Commissioner of Internal Revenue v. Philippine National Bank

EN BANC [C.T.A. EB CASE NO. 1533. April 23, 2018.] (C.T.A. Case No. 8268) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs. PHILIPPINE NATIONAL BANK , respondent . DECISION CASTAEDA, JR. , J p : Before the Court En Banc is a Petition for Review filed by the Commissioner of Internal Revenue (CIR) pursuant to Sections 3 (b) and 4 (b), Rule 8 of the Revised Rules of the Court of Tax Appeals (RRCTA) in relation to Rule 43 of the Rules of Court seeking the nullification and recall of the following: 1. May 6, 2016 Amended Decision 1 of the CTA Special First Division 2 the dispositive portion of which reads: " WHEREFORE , premises considered, petitioner's Motion for Reconsideration is PARTIALLY GRANTED . Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Philippine National Bank the reduced amount of ONE HUNDRED EIGHTY-THREE MILLION FIVE HUNDRED FOUR THOUSAND FOUR HUNDRED SEVENTY-TWO AND 42/100 (P183,504,472.42) , representing petitioner's excess creditable withholding taxes (CWT) for taxable year 2008. SO ORDERED ." 2. September 27, 2016 Resolution 3 denying the CIR's Motion for Partial Reconsideration (Re: Amended Decision Promulgated 6 May 2016) for lack of merit. THE FACTS The facts, condensed from the records, are as follows: Petitioner Commissioner of Internal Revenue (CIR), with main office at the BIR National Office Building, Agham Road, Diliman, Quezon City, is vested by law with authority to carry out all the functions, duties and responsibilities of the Bureau of Internal Revenue (BIR), including the power to decide, approve, and grant refund claims or tax credit of internal revenue taxes. 4 Respondent Philippine National Bank (PNB) is a domestic corporation organized and existing under Philippine laws, with principal business address at the PNB Financial Center, President Diosdado Macapagal Boulevard, Pasay City. 5 On April 15, 2009, PNB manually filed its Annual ITR with the BIR for taxable year 2008 and filed the same through the Electronic Filing and Payment System (eFPS), on April 30, 2009. 6 Subsequently, it amended the said return on June 1, 2009, 7 on January 10, 2011, 8 and finally, on March 25, 2011. 9 The pertinent information reflected on the returns are reproduced below: 10 Exhibit V Exhibit A Exhibit B Exhibit C Exhibit D Date Filed with the BIR Wednesday, April 15, 2009 Thursday, April 30, 2009 Monday, June 1, 2009 Monday, January 10, 2011 Friday, March 25, 2011 Sales/Receipt/Revenues/ Fees P5,217,287,868.00 P5,217,287,868.00 P5,217,287,868.00 P5,217,287,868.00 P5,217,287,868.00 Less: Cost of Sales/Services P5,985,198,541.00 P5,985,198,541.00 P5,985,198,541.00 P,5,985,198,541.00 P5,985,198,541.00 Gross Income from Operation (P767,910,673.00) (P767,910,673.00) (P767,910,673.00) (P767,910,673.00) (P767,910,673.00) Add: Non-Operating & Other Income P4,449,302,517.00 P4,449,302,517.00 P4,449,302,517.00 P4,449,302,517.00 P4,449,302,517.00 Total Gross Income P3,681,391,844.00 P3,681,391,844.00 P3,681,391,844.00 P3,681,391,844.00 P3,681,391,844.00 Less: Deductions P4,293,749,899.00 P4,293,749,899.00 P4,293,749,899.00 P4,293,749,899.00 P4,293,749,899.00 Taxable Income (P612,358,055.00) (P612,358,055.00) (P612,358,055.00) (P612,358,055.00) (P612,358,055.00) Minimum Corporate Income Tax (MCIT) P60,898,451.00 P60,898,451.06 P60,898,451.06 P60,898,451.06 P60,898,451.06 Less: Tax Credits/Payments Prior Year's Excess Credits P85,571,293.00 P85,571,293.00 P85,571,293.00 P85,571,293.00 P85,571,293.00 Tax Payments for the First Three Quarters CWT for the First Three Quarters P51,543,962.00 P51,543,962.00 P51,543,962.00 P51,543,961.86 P51,543,961.86 CWT for the Fourth Quarter P44,469,940.00 P44,469,940.00 P68,391,572.00 P137,200,668.45 P157,789,285.79 Total Tax Credits/ Payments P181,585,195.00 P181,585,195.00 P205,506,827.00 P274,315,923.31 P294,904,540.65 Tax Payable/ (Overpayment) (P120,686,744.00) (P120,686,743.94) (P144,608,375.94) (P213,417,472.25) (P234,006,089.59) Subsequently, petitioner filed two (2) letters requesting for the issuance of tax credit certificate of alleged excess creditable withholding tax (CWT) from PNB's income from sales of acquired real properties, rental income, interest income, and commissions for taxable year 2008. CAIHTE The first letter was filed on January 14, 2011 on the basis of the second Amended Annual ITR in the amount of P188,744,630.31. 11 The second letter was filed on March 29, 2011 following the final Amended Annual ITR in the amount of P209,333,247.65. 12 In view of respondent's failure to act on petitioner's administrative claim and considering that the two-year prescriptive period is about to expire, petitioner filed the instant Petition for Review before this Court on April 13, 2011. 13 Proceedings before the CTA Special First Division In the Answer filed on May 24, 2011, respondent raised the following Special and Affirmative Defenses: 14 "6. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau. 7. Petitioner failed to demonstrate that the tax subject of the case at bar was erroneously or illegally collected. 