CIR v. AICHI FORGING COMPANY OF ASIA, INC. G.R. No. 184823 October 6, 2010 De C!"t# o, J.

Doctr#$e: - The CIR has 120 days, from the date of the submission of the complete documents within which to grant or deny the claim for refund/credit of input at! In case of full or partial denial by the CIR, the ta"payer#s recourse is to file an appeal before the CT$ within %0 days from receipt of the decision of the CIR! &owe er, if after the 120-day period the CIR fails to act on the application for ta" refund/credit, the remedy of the ta"payer is to appeal the inaction of the CIR to CT$ within %0 days! - $ ta"payer is entitled to a refund either by authority of a statute e"pressly granting such right, pri ilege, or incenti e in his fa or, or under the principle of solutio indebiti re'uiring the return of ta"es erroneously or illegally collected! In both cases, a ta"payer must pro e not only his entitlement to a refund but also his compliance with the procedural due process! - $s between the Ci il Code and the $dministrati e Code of 1()*, it is the latter that must pre ail being the more recent law, following the legal ma"im, Lex posteriori derogat priori! - The phrase +within two ,2- years " " " apply for the issuance of a ta" credit certificate or refund. under /ubsection ,$- of /ection 112 of the 0IRC refers to applications for refund/credit filed with the CIR and not to appeals made to the CT$! F!ct": Petitioner filed a claim of refund/credit of input vat in relation to its zero-rated sales from July 1, 2002 to September 30, 2002 !"e #!$ 2nd %ivision partially &ranted respondent's claim for refund/credit Petitioner filed a (otion for Partial )econsideration, insistin& t"at t"e administrative and t"e *udicial claims +ere filed beyond t"e t+o-year period to claim a ta, refund/credit provided for under Sections 112-$. and 22/ of t"e 01)# 2e reasoned t"at since t"e year 2003 +as a leap year, t"e filin& of t"e claim for ta, refund/credit on September 30, 2003 +as beyond t"e t+o-year period, +"ic" e,pired on September 2/, 2003 2e cited as basis $rticle 13 of t"e #ivil #ode, +"ic" provides t"at +"en t"e la+ spea4s of a year, it is e5uivalent to 367 days 1n addition, petitioner ar&ued t"at t"e simultaneous filin& of t"e administrative and t"e *udicial claims contravenes Sections 112 and 22/ of t"e 01)# $ccordin& to t"e petitioner, a prior filin& of an administrative claim is a 8condition precedent9 before a *udicial claim can be filed !"e #!$ denied t"e (P) t"us t"e case +as elevated to t"e #!$ :n ;anc for revie+ !"e decision +as affirmed !"us t"e case +as elevated to t"e Supreme #ourt )espondent contends t"at t"e non-observance of t"e 120-day period &iven to t"e #1) to act on t"e claim for ta, refund/credit in Section 112-%. is not fatal because +"at is important is t"at bot" claims are filed +it"in t"e t+o-year prescriptive period 1n support t"ereof, respondent cited Commissioner of Internal Re enue ! 1ictorias 2illing Co!, Inc! 31%0 4hil 12 ,1(5)-6 +"ere it +as ruled t"at 8if t"e #1) ta4es time in decidin& t"e claim, and t"e period of t+o years is about to end, t"e suit or proceedin& must be started in t"e #!$ before t"e end of t"e t+o-year period +it"out a+aitin& t"e decision of t"e #1) 9

