LAW OF BASIC TAXATION IN THE PHILIPPINES the ground that it was filed beyond the 2-year prescriptive period. It also denied PBCom’s claim for refund for 1986 amounting to 234,077.99 on the assumption that it was automatically credited by PBCom against its tax assessment in the succeeding year. Its motion for reconsideration having been denied, PBCom filed a petition for review with the Court of Appeals which, however, affirmed the CTA’s decision. PBCom averred that the Court of Appeals erred in denying its plea for tax refund or tax credit on the ground of prescription, despite its reliance on Revenue Memorandum Circular No. 7-85 (RMC 7-85), dated Apr. 1, 1985, changing the prescriptive period from 2 years to 10 years. Said circular states that overpaid income taxes are not covered by the 2-year prescriptive period under the ‘Tax Code and that taxpayers may claim refund or tax credit for the excess quarterly ineome tax from the BIR within 10 years pursuant to Art. 1144, Civil Code. Petitioner further argued that the Government is barred from asserting a position inconsistent with one previously taken and that BIR circulars or rulings have no retroactive effect when the same would result in injustice to taxpayers. Contrarily, the Commissioner of Internal Revenue insists on the reckoning of the 2-year prescriptive period from the date of filing the final adjusted income tax return. HELD: After a review of the records and applicable jurisprudence, the Supreme Court held that the relaxation of revenue regulations by RMC 7-80 is not warranted since it disregards the 2-year prescriptive period set by law. Claims for refund or tax credit should be made within the time fixed by law because the BIR, being an administrative body enforced to collect taxes, its functions should not be unduly delayed or hampered by incidental matters. Sec. 230, NIRC (now, Sec. 229, 1997 NIRC) which provides for the prescriptive period for filing a court proceeding for the recovery of tax erroneously or illegally collected, states that the taxpayer may file a claim for refund or credit with the Commissioner of Internal Revenue within 2 years after payment of the tax before any suit in the CTA is commenced. The 2-year prescriptive period should be computed from the time of filing the adjustment return and final payment of the tax for the year. When the Acting Commissioner of Internal Revenue issued RMC. 17-85 changing the prescriptive period of 2 years to 10 years on claims of excess quarterly income tax payments, such circular created a 164 ‘TAX LAWS AND REGULATIONS: loar inconsistency with the provision of Sec. 230 of the 1977 NIRC. In so doing, the BIR did not simply interpret the law; rather, it logislated guidelines contrary to the statute passed by Congress. Revenue memorandum circulars are considered administrative rulings (in the sense of more specific and less general interpretations ‘of tax laws) which are issued from time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive officers, whose duty is to onforce it, is entitled to great respect by the courts. Nevertheless, uch interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement. In People v. Lim (108 Phil. 1091), it was held that rules and regulations issued by administrative officials to implement a law cannot go beyond the terms and provisions of the latter. Fundamental is the rule that the State cannot be put in estoppel by the mistakes or errors ofits officials and agents. RMC 7-85 issued by the Acting Commissioner of Internal Revenue is an administrative interpretation which is not in harmony with Sec. 230 of the 1977 NIRC and should be nullified for being contrary to the express provision of a statute. Hence, his interpretation could not be given ‘weight for to do so would in effect amend the statute. ‘Administrative decisions do not enjoy the level of recognition as being part of the legal system of the country given to judicial decisions under Art. 8 of the Civil Code. A memorandum circular of a bureau head could not operate to vest a taxpayer with a shield against judicial action. 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. Moreover, the non-retroactivity of rulings by the Commissioner of Internal Revenue is not applicable in this case because the nullity of RMC 7-85 was declared by respondent courts and not by the Commissioner of Internal Revenue. A claim for refund is in the nature of a claim for exemption and should be construed strictissimi juris against the taxpayer. ‘Sec. 69 of the 1977 NIRC (now, Sec. 76 of the 1997 NIRC) provides that any excess of the total quarterly payments over the actual income tax computed in the adjustment or final corporate income tax return, shall either (a) be refunded to the corporation, or 165