G.R. No. 184823 October 6, 2010 7.

Petitioner must prove that the claim was filed within the
COMMISSIONER OF INTERNAL REVENUE, Petitioner, two (2) year period prescribed in Section 229 of the Tax
vs. Code;
AICHI FORGING COMPANY OF ASIA, INC., Respondent.
8. In an action for refund, the burden of proof is on the
taxpayer to establish its right to refund, and failure to
DECISION sustain the burden is fatal to the claim for refund; and

DEL CASTILLO, J.: 9. Claims for refund are construed strictly against the
claimant for the same partake of the nature of exemption
from taxation.13
A taxpayer is entitled to a refund either by authority of a statute
expressly granting such right, privilege, or incentive in his favor, or
under the principle of solutio indebiti requiring the return of taxes Trial ensued, after which, on January 4, 2008, the Second Division
erroneously or illegally collected. In both cases, a taxpayer must of the CTA rendered a Decision partially granting respondent’s claim
prove not only his entitlement to a refund but also his compliance for refund/credit. Pertinent portions of the Decision read:
with the procedural due process as non-observance of the
prescriptive periods within which to file the administrative and the
For a VAT registered entity whose sales are zero-rated, to validly
judicial claims would result in the denial of his claim.
claim a refund, Section 112 (A) of the NIRC of 1997, as amended,
provides:
This Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeks to set aside the July 30, 2008 Decision1 and the
SEC. 112. Refunds or Tax Credits of Input Tax. –
October 6, 2008 Resolution2 of the Court of Tax Appeals (CTA) En
Banc.
(A) Zero-rated or Effectively Zero-rated Sales. – Any VAT-registered
person, whose sales are zero-rated or effectively zero-rated may,
Factual Antecedents
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
Respondent Aichi Forging Company of Asia, Inc., a corporation duly refund of creditable input tax due or paid attributable to such sales,
organized and existing under the laws of the Republic of the except transitional input tax, to the extent that such input tax has not
Philippines, is engaged in the manufacturing, producing, and been applied against output tax: x x x
processing of steel and its by-products.3 It is registered with the
Bureau of Internal Revenue (BIR) as a Value-Added Tax (VAT)
Pursuant to the above provision, petitioner must comply with the
entity4 and its products, "close impression die steel forgings" and
following requisites: (1) the taxpayer is engaged in sales which are
"tool and dies," are registered with the Board of Investments (BOI)
zero-rated or effectively zero-rated; (2) the taxpayer is VAT-
as a pioneer status.5
registered; (3) the claim must be filed within two years after the close
of the taxable quarter when such sales were made; and (4) the
On September 30, 2004, respondent filed a claim for refund/credit of creditable input tax due or paid must be attributable to such sales,
input VAT for the period July 1, 2002 to September 30, 2002 in the except the transitional input tax, to the extent that such input tax has
total amount of ₱3,891,123.82 with the petitioner Commissioner of not been applied against the output tax.
Internal Revenue (CIR), through the Department of Finance (DOF)
One-Stop Shop Inter-Agency Tax Credit and Duty Drawback
The Court finds that the first three requirements have been complied
Center.6
[with] by petitioner.

Proceedings before the Second Division of the CTA

With regard to the first requisite, the evidence presented by
petitioner, such as the Sales Invoices (Exhibits "II" to "II-262," "JJ" to
On even date, respondent filed a Petition for Review7 with the CTA "JJ-431," "KK" to "KK-394" and "LL") shows that it is engaged in
for the refund/credit of the same input VAT. The case was docketed sales which are zero-rated.
as CTA Case No. 7065 and was raffled to the Second Division of the
CTA.
The second requisite has likewise been complied with. The
Certificate of Registration with OCN 1RC0000148499 (Exhibit "C")
In the Petition for Review, respondent alleged that for the period July with the BIR proves that petitioner is a registered VAT taxpayer.
1, 2002 to September 30, 2002, it generated and recorded zero-
rated sales in the amount of ₱131,791,399.00,8 which was paid
In compliance with the third requisite, petitioner filed its
pursuant to Section 106(A) (2) (a) (1), (2) and (3) of the National
administrative claim for refund on September 30, 2004 (Exhibit "N")
Internal Revenue Code of 1997 (NIRC);9 that for the said period, it
and the present Petition for Review on September 30, 2004, both
incurred and paid input VAT amounting to ₱3,912,088.14 from
within the two (2) year prescriptive period from the close of the
purchases and importation attributable to its zero-rated sales;10and
taxable quarter when the sales were made, which is from September
that in its application for refund/credit filed with the DOF One-Stop
30, 2002.
Shop Inter-Agency Tax Credit and Duty Drawback Center, it only
claimed the amount of ₱3,891,123.82.11
As regards, the fourth requirement, the Court finds that there are
12 some documents and claims of petitioner that are baseless and
In response, petitioner filed his Answer raising the following special
have not been satisfactorily substantiated.
and affirmative defenses, to wit:

