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COMMISSIONER OF INTERNAL REVENUE, Petitioner, - versus - |
G.R. No. 154068 Present: QUISUMBING,
J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. |
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ROSEMARIE ACOSTA, as represented by Virgilio
A. Abogado, Respondent. |
Promulgated: August 3, 2007 |
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DECISION
QUISUMBING, J.:
Assailed in this petition for
review are the Decision[1] and Resolution[2] dated February 13, 2002 and May 29, 2002, respectively, of the Court of
Appeals in CA-G.R. SP No. 55572 which had reversed the Resolution[3] dated August 4, 1999 of the Court of Tax Appeals in C.T.A. Case No. 5828
and ordered the latter to resolve respondent’s petition for review.
The facts are as follows:
Respondent is an employee of Intel
Manufacturing Phils., Inc. (Intel). For
the period P308,084.56.
On P17,693.37 plus interests in the amount
of P14,455.76. On P358,274.63.
Claiming that the income taxes
withheld and paid by Intel and respondent resulted in an overpayment of P340,918.92,[4] respondent filed on
In its Resolution dated
WHEREFORE, in view of all the
foregoing, Respondent’s Motion to Dismiss is GRANTED. Accordingly[,] the Petition for Review is
hereby DISMISSED.
SO ORDERED.[7]
Upon
review, the Court of Appeals reversed the CTA and directed the latter to
resolve respondent’s petition for review. Applying Section 204(c)[8] of the 1997 National Internal Revenue Code (NIRC), the Court of Appeals
ruled that respondent’s filing of an amended return indicating an overpayment
was sufficient compliance with the requirement of a written claim for refund.[9] The decretal portion of the Court
of Appeals’ decision reads:
WHEREFORE, finding the petition to be meritorious, this
Court GRANTS it due course and REVERSES the appealed Resolutions and DIRECTS the Court of Tax Appeal[s]
to resolve the petition for review on the merits.
SO ORDERED.[10]
Petitioner sought reconsideration,
but it was denied. Hence, the instant
petition raising the following questions of law:
I.
WHETHER OR NOT THE 1997 TAX
REFORM ACT CAN BE APPLIED RETROACTIVELY.
II.
WHETHER OR NOT THE CTA HAS
JURISDICTION TO TAKE [COGNIZANCE] OF RESPONDENT’S PETITION FOR REVIEW.[11]
While the main concern in this
controversy is the CTA’s jurisdiction, we must first resolve
two issues. First, does the amended
return filed by respondent indicating an overpayment constitute the written
claim for refund required by law, thereby vesting the CTA with jurisdiction
over this case? Second, can the 1997
NIRC be applied retroactively?
Petitioner avers that an amended
return showing an overpayment does not constitute the written claim for refund
required under Section 230[12] of the 1993 NIRC[13] (old Tax Code). He claims that an
actual written claim for refund is necessary before a suit for its recovery may
proceed in any court.
On the other hand, respondent contends
that the filing of an amended return indicating an overpayment of P358,274.63
constitutes a written claim for refund pursuant to the clear proviso stated in
the last sentence of Section 204(c) of the 1997 NIRC (new Tax Code), to wit:
x
x x x
…Provided, however, That
a return filed showing an overpayment shall be considered as a written claim
for credit or refund.
x
x x x
Along the same vein, respondent
invokes the liberal application of technicalities in tax refund cases,
conformably with our ruling in BPI-Family Savings Bank, Inc. v. Court of
Appeals.[14] We are, however, unable to agree
with respondent’s submission on this score.
The applicable law on refund of
taxes pertaining to the 1996 compensation income is Section 230 of the old Tax
Code, which was the law then in effect, and not Section 204(c) of the new Tax
Code, which was effective starting only on
Noteworthy, the requirements under
Section 230 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.[15] (Emphasis ours.)
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.[16]
Thus, on the first issue, we
rule against respondent’s contention. Entrenched
in our jurisprudence is the principle that tax refunds are in the nature of tax
exemptions which are construed strictissimi juris against the taxpayer
and liberally in favor of the government.
