CTA Case No. 3985

DECISION

2 - On t-1ay .19 ~ 1983, Ba tas F'ambansa B 1 g. 399 was approved ~ effective immediately, repealing the cot-por-ate deve 1 opment t.:n:

under- Section 24 (e) of the 1977 Tax Code.

The respondent, in implementing said law~ issued Revenue Memorandum Circular No. 1- 84 dated 1984, ~-.~hic:h pr-ovides follov1s:

11 Ac:co r·d ing 1 y ~ corporations other-wise qualifying as 'close ly held corporations' whos e taxable year ends after May 19~ .1.983 arc;> no 1 anger subject to the prrw i sion s of Section 24(e) of the Ta:-: Code.

Corpm-ations otherwise qualifying as ' c los ely held cor-porations' whose fi sca l year ends before May 19~ 1983 are stil l liable to pay the corporate deve l o pment ta>:.

11 as On October 16, 1985, pursuant to the above petitioner filed in the respondent's office , a formal claim for refund or tax credit in the amount of P248,108 repres enting the erroneously pa id co r porate development tax, and, simultaneousl y institute d this petition ·for· review to stop the r·unning of the two year· pres criptive period under Section 292 of the 1977 Tax Code. Res pondent anchors his argument on two t;.Jrounds:

(1) That the petitioner's c l aim for refund is time barred; and, ( 2) Peti tionet·· has not satisfactorily established a valid clai m to the refund or tax credit .

A suit or proceeding to enforce a claim for a refund mus t comply with Section 292 of the Tax Code ~-\lhich requir-es that a formal written claim for a r·efund must first be filed in the Revenue Office and that in no case may such suit or proceeding be filed beyond two ( 2 ) years from date of payment of This two-year period is mandatory. The Tax Code~ however~ does not prescribe how said pet- iod c.;ha ll be computed. Conc.;istent with prior ru ling s of this Court~ for failure of the Tax Code to pr-rJv .ide for· a mode of computing a period, the Civil Code will govern. Following the prescript of Article 18 of the said Code, in matters which are governed by special law, their deficiency shall be supplied by the pr·· ovisicms of the Ci.vil Code~ In relation ther·eto~ Arti c le 13 states that "~'lhen the law speaks of yeat-s, it shall be under·stood that yeat-s an~ t)f 365 days," and that "in computing a pet-iod, the fit-st day shall be e>:cluded and the last day included."

The two-year period then consists of 730 days such that any suit or proceeding begun ~.f:....t~.r.::. the e>:piration of this 730 day period shall no longer prosper. T a~ing note of the rulings of the Supreme

- 4 - Court in Prieto v. Collector, L-11976, August 29, 1961, 2 SCRA 1007, and Coaaissi(Jner of Internal Revenue v. Asia Australia Express , G.R. Ho. 85956, April 10 , 1989, if the tax is paid i n install me nts the ba.~o year pe riod is counted from t he date of final payment.

According l y, from the time petition er paid its last installment on Octobe r 17~ 1 983 unt i 1 tt1e time the r: 1 ai m for r·ef und and this petition was f". l d on Oc tober 16 , 1985, e>:actly 730 days have elap s ed~ which is within the 2-year period con t emplated by the Tax Code .

Hence~ petitionpr·'s r·i <Jht to file c.~ claim fot- refund has not yet prescribe d.

Reg;:wcling the validity of the clai m itself, thi s Cour·t.

·f inds that the petitioner has satis f acto r-ily es; 0:\blis hed its right to a refund.

Petitioner had been paying the corporate deve 1 opment ta>: since 1979. Batas Pambansa Big.

399 repealed Sec:t ' cm 24 ( e ) of the Ta>: Code which pr·ovided for the payment of the corporate deve l opment tc:nt for c lose ly held corporations not later than May 19, 1983 .

Thi s repea ling law is un a mbiguou s~ The last install ment payment having been made on October 17~ 1983~ or later than May .19, 1 983, ~"'lhen it is no longer liable to pay the corpor ate development tax, petitioner is therefore I' -~ n entitled toa the refund of the sum af F248,108.00 as erroneously paid carparate development LAN.

Moreover, petitioner's fiscal year ended June SO, id 198s, at ais thus clear that BF BAlg. 399 covers i petitioner. (Unimart, Inc. vs. Comm. of Int. Reva, €.T.A. Case No. 39986, Sept. 28, 19903 Unibake, Inc. vs. Comm. of Int. Rev., €.7.A. Case Na. 3987, July Si, 1989.)

WHEREFORE, respondent Commissioner of Internal Revenue is hereby ordered to refund or credit to petitioner the amount of FP249,108.00 representing erraneously paid carporate development tax for the fiscal year ended June SO, 199%.

I CONCUR:

REYE Judge

·-- 6 -· CERTIFICATION I certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Constitution. -~~ Court of Tax Appeals