8. Petitioner must show that it has complied with the provisions of Sections 204(c) and 229 of the Tax Code on the prescriptive period for claiming tax refund/credit. 9. Taxes remitted to the BIR are presumed to have been made in the regular course of business and in accordance with the provisions of law. 10. Petitioner failed to substantiate its claim for refund/issuance of tax credit certificate in the amount of Two Hundred Nine Million Three Hundred Thirty-Three Thousand Two Hundred Forty-Seven Pesos and 65/100 (P209,333,247.65) representing alleged unutilized creditable withholding tax for the taxable year 2008. 11. In the case entitled 'Commissioner of Internal Revenue vs. Rosemarie Acosta,' the Supreme Court had the occasion to say: '. . .Noteworthy, the requirements under Section 230 (now Section 204) for refund claims are as follows: 1. A written claim for refund or tax credit must be filed by the taxpayer with the Commissioner; 2. The claim for refund must be a categorical demand for reimbursement; 3. The claim for refund or tax credit must be filed, or the suit or proceeding therefor must be commenced in court within two (2) years from date of payment of the tax or penalty regardless of any supervening cause . In our view, the law is clear. A claimant must first file a written claim for refund, categorically demanding recovery of overpaid taxes with the CIR, before resorting to an action in court. This obviously is intended, first, to afford the CIR an opportunity to correct the action of subordinate officers ; and second, to notify the government that such taxes have been questioned, and the notice should then be borne in mind in estimating the revenue available for expenditure. . . .' (Emphasis and underscoring supplied) 12. In order to be entitled to the refund being sought, petitioner must satisfactorily comply with the following requisites: a.) That the claim for refund was filed within the two-year prescriptive period as provided under Section 204(c) in relation to Section 229 of the NIRC of 1997; b.) That the fact of withholding is established by a copy of a statement duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom; and c.) That the income upon which the taxes were withheld was included in the return of the recipient. 13. Petitioner must prove that the administrative and judicial claims were filed within the period prescribed by law. 14. Petitioner must prove that it has fully complied with the requirements of Revenue Memorandum Order No. 53-98, for purposes of submission of the supporting documents, otherwise, there would be no sufficient compliance with regard to the filing of an administrative claim for tax credit/refund which is a condition sine qua non prior to the filing of judicial claim. 15. Respondent humbly manifests that petitioner failed to indicate and prove that it opted a claim for refund of its alleged excess and unutilized creditable withholding tax for taxable year 2008. Section 76 of the National Internal Revenue Code of 1997, as amended, provides: Final Adjustment Return. Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year, the corporation shall either: a. Pay the balance of tax still due; b. Carry over the excess credit; or c. Be credited or refund the excess amount paid, as the case may be. If the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor .' (Emphasis and underscoring supplied) 16. Petitioner alleged that it filed its initial administrative claim for refund with respondent amounting to P188,744,630.31 representing excess income tax payments for taxable year 2008 on January 11, 2011. However, on March 29, 2011, it allegedly filed an amended administrative claim for refund for the increased amount of P209,333,247.65. It bears stressing that exactly fifteen (15) days after the filing of the aforesaid alleged administrative claim, it filed before the Honorable Court its Petition for Review. Respondent therefore, was not accorded the fullest opportunity to act appropriately on the matter. It would be highly improbable to grant or deny the claim for refund in a matter of sixteen (16) days. In fact, petitioner was very much aware of the two (2)-year prescriptive period embodied in Section 229 of the National Internal Revenue (NIRC) of 1997, as amended. As found in Paragraph 7 of its Petition for Review, Section 229 of the NIRC of 1997, as amended, was even made the basis for the filing of the administrative claim for refund on its alleged excess creditable withholding tax. Mindful of Section 229, petitioner should have at least filed its application for tax refund earlier than March 29, 2011, for that matter, so that respondent will be given ample time to review and evaluate its application for tax refund. 17. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund. 18. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation. 19. Basic is the rule that tax refunds are regarded as tax exemptions that are in derogation of sovereign authority and are to be construed in strictissimi juris against the person or entity claiming the exemption (Philippine Phosphate Fertilizer Corporation v. Commissioner of Internal Revenue, G.R. No. 141973, June 28, 2005) . The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted ( Sea-land Service vs. Court of Appeals , 357 SCRA 444)." (Citations omitted) After the pre-trial conference on June 17, 2011, the parties submitted their Joint Stipulation of Facts and Issues on July 7, 2011. 