xxxx
4. Petitioner’s alleged claim for refund is subject to
administrative investigation by the Bureau;
In sum, petitioner has sufficiently proved that it is entitled to a refund
or issuance of a tax credit certificate representing unutilized excess
5. Petitioner must prove that it paid VAT input taxes for the
input VAT payments for the period July 1, 2002 to September 30,
period in question;
2002, which are attributable to its zero-rated sales for the same
period, but in the reduced amount of ₱3,239,119.25, computed as
6. Petitioner must prove that its sales are export sales follows:
contemplated under Sections 106(A) (2) (a), and 108(B)
(1) of the Tax Code of 1997;
Amount of Claimed Input VAT
Less:
Exceptions as found by the ICPA
 Net Creditable Input VAT ₱ 3,850,103.45
In relation to this, the reckoning of the two-year period provided
Less: under Section 229 of the 1997 NIRC should start from the payment
Output VAT Due of tax subject claim for refund. As stated above, respondent filed its
610,984.20
VAT Return for the taxable third quarter of 2002 on October 20,
Excess Creditable Input VAT ₱ 3,239,119.25
2002. Thus, respondent's administrative and judicial claims for
refund filed on September 30, 2004 were filed on time because
WHEREFORE, premises considered, the present Petition for Review AICHI has until October 20, 2004 within which to file its claim for
is PARTIALLY GRANTED. Accordingly, respondent is hereby refund.
ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE
in favor of petitioner [in] the reduced amount of THREE MILLION
TWO HUNDRED THIRTY NINE THOUSAND ONE HUNDRED In addition, We do not agree with the petitioner's contention that the
NINETEEN AND 25/100 PESOS (₱3,239,119.25), representing the 1997 NIRC requires the previous filing of an administrative claim for
unutilized input VAT incurred for the months of July to September refund prior to the judicial claim. This should not be the case as the
2002. law does not prohibit the simultaneous filing of the administrative
and judicial claims for refund. What is controlling is that both claims
for refund must be filed within the two-year prescriptive period.
SO ORDERED.14

