On 15 October 2008, respondent filed an application for relief from double taxation before the International Tax Affairs division of the BIR to confirm that the redemption of respondent’s preferred shares owned by an American company was not subject to Philippine income tax.
Nonetheless, respondent still withheld and remitted 15% final withholding tax (FWT) to the BIR on 03 November 2008.
On 21 October 2010, respondent filed an administrative claim for refund or issuance of tax credit certificate (TCC) before the BIR. On 03 November 2010, it filed a judicial claim by way of petitioner for review before the CTA.
Whether respondent correctly and timely sought judicial redress, notwithstanding that its administrative and judicial claims were filed only 13 days apart.
YES. Section 229 of the Tax Code does not mean that the taxpayer must await the final resolution of its administrative claim for refund, since doing so would be tantamount to the taxpayer’s forfeiture of its right to seek judicial recourse should the two-year prescriptive period expire without the appropriate judicial claim being filed.
Section 228 of the Tax Code only required that an administrative claim be first filed. It bears stressing that respondent could not be faulted for resorting to court action considering that the prescriptive period stated therein was about to expire. Had respondent awaited the action of petitioner knowing fully well that the prescriptive period was about to lapse, it would have resultantly forfeited its right to seek a judicial review of its claim, thereby suffering irreparable damage.
credit to: Aldhelm Joy Biswas