BPI v. CIR the claim for tax refund had already prescribed.
1 An MR was filed but it was
April 14, 2000 | Aquino, J. | Petition for Review | Returns of Corporations
Contemplating Dissolution/Reorganization
PETITIONER: Bank of the Philippine Islands
RESPONDENT: Commissioner of Internal Revenue
SUMMARY: Petitioner, as successor-in-interest of the Family Bank and Trust
Company (FBTC), filed a letter claim with the BIR asking for a refund of
FBTCs withheld income taxes on rentals and interests. Both the Commissioner
and the CTA held that the claim for refund has already prescribed. The SC
affirmed and dismissed the petition.
DOCTRINE: Sec. 78 of the Tax Code and Sec. 244 of Revenue Regulation No.
2 require a dissolving corporation to file its income tax return within 30 days
after the cessation of its business. Under Sec. 292 of the Tax Code, an action to
claim for refund of an excessively collected tax starts to run from the day in
which a corporate taxpayer is required by law to file its final income tax return.
FACTS:
1. By virtue of the Articles of Merger approved by the SEC on 1 July 1985,
petitioner became the successor-in-interest of the Family Bank and Trust
Company (FBTC) whose corporate existence ended on 30 June 1985.
2. From January 1 to June 30, FBTC earned income consisting of rentals from its
leased properties and interest from treasury notes purchased from the Central
Bank. Pursuant to the Expanded Withholding Tax Regulations, the lessees of
FBTC withheld 5 percent or P118,609.17 on said rentals while the Central Bank
withheld 15 percent or P55,456.60 on the interest on the treasury notes. These
withheld income taxes in the total amount of P174,065.77 were remitted to the
Bureau of Internal Revenue. Moreover, the FBTC had a prior years' excess
credit of P2,146,072.57. This excess credit plus the withheld income taxes
amounted to P2,320,138.34.
3. On April 10, 1986, the FBTC filed its final income tax return with the BIR
showing a net loss of P64,502,935.00 and a refundable amount of P174,065.77
representing the creditable income tax withheld at source from January 1 to
June 30, 1985. On October 7, 1986, petitioner BPI as successor-in-interest of
FBTC filed a letter claim dated October 10, 1986 with the BIR asking for a
refund of P2,320,138.34. The BIR, however, refunded to petitioner BPI only
the amount of P2,146,072.57 (prior years' excess credits).
4. Since the BIR refused to refund the withheld income taxes on rentals and
interests in the amount of P174,065.77, petitioner BPI filed on December 29,
1987 a petition for review with the Court of Tax Appeals seeking a reversal of
BIR's resolution. After due proceedings, the Court of Tax Appeals rendered on
July 19, 1994 a decision dismissing the petition for review on the ground that
denied.
5. Citing Sec. 78 of the Tax Code2 and Sec. 744 of the Income Tax Resolution 3,
the CTA held that said return should have been filed within 30 days from
SEC's approval of the Articles of Merger on July 1, 1985. Petitioner BPI
disagrees and, invoking Sec. 46 (a)4 and Sec. 70 (B) of the Tax Code 5,
contends that said return should have been filed on the 15th day of the 4th
month following the close of FBTC's taxable year.6
1 It should be noted that this case was decided under the Tax Code which has already been
amended and modified by R.A. 8424 otherwise known as the Comprehensive Tax Reform
Program which became effective on January 1, 1998.
2 Sec. 78.Return of corporation contemplating dissolution. Every corporation
shall, within thirty days after the adoption by the corporation of a resolution or plan
for the dissolution of the corporation or for the liquidation of the whole or any part of
its capital stock, render a correct return to the Collector of Internal Revenue, verified
under oath, setting forth the terms of such resolution or plan and such other
information as the Minister of Finance shall by regulations, prescribe.
3 Sec. 244. Return of corporation contemplating dissolution or retiring from
business. All corporations, partnership, joint accounts and associations,
contemplating dissolution, shall within 30 days after the approval of such resolution
authorizing their dissolution, and within the same period after their retirement from
business, file their income tax return covering the profit earned or business done by
them from the beginning of the year up to the date of such dissolution or retirement
and pay the corresponding income tax due thereon upon demand by the
Commissioner of Internal Revenue. . . ."
4 Sec. 46. Corporation returns. (a) Requirements. Every corporation, subject to
the tax herein imposed, except foreign corporations not engaged in trade or business
in the Philippines shall render, in duplicate, a true and accurate quarterly income tax
return and final or adjustment return in accordance with the provisions of Chapter IX
of this Title. The return shall be filed by the president, vice-president or other
principal officer, and shall be sworn to by such officer and by the treasurer or
assistant treasurer."
5 "(b)Time of filing the income tax return. The corporate quarterly declaration
shall be filed within (60) days following the close of each of the first three quarter of
the taxable year. The final adjustment return shall be filed on or before the 15th day
of April or on or before the 15th day of the fourth month following the close of the
fiscal year, as the case may be."
ISSUE: WoN BPIs claim for refund of withheld income taxes in the amount of "Moreover, this Court gives more weight to Section 244 of Rev. Regs.
P174,065.77 has already prescribedYES. No. 2 when it stated 'income tax return'. As a rule, all regulations
promulgated by the Secretary of Finance for the effective enforcement
RULING: Petition DENIED. Decision of the CTA AFFIRMED.
of the provisions of the National Internal Revenue Code are presumed
RATIO: valid unless they are unreasonable and contrary to law or the
1. Sec. 78 of the Tax Code and Sec. 244 of the Revenue Regulations No. 2 required Constitution.
FBTC as a dissolving corporation to file its income tax return within 30 days
after the cessation of its business or 30 days after the approval of the merger on
July 1, 1985 or up to July 31, 1985. Under Sec. 292 of the Tax Code, an action to
claim for refund of an excessively collected tax starts to run from the day in
which a corporate taxpayer is required by law to file its final income tax return.
Accordingly, petitioner BPI should have filed the action for the refund of the
excessively collected income tax return within two (2) years from July 31,
1985 which was July 31, 1987. Unfortunately, petitioner filed said action only
on December 29, 1987 which was late by 151 days. Said action was, therefore,
clearly time-barred.
2. Petitioner contends that Sec. 78 required not an income tax or final adjustment
return but an information return. The Court disagrees with petitioner and quoted
the correct interpretation of the CTA in this wise:

On the other hand, Chapter X of Title II (Income Tax) refers to the

Quarterly Corporate Income Tax Payments, Petitioner tried to mislead
us by saying that what is required is only an information return. The
amendment merely added a sanction on the part of the officers of the
corporation in case of failure to provide such information return and to
secure the necessary tax clearance,

"A closer look of Section 46(a) and Chapter X of Title II showed that
it both made specific mention of "income tax return" and "income tax
payments", respectively. Normally, an ongoing corporation files a
Quarterly Corporate Income Tax Return. The final adjustment return
therefore aptly refers to the Final Adjustment Income Tax Return. All
references pointed to by petitioner have some relations to income tax
payments and the filing of an accurate Income Tax Return. We cannot
deviate from the fact that indeed 'correct return' means 'correct income
tax return', the Final Adjustment Income Tax Return.