Title
Bank of the Philippine Islands vs. Commissioner of Internal Revenue
Case
G.R. No. 144653
Decision Date
Aug 28, 2001
BPI sought a tax refund as FBTC's successor after its merger, but the Supreme Court ruled the claim barred by prescription, as the two-year period began upon FBTC's dissolution approval, not its tax filing.
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Case Digest (G.R. No. 144653)

Facts:

  1. Merger and Income Earned:

    • Prior to its merger with Bank of the Philippine Islands (BPI) on July 1, 1985, Family Bank and Trust Co. (FBTC) earned income from rentals and interest on treasury notes for the period January 1 to June 30, 1985.
    • Lessees withheld 5% of rental income (P118,609.17), and the Central Bank withheld P55,456.60 from interest income, totaling P174,065.77 in creditable withholding taxes remitted to the Commissioner of Internal Revenue (CIR).
  2. Net Loss and Excess Credit:

    • FBTC incurred a net loss of approximately P64,000,000.00 during the same period and had an excess credit of P2,146,072.57 from the previous year.
    • Upon dissolution, FBTC had a refundable amount of P2,320,138.34, comprising the current year’s tax credit (P174,065.77) and the previous year’s excess credit (P2,146,072.57).
  3. Claim for Refund:

    • As FBTC’s successor-in-interest, BPI claimed the refund. The CIR refunded only P2,146,072.57, leaving a balance of P174,065.77.
    • BPI filed a petition for review with the Court of Tax Appeals (CTA) on December 29, 1987, seeking the refund of the remaining amount.
  4. CTA and CA Decisions:

    • The CTA dismissed BPI’s petition on July 19, 1994, ruling that the claim had prescribed.
    • The Court of Appeals (CA) affirmed the CTA’s decision on April 14, 2000, and denied BPI’s motion for reconsideration on August 21, 2000.

Issue:

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Ruling:

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Ratio:

  1. Prescriptive Period for Refund Claims:

    • Under Section 292 of the Tax Code, the two-year prescriptive period for filing a refund claim begins on the date of payment of the tax.
    • In cases of corporate dissolution, the period starts from the filing of the return required under Section 78 of the Tax Code, which mandates the filing of an income tax return within 30 days after the SEC approves the dissolution.
  2. Applicability of Section 78:

    • Section 78 applies to corporations contemplating dissolution, requiring them to file a return within 30 days after SEC approval. This provision takes precedence over the general rule under Section 46(a) of the Tax Code, which applies to continuing corporations.
    • FBTC’s taxable year was shortened to six months (January 1 to June 30, 1985) due to its dissolution. Thus, it was required to file its return by July 30, 1985, not April 15, 1986, as argued by BPI.
  3. No Need for Final Adjustment Return:

    • Since FBTC did not file quarterly returns for 1985, there was no need for a Final Adjustment Return. The shortened taxable year and dissolution made Section 78 applicable.
  4. Administrative Interpretations:

    • BPI’s reliance on Revenue Memorandum Circular No. 14-85, which referred to an “information return,” was rejected. Administrative interpretations cannot override statutory provisions or regulations.
    • Revenue Regulation No. 2, Section 244, explicitly requires corporations contemplating dissolution to file an income tax return, not merely an information return.
  5. Extension of Time to File:

    • BPI could have sought an extension under Section 47 of the Tax Code but failed to do so.
  6. Prescription Barred the Claim:

    • The two-year prescriptive period ended on July 30, 1987. BPI’s claim, filed on December 29, 1987, was time-barred.


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