Case Summary (G.R. No. 162155)
Procedural History
– March 11, 1999: Respondent filed administrative claim for refund/credit (P26,318,398.32).
– April 14, 2000: Respondent’s petition for refund dismissed by Court of Tax Appeals (CTA) as filed beyond the two-year prescriptive period under NIRC §229.
– August 1, 2003: Court of Appeals (CA) reversed CTA, finding the petition timely.
– Supreme Court review under Rule 45 of the Rules of Court.
Facts of the Case
- 1997: Respondent incurred net losses of ₱71,879,228 due to industry slowdown; nonetheless paid quarterly corporate income taxes and remitted creditable withholding taxes totaling ₱26,318,398.32.
- Respondent’s final adjusted return was filed on April 14, 1998.
- Respondent filed CTA petition on April 14, 2000, claiming refund or credit.
Issue
How should the two-year prescriptive period under NIRC §229 for judicial claims for tax refund or credit be computed—by reference to Article 13 of the Civil Code (365 days per year) or Section 31, Book I, Administrative Code of 1987 (twelve calendar months per year)?
Applicable Law
• 1987 Philippine Constitution (governing subsequent laws post-1990)
• National Internal Revenue Code (NIRC) §229 – two-year period from payment for filing refund/credit claim
• Civil Code, Art. 13 – “year” equals 365 days, first day excluded, last included
• Administrative Code of 1987, Sec. 31, Book I – “year” equals twelve calendar months; “month” equals thirty days unless specified as a calendar month
Court of Appeals Ruling
The CA held that:
• Under Civil Code Art. 13, each year equals 365 days, even during a leap year, yielding a 730-day period for two years.
• Respondent’s petition filed on the 731st day (April 14, 2000) fell within 730 days, hence timely.
Petitioners’ Arguments
• Tax exemptions and refunds must be strictly construed in favor of the State.
• Prescriptive period under NIRC §229 begins on filing of the final adjusted return and must be reckoned strictly as two years (730 days).
Supreme Court’s Analysis on Computation of Prescriptive Period
- Lex posterior derogat priori: The Administrative Code of 1987 (1987 EO 292) is later than Civil Code provisions—its Sec. 31, Book I governs computation of legal periods.
- Under Sec. 31, a “year” is twelve calendar months, irrespective of the number of days.
- Implied repeal of Civil Code Art. 13 by the Administrative Code must be
Case Syllabus (G.R. No. 162155)
Facts
- On March 11, 1999, Gilbert Yap, vice chair of Primetown Property Group, Inc., applied for refund or credit of income taxes paid in 1997.
- Respondent explained that an industry-wide slowdown—due to rising labor and material costs, difficulty in financing projects, and collecting receivables—depressed its operations.
- Although business was robust in the first quarter of 1997, respondent incurred net losses of ₱71,879,228 for the year.
- Despite the losses, respondent remitted quarterly corporate income tax and creditable withholding tax totaling ₱26,318,398.32.
- Respondent claimed entitlement to a refund or tax credit of that amount.
Procedural History
- May 13, 1999: BIR revenue officer required submission of additional documents; respondent complied but received no action.
- April 14, 2000: Respondent filed Petition for Review in the Court of Tax Appeals (CTA), docketed as C.T.A. Case No. 6113.
- December 15, 2000: CTA dismissed the petition for being filed beyond the two-year prescriptive period under Section 229, National Internal Revenue Code (NIRC).
- Motion for reconsideration before the CTA was denied.
- Respondent appealed to the Court of Appeals (CA), docketed as CA-G.R. SP No. 64782.
- August 1, 2003: CA reversed and set aside the CTA decision, ruling that the petition was filed within the two-year period.
- Motion for reconsideration before the CA was denied.
- Petitioners filed a petition for review on certiorari under Rule 45 of the Rules of Court before the Supreme Court.
Issue
- Whether Primetown’s petition for tax refund or credit was filed within the two-year prescriptive period prescribed by Section 229 of the NIRC, reckoned from the filing of its final adjusted return.
Ruling of the Court of Tax Appeals
- Held that Section 229’s two-year period runs from the date of filing the final adjusted return (April 14, 1998).
- Applied Article 13, Civil Code: a year is 365 days; the year