15 Subsequently, the parties filed a Supplemental Joint Stipulation of Facts and Issues on July 22, 2011, 16 which the Court approved in the Resolution dated July 27, 2011. 17 DETACa The Court issued a Pre-Trial Order on September 16, 2011. 18 During trial, petitioner PNB presented oral and documentary evidence and filed its Formal Offer of Evidence on August 6, 2012, offering Exhibits A to BBB-5-1, inclusive of sub-markings. 19 Respondent CIR filed a Comment (On Petitioner's Formal Offer of Evidence) on September 11, 2012. 20 On January 7, 2013, with the admission of PNB's documentary exhibits, it was deemed to have rested its case. 21 On January 31, 2013, during the supposed initial presentation of the respondent CIR's evidence, originally set on December 6, 2012, 22 the respondent's counsel manifested that the case has no report of investigation and that respondent would not be presenting evidence. Thus, in the Resolution dated January 31, 2013, the Court granted the CIR, a period of thirty (30) days from even date, and PNB, a period of twenty days (20) from receipt of the Resolution, to file their memoranda. 23 On March 22, 2013, 24 the case was submitted for decision, after PNB filed its Memorandum on March 18, 2013, 25 and the CIR, on March 19, 2013. 26 In its December 10, 2013 Decision, 27 the court denied the claim for refund for insufficiency of evidence. The decision reads in pertinent part: "Considering that the aforesaid second condition is to the effect that there must be a showing on the return [sic] of petitioner that the income payment subjected to withholding tax was declared as part of the gross income, it is logical that the first and foremost document to be closely examined and scrutinized is the Annual ITR of petitioner for 2008, particularly the information indicated therein. Thus, such examination and scrutiny must not only be confined to a particular entry or item in the said return, but must be made in its entirety. In fine, it must be emphasized that as cases filed before this Court are litigated de novo , party-litigants should prove every minute aspect of their cases. Thus, petitioner clearly failed to prove compliance with the second condition for the grant of a claim for refund of creditable withholding income tax. It must be stressed that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund. Tax refunds are in the nature of tax exemptions. As such, they are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the refund. WHEREFORE , premises considered, the instant Petition for Review is hereby DENIED due to insufficiency of evidence . SO ORDERED ." (Underscoring supplied; citations omitted) On January 20, 2014, PNB filed a Motion for Reconsideration (With Motion to Reopen Trial). 28 On February 28, 2014, the CIR filed a Comment [To Petitioner's Motion for Reconsideration (with Motion to Reopen Trial)] 29 in compliance with the January 24, 2014 Resolution of the court. 30 On March 18, 2014, PNB filed a Reply (to Respondent's Comment dated 28 February 2014) after filing for leave of court. 31 On May 2, 2014, the Court granted PNB's Motion to Reopen Trial in the interest of substantial justice, set the presentation of evidence on June 5, 2014 but held in abeyance the resolution of the Motion for Reconsideration. 32 On May 22, 2014, the CIR filed a Motion for Reconsideration (of the Resolution promulgated on 02 May 2014) 33 to which PNB filed a Comment/Opposition. 34 In a September 3, 2014 Resolution, the court denied the CIR's motion and set the presentation of PNB's supplemental evidence on October 21, 2014. 35 On October 17, 2014, PNB filed a Manifestation and Motion requesting for the resetting of the October 21, 2014 hearing in order for the commissioning of a new Independent Certified Public Accountant (ICPA), Atty. Fredieric B. Landicho. The motion was granted and the commissioning was, thus, reset to November 25, 2014 36 and then to February 24, 2015. 37 Upon motion of PNB and to expedite the proceedings, the hearing was reset to an earlier date, January 13, 2015 38 and then to February 10, 2015. 39 On February 5, 2015, PNB filed the judicial affidavit of Atty. Landicho for the purpose of his appointment as ICPA. 40 On February 10, 2015, finding merit in PNB's motion as regards the competence and independence of Atty. Landicho, and there being no objection interposed by the CIR, the motion was granted by the court. Atty. Landicho, after taking his oath as ICPA, was given forty-five (45) days or until March 27, 2015 to file his ICPA Supplemental Report. 41 On March 27, 2015, in compliance with the instructions of the court the ICPA submitted his report. 42 On April 30, 2015, PNB filed the Judicial Affidavit of Atty. Landicho on the independent study he conducted covering the taxable period of January 1 to December 31, 2008 including the findings and observations contained in the Supplemental ICPA Report. 