BANK OF THE PHILIPPINE ISLANDS, Petitioner, -versus- COMMISSIONER OF INTERNAL REVENUE,

Respondents. G.R. No. 144653, August 28, 2001, MENDOZA, J.: FACTS: Prior to its merger with petitioner
Bank of the Philippine Islands (BPI) on July 1985, The Family Bank and Trust Co. (FBTC) earned income
consisting of rentals from its leased properties and interest from its treasury notes for the period
January 1 to June 30, 1985. As required by the Expanded Withholding Tax Regulation, the lessees of
FBTC withheld 5 percent of the rental income, in the amount of P118,609.17, while the Central Bank,
from which the treasury notes were purchased by FBTC, withheld P55,456.60 from the interest earned
thereon. Creditable withholding taxes in the total amount of P174,065.77 were remitted to respondent
Commissioner of Internal Revenue. FBTC, however, suffered a new loss of about P64,000,000.00 during
the period in question. It also had an excess credit of P2,146,072.57 from the previous year. Thus, upon
its dissolution in 1985, FBTC had a refundable of P2,320,138.34, representing that year's tax credit of
P174,065.77 and the previous year's excess credit of P2,146,072.57. As FBTC's successor-in-interest,
petitioner BPI claimed this amount as tax refund, but respondent Commissioner of Internal Revenue
refunded only the amount of P2,146,072.57, leaving a balance of P174,065.77. Accordingly, petitioner
filed a petition for review in the Court of Tax Appeals on December 29, 1987, seeking the refund of the
aforesaid amount.However, in its decision rendered on July 19, 1994, the Court of Tax Appeals dismissed
petitioner's petition for review and denied its claim for refund on the ground that the claim had already
prescribed. In its resolution, dated August 4, 1995, the Court of Tax Appeals denied petitioner's motion
for reconsideration. Petitioner appealed to the Court of Appeals, but, in its decision rendered on April
14, 2000, the appeals court affirmed the decision of the CTA. The appeals court subsequently denied
petitioner's motion for reconsideration. Hence this petition. ISSUE: Whether petitioner's claim is barred
by prescription. RULING: After due consideration of the parties' arguments, we are of the opinion that,
in case of the dissolution of a corporation, the period of prescription should be reckoned from the date
of filing of the return required by §78 of the Tax Code. Accordingly, we hold that petitioner's claim for
refund is barred by prescription. This Court finds that the petition for review is filed out of time. FBTC,
after the end of its corporate life on June 30, 1985, should have filed its income tax return within thirty
days after the cessation of its business or thirty days after the approval of the Articles of Merger. This is
bolstered by Sec. 78 of the tax Code and under Sec. 244 of Revenue Regulation No. 2… DEAN’S CIRCLE
2019 – UST FACULTY OF CIVIL LAW 71 As the FBTC did not file its quarterly income tax returns for the
year 1985, there was no need for it to file a Final adjustment Return because there was nothing for it to
adjust or to audit. After it ceased operations on June 30, 1985, its taxable year was shortened to six
months, from January 1, 1985 to June 30, 1985 The situation of FBTC is precisely what was
contemplated under §78 of the Tax Code. It thus became necessary for FBTC to file its income tax return
within 30 days after approval by the SEC of its plan or resolution of dissolution. Indeed, it would be
absurd for FBTC to wait until the fifteenth day of April, or almost 10 months after it ceased its
operations, before filing its income tax return. Thus, §46(a) of the Tax Code applies only to instances in
which the corporation remains subsisting and its business operations are continuing. In instances in
which the corporation is contemplating dissolution, §78 of the Tax Code applies. It is a rule of statutory
construction that "[w]here there is in the same statute a particular enactment and also a general one
which in its most comprehensive sense would include what is embraced in the former, the particular
enactment must be operative, and the general enactment must be taken to affect only such cases within
its general language as are not within the provisions of the particular enactment. Petitioner argues that
to hold, as the Court of Tax Appeals and the Court of Appeals do, that §78 applies in case a corporation
contemplates dissolution would lead to absurd results. It contends that it is not feasible for the certified
public accountants to complete their report and audited financial statements, which are required to be
submitted together with the plan of dissolution to the SEC, within the period contemplated by §78. It
maintains that, in turn, the SEC would not have sufficient time to process the papers considering that
§78 also requires the submission of a tax clearance certificate before the SEC can approve the plan of
dissolution. Considering that §78 of the Tax Code, in relation to §244 of Revenue Regulation No. 2
applies to FBTC, the two-year prescriptive period should be counted from July 30, 1985, i.e., 30 days
after the approval by the SEC of its plan for dissolution. In accordance with §292 of the Tax Code, July
30, 1985 should be considered the date of payment by FBTC of the taxes withheld on the earned
income. Consequently, the two-year period of prescription ended on July 30, 1987. As petitioner's claim
for tax refund before the Court of Tax Appeals was filed only on December 29, 1987, it is clear that the
claim is barred by prescription