I""%e": 1 <"et"er or not t"e claim for refund +as filed +it"in t"e prescribed period 2 <"et"er or not t"e simultaneous filin& of t"e administrative and t"e *udicial claims contravenes Section 22/ of t"e 01)#, +"ic" re5uires t"e prior filin& of an administrative claim, and violates t"e doctrine of e,"austion of administrative remedies He &: 1 =es $s ruled in t"e case of Commissioner of Internal Re enue ! 2irant 4agbilao Corporation ,7!R! 0o! 1*212(, /eptember 12, 200)-, t"e t+o-year period s"ould be rec4oned from t"e close of t"e ta,able 5uarter +"en t"e sales +ere made 1n Commissioner of Internal Re enue ! 4rimetown 4roperty 7roup, Inc ,7!R! 0o! 152188, $ugust 2), 200*, 8%1 /CR$ 9%5- , +e said t"at as bet+een t"e #ivil #ode, +"ic" provides t"at a year is e5uivalent to 367 days, and t"e $dministrative #ode of 1/>?, +"ic" states t"at a year is composed of 12 calendar mont"s, it is t"e latter t"at must prevail bein& t"e more recent la+, follo+in& t"e le&al ma,im, 'e( )o"ter#or# &ero*!t )r#or# !"us, applyin& t"is to t"e present case, t"e t+o-year period to file a claim for ta, refund/credit for t"e period July 1, 2002 to September 30, 2002 e,pired on September 30, 2003 2ence, respondent's administrative claim +as timely filed 2 =es <e find t"e filin& of t"e *udicial claim +it" t"e #!$ premature Section 112-%. of t"e 01)# clearly provides t"at t"e #1) "as 8120 days, from t"e date of t"e submission of t"e complete documents in support of t"e application @for ta, refund/creditA,9 +it"in +"ic" to &rant or deny t"e claim 1n case of full or partial denial by t"e #1), t"e ta,payer's recourse is to file an appeal before t"e #!$ +it"in 30 days from receipt of t"e decision of t"e #1) 2o+ever, if after t"e 120-day period t"e #1) fails to act on t"e application for ta, refund/credit, t"e remedy of t"e ta,payer is to appeal t"e inaction of t"e #1) to #!$ +it"in 30 days Subsection -$. of Section 112 of t"e 01)# states t"at 8any B$!-re&istered person, +"ose sales are zero-rated or effectively zerorated may, +#t,#$ t+o -e!r" after t"e close of t"e ta,able 5uarter +"en t"e sales +ere made, !)) - .or t,e #""%!$ce o. ! t!( cre&#t cert#.#c!te or re.%$& of creditable input ta, due or paid attributable to suc" sales 9 !"e p"rase 8+it"in t+o -2. years , , , apply for t"e issuance of a ta, credit certificate or refund9 refers to applications for refund/credit filed +it" t"e #1) and not to appeals made to t"e #!$ !"e case of Commissioner of Internal Re enue ! 1ictorias 2illing, Co!, Inc! is inapplicable as t"e ta, provision involved in t"at case is Section 306, no+ Section 22/ of t"e 01)# Section 22/ does not apply to refunds/credits of input B$! !"e premature filin& of respondent's claim for refund/credit of input B$! before t"e #!$ +arrants a dismissal inasmuc" as no *urisdiction +as ac5uired by t"e #!$

)epublic of t"e P"ilippines S%)re/e Co%rt (anila FIRS0 DI1ISION COMMISSION2R OF IN02RNA' R212N32, 4etitioner, Present: #C)C0$, C! :!, Chairperson, - versus B:D$S#C, J) , D:C0$)%C-%: #$S!)C, %:D #$S!1DDC, and P:):E, ::! AICHI FORGING COMPANY OF ASIA, INC., Respondent! Promul&ated: Cctober 6, 2010 ,-------------------------------------------------------------------, D2CISION D2' CAS0I''O, J.4 G.R. No. 184823

$ ta,payer is entitled to a refund eit"er by aut"ority of a statute e,pressly &rantin& suc" ri&"t, privile&e, or incentive in "is favor, or under t"e principle of solutio indebitire5uirin& t"e return of ta,es erroneously or ille&ally collected 1n bot" cases, a ta,payer must prove not only "is entitlement to a refund but also "is compliance +it" t"e procedural due process as non-observance of t"e prescriptive periods +it"in +"ic" to file t"e administrative and t"e *udicial claims +ould result in t"e denial of "is claim

!"is Petition for )evie+ on Certiorari under )ule 37 of t"e )ules of #ourt see4s to set aside t"e July 30, 200> %ecision @1A and t"e Cctober 6, 200> )esolution@2A of t"e #ourt of !a, $ppeals -#!$. ;n <anc Factual Antecedents

)espondent $ic"i For&in& #ompany of $sia, 1nc , a corporation duly or&anized and e,istin& under t"e la+s of t"e )epublic of t"e P"ilippines, is en&a&ed in t"e manufacturin&, producin&, and processin& of steel and its by-products @3A 1t is re&istered +it" t"e ;ureau of 1nternal )evenue -;1). as a Balue-$dded !a, -B$!. entity@3A and its products, 8close impression die steel for&in&s9 and 8tool and dies,9 are re&istered +it" t"e ;oard of 1nvestments -;C1. as a pioneer status @7A

Cn September 30, 2003, respondent filed a claim for refund/credit of input B$! for t"e period July 1, 2002 to September 30, 2002 in t"e total amount of P3,>/1,123 >2 +it" t"e petitioner #ommissioner of 1nternal )evenue -#1)., t"rou&" t"e %epartment of Finance -%CF. Cne-Stop S"op 1nter-$&ency !a, #redit and %uty %ra+bac4 #enter @6A

