Floro v. Philippine National Bank
REITERATIONFacts
The Antecedents: Plaintiff-appellee Exequiel Floro sought the refund of P25,010.49 levied by the Central Bank as a 17% special excise tax on dollar remittances related to importations from the United States, pursuant to Republic Act No. 601. Between July 1949 and December 1950, Floro obtained letters of credit from Philippine National Bank (PNB) for importations. Dollar drafts drawn against these letters of credit were paid by PNB's New York agency between August 1949 and March 1951, all prior to Republic Act No. 601's effectivity. Floro paid PNB the full amount of the covering drafts, including the 17% excise tax, between April and September 1951. The collected tax was remitted to the Central Bank. Procedural History: The Court of First Instance of Manila rendered judgment in favor of Floro. The Central Bank appealed. The Petition: The Central Bank, as defendant-appellant, raised legal defenses, primarily prescription of action, even conceding that the collected amounts were not due in light of subsequent Supreme Court decisions.
Issue(s)
Whether the prescriptive period for recovering illegally collected taxes accrues from the date of collection or from the date of the Supreme Court's decision clarifying the legality of the tax. Whether the action for refund is barred by prescription.
Ruling
The judgment of the Court of First Instance of Manila is set aside, and the complaint is dismissed. The action for refund is barred by prescription.
Ratio Decidendi
On the prescriptive period for recovering illegally collected taxes: The Court held that the prescriptive period for an action to recover illegally collected taxes accrues from the date of collection, as provided by Article 1150 of the Civil Code. The error of the Monetary Board in the interpretation of Republic Act No. 601 does not alter or extend the time of accrual of the action. Mistakes of officers in the collection of taxes cannot prejudice the Government. Therefore, the plaintiff-appellee's contention that the prescriptive period should begin from the promulgation of the Supreme Court's decision in Philippine National Bank vs. Zulueta was rejected. The Court reiterated the principle established in Nazario & Sons vs. Central Bank, stating that if a tax is unlawfully collected, the action to recover should accrue from the date of collection. On whether the action for refund is barred by prescription: The Court applied Article 1145 of the Civil Code, which provides that actions upon a quasi-contract must be commenced within six years. The tax payments were made in 1951, with the latest payment on September 14, 1951. The complaint for refund was filed on August 7, 1958. This period of over six years from the date of payment clearly bars the action. Even if the period were computed from the filing of the application for refund on January 18, 1958, the action would still be considered barred as it was filed more than six years after the payments were made in 1951. Consequently, the Court found it unnecessary to pass upon other issues raised by the appellant.
Main Doctrine
The prescriptive period for an action to recover illegally collected taxes accrues from the date of collection, not from the date of a Supreme Court decision clarifying the law, and is governed by the six-year period under Article 1145 of the Civil Code.