In sum, the Court En Banc finds no cogent justification to disturb the

Dissatisfied with the above-quoted Decision, petitioner filed a Motion findings and conclusion spelled out in the assailed January 4, 2008
for Partial Reconsideration,15 insisting that the administrative and the Decision and March 13, 2008 Resolution of the CTA Second
judicial claims were filed beyond the two-year period to claim a tax Division. What the instant petition seeks is for the Court En Banc to
refund/credit provided for under Sections 112(A) and 229 of the view and appreciate the evidence in their own perspective of things,
NIRC. He reasoned that since the year 2004 was a leap year, the which unfortunately had already been considered and passed upon.
filing of the claim for tax refund/credit on September 30, 2004 was
beyond the two-year period, which expired on September 29,
2004.16 He cited as basis Article 13 of the Civil Code,17 which WHEREFORE, the instant Petition for Review is hereby DENIED
provides that when the law speaks of a year, it is equivalent to 365 DUE COURSE and DISMISSED for lack of merit. Accordingly, the
days. In addition, petitioner argued that the simultaneous filing of the January 4, 2008 Decision and March 13, 2008 Resolution of the
administrative and the judicial claims contravenes Sections 112 and CTA Second Division in CTA Case No. 7065 entitled, "AICHI
229 of the NIRC.18 According to the petitioner, a prior filing of an Forging Company of Asia, Inc. petitioner vs. Commissioner of
administrative claim is a "condition precedent"19 before a judicial Internal Revenue, respondent" are hereby AFFIRMED in toto.
claim can be filed. He explained that the rationale of such
requirement rests not only on the doctrine of exhaustion of SO ORDERED.22
administrative remedies but also on the fact that the CTA is an
appellate body which exercises the power of judicial review over
administrative actions of the BIR. 20 Petitioner sought reconsideration but the CTA En Banc denied23 his
Motion for Reconsideration.
The Second Division of the CTA, however, denied petitioner’s
Motion for Partial Reconsideration for lack of merit. Petitioner thus Issue
elevated the matter to the CTA En Banc via a Petition for Review.21
Hence, the present recourse where petitioner interposes the issue of
Ruling of the CTA En Banc whether respondent’s judicial and administrative claims for tax
refund/credit were filed within the two-year prescriptive period
provided in Sections 112(A) and 229 of
On July 30, 2008, the CTA En Banc affirmed the Second Division’s
Decision allowing the partial tax refund/credit in favor of respondent.
However, as to the reckoning point for counting the two-year period, the NIRC.24
the CTA En Banc ruled:
Petitioner’s Arguments
Petitioner argues that the administrative and judicial claims were
filed beyond the period allowed by law and hence, the honorable Petitioner maintains that respondent’s administrative and judicial
Court has no jurisdiction over the same. In addition, petitioner further claims for tax refund/credit were filed in violation of Sections 112(A)
contends that respondent's filing of the administrative and judicial
and 229 of the NIRC.25 He posits that pursuant to Article 13 of the
[claims] effectively eliminates the authority of the honorable Court to Civil Code,26 since the year 2004 was a leap year, the filing of the
exercise jurisdiction over the judicial claim. claim for tax refund/credit on September 30, 2004 was beyond the
two-year period, which expired on September 29, 2004.27
We are not persuaded.
Petitioner further argues that the CTA En Banc erred in applying
Section 114 of the 1997 NIRC, and We quote, to wit: Section 114(A) of the NIRC in determining the start of the two-year
period as the said provision pertains to the compliance requirements
in the payment of VAT.28 He asserts that it is Section 112, paragraph
SEC. 114. Return and Payment of Value-added Tax. – (A), of the same Code that should apply because it specifically
provides for the period within which a claim for tax refund/ credit
(A) In General. – Every person liable to pay the value-added tax should be made.29
imposed under this Title shall file a quarterly return of the amount of
his gross sales or receipts within twenty-five (25) days following the Petitioner likewise puts in issue the fact that the administrative claim
close of each taxable quarter prescribed for each taxpayer: with the BIR and the judicial claim with the CTA were filed on the
Provided, however, That VAT-registered persons shall pay the same day.30 He opines that the simultaneous filing of the
value-added tax on a monthly basis. administrative and the judicial claims contravenes Section 229 of the
NIRC, which requires the prior filing of an administrative claim. 31 He
[x x x x ] insists that such procedural requirement is based on the doctrine of
exhaustion of administrative remedies and the fact that the CTA is
an appellate body exercising judicial review over administrative
Based on the above-stated provision, a taxpayer has twenty five (25) actions of the CIR.32
days from the close of each taxable quarter within which to file a
quarterly return of the amount of his gross sales or receipts. In the
case at bar, the taxable quarter involved was for the period of July 1, Respondent’s Arguments
2002 to September 30, 2002. Applying Section 114 of the 1997
NIRC, respondent has until October 25, 2002 within which to file its For its part, respondent claims that it is entitled to a refund/credit of
quarterly return for its gross sales or receipts [with] which it complied its unutilized input VAT for the period July 1, 2002 to September 30,
when it filed its VAT Quarterly Return on October 20, 2002. 2002 as a matter of right because it has substantially complied with
all the requirements provided by law.33 Respondent likewise defends filed by the taxpayer for his principal place of business or head office
the CTA En Banc in applying Section 114(A) of the NIRC in and all branches.
computing the prescriptive period for the claim for tax refund/credit.
Respondent believes that Section 112(A) of the NIRC must be read
xxxx
together with Section 114(A) of the same Code. 34