Proceedings before the Second Division of the CTA

Cn even date, respondent filed a Petition for )evie+ @?A +it" t"e #!$ for t"e refund/credit of t"e same input B$! !"e case +as doc4eted as #!$ #ase 0o ?067 and +as raffled to t"e Second %ivision of t"e #!$

1n t"e Petition for )evie+, respondent alle&ed t"at for t"e period July 1, 2002 to September 30, 2002, it &enerated and recorded zero-rated sales in t"e amount ofP131,?/1,3// 00,@>A +"ic" +as paid pursuant to Section 106-$. -2. -a. -1., -2. and -3. of t"e 0ational 1nternal )evenue #ode of 1//? -01)#.G@/A t"at for t"e said period, it incurred and paid input B$! amountin& to P3,/12,0>> 13 from purc"ases and importation attributable to its zero-rated salesG@10A and t"at in its application for refund/credit filed +it" t"e %CF Cne-Stop S"op 1nter-$&ency !a, #redit and %uty %ra+bac4 #enter, it only claimed t"e amount of P3,>/1,123 >2 @11A

1n response, petitioner filed "is $ns+er@12A raisin& t"e follo+in& special and affirmative defenses, to +it: 3 7 6 ? #odeG > / 1n an action for refund, t"e burden of proof is on t"e ta,payer to establis" its ri&"t to refund, and failure to sustain t"e burden is fatal to t"e claim for refundG and #laims for refund are construed strictly a&ainst t"e claimant for t"e same parta4e of t"e nature of e,emption from ta,ation @13A Petitioner's alle&ed claim for refund is sub*ect to administrative investi&ation by t"e ;ureauG Petitioner must prove t"at it paid B$! input ta,es for t"e period in 5uestionG Petitioner must prove t"at its sales are e,port sales contemplated under Sections 106-$. -2. -a., and 10>-;. -1. of t"e !a, #ode of 1//?G Petitioner must prove t"at t"e claim +as filed +it"in t"e t+o -2. year period prescribed in Section 22/ of t"e !a,

!rial ensued, after +"ic", on January 3, 200>, t"e Second %ivision of t"e #!$ rendered a %ecision partially &rantin& respondent's claim for refund/credit Pertinent portions of t"e %ecision read: For a B$! re&istered entity +"ose sales are zero-rated, to validly claim a refund, Section 112 -$. of t"e 01)# of 1//?, as amended, provides: S:# 112 )efunds or !a, #redits of 1nput !a, H -$. Eero-rated or :ffectively Eero-rated Sales H $ny B$!-re&istered person, +"ose sales are zero-rated or effectively zero-rated may, +it"in t+o -2. years after t"e close of t"e ta,able 5uarter +"en t"e

sales +ere made, apply for t"e issuance of a ta, credit certificate or refund of creditable input ta, due or paid attributable to suc" sales, e,cept transitional input ta,, to t"e e,tent t"at suc" input ta, "as not been applied a&ainst output ta,: , , , Pursuant to t"e above provision, petitioner must comply +it" t"e follo+in& re5uisites: -1. t"e ta,payer is en&a&ed in sales +"ic" are zero-rated or effectively zero-ratedG -2. t"e ta,payer is B$!-re&isteredG -3. t"e claim must be filed +it"in t+o years after t"e close of t"e ta,able 5uarter +"en suc" sales +ere madeG and -3. t"e creditable input ta, due or paid must be attributable to suc" sales, e,cept t"e transitional input ta,, to t"e e,tent t"at suc" input ta, "as not been applied a&ainst t"e output ta, !"e #ourt finds t"at t"e first t"ree re5uirements "ave been complied @+it"A by petitioner <it" re&ard to t"e first re5uisite, t"e evidence presented by petitioner, suc" as t"e Sales 1nvoices -:,"ibits 8119 to 811262,9 8JJ9 to 8JJ-331,9 8II9 to 8II-3/39 and 8DD9. s"o+s t"at it is en&a&ed in sales +"ic" are zero-rated !"e second re5uisite "as li4e+ise been complied +it" !"e #ertificate of )e&istration +it" C#0 1)#000013>3// -:,"ibit 8#9. +it" t"e ;1) proves t"at petitioner is a re&istered B$! ta,payer 1n compliance +it" t"e t"ird re5uisite, petitioner filed its administrative claim for refund on September 30, 2003 -:,"ibit 809. and t"e present Petition for )evie+ on September 30, 2003, bot" +it"in t"e t+o -2. year prescriptive period from t"e close of t"e ta,able 5uarter +"en t"e sales +ere made, +"ic" is from September 30, 2002 $s re&ards, t"e fourt" re5uirement, t"e #ourt finds t"at t"ere are some documents and claims of petitioner t"at are baseless and "ave not been satisfactorily substantiated ,,,, 1n sum, petitioner "as sufficiently proved t"at it is entitled to a refund or issuance of a ta, credit certificate representin& unutilized e,cess input B$! payments for t"e period July 1, 2002 to September 30, 2002, +"ic" are attributable to its zero-rated sales for t"e same period, but in t"e reduced amount of P3,23/,11/ 27, computed as follo+s: $mount of #laimed 1nput B$! Dess: :,ceptions as found by t"e 1#P$ 0et #reditable 1nput B$! Dess: Cutput B$! %ue :,cess #reditable 1nput B$! P P P 3,>/1,123 >2 31,020 3? 3,>70,103 37 610,/>3 20 3,23/,11/ 27