43 On May 5, 2015, Atty. Landicho testified on direct examination by way of his judicial affidavit and underwent cross-examination without re-direct examination. 44 On May 20, 2015, PNB filed its Supplemental Formal Offer of Evidence. 45 In a Resolution dated July 13, 2015, 46 the court admitted the exhibits except for Exhibits FF-637, FF-744, FF-794, FF-1133, FF-1136, FF-1203, FF-1373, FF-1516, FF-220a, FF-221a, FF-298a, FF-637a, FF-650a, FF-651a, FF-744a, FF-897a, FF-994a, FF-1040a to FF-1054a, FF-1133a, FF-1136a, FF-1297a, FF-1373a, FF-1380a, FF1406a, FF-1516a, FF-1626a, FF-1632a, FF-1635a, FF-2304a, FF-2309a, FF-2317a, FF-2339a, FF-2505a, FF-2515a, FF-2542a, FF-2544a, FF-2546a, FF-2547a and FF-2557a because they were not found in the records. The court also noted the duplication in the marking of documents as Exhibits FF-1470, FF-1297 and FF-2547. On August 5, 2015, PNB filed a Motion for Partial Reconsideration (Re: Resolution dated 13 July 2015) 47 without the CIR's comment despite notice. 48 In a Resolution dated September 28, 2015, 49 the court set a commissioner's hearing on November 5, 2015 for the remarking of Exhibits FF-1297 and FF-2547. On November 9, 2015, PNB filed a Manifestation and Motion praying for the partial reconsideration of the July 13, 2015 Resolution and the admission of Exhibits FF-794, FF-1203, FF-1040a to FF-1054a, FF-1308a, FF-1406a, FF-1297a and FF-2547a. 50 In a Resolution dated December 18, 2015, the court granted PNB's motion and gave the parties twenty (20) days to file their memoranda. On January 12, 2016, the CIR manifested that she will no longer file a memorandum. 51 On February 24, 2016, PNB filed its Supplemental Memorandum. 52 On May 6, 2016, the court promulgated an Amended Decision partially granting PNB reconsideration and refunded a reduced amount of P183,504,472.42: 53 " Now, in support of petitioner's Motion for Reconsideration and in order to prove its entitlement to refund of excess CWT, petitioner presented additional documentary and testimonial evidence such as the Trial Balance for the year 2008, Reconciliation of Income per Audited Financial Statements against Income per Income Tax Return, testimony of the new Court-commissioned ICPA, Atty. Fredieric B. Landicho, and Supplemental ICPA Report dated March 27, 2015, among others . After careful evaluation of the additional evidence presented, this Court finds that petitioner's income upon which the taxes were withheld were properly reported and formed part of its gross income declared in the Annual ITR for taxable year 2008 . aDSIHc The income payments appearing in each CWT certificates (BIR Form No. 2307) were checked against the relevant documents such as Transaction Tickets/Input Sheets and Deeds of Sale. Said income payments appearing in the documents were individually traced to the specific General Ledger of the relevant income account to ascertain whether the same were properly posted. The ending balances of the General Ledger of income accounts from which the taxes were withheld correspond with the amounts reported in the Trial Balance. Thereafter, the income accounts in the Adjusted Trial Balance were compared against the amounts reported in the AFS. Upon comparison, minimal discrepancies appeared due to rounding off, to wit: xxx xxx xxx As per Reconciliation of Income per Audited Financial Statements against Income per Income Tax Return, it shows that the income payments upon which the taxes were withheld were properly reported and formed part of the gross income declared in its ITR for the taxable year 2008, We quote: xxx xxx xxx Further, as found by the ICPA in his Report, not all the income payments per CWT certificates were traced to the General Ledger, and it cannot be ascertained whether the same were reported in petitioner's ITR. The findings of the ICPA are summarized as follows: xxx xxx xxx Considering the above findings together with the submitted documents, schedules and reconciliation, this Court finds the Supplemental ICPA Report in order. Consequently, after excluding items d.2, e, h, i, j and k abovementioned, only the CWT in the amount of P183,504,472.42 which are duly supported by certificates and of which the related income payments of P4,146,736,265.30 were traced to General Ledger and thereafter reported in the Audited FS and Annual ITR for taxable year 2008 shall be refunded, to wit : xxx xxx xxx WHEREFORE , premises considered, petitioner's Motion for Reconsideration is PARTIALLY GRANTED . Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Philippine National Bank the reduced amount of ONE HUNDRED EIGHTY-THREE MILLION FIVE HUNDRED FOUR THOUSAND FOUR HUNDRED SEVENTY-TWO AND 42/100 (P183,504,472.42) , representing petitioner's excess creditable withholding taxes (CWT) for taxable year 2008. SO ORDERED ." (Citations omitted; underscoring supplied) On May 26, 2016, the CIR filed a Motion for Partial Reconsideration (Re: Amended Decision Promulgated 6 May 2016) by registered mail. 54 On June 27, 2016, PNB filed a Comment on the Motion for Partial Reconsideration. 