SEC. 229. Recovery of tax erroneously or illegally collected. –

As to the alleged simultaneous filing of its administrative and judicial
claims, respondent contends that it first filed an administrative claim
with the One-Stop Shop Inter-Agency Tax Credit and Duty No suit or proceeding shall be maintained in any court for the
Drawback Center of the DOF before it filed a judicial claim with the recovery of any national internal revenue tax hereafter alleged to
CTA.35 To prove this, respondent points out that its Claimant have been erroneously or illegally assessed or collected, or of any
Information Sheet No. 4970236 and BIR Form No. 1914 for the third penalty claimed to have been collected without authority, or of any
quarter of 2002,37 which were filed with the DOF, were attached as sum alleged to have been excessively or in any manner wrongfully
Annexes "M" and "N," respectively, to the Petition for Review filed collected, until a claim for refund or credit has been duly filed with
with the CTA.38 Respondent further contends that the non- the Commissioner; but such suit or proceeding may be maintained,
observance of the 120-day period given to the CIR to act on the whether or not such tax, penalty or sum has been paid under protest
claim for tax refund/credit in Section 112(D) is not fatal because or duress.
what is important is that both claims are filed within the two-year
prescriptive period.39 In support thereof, respondent cites
In any case, no such suit or proceeding shall be filed after the
Commissioner of Internal Revenue v. Victorias Milling Co.,
Inc.40 where it was ruled that "[i]f, however, the [CIR] takes time in expiration of two (2) years from the date of payment of the tax or
deciding the claim, and the period of two years is about to end, the penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even
suit or proceeding must be started in the [CTA] before the end of the
two-year period without awaiting the decision of the [CIR]."41 Lastly, without written claim therefor, refund or credit any tax, where on the
respondent argues that even if the period had already lapsed, it may face of the return upon which payment was made, such payment
appears clearly to have been erroneously paid. (Emphasis supplied.)
be suspended for reasons of equity considering that it is not a
jurisdictional requirement.42
Hence, the CTA En Banc ruled that the reckoning of the two-year
Our Ruling period for filing a claim for refund/credit of unutilized input VAT
should start from the date of payment of tax and not from the close
of the taxable quarter when the sales were made.43
The petition has merit.
The pivotal question of when to reckon the running of the two-year
Unutilized input VAT must be claimed within two years after the prescriptive period, however, has already been resolved in
close of the taxable quarter when the sales were made Commissioner of Internal Revenue v. Mirant Pagbilao
Corporation,44 where we ruled that Section 112(A) of the NIRC is the
applicable provision in determining the start of the two-year period
In computing the two-year prescriptive period for claiming a
for claiming a refund/credit of unutilized input VAT, and that Sections
refund/credit of unutilized input VAT, the Second Division of the CTA
204(C) and 229 of the NIRC are inapplicable as "both provisions
applied Section 112(A) of the NIRC, which states:
apply only to instances of erroneous payment or illegal collection of
internal revenue taxes."45 We explained that:
SEC. 112. Refunds or Tax Credits of Input Tax. –
The above proviso [Section 112 (A) of the NIRC] clearly provides in
(A) Zero-rated or Effectively Zero-rated Sales – Any VAT-registered no uncertain terms that unutilized input VAT payments not
person, whose sales are zero-rated or effectively zero-rated may, otherwise used for any internal revenue tax due the taxpayer
within two (2) years after the close of the taxable quarter when the must be claimed within two years reckoned from the close of
sales were made, apply for the issuance of a tax credit certificate or the taxable quarter when the relevant sales were made
refund of creditable input tax due or paid attributable to such sales, pertaining to the input VAT regardless of whether said tax was
except transitional input tax, to the extent that such input tax has not paid or not. As the CA aptly puts it, albeit it erroneously applied the
been applied against output tax: Provided, however, That in the case aforequoted Sec. 112 (A), "[P]rescriptive period commences from
of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and the close of the taxable quarter when the sales were made and not
Section 108 (B)(1) and (2), the acceptable foreign currency from the time the input VAT was paid nor from the time the official
exchange proceeds thereof had been duly accounted for in receipt was issued." Thus, when a zero-rated VAT taxpayer pays its
accordance with the rules and regulations of the Bangko Sentral ng input VAT a year after the pertinent transaction, said taxpayer only
Pilipinas (BSP): Provided, further, That where the taxpayer is has a year to file a claim for refund or tax credit of the unutilized
engaged in zero-rated or effectively zero-rated sale and also in creditable input VAT. The reckoning frame would always be the end
taxable or exempt sale of goods or properties or services, and the of the quarter when the pertinent sales or transaction was made,
amount of creditable input tax due or paid cannot be directly and regardless when the input VAT was paid. Be that as it may, and
entirely attributed to any one of the transactions, it shall be allocated given that the last creditable input VAT due for the period covering
proportionately on the basis of the volume of sales. (Emphasis the progress billing of September 6, 1996 is the third quarter of 1996
supplied.) ending on September 30, 1996, any claim for unutilized creditable
input VAT refund or tax credit for said quarter prescribed two years
after September 30, 1996 or, to be precise, on September 30, 1998.
The CTA En Banc, on the other hand, took into consideration
Consequently, MPC’s claim for refund or tax credit filed on
Sections 114 and 229 of the NIRC, which read:
December 10, 1999 had already prescribed.

