University of the Philippines College of Law

DMOB

Topic XIII. Returns and Payments; C. Corporations

Case No. 204 SCRA 957
Case Name ACCRA vs CIR
Ponente Gutierrez, J.

DOCTRINE
The 2-year prescriptive period for corporations for the claim of refund which prescribes after 2 years from the date of
payment only start to run after the filing of the return. There is the need to file a return first before a claim for refund can
prosper inasmuch as the respondent Commissioner by his own rules and regulations mandates that the corporate taxpayer
opting to ask for a refund must show in its final adjustment return the income it received from all sources and the amount
of withholding taxes remitted by its withholding agents to the Bureau of Internal Revenue.

RELEVANT FACTS

ACCRA is a corporation engaged in the business of real estate investments and management consultancy. The rental,
commission and consultancy income was properly withheld by the withholding agents from Feb to December of 1981.
Through a letter dated December 29 1983, ACCRA claimed for a refund. And due to the later inaction of the BIR, filed for a
petition for review with the CTA.
CTA dismissed the petition on the ground that the 2 year period has already prescribed. CA affirmed.

ISSUE AND RATIO DECIDENDI

Issue Ratio
W/N 2 year period has NO.
prescribed
Gibbs vs CIR:

Consequently, a taxpayer whose income is withheld at source will be deemed to have

paid his tax liability end of the tax year. It is from when the same falls due at this latter
date then, or when the two-year prescriptive period under Section 306 of the Revenue
Code starts to run with respect to payments effected through the withholding tax
system.

The aforequoted ruling presents two alternative reckoning dates, i.e., (1) the end of
the tax year; and (2) when the tax liability falls due. In the instant case, it is undisputed
that the petitioner corporation's withholding agents had paid the corresponding taxes
withheld at source to the Bureau of Internal Revenue from February to December
1981. In having applied the first alternative date - "the end of the tax year" in order to
determine whether or not the petitioner corporation's claim for refund had been
seasonably filed, the respondent appellate court failed to appreciate properly the
attending circumstances of this case.
The petitioner corporation is not claiming a refund of overpaid withholding taxes, per
se. It is asking for the recovery of the sum of P82,751.91.00, the refundable or
creditable amount determined upon the petitioner corporation's filing of the its final
adjustment tax return on or before 15 April 1982 when its tax liability for the year 1981
fell due.
 University of the Philippines College of Law
DMOB

Clearly, there is the need to file a return first before a claim for refund can prosper
inasmuch as the respondent Commissioner by his own rules and regulations mandates
that the corporate taxpayer opting to ask for a refund must show in its final adjustment
return the income it received from all sources and the amount of withholding taxes
remitted by its withholding agents to the Bureau of Internal Revenue. The petitioner
corporation filed its final adjustment return for its 1981 taxable year on April 15, 1982.
In our Resolution dated April 10, 1989 in the case of Commissioner of Internal Revenue
v. Asia Australia Express, Ltd. (G. R. No. 85956), we ruled that 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. Hence, the petitioner corporation had until
April 15, 1984 within which to file its claim for refund. Considering that ACCRAIN filed
its claim for refund as early as December 29, 1983 with the respondent Commissioner
who failed to take any action thereon.
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.
The "date of payment", therefore, in ACCRAIN's case was when its tax liability, if any,
fell due upon its filing of its final adjustment return on April 15, 1982.

RULING

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals dated May 28, 1990
and its resolution of November 20, 1990 are hereby REVERSED and SET ASIDE. The respondent Commissioner of Internal
Revenue is directed to refund to the petitioner corporation the amount of P82,751.91.

NOTES