View full case

CIR v. PRIMETOWN PROPERTY GROUP

FACTS:

Gilbert Yap, the vice chair of Primetown Property Group, Inc., filed a petition for review on certiorari to challenge the decision of the Court of Appeals (CA) denying their claim for a tax refund or tax credit. Primetown had paid a total amount of P26,318,398.32 as quarterly corporate income tax and creditable withholding tax in 1997. Yap explained that the real estate industry incurred losses due to various factors, such as labor and material cost increases, difficulty in obtaining financing, and trouble in collecting receivables. Primetown believed that it was entitled to a refund or credit for the taxes paid. They submitted additional documents as required, but no action was taken by the authorities. Primetown then filed a petition in the Court of Tax Appeals (CTA), which was dismissed on the grounds that it was filed beyond the two-year prescriptive period. Primetown appealed to the CA, which reversed the CTA's decision, stating that the computation of the prescriptive period should be based on Article 13 of the Civil Code, with each period considered as 365 days. The CA denied the motion for reconsideration, leading to the present appeal. Primetown argues that tax refunds should be strictly construed against claimants and that the prescriptive period should start from the day the refund claim was filed, as provided by Section 229 of the National Internal Revenue Code (NIRC).

ISSUES:

  1. Whether the petition for tax refund or credit filed by respondent was filed within the two-year prescriptive period.

  2. Whether Article 13 of the Civil Code should be applied in computing the prescriptive period.

RULING:

  1. The Court of Appeals ruled that the petition for tax refund or credit filed by respondent was filed within the two-year prescriptive period. The CA held that the two-year period under Section 229 of the NIRC for filing judicial claims is equivalent to 730 days, regardless of whether the year is a leap year or not.

  2. The CA ruled that Article 13 of the Civil Code should be applied in computing the prescriptive period. It held that the rule that a year has 365 days applies, even in a leap year, and that the periods covered by April 15, 1998 to April 14, 1999 and April 15, 1999 to April 14, 2000 should be counted as 365 days each or a total of 730 days.

PRINCIPLES:

  • Tax refunds, being in the nature of an exemption, should be strictly construed against claimants.

  • Section 229 of the NIRC provides the prescriptive period for filing claims for tax refunds or credits.

  • Article 13 of the Civil Code governs the computation of periods, stating that a year has 365 days, months have 30 days, and days have 24 hours.