As tax refunds involve a return of revenue from the government, the
claimant must show indubitably the specific provision of law from which her
right arises; it cannot be allowed to exist upon a mere vague implication or
inference[17] nor can it be extended beyond the ordinary and reasonable intendment of
the language actually used by the legislature in granting the refund.[18] To repeat, strict compliance with
the conditions imposed for the return of revenue collected is a doctrine
consistently applied in this jurisdiction.[19]
Under the circumstances of this case, we cannot agree that the amended
return filed by respondent constitutes the written claim for refund required by
the old Tax Code, the law prevailing at that time. Neither
can we apply the liberal interpretation of the law based on our pronouncement
in the case of BPI-Family Savings Bank, Inc. v. Court of Appeals, as the
taxpayer therein filed a written claim for refund aside from presenting other
evidence to prove its claim, unlike this case before us.
On the second issue, petitioner argues that the
1997 NIRC cannot be applied retroactively as the instant case involved refund
of taxes withheld on a 1996 income. Respondent, however, points out that when the petition was filed with the
CTA on April 15, 1999, the 1997 NIRC was already in effect, hence, Section 204(c)
should apply, despite the fact that the refund being sought pertains to a 1996
income tax. Note that the issue on the
retroactivity of Section 204(c) of the 1997 NIRC arose because the last
paragraph of Section 204(c) was not found in Section 230 of the old Code. After a thorough consideration of this
matter, we find that we cannot give retroactive application to Section 204(c) abovecited. We have to stress that tax laws are
prospective in operation, unless the language of the statute clearly provides
otherwise.[20]
Moreover,
it should be emphasized that a party seeking
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 court action.[21] This
the respondent did not follow through. Additionally,
it could not escape notice that at the time respondent filed her amended
return, the 1997 NIRC was not yet in effect.
Hence, respondent had no reason at that time to think that the filing of
an amended return would constitute the written claim for refund required by applicable
law.
Furthermore, as the CTA stressed, even the
date of filing of the Final Adjustment Return was omitted, inadvertently or
otherwise, by respondent in her petition for review. This omission was fatal to respondent’s claim,
for it deprived the CTA of its jurisdiction over the subject matter of the
case.
Finally, we cannot agree with the Court
of Appeals’ finding that the nature of the instant case calls for the
application of remedial laws. Revenue
statutes are substantive laws and in no sense must their application be equated
with that of remedial laws. As well said
in a prior case, revenue laws are not intended to be liberally construed.[22] Considering that taxes are the
lifeblood of the government and in Holmes’s memorable metaphor, the price we
pay for civilization, tax laws must be faithfully and strictly implemented.
WHEREFORE, the petition is GRANTED. Both the assailed Decision and
Resolution dated
No pronouncement as to costs.
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
WE CONCUR:
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ANTONIO T. CARPIO Associate Justice |
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CONCHITA CARPIO MORALES Associate Justice |
DANTE O. TINGA Associate Justice |
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PRESBITERO J. VELASCO, JR. Associate Justice |
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A T T E S T A T I O N
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, I certify that
the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
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REYNATO S. PUNO Chief Justice |
[1] Rollo, pp. 22-27. Penned by Associate Justice
Hilarion L. Aquino, with Associate Justices
[2]
[3]
[4]
[5]
[6]
[7]
[8] SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. – The Commissioner may –
x
x x x
(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. (Emphasis ours.)
x x x x
[9] Rollo, p. 26.
[10]
[11]
[12] 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; but such suit or proceeding may
be maintained, whether or not such tax, penalty, or sum has been paid under
protest or duress. (Emphasis ours.)
x x x x
[13] The 1993 NIRC pertains to the National
Internal Revenue Code of 1986, as amended.
See V. Reyes, Income Tax,
Law and Accounting A New Approach, 5 (2003 Edition).
[14] G.R. No. 122480,
[15] Prescribed under Section
230 of the old Tax Code, now Section 229 of the new Tax Code. See B. Aban, Law of Basic Taxation in the
[16]
[17] Floro Cement Corporation v. Gorospe, G.R.
No. 46787,
[18] See Paper Industries Corporation of the
[19] Supra note
16, at 98.
[20] J. Vitug and
E. Acosta, Tax Law and Jurisprudence, 39 (2000 Edition), citing
Hydro Resources Contractors Corp. v. Court of Tax Appeals, G.R. No.
80276, December 21, 1990, 192 SCRA 604, 611.
[21] Gorospe v.
Vinzons-Chato, G.R. No. 132228,
[22] Froehlich & Kuttner v. Collector of
Customs, 18 Phil. 461, 481-482 (1911).