55 On September 27, 2016, the Court issued a Resolution which denied CIR's Motion for Partial Reconsideration for lack of merit. 56 Proceedings before the CTA En Banc On October 19, 2016, the CIR filed a Motion for Extension for Time to File Petition for Review 57 which the Court En Banc granted in a Minute Resolution. 58 On November 3, 2016, the CIR filed a Petition for Review. 59 In a Resolution dated November 29, 2016, PNB was ordered to file its comment on the petition. 60 On January 16, 2017, after an extension granted by the Court, 61 PNB filed its Comment (to CIR's Petition for Review dated 03 November 2016). 62 In a Resolution dated February 13, 2017, the Court gave due course to CIR's Petition for Review and required the parties to submit their memoranda. 63 On May 23, 2017, with the filing of PNB's Memorandum on March 20, 2017 64 and considering the failure of the CIR to file its memorandum despite notice, the Court submitted the case for decision. 65 THE ISSUES The CIR petitions the Court to deny PNB's CWT refund/tax credit claim on the sole ground that PNB violated the exhaustion of administrative remedies thereby depriving said administrative agency of the opportunity to pass upon the claim. THIS COURT'S RULING We deny the CIR's petition. Directly quoting from Laguna CATV Network, Inc. v. Hon. Alex E. Maraan , 66 the CIR states that PNB as the taxpayer with an administrative remedy must not merely initiate the prescribed administrative procedure to obtain relief but also pursue it to its appropriate conclusion before seeking judicial intervention in order to give the administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to the court. 67 The CIR elaborates that, since the administrative claims were filed only on January 14, 2011 and on March 29, 2011, 68 this effectively gave the BIR less than one month to process the claim 69 before the filing of the judicial claim on April 13, 2011. 70 This limited period, stresses the CIR, is clearly insufficient for the purpose of processing the administrative claim and reveals clearly that PNB filed a pro forma claim and had no intention to pursue its administrative remedy. 71 To begin with, the Court En Banc notes that this is not the first time that petitioner CIR raised this issue. Early on in the Answer, the doctrine of exhaustion of administrative remedies was raised as one of the grounds to deny the judicial claim, thus: "16. Petitioner alleged that it filed its initial administrative claim for refund with respondent amounting to P188,744,630.31 representing excess income tax payments for taxable year 2008 on January 11, 2011. However, on March 29, 2011, it allegedly filed an amended administrative claim for refund for the increased amount of P209,333,247.65. It bears stressing that exactly fifteen (15) days after the filing of the aforesaid alleged administrative claim, it filed before the Honorable Court its Petition for Review. Respondent therefore, was not accorded the fullest opportunity to act appropriately on the matter. It would be highly improbable to grant or deny the claim for refund in a matter of sixteen (16) days . In fact, petitioner was very much aware of the two (2)-year prescriptive period embodied in Section 229 of the National Internal Revenue (NIRC) of 1997, as amended. As found in Paragraph 7 of its Petition for Review, Section 229 of the NIRC of 1997, as amended, was even made the basis for the filing of the administrative claim for refund on its alleged excess creditable withholding tax. Mindful of Section 229, petitioner should have at least filed its application for tax refund earlier than March 29, 2011, for that matter, so that respondent will be given ample time to review and evaluate its application for tax refund." 72 (Underscoring supplied) ETHIDa Accordingly, the instant petition is but a reiteration of the arguments previously set forth which the Court a quo had already considered, weighed, and resolved before it rendered its Amended Decision and Resolution now sought to be set aside: " Moreover, contrary to respondent's allegations, petitioner was able to show its compliance with the exhaustion of administrative remedies when it filed an administrative claim prior to the filing of a judicial claim . Its administrative claim, filed on January 14, 2011, and the amendment thereto, filed on March 29, 2011, were both filed prior to the filing of the Petition for Review and were both made within the two-year prescriptive period provided by law. Likewise, the ruling of Jariol on exhaustion of administrative remedies does not find application in this case since it pertains to an election suit and its proceedings before the COMELEC. The petitioners therein immediately filed a special civil action for certiorari under Rule 65 of the Rules of Court without filing a Motion for Reconsideration of the COMELEC's Resolution No. 2879. Here, the law provides specific procedures in filing a claim for refund. While respondent insists that petitioner must not merely initiate the prescribed administrative procedure to obtain relief, but also must pursue it to its appropriate conclusion before seeking judicial intervention, the law on refund of excessively collected taxes is clear on the procedure for filing claims on the administrative and judicial levels. In the early case of Gibbs vs. Collector , the Supreme Court held that if, however, the Collector (now Commissioner) 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 CTA before the end of the two (2)-year period without awaiting the decision of the Commissioner. Furthermore, in the case of Commissioner of Customs and Commissioner of Internal Revenue vs. The Honorable Court of Tax Appeals and Planters Products, Inc. , the Supreme Court held that 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. 