2. A claim for refund of erroneously or illegally collected internal revenue taxes.

Before a tax payer can claim for a refund and tax credit on an erroneously or illegally
collected tax the following grounds must be present:

a. That the tax is erroneously or illegally collected or assessed;

b. That the penalty is imposed without authority; and
c. That the sum collected is excessive or in any manner wrongfully collected.

If the above mentioned ground were present, the next step would to comply with the requirements
under the NIRC for a claim of tax refund or tax credit as follows:

a. That there must be a written claim for refund filed by the taxpayer with the CIR subject
to the following exceptions:
i. As provided for under Section 229 of the NIRC, when on the face of the
return upon which payment was made, such payment appears clearly to
have erroneously paid - the CIR may refund or credit the tax even without a
written claim; and
ii. Under Section 204 (c) of the NIRC, A return filed showing an overpayment
shall be considered as a written claim for credit or refund.

b. That there must be a categorical claim for refund or credit;

c. That it must be filed within 2 years from date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment. No suit or proceeding
shall be instituted after the expiration of the such period; and
d. That the taxpayer must present proof of payment of the tax.

Note that in claiming for refund or tax credit, payment under protest in such case is not required.

Summary rules for claiming tax credit under Section 102 of the NIRC.

Any VAT-registered person, whose sales are zero rated or effectively zero-rated may, within two (2)
years after the close of the taxable quarter when the sales were made, apply for the issuance of a
tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been applied against output tax, with
the appropriate BIR Office-Large Taxpayer or RDO having jurisdiction over the principal place of
business of the taxpayer.

The commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes
within one hundred twenty (120) days from the date of submission of compete documents in support
of the application
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration
of the one hundred twenty day-period, appeal the decision or claim with the Court of Tax Appeals