Commissioner of Internal Revenue v. TMX Sales Inc G.R. No. 83736. January 15, 1992

Facts: TMX Sales Inc. filed its quarterly income tax for the 1st quarter of 1981. It declared P571,174.31 and paying an income tax  of P247,019 on May 13, 1981. However, during the subsequent quarters, TMX suffered losses. On April 15, 1982, when TMX filed its Annual Income Tax Return for the year ended in December 31, 1981, it declared a net loss of P6,156,525. On July 9, 1982, TMX filed with the Appellate Division of BIR for refund in the amount of P247,010 representing overpaid income tax. His claim was not acted upon by the Commissioner of Internal Revenue. On May 14, 1984, TMX Sales filed a petition for review before the Court of Tax Appeals against CIR, praying that the CIR be ordered to refund to TMX the amount of P247,010. The CIR averred that TMX is already barred for claiming the refund since more than 2 years has elapsed between the payment (May 15, 1981) and the filing of the claim in court (March 14, 1984). The Court of Tax Appeals rendered a decision granting the petition of TMX Sales and ordered CIR to refund the amount mentioned. Hence, this appeal of CIR.

Issue: Whether or not TMX Sales Inc. is entitled to a refund considering that two years gas already elapsed since the payment of the tax

Held: Yes. Petition denied.

Ratio: Sec. 292, par. 2 of the National Internal Revenue Code stated that “in any case, no such suit or proceeding shall be begun after the expiration of two years from the date of the payment of the tax or penalty regardless of any supervening cause that may arise after payment.” This should be interpreted in relation to the other provisions of the Tax Code. The most reasonable and logical application of the law would be to compute the 2-year prescriptive period at the time of the filing of the Final Adjustment Return or the Annual Income Tax Return, where it can finally be ascertained if the tax payer has still to pay additional income tax or if he is entitled to a refund of overpaid income tax. Since TMX filed  the suit on March 14, 1984, it is within the 2-year prescriptive period starting from April 15, 1982 when they filed their  Annual Income Tax Return.

StatCon maxim: The intention of the legislature must be ascertained from the whole text of the law and every part of the act is taken into view.