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 (now Commissioner) 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 Commissioner, would have, at his personal convenience, given his go signal ." 73 (Underscoring supplied; citations omitted) Second, the Court En Banc is not unaware of the doctrine raised by the petitioner, the rationale and importance of which was discussed by the Supreme Court in this wise: "The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. The rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of controversies. Comity and convenience also impel courts of justice to shy away from a dispute until the system of administrative redress has been completed ." 74 This general rule, however, admits of several exceptions: "One of the reasons for the doctrine of exhaustion is the separation of powers which enjoins upon the judiciary a becoming policy of non-interference with matters coming primarily within the competence of other department. x x x. There are however a number of instances when the doctrine may be dispensed with and judicial action validly resorted to immediately. Among these exceptional cases are : (1) when the question raised is purely legal, (2) when the administrative body is in estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent need for judicial intervention ; (5) when the claim involved is small; (6) when irreparable damage will be suffered; (7) when there is no other plain, speedy and adequate remedy; (8) when strong public interest is involved; (9) when the subject of controversy is private land; and (10) in quo-warranto proceeding." 75 In the case at bench, records show that PNB manually filed its Annual Income Tax Return (ITR) for taxable year 2008 on April 15, 2009 and then filed the same via the eFPS on April 30, 2009. 76 Under Section 229, PNB only had two years from the date of payment of the tax to file the judicial claim: " SEC. 229 . Recovery of Tax Erroneously or Illegally Collected . No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment : Provided, however , That the Commissioner may, even without a written claim therefor; refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." (Underscoring supplied) Accordingly, counting two (2) years from April 15, 2009, PNB had until April 15, 2011 to file its suit with the CTA to recover the excess CWT. Without a doubt, when PNB filed its administrative claims on January 14, 2011 and on March 29, 2011 with the BIR, it only had a few days remaining until the statutory deadline on April 15, 2011 when the claim should be elevated to the CTA. Clearly, in order to comply with the statute of limitation set in Section 229, PNB had to elevate the claim on or before April 15, 2011. Otherwise, it would have been barred by prescription. The CIR, furthermore, invokes no legal provision or case law that requires taxpayers to file the administrative claims not only within the deadline but also earlier than when they were actually filed in this case. What is clear, under Section 204 of the NIRC, is that the taxpayer must file the administrative claims with the CIR also within two (2) years after the payment of tax: " SEC. 204 . Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes . The Commissioner may (A) Compromise the payment of any internal revenue tax, when: xxx xxx xxx (B) Abate or cancel a tax liability, when: xxx xxx xxx (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty : Provided, however , That a return filed showing an overpayment shall be considered as a written claim for credit or refund. xxx xxx xxx" (Underscoring supplied) When Section 204 is read together with Section 229, therefore, it is evident that the deadlines for both the administrative and the judicial claims coincide. However, what Section 229 requires as a condition sine qua non is that an administrative claim must be filed prior to the judicial claim, as stated in the clause "no suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax x x x, until a claim for refund or credit has been duly filed with the Commissioner." Accordingly, We find no basis in law to oblige the taxpayer to file the administrative claim at least within a certain number of days prior to the filing of the judicial claim, as the CIR insists. In Allison J. Gibbs, et al. vs. Collector of Internal Revenue, et al. , 77 the Supreme Court En Banc affirmed the decision of the CTA which dismissed the judicial claim for refund of income tax paid under protest after