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RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.154068August3,2007
COMMISSIONEROFINTERNALREVENUE,petitioner,
vs.
ROSEMARIEACOSTA,asrepresentedbyVirgilioA.Abogado,respondent.
DECISION
QUISUMBING,J.:
AssailedinthispetitionforreviewaretheDecision1andResolution2datedFebruary13,2002andMay29,2002,
respectively,oftheCourtofAppealsinCAG.R.SPNo.55572whichhadreversedtheResolution3datedAugust
4, 1999 of the Court of Tax Appeals in C.T.A. Case No. 5828 and ordered the latter to resolve respondents
petitionforreview.
Thefactsareasfollows:
RespondentisanemployeeofIntelManufacturingPhils.,Inc.(Intel).FortheperiodJanuary1,1996toDecember
31, 1996, respondent was assigned in a foreign country. During that period, Intel withheld the taxes due on
respondents compensation income and remitted to the Bureau of Internal Revenue (BIR) the amount of
P308,084.56.
OnMarch21,1997,respondentandherhusbandfiledwiththeBIRtheirJointIndividualIncomeTaxReturnfor
theyear1996.Later,onJune17,1997,respondent,throughherrepresentative,filedanamendedreturnanda
NonResident Citizen Income Tax Return, and paid the BIR P17,693.37 plus interests in the amount of
P14,455.76.OnOctober8,1997,shefiledanotheramendedreturnindicatinganoverpaymentofP358,274.63.
Claiming that the income taxes withheld and paid by Intel and respondent resulted in an overpayment of
P340,918.92,4respondentfiledonApril15,1999apetitionforreviewdocketedasC.T.A.CaseNo.5828withthe
Court of Tax Appeals (CTA). The Commissioner of Internal Revenue (CIR) moved to dismiss the petition for
failureofrespondenttofilethemandatorywrittenclaimforrefundbeforetheCIR.
In its Resolution dated August 4, 1999, the CTA dismissed respondents petition. For one, the CTA ruled that
respondentfailedtofileawrittenclaimforrefundwiththeCIR,aconditionprecedenttothefilingofapetitionfor
reviewbeforetheCTA.5Second,theCTAnotedthatrespondentsomission,inadvertentlyorotherwise,toallege
in her petition the date of filing the final adjustment return, deprived the court of its jurisdiction over the subject
matterofthecase.6ThedecretalportionoftheCTAsresolutionstates:
WHEREFORE,inviewofalltheforegoing,RespondentsMotiontoDismissisGRANTED.Accordingly[,]the
PetitionforReviewisherebyDISMISSED.
SOORDERED.7
Upon review, the Court of Appeals reversed the CTA and directed the latter to resolve respondents petition for
review.ApplyingSection204(c)8ofthe1997NationalInternalRevenueCode(NIRC),theCourtofAppealsruled
that respondents filing of an amended return indicating an overpayment was sufficient compliance with the
requirementofawrittenclaimforrefund.9ThedecretalportionoftheCourtofAppealsdecisionreads:
WHEREFORE,findingthepetitiontobemeritorious,thisCourtGRANTSitduecourseandREVERSESthe
appealed Resolutions and DIRECTS the Court of Tax Appeal[s] to resolve the petition for review on the
merits.

