COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. BANK OF THE PHILIPPINE ISLANDS, as LIQUIDATOR OF PARAMOUNT ACCEPTANCE CORPORATION and THE COURT OF TAX APPEALS, respondents.

[CA-G.R. SP No. 34102. September 19, 1994.] (C.T.A. Case No. 4257) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . BANK OF THE PHILIPPINE ISLANDS, as LIQUIDATOR OF PARAMOUNT ACCEPTANCE CORPORATION and THE COURT OF TAX APPEALS , respondents . D E C I S I O N GONZAGA-REYES , J p : Petition for Review of the decision of the Court of Tax Appeals ordering the Commissioner of Internal Revenue to refund to the Bank of Philippine Islands the amount of P65,259.00 as overpaid income tax of Paramount Acceptance Corporation for the calendar year 1985. The following facts as found by respondent court are undisputed: "Petitioner, Bank of the Philippine Islands (BPI for short) is a bank and trust corporation duly organized and existing under Philippine laws. It acts as the liquidator of Paramount Acceptance Corporation after its dissolution on March 31, 1986. On August 2, 1986, Paramount Acceptance Corporation (Paramount for brevity) filed its Corporate Annual Income Tax Return, for calendar year ending December 31, 1985, declaring a Net Income of P3,324,802.00 (Exh. A). The income tax due thereon is P1,153,681.00. However, Paramount paid the BIR its quarterly income tax, to wit: Qtr. CR/ROR Date Bank Amount Exh. 1st 6817293 5-30-85 DBP P308,779.00 C 2nd 5613316 8-29-85 DBP 626,000.00 C-1 3rd 7720471 11-29-85 DBP 284,161.00 C-2 TOTAL P1,218,940.00 ========= After deducting Paramount's total quarterly income tax payments of P1,218,940.00 from its income tax of P1,153,681.00, the return showed a refundable amount of P65,259.00. The appropriate box in the return was marked with a cross (x) indicating ' To be refunded' the amount of P65,259.00. On April 14, 1988, petitioner BPI, as liquidator of Paramount, through counsel filed a letter dated April 12, 1988 reiterating its claim for refund of P65,259.00 as overpaid income tax for the calendar year 1985. The following day or on April 15, 1988, BPI filed the instant petition with this Court in order to toll the running of the prescriptive period for filing a claim for refund or overpaid income taxes." The respondent court, with one judge dissenting, ruled in favor of BPI, and ordered the Commissioner of Internal Revenue to refund the sum of P65,259.00. Motion for Reconsideration of the Decision having been denied, the Commissioner of Internal Revenue filed this petition for review on the following assignment of errors: "I RESPONDENT TAX COURT FAILED TO CONSIDER THAT PRIVATE RESPONDENT HAS NO CAUSE OF ACTION AGAINST PETITIONER. II RESPONDENT TAX COURT IN DECIDING THE CASE IN FAVOR OF PRIVATE RESPONDENT DISREGARDED THE APPLICABLE LAW LAID DOWN IN THE CASE OF GEODETIC AND CONSTRUCTION SURVEY LTD. v. COMMISSIONER OF INTERNAL REVENUE (CTA Case No. 4526, Dec. dated June 2, 1993); CA-G.R. No. SP-32108, Appeal Withdrawn) III RESPONDENT TAX COURT IN ORDERING PETITIONER TO REFUND TO PRIVATE RESPONDENT THE ALLEGED OVERPAID INCOME TAXES SUBJECT OF THE INSTANT CASE HAS OVERLOOKED THE FACT THAT PRIVATE RESPONDENT'S CLAIM IS TIME-BARRED PURSUANT TO SECTION 230 OF THE TAX C OD E AND PERTINENT DECISIONS OF THE HONORABLE SUPREME COURT." The petitioner alleges that the BPI has no cause of action against it. It is contended that BPI's action of filing the subject claim for refund with the Court of Tax Appeals on April 15, 1988, or a day after it filed its claim for refund with the Bureau of Internal Revenue on April 14, 1988 deprived the petitioner of the opportunity to act on the said claim for refund, a violation of the rule on non-exhaustion of administrative remedies tantamount to lack of cause of action. By filing his claim for refund with the Commissioner of Internal Revenue on the last day, the Bureau is deprived of the opportunity of passing upon the claim for refund. And in the absence of a decision of the Commissioner of Internal Revenue, there is no decision which the Court of Tax Appeals can review in the exercise of its exclusive appellate jurisdiction. The petitioner also contends that BPI's claim for refund it time-barred, having been filed more than two years from April 2, 1986, the date when it filed its final adjustment returns. Private respondent BPI claims that the two-year prescriptive period for filing claims for refund should commence only on April 15, 1986, the date when the previous year's income tax becomes due and payable, and regardless of the time when the final adjustment returns was filed. BPI further alleges that it has exhausted administrative remedies because it indicated that it was claiming the refund of the amount of P65,259.00 when it filed its income tax returns. BPI also questions the timeliness of the filing of the petition for review, since extensions of time to file petition for review should be limited to fifteen days. We resolve to dismiss the petition for review for lack of merit. Sections 230 and 204, par. 3 of the National Internal Revenue Code (PD 1158 as amended) respectively read as follows: "SEC. 230. 