SEC. 114. Return and Payment of Value-Added Tax. –

Reckoning for prescriptive period under
Secs. 204(C) and 229 of the NIRC inapplicable
(A) In General. – Every person liable to pay the value-added tax
imposed under this Title shall file a quarterly return of the amount of
To be sure, MPC cannot avail itself of the provisions of either Sec.
his gross sales or receipts within twenty-five (25) days following the
204(C) or 229 of the NIRC which, for the purpose of refund,
close of each taxable quarter prescribed for each taxpayer:
prescribes a different starting point for the two-year prescriptive limit
Provided, however, That VAT-registered persons shall pay the
for the filing of a claim therefor. Secs. 204(C) and 229 respectively
value-added tax on a monthly basis.
provide:

Any person, whose registration has been cancelled in accordance

Sec. 204. Authority of the Commissioner to Compromise, Abate and
with Section 236, shall file a return and pay the tax due thereon
Refund or Credit Taxes. – The Commissioner may –
within twenty-five (25) days from the date of cancellation of
registration: Provided, That only one consolidated return shall be
xxxx
(c) Credit or refund taxes erroneously or illegally received or transactions were made pertaining to the creditable input VAT,
penalties imposed without authority, refund the value of internal applies to the instant case, and not to the other actions which
revenue stamps when they are returned in good condition by the refer to erroneous payment of taxes.46 (Emphasis supplied.)
purchaser, and, in his discretion, redeem or change unused stamps
that have been rendered unfit for use and refund their value upon
In view of the foregoing, we find that the CTA En Banc erroneously
proof of destruction. No credit or refund of taxes or penalties shall be
applied Sections 114(A) and 229 of the NIRC in computing the two-
allowed unless the taxpayer files in writing with the Commissioner a
year prescriptive period for claiming refund/credit of unutilized input
claim for credit or refund within two (2) years after the payment of
VAT. To be clear, Section 112 of the NIRC is the pertinent provision
the tax or penalty: Provided, however, That a return filed showing an
for the refund/credit of input VAT. Thus, the two-year period should
overpayment shall be considered as a written claim for credit or
be reckoned from the close of the taxable quarter when the sales
refund.
were made.

xxxx
The administrative claim was timely filed

Sec. 229. Recovery of Tax Erroneously or Illegally Collected. – No

Bearing this in mind, we shall now proceed to determine whether the
suit or proceeding shall be maintained in any court for the recovery
administrative claim was timely filed.
of any national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, or of any penalty
claimed to have been collected without authority, of any sum alleged Relying on Article 13 of the Civil Code,47 which provides that a year
to have been excessively or in any manner wrongfully collected is equivalent to 365 days, and taking into account the fact that the
without authority, or of any sum alleged to have been excessively or year 2004 was a leap year, petitioner submits that the two-year
in any manner wrongfully collected, until a claim for refund or credit period to file a claim for tax refund/ credit for the period July 1, 2002
has been duly filed with the Commissioner; but such suit or to September 30, 2002 expired on September 29, 2004.48
proceeding may be maintained, whether or not such tax, penalty, or
sum has been paid under protest or duress.
We do not agree.