SOORDERED.10
Petitionersoughtreconsideration,butitwasdenied.Hence,theinstantpetitionraisingthefollowingquestionsof
law:
I.
WHETHERORNOTTHE1997TAXREFORMACTCANBEAPPLIEDRETROACTIVELY.
II.
WHETHER OR NOT THE CTA HAS JURISDICTION TO TAKE [COGNIZANCE] OF RESPONDENTS
PETITIONFORREVIEW.11
WhilethemainconcerninthiscontroversyistheCTAsjurisdiction,wemustfirstresolvetwoissues.First,does
theamendedreturnfiledbyrespondentindicatinganoverpaymentconstitutethewrittenclaimforrefundrequired
by law, thereby vesting the CTA with jurisdiction over this case? Second, can the 1997 NIRC be applied
retroactively?
Petitioneraversthatanamendedreturnshowinganoverpaymentdoesnotconstitutethewrittenclaimforrefund
required under Section 23012 of the 1993 NIRC13 (old Tax Code). He claims that an actual written claim for
refundisnecessarybeforeasuitforitsrecoverymayproceedinanycourt.
On the other hand, respondent contends that the filing of an amended return indicating an overpayment of
P358,274.63 constitutes a written claim for refund pursuant to the clear proviso stated in the last sentence of
Section204(c)ofthe1997NIRC(newTaxCode),towit:
xxxx
Provided,however,Thatareturnfiledshowinganoverpaymentshallbeconsideredasawrittenclaimfor
creditorrefund.
xxxx
Alongthesamevein,respondentinvokestheliberalapplicationoftechnicalitiesintaxrefundcases,conformably
with our ruling in BPIFamily Savings Bank, Inc. v. Court of Appeals.14 We are, however, unable to agree with
respondentssubmissiononthisscore.
Theapplicablelawonrefundoftaxespertainingtothe1996compensationincomeisSection230oftheoldTax
Code,whichwasthelawthenineffect,andnotSection204(c)ofthenewTaxCode,whichwaseffectivestarting
onlyonJanuary1,1998.
Noteworthy,therequirementsunderSection230forrefundclaimsareasfollows:
1.AwrittenclaimforrefundortaxcreditmustbefiledbythetaxpayerwiththeCommissioner
2.Theclaimforrefundmustbeacategoricaldemandforreimbursement
3.Theclaimforrefundortaxcreditmustbefiled,orthesuitorproceedingthereformustbecommencedin
courtwithintwo(2)yearsfromdateofpaymentofthetaxorpenaltyregardlessofanysupervening
cause.15(Emphasisours.)
Inourview,thelawisclear.Aclaimantmustfirstfileawrittenclaimforrefund,categoricallydemandingrecovery
ofoverpaidtaxeswiththeCIR,beforeresortingtoanactionincourt.Thisobviouslyisintended,first,toaffordthe
CIRanopportunitytocorrecttheactionofsubordinateofficersandsecond,tonotifythegovernmentthatsuch
taxeshavebeenquestioned,andthenoticeshouldthenbeborneinmindinestimatingtherevenueavailablefor
expenditure.16
Thus,onthefirstissue,weruleagainstrespondentscontention.Entrenchedinourjurisprudenceistheprinciple
thattaxrefundsareinthenatureoftaxexemptionswhichareconstruedstrictissimijurisagainstthetaxpayerand
liberallyinfavorofthegovernment.Astaxrefundsinvolveareturnofrevenuefromthegovernment,theclaimant
mustshowindubitablythespecificprovisionoflawfromwhichherrightarisesitcannotbeallowedtoexistupona
merevagueimplicationorinference17norcanitbeextendedbeyondtheordinaryandreasonableintendmentof
the language actually used by the legislature in granting the refund.18 To repeat, strict compliance with the
conditionsimposedforthereturnofrevenuecollectedisadoctrineconsistentlyappliedinthisjurisdiction.19
Underthecircumstancesofthiscase,wecannotagreethattheamendedreturnfiledbyrespondentconstitutes

thewrittenclaimforrefundrequiredbytheoldTaxCode,thelawprevailingatthattime.Neithercanweapplythe
liberalinterpretationofthelawbasedonourpronouncementinthecaseofBPIFamilySavingsBank,Inc.v.Court
ofAppeals,asthetaxpayerthereinfiledawrittenclaimforrefundasidefrompresentingotherevidencetoprove
itsclaim,unlikethiscasebeforeus.
On the second issue, petitioner argues that the 1997 NIRC cannot be applied retroactively as the instant case
involvedrefundoftaxeswithheldona1996income.Respondent,however,pointsoutthatwhenthepetitionwas
filed with the CTA on April 15, 1999, the 1997 NIRC was already in effect, hence, Section 204(c) should apply,
despitethefactthattherefundbeingsoughtpertainstoa1996incometax.Notethattheissueontheretroactivity
ofSection204(c)ofthe1997NIRCarosebecausethelastparagraphofSection204(c)wasnotfoundinSection
230 of the old Code. After a thorough consideration of this matter, we find that we cannot give retroactive
applicationtoSection204(c)abovecited.Wehavetostressthattaxlawsareprospectiveinoperation,unlessthe
languageofthestatuteclearlyprovidesotherwise.20
Moreover, it should be emphasized that a party seeking an administrative remedy must not merely initiate the
prescribedadministrativeproceduretoobtainrelief,butalsopursueittoitsappropriateconclusionbeforeseeking
judicialinterventioninordertogivetheadministrativeagencyanopportunitytodecidethematteritselfcorrectly
and prevent unnecessary and premature resort to court action.21 This the respondent did not follow through.
Additionally,itcouldnotescapenoticethatatthetimerespondentfiledheramendedreturn,the1997NIRCwas
notyetineffect.Hence,respondenthadnoreasonatthattimetothinkthatthefilingofanamendedreturnwould
constitutethewrittenclaimforrefundrequiredbyapplicablelaw.
Furthermore, as the CTA stressed, even the date of filing of the Final Adjustment Return was omitted,
inadvertentlyorotherwise,byrespondentinherpetitionforreview.Thisomissionwasfataltorespondentsclaim,
foritdeprivedtheCTAofitsjurisdictionoverthesubjectmatterofthecase.
Finally, we cannot agree with the Court of Appeals finding that the nature of the instant case calls for the
application of remedial laws. Revenue statutes are substantive laws and in no sense must their application be
equated with that of remedial laws. As well said in a prior case, revenue laws are not intended to be liberally
construed.22ConsideringthattaxesarethelifebloodofthegovernmentandinHolmessmemorablemetaphor,
thepricewepayforcivilization,taxlawsmustbefaithfullyandstrictlyimplemented.
WHEREFORE,thepetitionisGRANTED.BoththeassailedDecisionandResolutiondatedFebruary13,2002and
May29,2002,respectively,oftheCourtofAppealsinCAG.R.SPNo.55572areREVERSEDandSETASIDE.
The Resolution dated August 4, 1999 of the Court of Tax Appeals in C.T.A. Case No. 5828 is hereby
REINSTATED.
Nopronouncementastocosts.
SOORDERED.
Carpio,CarpioMorales,Tinga,Velasco,Jr.,JJ.,concur.