<2:):FC):, premises considered, t"e present Petition for )evie+ is P$)!1$DD= J)$0!:% $ccordin&ly, respondent is "ereby C)%:):% !C ):FK0% C) 1SSK: $ !$L #):%1! #:)!1F1#$!: in favor of petitioner @inA t"e reduced amount of !2):: (1DD1C0 !<C 2K0%):% !21)!= 010: !2CKS$0% C0: 2K0%):% 010:!::0 $0% 27/100 P:SCS -P3,23/,11/ 27., representin& t"e unutilized input B$! incurred for t"e mont"s of July to September 2002 SC C)%:):% @13A

%issatisfied +it" t"e above-5uoted %ecision, petitioner filed a (otion for Partial )econsideration, @17A insistin& t"at t"e administrative and t"e *udicial claims +ere filed beyond t"e t+o-year period to claim a ta, refund/credit provided for under Sections 112-$. and 22/ of t"e 01)# 2e reasoned t"at since t"e year 2003 +as a leap year, t"e filin& of t"e claim for ta, refund/credit on September 30, 2003 +as beyond t"e t+o-year period, +"ic" e,pired on September 2/, 2003 @16A 2e cited as basis $rticle 13 of t"e #ivil #ode, @1?A+"ic" provides t"at +"en t"e la+ spea4s of a year, it is e5uivalent to 367 days 1n addition, petitioner ar&ued t"at t"e simultaneous filin& of t"e administrative and t"e *udicial claims contravenes Sections 112 and 22/ of t"e 01)# @1>A $ccordin& to t"e petitioner, a prior filin& of an administrative claim is a 8condition precedent9 @1/A before a *udicial claim can be filed 2e e,plained t"at t"e rationale of suc" re5uirement rests not only on t"e doctrine of e,"austion of administrative

remedies but also on t"e fact t"at t"e #!$ is an appellate body +"ic" e,ercises t"e po+er of *udicial revie+ over administrative actions of t"e ;1)
@20A

!"e Second %ivision of t"e #!$, "o+ever, denied petitioner's (otion for Partial )econsideration for lac4 of merit Petitioner t"us elevated t"e matter to t"e #!$ ;n <ancvia a Petition for )evie+ @21A

