Recovery of Tax Erroneously or Illegally
Collected
2. Statutory Requirements
Metropolitan Bank & Trust Co. vs. CIR, GR
No. 182582, 17 Apr 2017
Facts: Solidbank, prior to having been
acquired by Metrobank extended to Luzon
Hydro Corporation (LHC) a foreign currency
denominated loan in the principal amount of
$123,780,000 as stipulated in their
agreement. Pursuant to this agreement, LHC
withheld, and eventually paid to the BIR, the
10% final tax on the interest portions of the
payments.
Metrobank averred that it mistakenly remitted
the aforesaid amount when they were
inadvertently included in its own Monthly
Remittance Returns (MRR) of Final
Income Taxes Withheld (FITW) for the
months of March 2001 and October 2001.
Thus, on December 27, 2002, Metrobank
filed an administrative claim for refund before
the CIR. Due to the latter’s inaction, it filed its
judicial claim for refund before the CTA on
September 10, 2003.
One of the CIR’s contentions was that: such
claim must be filed within the prescriptive
period laid down by law.
The CTA Division ruled in favor of the CIR,
which ruling was affirmed by the CTA En
Banc.
Issue: WON Metrobank's claim for refund
relative to its March 2001 final tax had
already prescribed
Ruling: The SC ruled in the affirmative and
held that pursuant to Sections 204(C) and
229 of the Tax Code, as amended: “no suit
or proceeding shall be filed after the
expiration of two (2) years from the date
of payment of the tax or penalty regardless
of any supervening cause that may arise
after payment.
A claimant for refund must first file an
administrative claim (AC) before the CIR,
prior to filing a judicial claim (JC) before the
CTA. Both of these claims should be filed
within the two (2)-year prescriptive period.
Further, the claimant is allowed to file the JC
even without waiting for the resolution of the
AC in order to prevent the forfeiture of its
claim through prescription.
The primary purpose of filing an AC is to
serve as a notice of warning to the CIR that
court action would follow unless the tax or
penalty is refunded.
Since the tax involved in this case is a 10%
final withholding tax (FWT), RR No. 02-98
(Sec. 2.57) also applies, which provides that
“the amount of income tax withheld is
constituted as a full and final payment of
the income tax due, and thus, are not
subject to any adjustments”.
The two (2)-year prescriptive period runs
from the time the refund is ascertained, i.e.,
the date such tax was paid.
Metrobank's final withholding tax (FWT)
liability in March 2001 was remitted on April
25, 2001. As such, it only had until April 25,
2003 to file its administrative and judicial
claims for refund.
Petition is denied.