Footnotes
1Rollo,pp.2227.PennedbyAssociateJusticeHilarionL.Aquino,withAssociateJusticesBuenaventuraJ.

GuerreroandMercedesGozoDadoleconcurring.
2Id.at2829.
3Id.at3037.PennedbyPresidingJudgeErnestoD.Acosta,withAssociateJudgesAmancioQ.Sagaand

RamonO.DeVeyraconcurring.
4Id.at86.
5Id.at34.
6Id.at37.
7Id.
8SEC.204.AuthorityoftheCommissionertoCompromise,AbateandRefundorCreditTaxes.The

Commissionermay

xxxx
(C)Creditorrefundtaxeserroneouslyorillegallyreceivedorpenaltiesimposedwithoutauthority,
refundthevalueofinternalrevenuestampswhentheyarereturnedingoodconditionbythe
purchaser,and,inhisdiscretion,redeemorchangeunusedstampsthathavebeenrenderedunfit
foruseandrefundtheirvalueuponproofofdestruction.Nocreditorrefundoftaxesorpenalties
shallbeallowedunlessthetaxpayerfilesinwritingwiththeCommissioneraclaimforcreditorrefund
withintwo(2)yearsafterthepaymentofthetaxorpenalty.Provided,however,Thatareturnfiled
showinganoverpaymentshallbeconsideredasawrittenclaimforcreditorrefund.
(Emphasisours.)
xxxx
9Rollo,p.26.
10Id.at27.
11Id.at7374.
12Sec.230.Recoveryoftaxerroneouslyorillegallycollected.Nosuitorproceedingshallbe

maintainedinanycourtfortherecoveryofanynationalinternalrevenuetaxhereafterallegedtohavebeen
erroneouslyorillegallyassessedorcollected,orofanypenaltyclaimedtohavebeencollectedwithout
authority,orofanysumallegedtohavebeenexcessiveorinanymannerwrongfullycollected,untilaclaim
forrefundorcredithasbeendulyfiledwiththeCommissionerbutsuchsuitorproceedingmaybe
maintained,whetherornotsuchtax,penalty,orsumhasbeenpaidunderprotestorduress.(Emphasis
ours.)
xxxx
13The1993NIRCpertainstotheNationalInternalRevenueCodeof1986,asamended.SeeV.Reyes,

IncomeTax,LawandAccountingANewApproach,5(2003Edition).
14G.R.No.122480,April12,2000,330SCRA507.
15PrescribedunderSection230oftheoldTaxCode,nowSection229ofthenewTaxCode.SeeB.Aban,

LawofBasicTaxationinthePhilippines,326327(2001Edition).
16Bermejov.CollectorofInternalRevenue,87Phil.96,97(1950).
17FloroCementCorporationv.Gorospe,G.R.No.46787,August12,1991,200SCRA480,488.
18SeePaperIndustriesCorporationofthePhilippinesv.CourtofAppeals,G.R.Nos.10694950,

December1,1995,250SCRA434,457458.
19Supranote16,at98.
20J.VitugandE.Acosta,TaxLawandJurisprudence,39(2000Edition),citingHydroResources

ContractorsCorp.v.CourtofTaxAppeals,G.R.No.80276,December21,1990,192SCRA604,611.
21Gorospev.VinzonsChato,G.R.No.132228,January21,2003,p.6(UnsignedResolution).
22Froehlich&Kuttnerv.CollectorofCustoms,18Phil.461,481482(1911).
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