In any case, no such suit or proceeding shall be filed after the

expiration of two (2) years from the date of payment of the tax or In Commissioner of Internal Revenue v. Primetown Property Group,
Inc.,49 we said that as between the Civil Code, which provides that a
penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even year is equivalent to 365 days, and the Administrative Code of 1987,
without a written claim therefor, refund or credit any tax, where on which states that a year is composed of 12 calendar months, it is the
the face of the return upon which payment was made, such payment latter that must prevail following the legal maxim, Lex posteriori
appears clearly to have been erroneously paid. derogat priori.50 Thus:

Notably, the above provisions also set a two-year prescriptive Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I
period, reckoned from date of payment of the tax or penalty, for the of the Administrative Code of 1987 deal with the same subject
filing of a claim of refund or tax credit. Notably too, both provisions matter – the computation of legal periods. Under the Civil Code, a
apply only to instances of erroneous payment or illegal year is equivalent to 365 days whether it be a regular year or a leap
collection of internal revenue taxes. year. Under the Administrative Code of 1987, however, a year is
composed of 12 calendar months. Needless to state, under the
Administrative Code of 1987, the number of days is irrelevant.
MPC’s creditable input VAT not erroneously paid
There obviously exists a manifest incompatibility in the manner of
For perspective, under Sec. 105 of the NIRC, creditable input VAT is
an indirect tax which can be shifted or passed on to the buyer,
transferee, or lessee of the goods, properties, or services of the computing legal periods under the Civil Code and the Administrative
Code of 1987. For this reason, we hold that Section 31, Chapter VIII,
taxpayer. The fact that the subsequent sale or transaction involves a
wholly-tax exempt client, resulting in a zero-rated or effectively zero- Book I of the Administrative Code of 1987, being the more recent
rated transaction, does not, standing alone, deprive the taxpayer of law, governs the computation of legal periods. Lex posteriori derogat
priori.
its right to a refund for any unutilized creditable input VAT, albeit the
erroneous, illegal, or wrongful payment angle does not enter the
equation. Applying Section 31, Chapter VIII, Book I of the Administrative Code
of 1987 to this case, the two-year prescriptive period (reckoned from
xxxx the time respondent filed its final adjusted return on April 14, 1998)
consisted of 24 calendar months, computed as follows:

Considering the foregoing discussion, it is clear that Sec. 112 (A)

of the NIRC, providing a two-year prescriptive period reckoned
from the close of the taxable quarter when the relevant sales or
Year 1 1st calendar month April 15, 1998 to May 14, 1998

