tl~FU:BLIC v "fHf! PHILl:PJ"lNlQtf ~URT OF fAX AP.PE.Al.S ~-4-"<~ll.-4 OQ~IS ELECTRIC SERVICE C. T. A. CO. , I NC. , CASE NO. 635 Petitioner , - ver sus - COI'v1MISSIONER OF INTERNAL REVENUE , Respondent . X- - - - - - - - - - X DEC I S I 0 N The petitioner is seeking the recovery of the sum of P2 , 660. 60 , representing the income tax which it erroneously paid in 1953 and 1954 , the last pay- ment having been made on May 12, 1954~ The claim for refund of said amount was filed on November 20 , 1956 , admittedly beyond two years from the dates of paymeht. Respondent denied the claim for refund on the ground that said claim was filed beyond two years from the dates of payment , pursuant to Section 309 of the Na- tional Internal Revenue Code . Hence this appeal. The f acts , as narrated by counsel for petition&r, are as follows: . 8 That petitioner , Ocmis Electric Service Co. , Inc. , is a corporation duly organized and existing by virtue of the laws of the Philipp ines , with principal place of business at Oroquie- ta , Misamis Occidental. By virtue of Acts No. 3645 , approved on December 7 , 1929, and Act No. 3951 , approved on December 21 , 1932, it has established and maintained an electric light and power plant at Oroquieta , Misamis Oc- cidental. Since then , it has been pay - ing its income taxes up to September 6 ,

DECISION - C. I . A. CASE NO. 635 - 2- 1957. As petitioner filed its claim for refund for these income taxes for the first time on October 20 , 1952 only , we are compiling below the different payments of petitioner ' s income taxes from May 15, 1951: Qfficial Beceip~ &nount -N-o. May 15 , 1951 p 308. 00 Aug. 15 , 1951 308. 00 153098 May22, 1952 153144 . May 15, 1953 1 , 366. 00 339323 Aug. 12 , 1953 686. 50 339442 May 12 , 1954 686. 50 339719 May 10, 1955 339763 Aug. 9 , 1955 1 , 287, 60 339888 Aug. 15 , 1955 854. 00 485724 May 12 , 1956 854. 00 485735 Aug. 11 , 1956 430. 15 485769 May 14 , 1957 748. 00 485798 Sept. 6 , 1957 748. 00 486000 877. 00 486048 877. 00 l0 , 516. 15 "According to the records of the res- pondent , petitioner has paid only the sum of Pl0, 030. 75 from May 15 , 1951 up to Sept - ember 6 , 1957. For purposes of expediency , petitioner ha s conceded the latter amount . ~"Because of the provision of Sec. 10 , of Act 3636 , made applicable to the herein peti�ioner by the provision of Sec. 17 , of Act No. 3645 ,� exemptimg the herein peti - tioner from the payment of all taxes of any king and nature , except the so c alled fran - chise tax , it filed a claim for refund for the income taxes that it has paid. The first claim was filed on October 20 , 1952 , reiterated on November 12 , 1956 , and fol - lowed up frequently in the years 1957 and 1958. "On September 5, 1958 , respondent refund- ed the herein petitioner the amount of P7 , 3ll. 03 , under Treasury Warrant No. 30,- 394 , 500, leaving a balance , per records of respondent , in the amount of P2 , 660. 60. The latter sum corresponds to the total payments mgde on May 15 , 1953 , May 12 11 1953 , and May 12 , 1954 (0. R. No. 339442, 339719 , and . 339763 , respectively � The refund of the a - mount of P2 , 660. 60 was refused on the strict interpretation of Sec. 309 of the National Internal Revenue Code which provides that ../ .

DECISION - C. I . A. CASE NO. 635 -3- claims for refund should be filed within two years from payment of the tax . The sum disallowed is admittedly beyond the two year period previous to November 20 , 1956. "There is no dispute on the pro- priety of the refund of the sum of P7 , 3ll. 03 , as this is in accordance with Sec. 10 , of Act No. 3636 , made app lica- ble under Sec. 17 , of the petitioner's franchise . Act No. 3645 , and further sup - ported by the ruling of the case of Car- car Electric & Ice Plant Co., Inc. vs . Collector of Internal Revenue (G. R. No. L- 9257 , promulqated Oct. 17 , 1956). "The present case seeks refund of the amount disallowed, that is , the sum of ~2 , 660. 60. " (Pp . 1-2 , Memorandum for Petitioner. ) The sole issue presented for our consideration is whether or not respondent erred in not refunding to petitioner the sum of P2 , 660. 60. Petitioner con- tends that , on equitable grounds , the said amount should be refunded . It is alleged that the re is no reason why the amounts paid in 1951 and 1952 were refunded by respondent and yet the refund of the amounts paid in 1953 and 1954 was denied . The case of Panay Electric Co., Inc . v. Collector of Internal Revenue , G. R. No. 10574 , May 28 , 1958 , has been cited in supp ort of the view that the refund is in order. There is no dispute that the sum of 2 , 660. 60 was erroneously paid by petitioner. The fact is also admitted that the claim for refund of said amount was filed with the Bureau of Internal Revenue after the lapse of two years from the dates of payment. Therefore , respondent correctly denied the claim for refund , pursuant to Section 309 of the Revenue Code . And

DECISION - C.T. A. CASE NO. 635 -4- the Court may not order the refund by virtue of Sec- tion 306 which provides that no suit or proceeding may be instituted until a claim for refund has been duly filed with the Bureau of Internal Revenue in ac - cordance with Section 309. Any action instituted for recovery of an internal revenue tax , where no claim for refund thereof has been filed within the statutory period, is subject to dismissal for lack of cause of action. {Johnston Lumber Co., Inc. v. Court of Tax Appeals , G. R. No. L- 9292 , April 23 , 1957. ) But it is argued that petitioner is entitled to the refund on equitable grounds , citing Panay Elec- tric Co., Inc. v. Collector of Internal Revenue , agp~ In the case cited above , a claim for refund was filed within the statutory period , and the Collector (now Commissioner of Internal Revenue at the time admit- ted the right of the taxpayer to the refund. However , the � taxpayer was not able to i nstitute court action for recovery of the amount claimed within two years from the dates of payment because of an agreement between the taxpayer and the Collector that they should await the result of a case pending in the Supreme Court in which the questions involve9 were similar to the case of Panay Electric Company. Ihe case of herein pe- titioner is , therefore , entirely different from that case . No equitable ground exists in the instant case to justify the application of the doctrine laid down in the case of Panay Electric Company.

DECISION - C. I . A. CASE NO. 593 - 5- The fact that respondent allowed the claim with respect to payments made in 1951 and 1952 does not justify allowance of the claim for refund of payments made in 1953 and 1954. In the former , there was a claim for refund filed within the two-year period; in the latter there is none . That the claim for refund of the payments made in 1951 and 1952 was at first denied is immaterial. Respondent has the right to reconsider his decision. ~nding the decision appealed from in order , the same ~reby affirmed. No pronouncement as to costs. SO ORDERED. Manila , October 31, 1960. ReMAN M. U\1ALI Associate Judge E CONQJR: Presiding Judge