Ruling of the CTA En anc

Cn July 30, 200>, t"e #!$ ;n <anc affirmed t"e Second %ivision's %ecision allo+in& t"e partial ta, refund/credit in favor of respondent 2o+ever, as to t"e rec4onin& point for countin& t"e t+o-year period, t"e #!$ ;n <anc ruled: Petitioner ar&ues t"at t"e administrative and *udicial claims +ere filed beyond t"e period allo+ed by la+ and "ence, t"e "onorable #ourt "as no *urisdiction over t"e same 1n addition, petitioner furt"er contends t"at respondentMs filin& of t"e administrative and *udicial @claimsA effectively eliminates t"e aut"ority of t"e "onorable #ourt to e,ercise *urisdiction over t"e *udicial claim <e are not persuaded Section 113 of t"e 1//? 01)#, and <e 5uote, to +it: S:# 113 )eturn and Payment of Balue-added !a, H -$. 1n Jeneral H :very person liable to pay t"e value-added ta, imposed under t"is !itle s"all file a 5uarterly return of t"e amount of "is &ross sales or receipts +it"in t+enty-five -27. days follo+in& t"e close of eac" ta,able 5uarter prescribed for eac" ta,payer: Provided, "o+ever, !"at B$!-re&istered persons s"all pay t"e value-added ta, on a mont"ly basis @, , , , A ;ased on t"e above-stated provision, a ta,payer "as t+enty five -27. days from t"e close of eac" ta,able 5uarter +it"in +"ic" to file a 5uarterly return of t"e amount of "is &ross sales or receipts 1n t"e case at bar, t"e ta,able 5uarter involved +as for t"e period of July 1, 2002 to September 30, 2002 $pplyin& Section 113 of t"e 1//? 01)#, respondent "as until Cctober 27, 2002 +it"in +"ic" to file its 5uarterly return for its &ross sales or receipts @+it"A +"ic" it complied +"en it filed its B$! Nuarterly )eturn on Cctober 20, 2002 1n relation to t"is, t"e rec4onin& of t"e t+o-year period provided under Section 22/ of t"e 1//? 01)# s"ould start from t"e payment of ta, sub*ect claim for refund $s stated above, respondent filed its B$! )eturn for t"e ta,able t"ird 5uarter of 2002 on Cctober 20, 2002 !"us, respondentMs administrative and *udicial claims for refund filed on September 30, 2003 +ere filed on time because $1#21 "as untilCctober 20, 2003 +it"in +"ic" to file its claim for refund 1n addition, <e do not a&ree +it" t"e petitionerMs contention t"at t"e 1//? 01)# re5uires t"e previous filin& of an administrative claim for refund prior to t"e *udicial claim !"is s"ould not be t"e case as t"e la+ does not pro"ibit t"e simultaneous filin& of t"e administrative and *udicial claims for refund <"at is controllin& is t"at bot" claims for refund must be filed +it"in t"e t+o-year prescriptive period 1n sum, t"e #ourt :n ;anc finds no co&ent *ustification to disturb t"e findin&s and conclusion spelled out in t"e assailed January 3, 200> %ecision and (arc" 13, 200> )esolution of t"e #!$ Second %ivision <"at t"e instant petition see4s is for t"e #ourt :n ;anc to vie+ and appreciate t"e evidence in t"eir o+n perspective of t"in&s, +"ic" unfortunately "ad already been considered and passed upon <2:):FC):, t"e instant Petition for )evie+ is "ereby %:01:% %K: #CK)S: and %1S(1SS:% for lac4 of merit $ccordin&ly, t"e January 3, 200> %ecision and (arc" 13, 200> )esolution of t"e #!$ Second %ivision in #!$ #ase

0o ?067 entitled, 8$1#21 For&in& #ompany of $sia, 1nc petitioner vs #ommissioner of 1nternal )evenue, respondent9 are "ereby $FF1)(:% in toto SC C)%:):% @22A

Petitioner sou&"t reconsideration but t"e #!$ ;n <anc denied@23A "is (otion for )econsideration

I""%e

2ence, t"e present recourse +"ere petitioner interposes t"e issue of +"et"er respondent's *udicial and administrative claims for ta, refund/credit +ere filed +it"in t"e t+o-year prescriptive period provided in Sections 112-$. and 22/ of

t"e 01)# @23A

Petitioner!s Argu"ents

Petitioner maintains t"at respondent's administrative and *udicial claims for ta, refund/credit +ere filed in violation of Sections 112-$. and 22/ of t"e 01)# @27A 2e posits t"at pursuant to $rticle 13 of t"e #ivil #ode, @26A since t"e year 2003 +as a leap year, t"e filin& of t"e claim for ta, refund/credit on September 30, 2003 +as beyond t"e t+o-year period, +"ic" e,pired on September 2/, 2003 @2?A

Petitioner furt"er ar&ues t"at t"e #!$ ;n <anc erred in applyin& Section 113-$. of t"e 01)# in determinin& t"e start of t"e t+o-year period as t"e said provision pertains to t"e compliance re5uirements in t"e payment of B$! @2>A 2e asserts t"at it is Section 112, para&rap" -$., of t"e same #ode t"at s"ould apply because it specifically provides for t"e period +it"in +"ic" a claim for ta, refund/ credit s"ould be made @2/A

Petitioner li4e+ise puts in issue t"e fact t"at t"e administrative claim +it" t"e ;1) and t"e *udicial claim +it" t"e #!$ +ere filed on t"e same day @30A 2e opines t"at t"e simultaneous filin& of t"e administrative and t"e *udicial claims contravenes Section 22/ of t"e 01)#, +"ic" re5uires t"e prior filin& of an administrative claim @31A 2e insists t"at suc" procedural re5uirement is based on t"e doctrine of e,"austion of administrative remedies and t"e fact t"at t"e #!$ is an appellate body e,ercisin& *udicial revie+ over administrative actions of t"e #1) @32A

