G.R. No. L-5163; April 22, 1953
P.J. KIENER COMPANY, LTD., plaintiff-appellant, vs. SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellee.

FACTS

The appellant, P.J. Kiener Company, Ltd., paid the appellee, the Collector of Internal Revenue, a total sum of P10,421.10 as percentage tax for 1948, with the last payment made on January 20, 1949. Alleging an overpayment of P7,356.70, the appellant filed a claim for refund with the Collector on May 25, 1949. The Collector did not act on this claim until formally denying it on June 11, 1951. The appellant filed its suit for recovery of the alleged overpayment on July 12, 1951, which was more than two years after the last tax payment on January 20, 1949.

ISSUE

Whether the appellant’s suit for recovery of tax, filed more than two years from the date of payment, is barred by the two-year prescriptive period under Section 306 of the Tax Code, despite the pending administrative claim for refund.

RULING

Yes, the suit is barred. The Court affirmed the dismissal order. Section 306 of the Tax Code requires that a suit for recovery of tax must be commenced within two years from the date of payment. The requirement of first filing a claim for refund with the Collector is intended to give the Collector an opportunity to correct any error before being sued, but it does not interrupt or suspend the two-year period for filing the court action. The taxpayer must file the judicial suit within the two-year period from payment, regardless of whether the Collector has acted on the administrative claim. The appellant’s suit, filed on July 12, 1951, was beyond the two-year period from the last payment on January 20, 1949, and was therefore barred.