an assessment because the taxpayer's petition was filed out of time. The Court declared that the taxpayer had no obligation to wait for the decision of the CIR on the administrative claim especially when the deadline for the judicial claim is about to lapse: " The only issue to be resolved in this case is whether or not petitioners' appeal (petition for review and refund) from the decision of respondent Collector of Internal Revenue [now Commissioner of Internal Revenue], was filed with respondent Court of Tax Appeals within the statutory period . Section 7 of Republic Act No. 1125, in part, provides: xxx xxx xxx It is not disputed that petitioners received on November 14, 1956, notice of respondent Collector's [now Commissioner] decision denying their request for a refund of the deficiency assessment paid by them. Pursuant to the above-quoted provision of Section 11 of Republic Act 1125, they had 30 days from said date within which to file their appeal (petition for review and refund) with respondent court. However, they filed said appeal only on September 27, 1957, or more than ten (10) months thereafter, much beyond the aforementioned 30-day period within which to file the same. Consequently, respondent court had acquired no jurisdiction to entertain said appeal and the dismissal of the same was proper. cSEDTC Petitioners, however, contend that although their appeal was filed beyond said 30-day period, respondent court still had jurisdiction over the same, by virtue of the provision of Section 306 of the National Internal Revenue Code [now Section 229], which reads: 'SEC. 306. Recovery of tax erroneously or illegally collected . No suit or proceeding shall be maintained in any court for the recovery of any national internal-revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Collector of Internal Revenue ; but such suit or proceeding may be maintained, whether or not such tax penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty.' (Emphasis supplied.) The contention is devoid of any merit. In the case of Johnston Lumber Co., Inc. vs. Court of Tax Appeals, et al . 101 Phil., 654; 54 Off. Gaz. [16] 5226, we held: 'It is the contention of petitioner that the aforequoted provisions cannot stand side by side because, whereas Section 306 [now Section 229] of the Tax Code required the filing of a claim before an action in court may be maintained, Republic Act No. 1125 which confers jurisdiction upon the Court of Tax Appeals to take cognizance of appeals from the decisions of the Collector of Internal Revenue does not require any more the filing of said claim but merely provides that said appeal may be filed within 30 days from receipt of such decision or ruling. A careful analysis of the provisions of both enactments would negative the assertion of petitioner. The specific provision of Republic Act No. 1125 regarding appeal (Section 11) was intended to cope with a situation where the taxpayer, upon receipt of a decision or ruling of the Collector of Internal Revenue, elects to appeal to the Court of Tax Appeals instead of paying the tax . For this reason, the latter part of said Section 11, provides that no such appeal would suspend the payment of the tax demanded by the Government, unless for special reasons, the Court of Tax Appeals would deem it fit to restrain said collection. Section 306, of the Tax Code, on the other hand, contemplates of a case wherein the taxpayer paid the tax , whether under protest or not, and later on decides to go to court for its recovery. We can, therefore, conclude that where payment has already been made and the taxpayer is merely asking for its refund, he must first file with the Collector of Internal Revenue [now Commissioner of Internal Revenue] a claim for refund before taking the matter to the Court, as required by Section 306 of the National Internal Revenue Code [now Section 229] and that appeals from decisions or rulings of the Collector of Internal Revenue [now Commissioner of Internal Revenue] to the Court of Tax Appeals must always be perfected within 30 days after the receipt of the decision or ruling that is being appealed , as required by Section 11 of Republic Act No. 1125. We see no conflict between the aforementioned sections of said laws.' (Emphasis supplied.) Under the above ruling, it is clear that Section 306 [now Section 229] 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 [now Commissioner 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 [now Commissioner's] decision or ruling denying his claim for refund, as required by said Section 11 of Republic Act No. 1125. If, however, the Collector [now Commissioner] 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 [now Commissioner]. This is so because of the positive requirement of Section 306 and the doctrine that delay of the Collector [now Commissioner] 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." (Citations omitted; underscoring supplied) As final word, substantial justice dictates that the government should not keep money that does not belong to it at the expense of its citizens. 