January 28, 1999
Quisumbing, J.
FACTS
The Philippine Bank of Commerce or PBCom filed its ITRs for the first and second quarter of the year 1985 and paid income taxes. However, at the end of the year and for the subsequent year, it suffered loss. Thus, it filed for tax refund and tax credit.
Pending the investigation of the claim, it filed a case with the CTA, which subsequently denied the claim for having been filed beyond the prescriptive period of two years as stated in the law. PBCom relied on the RMC 7-85 issued by the BIR extending the prescriptive period to 10 years.
RULING
The Court ruled for the Government.
A memorandum-circular of a bureau head could not operate to vest a taxpayer with a shield against judicial action. For there are no vested rights to speak of respecting a wrong construction of the law by the administrative officials and such wrong interpretation could not place the Government in estoppel to correct or overrule the same.
Granted, RMC 785 is invalid and cannot be relied on by PBCom because it is contrary to the statute. A mere BIR ruling cannot supersede legislation by Congress. Moreover, no right can be vested coming from a memorandum or ruling that stems from a wrongful interpretation of the law.
