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Prescription of Claims for Refund or Tax Credit of Documentary Stamp Metering Machine Users

Philippine Bank of Communications versus Commissioner of Internal Revenue; G.R. No. 194065; June 20, 2016

Under the National Internal Revenue Code of 1997 (Tax Code), a taxpayer may recover erroneously or illegally collected taxes by applying for tax refund or issuance of tax credit certificate. Sec. 204 of the Tax Code requires that the administrative claim for cash refund or tax credit must be filed with the Bureau of Internal Revenue (BIR) within two years after the date of payment of the subject tax. Under Sec. 229, the judicial claim must also be filed with the Court of Tax Appeals (CTA) within the same two-year prescriptive period. Any claim for refund or tax credit which is not filed within the said period shall be barred by prescription; hence, the erroneously or illegally collected tax or taxes cannot be recovered by the taxpayer anymore.

The reckoning date of the two-year prescriptive period seems to be clear – the date of payment of the tax for which cash refund or issuance of tax credit certificate is sought. Confusion, however, may arise in certain cases. For instance, authorized Documentary Stamp (DS) metering machine users purchase documentary stamps in advance to be loaded into the DS metering machine, at which time the corresponding DST Declaration Return is also filed. The documentary stamp, however, is actually imprinted on the document at a later time when an actual transaction occurs. In such a case, when does the two-year prescriptive period for filing  a claim for refund or tax credit commence to run – the date of purchase or the date of imprinting?

This issue was resolved by the Supreme Court in the case of PBCom vs. CIR (G.R. No. 194065).

Philippine Bank of Communications, Petitioner, – versus – Commissioner of Internal Revenue, Respondent.

G.R. NO. 194065
June 20, 2016

Facts:

Pursuant to Revenue Regulations (RR) No. 7-92, the Bureau of Internal Revenue (BIR) issued Certificate No. 08-0434 on 31 July 2001 authorizing petitioner to operate and use the On-line Electronic Documentary Stamp Metering Machine (DS metering machine) with Serial No. SN363 1711.

Petitioner purchased documentary stamps from the BIR and loaded them to its DS metering machine. During the period 23 March 2004 to 23 December 2004, petitioner executed several repurchase agreements with the Bangko Sentral ng Pilipinas (BSP). The documentary stamps were imprinted on the Confirmation Letters corresponding to those repurchase agreements through petitioner’s DS metering machine.

Petitioner claimed that the repurchase agreements were not subject to the documentary stamp tax (DST). Thus, on 12 May 2006, it filed with the BIR an administrative claim for the issuance of tax credit certificates for the alleged erroneous payment of the DST in the total amount of ₱11,063,866.67.

Alleging the inaction of the BIR on the administrative claim of petitioner, the latter filed a Petition for Review with the CTA on 18 May 2006. Petitioner reiterated its claim for the refund or issuance of its tax credit certificate for the amount of ₱11,063,866.67 representing the erroneously paid DST for several repurchase agreements it had executed with the BSP.

The CTA en banc ruled that insofar as the taxpayers using the DS metering machine were concerned, the DST was deemed paid upon the purchase of documentary stamps for loading and reloading on the DS metering machine, through the filing of the DST Declaration under BIR Form No. 2000. Thus, the two-year prescriptive period for taxpayers using DS metering machine started to run from the date of filing of the DST Declaration under BIR Form No. 2000, and not from the date appearing on the documentary stamp imprinted through the DS metering machine.

Issue:

Whether or not the documentary stamp tax (DST) is deemed paid upon the purchase of the documentary stamps for loading/reloading of the DS metering machine, at which time the DST Declaration Return is also filed, for the purpose of counting the two-year prescriptive period for filing a claim for refund or tax credit.

Ruling:

No.

The rule is that the date of payment is when the tax liability falls due. Jurisprudence has made exceptions for reckoning the period of prescription from the actual date of payment of tax by instead reckoning that date from the filing of the final adjusted returns, i.e. income tax and other withholding taxes. These exceptions are nevertheless grounded on the same rationale that payment of the tax is deemed made when it falls due.

In Gibbs v. Commissioner of Internal Revenue, Court ruled that “[p]ayment is a mode of extinguishing obligations (Art. 1231, Civil Code) and it means not only the delivery of money but also the performance, in any other manner, of an obligation. A taxpayer, resident or non-resident, does so not really to deposit an amount to the Commissioner of Internal Revenue, but, in truth, to perform and extinguish his tax obligation for the year concerned. In other words, he is paying his tax liabilities for that year. Consequently, a taxpayer whose income is withheld at source will be deemed to have paid his tax liability when the same falls due at the end of the tax year. It is from this latter date then, or when the tax liability falls due, that the two-year prescriptive period under Section 306 (now part of Section 230) 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: (1) the end of the tax year; and (2) the date when the tax liability falls due.

For DS metering machine users, the payment of the DST upon loading/reloading is merely an advance payment for future application. The liability for the payment of the DST falls due only upon the occurrence of a taxable transaction...

Applying the same rationale, the payment of the DST and the filing of the DST Declaration Return upon loading/reloading of the DS metering machine must not be considered as the “date of payment” when the prescriptive period to file a claim for a refund/credit must commence. For DS metering machine users, the payment of the DST upon loading/reloading is merely an advance payment for future application. The liability for the payment of the DST falls due only upon the occurrence of a taxable transaction. Therefore, it is only then that payment may be considered for the purpose of filing a claim for a refund or tax credit. Since actual payment was already made upon loading/reloading of the DS metering machine and the filing of the DST Declaration Return, the date of imprinting the documentary stamp on the taxable document must be considered as the date of payment contemplated under Section 229 of the NIRC.

In this case, the DST fell due when petitioner entered into repurchase agreements with the BSP and the corresponding documentary stamps were imprinted on the Confirmation Letters.

Therefore, the prescriptive period for the filing of a claim for a refund or tax credit under Section 229 must be reckoned from the date when the documentary stamps were imprinted on the Confirmation Letters.

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