2nd calendar month May 15, 1998 to June 14, 1998

3rd calendar month June 15, 1998 to July 14, 1998

4th calendar month July 15, 1998 to August 14, 1998

5th calendar month August 15, 1998 to September 14, 1998

6th calendar month September 15, 1998 to October 14, 1998

7th calendar month October 15, 1998 to November 14, 1998

8th calendar month November 15, 1998 to December 14, 1998

9th calendar month December 15, 1998 to January 14, 1999

10th calendar month January 15, 1999 to February 14, 1999

11th calendar month February 15, 1999 to March 14, 1999

12th calendar month March 15, 1999 to April 14, 1999

 administrative and the judicial claims are filed within the two-year
Year 2 13th calendar month April 15, 1999 to May 14, 1999
prescriptive period52 has no legal basis.
14th calendar month May 15, 1999 to June 14, 1999
There is nothing in Section 112 of the NIRC to support respondent’s
15th calendar month June 15, 1999 to July 14, 1999
view. Subsection (A) of the said provision states that "any VAT-
16th calendar month July 15, 1999 to August 14,registered
1999 person, whose sales are zero-rated or effectively zero-
rated may, within two years after the close of the taxable quarter
when14,
17th calendar month August 15, 1999 to September the1999
sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to
18th calendar month September 15, 1999 to October 14, 1999
such sales." The phrase "within two (2) years x x x apply for the
issuance of a tax credit certificate or refund" refers to applications for
19th calendar month October 15, 1999 to November 14, 1999filed with the CIR and not to appeals made to the CTA.
refund/credit
This is apparent in the first paragraph of subsection (D) of the same
20th calendar month November 15, 1999 to December
provision,14,which
1999 states that the CIR has "120 days from the
submission
21st calendar month December 15, 1999 to January of complete documents in support of the application filed
14, 2000
in accordance with Subsections (A) and (B)" within which to decide
22nd calendar month January 15, 2000 to Februaryon the
14,claim.
2000

23rd calendar month February 15, 2000 to March 14, 2000

In fact, applying the two-year period to judicial claims would render
24th calendar month March 15, 2000 to April 14,nugatory
2000 Section 112(D) of the NIRC, which already provides for a
specific period within which a taxpayer should appeal the decision or
We therefore hold that respondent's petition (filed on April 14, 2000) inaction of the CIR. The second paragraph of Section 112(D) of the
was filed on the last day of the 24th calendar month from the day NIRC envisions two scenarios: (1) when a decision is issued by the
respondent filed its final adjusted return. Hence, it was filed within CIR before the lapse of the 120-day period; and (2) when no
the reglementary period.51 decision is made after the 120-day period. In both instances, the
taxpayer has 30 days within which to file an appeal with the CTA. As
Applying this to the present case, the two-year period to file a claim we see it then, the 120-day period is crucial in filing an appeal with
for tax refund/credit for the period July 1, 2002 to September 30, the CTA.
2002 expired on September 30, 2004. Hence, respondent’s
administrative claim was timely filed. With regard to Commissioner of Internal Revenue v. Victorias
Milling, Co., Inc.53 relied upon by respondent, we find the same
The filing of the judicial claim was premature inapplicable as the tax provision involved in that case is Section 306,
now Section 229 of the NIRC. And as already discussed, Section
229 does not apply to refunds/credits of input VAT, such as the
However, notwithstanding the timely filing of the administrative instant case.
claim, we
In fine, the premature filing of respondent’s claim for refund/credit of
are constrained to deny respondent’s claim for tax refund/credit for input VAT before the CTA warrants a dismissal inasmuch as no
having been filed in violation of Section 112(D) of the NIRC, which jurisdiction was acquired by the CTA.
provides that:
WHEREFORE, the Petition is hereby GRANTED. The assailed July
SEC. 112. Refunds or Tax Credits of Input Tax. – 30, 2008 Decision and the October 6, 2008 Resolution of the Court
of Tax Appeals are hereby REVERSED and SET ASIDE. The Court
xxxx of Tax Appeals Second Division is DIRECTED to dismiss CTA Case
No. 7065 for having been prematurely filed.

(D) Period within which Refund or Tax Credit of Input Taxes shall be
Made. – In proper cases, the Commissioner shall grant a refund or SO ORDERED.
issue the tax credit certificate for creditable input taxes within one
hundred twenty (120) days from the date of submission of complete
documents in support of the application filed in accordance with
Subsections (A) and (B) hereof.

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 the unacted claim with the Court of
Tax Appeals. (Emphasis supplied.)

Section 112(D) of the NIRC clearly provides that the CIR has "120
days, from the date of the submission of the complete documents in
support of the application [for tax refund/credit]," within which to
grant or deny the claim. In case of full or partial denial by the CIR,
the taxpayer’s recourse is to file an appeal before the CTA within 30
days from receipt of the decision of the CIR. However, if after the
120-day period the CIR fails to act on the application for tax
refund/credit, the remedy of the taxpayer is to appeal the inaction of
the CIR to CTA within 30 days.

In this case, the administrative and the judicial claims were

simultaneously filed on September 30, 2004. Obviously, respondent
did not wait for the decision of the CIR or the lapse of the 120-day
period. For this reason, we find the filing of the judicial claim with the
CTA premature.

Respondent’s assertion that the non-observance of the 120-day

period is not fatal to the filing of a judicial claim as long as both the