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 Commissioner 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 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 tax appears clearly to have been erroneously paid." "SEC. 204. Authority of the Commissioner to compromise, abate, and refund/credit taxes . The Commissioner may xxx xxx xxx (3) 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 years after the payment of the tax or penalty." It is clear that a claim for refund should be filed with the Commissioner of Internal Revenue as a prerequisite before court action on tax refund cases can be commenced and that the suit for refund must be filed within two years from the date of payment of the tax. It is also clear from Section 204 that the claim for refund must be filed with the Commission within two years from payment of the tax. When the two-year period is about to prescribe and the claim for refund with the Commissioner of Internal Revenue has not been acted upon by him, for the protection of the interest of the taxpayer, he should file a petition for a review with the Court of Tax Appeals within the said two-year period; otherwise, if the decision of the Commissioner is adverse to the taxpayer and it was made after the two-year period he can no longer appeal the same to the Court of Tax Appeals (Gonzales and Gonzales, National Internal Revenue Code, 1988 ed., p. 384, citing Gibbs vs. Collector of Internal revenue and Court of Tax Appeals, 107 Phil. 232; Johnston Lumber Co. vs. C.T.A., 101 Phil. 151). Accordingly, We do not agree with appellant that it is necessary for the Commissioner of Internal revenue to act unfavorably on the claim for refund before the Court of Tax Appeals may acquire jurisdiction. This is so because of the positive requirement of Section 230 and the doctrine that delay of the Commissioner in rendering decision does not extend the peremptory period fixed by the statute. Neither are We convinced that the law requires that the claim for refund should have been filed at the earliest instance in order to give the Commissioner an opportunity to rule on it and the court to review the ruling of the Commissioner of Internal Revenue on appeal. The law fixed the same period two years for filing a claim for refund with the Commissioner (Sec. 204, par. 3), and for filing suit in court (Sec. 230), unlike in protests of assessment under Sec. 229 which fixed the period (thirty days from receipt of decision) for appealing to the court, thus clearly implying that the prior decision of the Commissioner is necessary favorably or unfavorably on the said claim for refund. The institution of a petition for review covering claim for refund filed with the Bureau of Internal Revenue has never been a bar to the continuous administrative processing of claim for refund. In fact in number of cases filed before this court, petition for review were withdrawn afterwards by the petitioner from this court by reason of the grant of the refund by the respondent." (See Order denying Motion for reconsideration dated April 27, 1994) The next question that arises is when the two-year period commences. It is not disputed that the BPI adopts the calendar basis of reporting its income and expenses; for the calendar year ending December 31, 1985, petitioner filed its income tax return on April 2, 1986, although under the law it has or on before April 15, 1986 to file the returns. Petitioner argues that since BPI filed its Final Adjustment Returns on April 2, 1986, the expiry date of the claim as prescribed by Section 230 of the Tax Code should be April 2, 1988. Hence the filing of the claim for refund on April 14, 1988 and the corresponding petitions for review on April 15, 1988 were time-barred. The Supreme Court has laid down the rule regarding the computation of the prescriptive period that the two-year period should be computed from the time of the filing of the Adjustment Returns on Annual Income Tax Return and final payment of income tax; it is only when the Adjustment Return covering the whole year is filed that the taxpayer would know whether a tax is still due or a refund can be claimed based on the adjusted and audited figured (Commissioner of Internal Revenue vs. TMX Sales Inc., 205 SCRA 184). The two-year prescriptive period within which to claim a refund commences to run, at the earliest, on the date of the filing of the adjusted final tax return (Commissioner of Internal Revenue vs. Asia Australia Express Ltd., G.R. No. 85956). The "date of payment" from which to reckon the two-year period, in the case of a corporation whose taxable year in on a calendar basis, is the 15th day of the fourth month (April 15th, following the close of the preceding taxable year is such "date of payment" (ACCRA Investments Corp. vs. Court of Appeals, 204 SCRA 957). In this case, BPI filed adjustment return in April 2, 1986. No takes were paid then because the returns showed that the quarterly taxes already paid exceeded the income tax due by P65,259.00. As correctly put by BPI, it is only on April, 15 that the previous year's income tax become due and payable and the taxpayer is still free to make amendments or adjustments on its return, without penalty, until April 15, 1986 (See Section 80, N.I.R.C.). Thus the final payment of income tax should be deemed to be on April 15, 1986, when the previous year's income tax became due and payable and when the quarterly corporate income taxes may be considered paid. Accordingly the administrative claim and court proceeding for tax refund were timely filed. As regards the timeliness of the filing of the petition for review, the same was filed within the extended period granted by this Court in its Resolution dated June 29, 1994. Notably Supreme Court Circular No. 1091 governing the procedure for filing petitions for review from quasi-judicial bodies did not adopt the limitation laid down in Lacsamana vs. IAC (143 SCRA 43) regarding the time allowed for extension of the period for filing petitions for review. At any rate, even under the Lacsamana ruling, motions for extension are addressed to the sound discretion of the Court; in this case petitioner's motions for extension timely filed, were not acted upon, for reasons not attributable to it, until June 29, 1994. WHEREFORE, the petition for review is DISMISSED for lack of merit. SO ORDERED. Montenegro and Vidallon-Magtolis, JJ ., concur.