FAR EAST BANK AND TRUST COMPANY AS TRUSTEE OF VARIOUS RETIREMENT FUNDS,

petitioner, vs. COMMISSIONER OF INTERNAL REVENUE AND THE COURT OF APPEALS,

respondents. G.R. No. 138919, May 2, 2006; Tinga, J.

This case hinges on a claim for refund of erroneously paid taxes due to the withholding of the
final tax on interest income earned in 1993 by different employees trust managed by Far East Bank. The
four claims for refund involving four quarters of 1993 were all filed with the BIR within two years from the
date of remittance of the tax. The Commissioner denied the claims due to the failure of the trustee-bank
to sufficiently substantiate the same. The petitioner did not appeal the denial to the CTA. However, on
April 28,1995, the petitioner filed a Motion to Admit Supplemental Petition in CTA case No. 4848
(involving claim for refund for an earlier year) seeking to include in that case the tax refund claimed for the
year 1993. The CTA denied the admission of the supplemental petition and advised the petitioner to
instead file a separate petition for review to which it complied but only October 9, 1995.

Issues: a) What evidentiary requirements must be complied to substantiate the claim for refund?
b) Is the two-year prescriptive period under Section 229 of the Tax Code, tolled by the filing of a
supplemental petition on a separate claim pending before the CTA?

The evidentiary requirements that need to be introduced are the documentary proof of
transactions such as confirmation receipts and purchase orders that would ordinarily show the fact of
purchase of treasury bills or money market placements by the various funds, together with their individual
bank account numbers. These documents are the best evidence on the participation of the funds, and
without them, there is no way for the Court to verify the actual involvement of the funds in the alleged
investment in treasury bills and money market placements. Since the petitioner failed to submit these vital
documents, the claim for refund must fail.

On the second issue, the SC said that the filing of the supplemental motion having been denied
by the CTA has produced no judicial effect. The CTA acquired jurisdiction over the claim for refund for
taxes paid by petitioner in 1993 only upon filing of the new Petition for Review on October 9, 1995 or
more than two years from the date of payment of the taxes sought to be refunded. But even if the CTA
allowed the filing of the supplemental petition on April 28, 1995, it will not alter the fact that taxes paid
from January to April 27, 1993 are no longer available for refund for the right to file the claim has already
prescribed.

An appeal from the decision of the Commissioner must be an independent action. It can not be done in
the guise of supplementing a pending case in the CTA. Allowing this would run counter to the provisions
of Section 229 of the NIRC which etched in stone the “supervening event clause” in pursuing a claim for
refund.