78 Considering the foregoing discussion, petitioner CIR has failed to validly argue against the holding of the Court a quo decreeing the partial grant of the claim in favor of PNB. WHEREFORE , premises considered, the Petition for Review is DENIED for lack of merit. The May 6, 2016 Amended Decision and the September 27, 2016 Resolution are hereby AFFIRMED . SDAaTC SO ORDERED. (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Roman G. del Rosario, P.J., Lovell R. Bautista, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, Ma. Belen M. Ringpis-Liban and Catherine T. Manahan, JJ. , concur. Erlinda P. Uy and Caesar A. Casanova, JJ. , are on leave. Footnotes 1. Annex A, Petition for Review, Rollo , pp. 18-27. 2. Penned by J. Erlinda P. Uy with the concurrence of J. Esperanza R. Fabon-Victorino. 3. Annex B, Petition for Review, Rollo , pp. 28-39. 4. Par. 2, Summary of Admitted Facts, Joint Stipulation of Facts and Issues, Division Docket, Vol. 5, pp. 2769-2770. 5. Par. 1, Summary of Admitted Facts, Joint Stipulation of Facts and Issues, Division Docket, Vol. 5, p. 2769. 6. Exhibit A, Petitioner's Formal Offer of Evidence, Division Docket, Vol. 6, pp. 3482-3483; See also December 10, 2013 Decision, Division Docket, Vol. 6, p. 3654. 7. Exhibit B, Petitioner's Formal Offer of Evidence, Division Docket, Vol. 6, pp. 3482-3483; See also December 10, 2013 Decision, Division Docket, Vol. 6, p. 3654. 8. Exhibit C, Petitioner's Formal Offer of Evidence, Division Docket, Vol. 6, pp. 3482-3483; See also December 10, 2013 Decision, Division Docket, Vol. 6, p. 3654. 9. Exhibit D, Petitioner's Formal Offer of Evidence, Division Docket, Vol. 6, pp. 3482-3484; See also December 10, 2013 Decision, Division Docket, Vol. 6, p. 3654. 10. December 10, 2013 Decision, Division Docket, Vol. 6, p. 3654-3655. 11. Exhibit H. 12. Exhibit I. 13. Par. 5, Summary of Admitted Facts, Joint Stipulation of Facts and Issues, Division Docket, Vol. 5, p. 2771. 14. Division Docket, Vol. 5, pp. 2737-2741. 15. Division Docket, Vol. 5, pp. 2769-2773. 16. Division Docket, Vol. 5, pp. 2780-2787. 17. Division Docket, Vol. 5, p. 2789. 18. Division Docket, Vol. 5, pp. 3290-3295. 19. Division Docket, Vol. 6, pp. 3482-3511. 20. Division Docket, Vol. 6, pp. 3518-3520. 21. October 3, 2012 and January 7, 2013 Resolutions, Division Docket, Vol. 6, pp. 3522-3524 and 3573-3574. 22. Resolution, Division Docket, Vol. 6, pp. 3568. 23. Resolution, Division Docket, Vol. 6, p. 3577. 24. Resolution, Division Docket, Vol. 6, p. 3640. 25. Division Docket, Vol. 6, pp. 3583-3610. 26. Division Docket, Vol. 6, pp. 3611-3635. 27. Division Docket, Vol. 6, pp. 3644-3663. 28. Division Docket, Vol. 6, pp. 3664-3686. 29. Division Docket, Vol. 6, pp. 3698-3705. 30. Division Docket, Vol. 6, p. 3688. 31. Division Docket, Vol. 6, pp. 3710-3712. 32. Resolution, Division Docket, Vol. 6, pp. 3725-3733. 33. Division Docket, Vol. 6, pp. 3734-3743. 34. Division Docket, Vol. 6, pp. 3749-3753. 35. Division Docket, Vol. 6, pp. 3757-3758. 36. Order, Division Docket, Vol. 6, p. 3767. 37. Order, Division Docket, Vol. 6, p. 3769. 38. Order, Division Docket, Vol. 6, p. 3775. 39. Order, Division Docket, Vol. 6, p. 3780. 40. Compliance, Division Docket, Vol. 6, pp. 3781-3792. 41. Resolution, Division Docket, Vol. 6, pp. 3800-3801. 42. April 1, 2015 Minute Resolution, Division Docket, Vol. 6, p. 3807. 43. Compliance with attachments including Exhibit MMM, Judicial Affidavit of Atty. Fredieric B. Landicho, Division Docket, Vol. 6, pp. 3808-3824. 44. Resolution, Division Docket, Vol. 6, pp. 3828-3829. 45. Division Docket, Vol. 6, pp. 3830-3842. 46. Division Docket, Vol. 6, pp. 3850-3852. 47. Division Docket, Vol. 6, pp. 3855-3860. 48. September 9, 2015 Resolution, Division Docket, Vol. 6, p. 3867. 49. Division Docket, Vol. 6, pp. 3870-3871. 50. Division Docket, Vol. 6, pp. 3876-3880. 51. Manifestation, Division Docket, Vol. 6, pp. 3887-3889. 52. Division Docket, Vol. 6, pp. 3900-3920. 53. Division Docket, Vol. 6, pp. 3925-3934. 54. Division Docket, Vol. 6, pp. 3935-3940. 55. Division Docket, Vol. 6, pp. 3949-3959. 56. Division Docket, Vol. 6, pp. 3966-3977. 57. Rollo , pp. 1-5. 58. Rollo , p. 6. 59. Rollo , pp. 7-17. 60. Rollo , pp. 44-45. 61. January 9, 2017 Minute Resolution, Rollo , p. 52A. 62. Rollo , pp. 53-64. 63. Rollo , pp. 66-67. 64. Rollo , pp. 68-85. 65. Rollo , pp. 88-89. 66. G.R. No. 139492, November 19, 2002. 67. Petition for Review, Rollo , pp. 11-12. 68. December 10, 2013 Decision, Division Docket, Vol. 6, p. 3645; Petition for Review, Rollo , p. 12. 69. Petition for Review, Rollo , p. 12. 70. December 10, 2013 Decision, Division Docket, Vol. 6, p. 3645. 71. Petition for Review, Rollo , p. 12. 72. Division Docket, Vol. 5, p. 2740. 73. Division Docket, Vol. 6, pp. 3974-3975. 74. New Sun Valley Homeowners' Association, Inc. v. Sangguniang Barangay, et al. , G.R. No. 156686, July 27, 2011. 75. Jaime C. Lopez v. City of Manila, et al. , G.R. No. 127139, February 19, 1999. 76. December 10, 2013 Decision, Division Docket, Vol. 6, p. 3654. 77. G.R. No. L-13453, February 29, 1960. 78. Commissioner of Internal Revenue v. Ironcon Builders and Development Corporation , G.R. No. 180042, February 8, 2010.