Respondent!s Argu"ents

For its part, respondent claims t"at it is entitled to a refund/credit of its unutilized input B$! for t"e period July 1, 2002 to September 30, 2002 as a matter of ri&"t because it "as substantially complied +it" all t"e re5uirements provided by la+ @33A )espondent li4e+ise defends t"e #!$ ;n <anc in applyin& Section 113-$. of t"e 01)# in computin& t"e prescriptive period for t"e claim for ta, refund/credit )espondent believes t"at Section 112-$. of t"e 01)# must be read to&et"er +it" Section 113-$. of t"e same #ode @33A

$s to t"e alle&ed simultaneous filin& of its administrative and *udicial claims, respondent contends t"at it first filed an administrative claim +it" t"e Cne-Stop S"op 1nter-$&ency !a, #redit and %uty %ra+bac4 #enter of t"e %CF before it filed a *udicial claim +it" t"e #!$ @37A !o prove t"is, respondent points out t"at its #laimant 1nformation S"eet 0o 3/?02@36A and ;1) Form 0o 1/13 for t"e t"ird 5uarter of 2002,@3?A +"ic" +ere filed +it" t"e %CF, +ere attac"ed as $nne,es 8(9 and 80,9 respectively, to t"e Petition for )evie+ filed +it" t"e #!$
@3>A

)espondent furt"er

contends t"at t"e non-observance of t"e 120-day period &iven to t"e #1) to act on t"e claim for ta, refund/credit in Section 112-%. is not fatal because +"at is important is t"at bot" claims are filed +it"in t"e t+o-year prescriptive period @3/A 1n support t"ereof, respondent cites Commissioner of Internal Re enue ! 1ictorias 2illing Co!, Inc @30A +"ere it +as ruled t"at 8@iAf, "o+ever, t"e @#1)A ta4es time in decidin& t"e claim, and t"e period of t+o years is about to end, t"e suit or proceedin& must be started in t"e @#!$A before t"e end of t"e t+o-year period +it"out a+aitin& t"e decision of t"e @#1)A 9@31A Dastly, respondent ar&ues t"at even if t"e period "ad already lapsed, it may be suspended for reasons of e5uity considerin& t"at it is not a *urisdictional re5uirement @32A

O%r R% #$*

!"e petition "as merit #nutili$ed input %AT "ust be clai"ed &ithin t&o 'ears after the close of the taxable (uarter &hen the sales &ere "ade

1n computin& t"e t+o-year prescriptive period for claimin& a refund/credit of unutilized input B$!, t"e Second %ivision of t"e #!$ applied Section 112-$. of t"e 01)#, +"ic" states: S:# 112 )efunds or !a, #redits of 1nput !a, H -$. Eero-rated or :ffectively Eero-rated Sales H $ny B$!-re&istered person, +"ose sales are zero-rated or effectively zero-rated may, +#t,#$ t+o 526 -e!r" !.ter t,e c o"e o. t,e t!(!b e 7%!rter +,e$ t,e "! e" +ere /!&e, apply for t"e issuance of a ta, credit certificate or refund of creditable input ta, due or paid attributable to suc" sales, e,cept transitional input ta,, to t"e e,tent t"at suc" input ta, "as not been applied a&ainst output ta,: Provided, "o+ever, !"at in t"e case of zerorated sales under Section 106-$.-2.-a.-1., -2. and -;. and Section 10> -;.-1. and -2., t"e acceptable forei&n currency e,c"an&e proceeds t"ereof "ad been duly accounted for in accordance +it" t"e rules and re&ulations of t"e ;an&4o Sentral n& Pilipinas -;SP.: Provided, furt"er, !"at +"ere t"e ta,payer is en&a&ed in zero-rated or effectively zero-rated sale and also in ta,able or e,empt sale of &oods or properties or services, and t"e amount of creditable input ta, due or paid cannot be directly and entirely attributed to any one of t"e transactions, it s"all be allocated proportionately on t"e basis of t"e volume of sales -:mp"asis supplied .

!"e #!$ ;n <anc, on t"e ot"er "and, too4 into consideration Sections 113 and 22/ of t"e 01)#, +"ic" read: S:# 113 )eturn and Payment of Balue-$dded !a, H -$. 1n Jeneral H :very person liable to pay t"e value-added ta, imposed under t"is !itle s"all .# e ! 7%!rter - ret%r$ o. t,e !/o%$t o. ,#" *ro"" "! e" or rece#)t" +#t,#$ t+e$t-8.#ve 5296 &!-" .o o+#$* t,e c o"e o. e!c, t!(!b e 7%!rter )re"cr#be& .or e!c, t!()!-er: Provided, "o+ever, !"at B$!-re&istered persons s"all pay t"e value-added ta, on a mont"ly basis

