College of Oral and Dental Surgery v.

CTA
GR No. L-10446 / 28 Jan 1958 / J. Felix
FACTS:
Petitioner College sent a letter in November 1952 to the CIR for refund of income tax it paid in
1950 and 1951. It claimed exemption by virtue of sec. 27(f) of the NIRC. The CIR denied the
refund saying that under RA 82 amending sex 27(e) of the tax code and the SOJ opinion no. 78
series of 1950, any income derived from activities conducted for profit, irrespective of the
disposition of such income, is taxable.
Petitioner sent another letter for reconsideration of the decision, but the CIR deferred this
awaiting the final decision of the SC in Jesus Sacred Heart College v. CIR which inoled similar
issues.
In April 1955, the CIR denied the request for reconsideration on the ground that while it was true
that the profits realized by the College were used for the expansion and improvement of the
school and that no part thereof apparently injured to the benefit of any individual stockholder, yet
considering that the records proved that Dr. Aldecoa, as president of the institution, received a
salary of Pl,000 a month and his wife a monthly compensation of P200 as treasurer thereof; and
that as the corporation could be dissolved any time because the period of its existence was not
fixed and upon its dissolution the properties could be divided among the stockholders, the
Aldecoa family in effect actually derived some benefits in the operation of the same.
The same month (April 1955) petitioner filed with the CTA a petition seeking review of the
CIRs decision.
CTA dismissed the petition on the ground that the court had no jurisdiction as it was filed 2 years
after the taxes sought to be refunded had been paid.
ISSUE
Whether the claim for refund is barred by prescription.
HELD
YES, petitioner cannot recover as no proceeding in court was instituted for the purpose of refund
within 2 years of the payment.
SEC. 306. RECOVERY OF TAX ERRONEOUSLY OR ILLEGALLY COLLECTED.No
suit or proceeding shall be maintained in any court for the recovery of any national internal
revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of
any penalty claimed to have been collected without authority, or of any sum alleged to have
been excessive or in any manner wrongfully collected, until a claim for refund or credit has
been duly filed with the Collector of Internal Revenue; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. IN
ANY CASE no such suit or proceeding shall be begun after the expiration of TWO YEARS
from the date of payment of the tax or penalty.

Petitioenr argues that the statutory period is abrogated by the enactment of RA 1125, providing:

SEC. 11. WHO MAY APPEAL; EFFECT OF APPEAL.Any person, association or corporation
adversely affected by a decision or ruling of the Collector of Internal Revenue, . . . may file an appeal
in the Court of Tax Appeals within thirty days after receipt of such decision or ruling.

However considering the taxes were paid in 1951, said legislative enactment which took effect
only in 1954 cannot be invoked as the action for recovery of the taxes paid in this case must be
governed by the pertinent law then enforced. And pursuant to the existing law on the matter,
which undoubtedly is Section 306 of the Tax Code and the jurisprudence obtaining in connection
therewith, as petitioner failed to institute the corresponding judicial proceeding within the 2-year
prescriptive period, his right to recover the taxes claimed to have been erroneously paid had
prescribed even before the enactment of Republic Act No. 1125, and there is no reason to
construe R, A. 1125 as reviving actions that have already prescribed on the date of its enactment.