The Court of Tax Appeals (CTA) has dismissed the petition for P44.25 million tax refund sought from the Bureau of Internal Revenue (BIR) by LKY Property Holdings, Inc.

In a decision, the CTA's first division said refunds for erroneously collected taxes must be made within two years from the payment of the taxes. 

LKY asked the CTA to order BIR to refund P44.25 million in erroneously collected documentary stamp tax (DST) and creditable withholding tax (CWT) in 2014.

"The present Petition for Review must be dismissed because the petitioner’s (LKY) administrative and judicial claims were filed out of time,” the CTA ruled in a decision written by Associate Justice Lanee S. Cui-David.

Citing Section 204(C) of the National Internal Revenue Code (NIRC) of 1997, as amended, the CTA said the law states: “No credit or refund taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner  (of the BIR) a claim for credit or refund within two years after the payment of the tax or penalty….”

The tax court also said that Section 229 of the NIRC provides:: “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 the authority, or of any sum alleged to have been excessively or in any manner wrongfully collected.…”

“Sections 204 and 229 fixed the same period of two (2) years for filing an administrative claim for refund before the BIR and to sue before this Court. As long as these two acts fall within the two (2)-year period, there is no legal impediment to the judicial claim for refund,” the court pointed out. 

“In this case, the payment of the subject DST and withholding tax were made on July 3, 2014 and July 9 , 2014, respectively. Hence, the two-year prescriptive period under Sections 204(C) and 229 ends on July 3 , 2016 for the DST payment, and on July 9, 2016, for the CWT payment. Considering that petitioner's administrative claim and the present judicial claim were filed only on December 12, 2016, and on February 7 , 2022, respectively, which are both beyond the two (2)-year prescriptive period, petitioner's refund claim was filed out of time. Hence, the Court cannot take cognizance of the same,” it explained.

It disagreed with LKY’s claims that the NIRC does not apply in the case but Article 1145 of the Civil Code on quasi-contracts or the rule on solution indebiti (a quasi contract that obligates a person to return a thing that was unduly delivered to him through mistake when he has no right to demand it) which has a prescriptive period of six years.

LKY is part of the LKY Group of Companies "that has revolutionized transport terminals, hotels and resorts, commercial leasing and advertising, construction and property development, and food operations nationwide in Philippines."