Anscor Hagedorn Securities, Inc. v. Commissioner of Internal Revenue

FOURTH DIVISION [CA-G.R. SP No. 48907. October 3, 2003.] ANSCOR HAGEDORN SECURITIES, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N JACINTO , J p : Appeal, by petition for review, from the resolution of the Court of Tax Appeals (CTA) in C.T.A. Case No. 5630 entitled "Anscor Hagedorn Securities, Inc., Petitioner, versus Commissioner of Internal Revenue, Respondent." The antecedent facts of the case are as follows: On April 15, 1998, petitioner Anscor Hagedorn Securities, Inc. filed with the Court of Tax Appeals (CTA) a petition for review seeking for a refund in the amount of Two Million Nine Hundred Sixty Thousand Eight Hundred Thirteen Pesos and Seventy-three Centavos (P2,960,813.73), from therein respondent Commissioner of Internal Revenue, representing unused overpaid taxes for the taxable year 1995. 1 On May 26, 1998, the Commissioner of Internal Revenue traversed the material averments of the petition, by alleging, among others, that the judicial action for tax refund was filed beyond the reglementary period of two years from the date the return was filed; that petitioner's Corporation/Partnership Annual Income Tax Return for the taxable year ending December 31, 1995 appeared to have been filed on April 10, 1996; that the petition was commenced only on April 15, 1998 which is clearly beyond the two-year period provided by law; that assuming that the petition was filed within the prescribed period, petitioner had no cause of action as the petition did not allege the dates when the taxes sought to be refunded were actually paid. Respondent prayed that the petition for review be dismissed for lack of merit. 2 On July 8, 1998, an Opposition to motion to dismiss was filed by petitioner. 3 In its Resolution of August 17, 1998, the CTA dismissed the petition for review, the dispositive portion of which reads: ACCORDINGLY, the instant petition for review is DISMISSED, without pronouncement as to costs. aEHASI SO ORDERED. 4 Hence this petition. Petitioner posits the following issue: IS A CORPORATE TAXPAYER WHO FILED ITS ANNUAL ADJUSTED FINAL INCOME TAX RETURN EARLIER THAN THE DEADLINE OF APRIL 15 OF EACH YEAR, NOT ENTITLED TO CLAIM THE BENEFIT OF THE DEADLINE OF APRIL 15 FOR PURPOSES OF COMPUTING THE COMMENCEMENT OF THE TWO-YEAR PRESCRIPTION PERIOD WITHIN WHICH TO FILE A CLAIM FOR REFUND? 5 We answer in the negative. Section 230 of the National Internal Revenue Code is quite explicit on this matter. The two-year period of prescription is counted "from the date of payment of the tax." We quote in full said provision: 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 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 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 payment appears clearly to have been erroneously paid. (Emphasis added) There is no dispute that petitioner filed its Corporation/Partnership Annual Income Tax Return on April 10, 1996. 6 Thus, the last day for filing an action for refund would have been on April 10, 1998. Considering that petitioner Anscor filed its petition for review seeking a refund only on April 15, 1998, the two-year period had already lapsed. Therefore, the court a quo did not err in dismissing the petition. In the context of Section 230 of the National Internal Revenue Code, which provides for a two-year period of prescription counted "from the date of payment of the tax" for actions for refund of corporate income tax, the two-year period should be computed from the time of actual filing of the Adjustment Return or Annual Income Tax Return. (Commissioner of Internal Revenue vs. Court of Appeals) 7 The rule states that the taxpayer may file a claim for refund or credit with the Commissioner of Internal Revenue, within two (2) years after payment of tax, before any suit in CTA is commenced. The two-year prescriptive period provided, should be computed from the time of filing the Adjustment Return and final payment of the tax for the year. (Philippine Bank of Communications vs. Commissioner of Internal Revenue) 8 The rationale for the computation of the two-year prescriptive period has been discussed in the following cases: (1) ACCRA Investments Corporation vs. Court of Appeals: 9 It bears emphasis at this point that the rationale in computing the two-year prescriptive period with respect to the petitioner corporation's claim for refund from the time it filed its final adjustment return is the fact that it was only then that ACCRAIN could ascertain whether it made profits or incurred losses in its business operations; (2) Commissioner of Internal Revenue vs. Philippine American Life Insurance, Co.: 10 The two-year prescriptive period to claim refunds commences to run only from the time the refund is ascertained, which can only be determined after a final adjustment return is accomplished; and in (3) Bank of the Philippine Islands vs. Commissioner of Internal Revenue: 11 Generally speaking, it is the Final Adjustment Return, in which amounts of the gross receipts and deductions have been audited and adjusted, which is reflective of the results of the operations of a business enterprise. It is only when the return, covering the whole year, is filed that the taxpayer will be able to ascertain whether a tax is still due or a refund can be claimed based on the adjusted and audited figures. . . . Taxes being the lifeblood of the nation, claims for refund or tax credit should be exercised within the time fixed by law because the BIR being an administrative body enforced to collect taxes, its functions should not be unduly delayed or hampered by incidental matters. 12 All told, we find no reason to disturb the conclusion reached by the court a quo and in the absence, as here, of a clear abuse of discretion on its part, case law demands that it be respected. The Supreme Court will not set aside lightly the conclusion reached by the Court of Tax Appeals which, by the very nature of its function, is dedicated exclusively to the consideration of tax problems and has necessarily developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority. (SeaLand Service, Inc. vs. Court of Appeals; Cyanamid Philippines, Inc. vs. Court of Appeals) 13 ALL CONSIDERED, the petition is DISMISSED and the resolution appealed from is hereby AFFIRMED. ACIDTE SO ORDERED. Asuncion and Bersamin JJ., concur. Footnotes 1. Annex "G" of the Petition, Rollo , p. 39 2. Annex "H" of the Petition, Ibid ., p. 46 3. Annex "I" of the Petition, Ibid ., p. 50 4. Ibid ., p. 27 5. Ibid ., p. 10 6. Annex "B" of the Petition, Ibid ., p. 28 7. 301 SCRA 435 [1999] 8. 302 SCRA 241 [1999] 9. 204 SCRA 957, 964 [1991] 10. 244 SCRA 446 [1995] 11. 363 SCRA 840 [2001] 12. Philippine Bank of Communications vs. Commissioner of Internal Revenue, 302 SCRA 241 [1991]. 13. 357 SCRA 441 [2001]; 322 SCRA 639 [2000]