$ny person, +"ose re&istration "as been cancelled in accordance +it" Section 236, s"all file a return and pay t"e ta, due t"ereon +it"in t+enty-five -27. days from t"e date of cancellation of re&istration: Provided, !"at only one consolidated return s"all be filed by t"e ta,payer for "is principal place of business or "ead office and all branc"es ,,,, S:# 22/ )ecovery of ta, erroneously or ille&ally collected H 0o suit or proceedin& s"all be maintained in any court for t"e recovery of any national internal revenue ta, "ereafter alle&ed to "ave been erroneously or ille&ally assessed or collected, or of any penalty claimed to "ave been collected +it"out aut"ority, or of any sum alle&ed to "ave been e,cessively or in any manner +ron&fully collected, until a claim for refund or credit "as been duly filed +it" t"e #ommissionerG but suc" suit or proceedin& may be maintained, +"et"er or not suc" ta,, penalty or sum "as been paid under protest or duress 1n any case, $o "%c, "%#t or )rocee&#$* ",! be .# e& !.ter t,e e()#r!t#o$ o. t+o 526 -e!r" .ro/ t,e &!te o. )!-/e$t o. t,e t!( or )e$! t- re&ardless of any supervenin& cause t"at may arise after payment: Provided, "o+ever, !"at t"e #ommissioner may, even +it"out +ritten claim t"erefor, refund or credit any ta,, +"ere on t"e face of t"e return upon +"ic" payment +as made, suc" payment appears clearly to "ave been erroneously paid -:mp"asis supplied .

2ence, t"e #!$ ;n <anc ruled t"at t"e rec4onin& of t"e t+o-year period for filin& a claim for refund/credit of unutilized input B$! s"ould start from t"e date of payment of ta, and not from t"e close of t"e ta,able 5uarter +"en t"e sales +ere made @33A

!"e pivotal 5uestion of +"en to rec4on t"e runnin& of t"e t+o-year prescriptive period, "o+ever, "as already been resolved in Commissioner of Internal Re enue ! 2irant 4agbilao Corporation, @33A +"ere +e ruled t"at Section 112-$. of t"e 01)# is t"e applicable provision in determinin& t"e start of t"e t+o-year period for claimin& a refund/credit of unutilized input B$!, and t"at Sections 203-#. and 22/ of t"e 01)# are inapplicable as 8bot" provisions apply only to instances of erroneous payment or ille&al collection of internal revenue ta,es 9 @37A <e e,plained t"at: !"e above proviso @Section 112 -$. of t"e 01)#A clearly provides in no uncertain terms t"at %$%t# #:e& #$)%t 1A0 )!-/e$t" $ot ot,er+#"e %"e& .or !$- #$ter$! reve$%e t!( &%e t,e t!()!-er /%"t be c !#/e& +#t,#$ t+o -e!r" rec;o$e& .ro/ t,e c o"e o. t,e t!(!b e 7%!rter +,e$ t,e re ev!$t "! e" +ere /!&e )ert!#$#$* to t,e #$)%t 1A0 re*!r& e"" o. +,et,er "!#& t!( +!" )!#& or $ot. $s t"e #$ aptly puts it, albeit it erroneously applied t"e afore5uoted Sec 112 -$., 8@PArescriptive period commences from t"e close of t"e ta,able 5uarter +"en t"e sales +ere made and not from t"e time t"e input B$! +as paid nor from t"e time t"e official receipt +as issued 9 !"us, +"en a zero-rated B$! ta,payer pays its input B$! a year after t"e pertinent transaction, said ta,payer only "as a year to file a claim for refund or ta, credit of t"e unutilized creditable input B$! !"e rec4onin& frame +ould al+ays be t"e end of t"e 5uarter +"en t"e pertinent sales or transaction +as made, re&ardless +"en t"e input B$! +as paid ;e t"at as it may, and &iven t"at t"e last creditable input B$! due for t"e period coverin& t"e pro&ress billin& of September 6, 1//6 is t"e t"ird 5uarter of 1//6 endin& on September 30, 1//6, any claim for unutilized creditable input B$! refund or ta, credit for said 5uarter prescribed t+o years after September 30, 1//6 or, to be precise, on September 30, 1//> #onse5uently, (P#'s claim for refund or ta, credit filed on %ecember 10, 1/// "ad already prescribed Rec)oning for prescriptive period under Secs* +,-.C/ and ++0 of the 12RC inapplicable !o be sure, (P# cannot avail itself of t"e provisions of eit"er Sec 203-#. or 22/ of t"e 01)# +"ic", for t"e purpose of refund, prescribes a different startin& point for t"e t+o-year prescriptive limit for t"e filin& of a claim t"erefor Secs 203-#. and 22/ respectively provide: Sec 203 $uthority of the Commissioner to Compromise, $bate and Refund or Credit Ta"es H !"e #ommissioner may H ,,,,

