Court of Tax Appeals
0Hf.:F'L''LI.IC1 of Tfff. ?Btu'F"Pi~F::S C" T, et al. vs. CO.TVLHISSIONER of Internal Revenue
Hf.:f'l''li.IC1 OF TFfF. ?BTU'f"Pi~f::S
c" t
,~ r cw T 'x A F' p.e; :1... L~
QUEZON UTY
'
.
RURAL BANK 014' STA. CRUZ,
(LAGUNA) , INC .,
Petitioner ,
- versus -
C. T. A. CASE NO . 2246
CO.tvlHISSIONER OF INTERNAL
REVENUE,
Respondent .
X -
-
-
-
-
-
-
-
~ -
-
-
~ X
D E C I S I 0 N
Petitioner is seeking refund of the sum of
~9 , 906 . 48 , representing deficiency income tax
paid by it for the taxable year 1968 under .Of-
ficial Receipt No . 1024601, dated August 12,
1969.
The facts of this case are embodied in the
"Stipulation of Facts" filed by the parties on
October 1, 1974, reading as follows :
"1. That petitioner is a corpo-
ration organized and constituted
under Rep . Act No . 720, as amended ,
and Act 1459, and subject to super-
vision by the Central Bank under the
provisions of Rep . Acts 720, 265 and 33~
as amended ;
"2. That petitioner was assessed
by respondent for corporate income tax
f or the period commencing from July 1 ,
1968 to December 31, 1968, and out of
the said tax assessment petitioner
paid the following s
Amount Paid
Date Paid Place of
Payment
o.R.
No .
~t9 , 906 . 48
Aug .
12 , 1~69 Sta.Cruz,
1024601
Laguna
"l • That petitioner , on September 23 ,
IECISIO -
CTA Case No . 2246
2
1~. , wrote respondent for the re-
fund of said payment ;
"4. That the aforementioned
letter of refund was received and
acknowledged by the respondent in
his letter of February 2 , 1970;
"5· That the instant petition
was filed on March 29, 1971;
"6. That petitioner uses the
calendar method (January 1 to Decem-
ber 31 of any year) in its account-
ing system, as provided for by
Sections 2~2 and 243 of the Rules
and Regulations Governing Rural
Banks , promulgated by the Monetary
Board of the Central Bank as Res .
No . 865 on May 19, 1969, and pub-
lished in the September 11, 1967
issue of the Official Gazette (See
page 7995 et sec.)".
In the answer of respondent , the jurisdiction
of this Court to take cognizance of the case was
raised .
It is alleged that the claim for refund of
the said amount of ~9 , 906 . 48 contained in the letter
of petitioner dated September 23 , 1969 was denied
by respondent in his letter dated February 2 , 1970,
but the petition for review was filed only on
March 29, 1971 which is beyond the 30- day period
within which to appeal to this eourt, pursuant to
Section 11 of Republic Act No . 1125.
It appears however , that the decision of re~
spondent dated February 2, 1970, which was sent by
DECISION -
CTA CASE No . 2246 3 ordinary mail, denying petitioner ' s claim for refund has not been received by the latter . In fact , in the petition for review it is alleged in paragraph 7 thereof that , up to the filing of ~~id petition, respondent had not answered the claim for refund of petitioner, and the petition for r eview was being filed "as the two- year period allowed (it) by law is aoout to expire. "
In view ·thereof, we are of the opinion that the two- year period provided in Section 306 of the Revenue Code, within which appeals in cases involving re- funds of internal revenue taxes may be filed , applies, and not the thirty- day period provided in Section 11 of Republic Act No . 1125.
(See Gibbs
v . Coll ector , 107 Phil . 232; Koppel v . Collector, G. R. No. L-10550, Sept . 16, 1961; Commissioner v. Victorias Milling , G. R. No . L-2~108 , Jan. 3, 1968, 22 SCRA 12. )
Accordingly, we are of the opinion that the herein appeal was timely filed. The other issue is whether or not the provisions of Republic Act. No .
5~31 should apply to petitioner effective July 1, 1968.
In the affirmative, it is not entitled to the refund of the aforesaid amount ; in the negative , it is entitled to the refund. Section 10 of Republic Act No .
5~31 provides that the provisions of said Act "shall apply to
DEGISION -
CTA Case No . 2246 4 income for taxable years beginning after June 30 , 1968 . 11 Resolving a similar question in the case of the Rural Bank of Camiling , Inc . vs . Commissioner of Internal Revenue , C.T. A. Case No . 2041 , promul- gated on March 1, 1974 (cert . denied in G. R. No . L-38476 , May 10, 1974) , this Court held: ·It appears that petitioner is keeping its books of account on the calendar year basis .
Its "taxable year 11 for purposes of the Income 1ax Law is the period from January 1 to December 31 each year.
Therefore , the beginning of its taxable year after June 30, 1968, is January 1, 1969, and not July 1 , 1968.
The de- cision of respondent holding that the provisions of Republic Act No . 543l .are applicable to petitioner effective July 1 , 1968, is obviously erroneous. In view of our opinion that rural banks are not subject to income tax on their income prior to December 31, 1968, pursuant to Section 10 of Republic Act No . 5431, we find it unnecessary to pss upon the issue whether or not said Act repealed the exemption from taxation of petitioner under Re- public Act No . 720 , as amended . At any rate , the exemption from taxation of rural banks has ap- parently been restored by Republic Act No. 5939 , assuming that Republic Act No . 5431 repealed the prior exemption.
WHEREFORE, respondent is hereby ordered to refund to petitioner the sum of ~9 , 906 . 48 which DECISION. - CTA CASE NO . 2246 5 was erroneously paid by the latter as deficiency income tax for 1968o No costs .
SO ORDERED .
Quezon City , November 11, 197lto
WE CONCUR:
~~~L,_-,
ROMAN Mo UMALI
Presiding
Judge
~~lf?~~_e ANISLAO R. ALV .AJ.lliz_:r--
Associate Judge ~
t..- it~- RAMON L. AVANCENA