-c. #redit or refund ta,es erroneously or ille&ally received or penalties imposed +it"out aut"ority, refund t"e value of internal revenue stamps +"en t"ey are returned in &ood condition by t"e purc"aser, and, in "is discretion, redeem or c"an&e unused stamps t"at "ave been rendered unfit for use and refund t"eir value upon proof of destruction 0o credit or refund of ta,es or penalties s"all be allo+ed unless t"e ta,payer files in +ritin& +it" t"e #ommissioner a claim for credit or refund +it"in t+o -2. years after t"e payment of t"e ta, or penalty: Provided, "o+ever, !"at a return filed s"o+in& an overpayment s"all be considered as a +ritten claim for credit or refund ,,,, Sec 22/ )ecovery of !a, :rroneously or 1lle&ally #ollected H 0o suit or proceedin& s"all be maintained in any court for t"e recovery of any national internal revenue ta, "ereafter alle&ed to "ave been erroneously or ille&ally assessed or collected, or of any penalty claimed to "ave been collected +it"out aut"ority, of any sum alle&ed to "ave been e,cessively or in any manner +ron&fully collected +it"out aut"ority, or of any sum alle&ed to "ave been e,cessively or in any manner +ron&fully collected, until a claim for refund or credit "as been duly filed +it" t"e #ommissionerG but suc" suit or proceedin& may be maintained, +"et"er or not suc" ta,, penalty, or sum "as been paid under protest or duress 1n any case, no suc" suit or proceedin& s"all be filed after t"e e,piration of t+o -2. years from t"e date of payment of t"e ta, or penalty re&ardless of any supervenin& cause t"at may arise after payment: Provided, "o+ever, !"at t"e #ommissioner may, even +it"out a +ritten claim t"erefor, refund or credit any ta,, +"ere on t"e face of t"e return upon +"ic" payment +as made, suc" payment appears clearly to "ave been erroneously paid 0otably, t"e above provisions also set a t+o-year prescriptive period, rec4oned from date of payment of t"e ta, or penalty, for t"e filin& of a claim of refund or ta, credit 0otably too, bot, )rov#"#o$" !)) - o$ - to #$"t!$ce" o. erro$eo%" )!-/e$t or # e*! co ect#o$ o. #$ter$! reve$%e t!(e". 3PC!s creditable input %AT not erroneousl' paid For perspective, under Sec 107 of t"e 01)#, creditable input B$! is an indirect ta, +"ic" can be s"ifted or passed on to t"e buyer, transferee, or lessee of t"e &oods, properties, or services of t"e ta,payer !"e fact t"at t"e subse5uent sale or transaction involves a +"olly-ta, e,empt client, resultin& in a zero-rated or effectively zero-rated transaction, does not, standin& alone, deprive t"e ta,payer of its ri&"t to a refund for any unutilized creditable input B$!, albeit t"e erroneous, ille&al, or +ron&ful payment an&le does not enter t"e e5uation ,,,, #onsiderin& t"e fore&oin& discussion, #t #" c e!r t,!t Sec. 112 5A6 o. t,e NIRC, )rov#&#$* ! t+o8-e!r )re"cr#)t#ve )er#o& rec;o$e& .ro/ t,e c o"e o. t,e t!(!b e 7%!rter +,e$ t,e re ev!$t "! e" or tr!$"!ct#o$" +ere /!&e )ert!#$#$* to t,e cre&#t!b e #$)%t 1A0, !)) #e" to t,e #$"t!$t c!"e, !$& $ot to t,e ot,er !ct#o$" +,#c, re.er to erro$eo%" )!-/e$t o. t!(e".@36A -:mp"asis supplied .

1n vie+ of t"e fore&oin&, +e find t"at t"e #!$ ;n <anc erroneously applied Sections 113-$. and 22/ of t"e 01)# in computin& t"e t+oyear prescriptive period for claimin& refund/credit of unutilized input B$! !o be clear, Section 112 of t"e 01)# is t"e pertinent provision for t"e refund/credit of input B$! !"us, t"e t+o-year period s"ould be rec4oned from t"e close of t"e ta,able 5uarter +"en t"e sales +ere made The ad"inistrative clai" &as ti"el' filed

;earin& t"is in mind, +e s"all no+ proceed to determine +"et"er t"e administrative claim +as timely filed

)elyin& on $rticle 13 of t"e #ivil #ode,@3?A +"ic" provides t"at a year is e5uivalent to 367 days, and ta4in& into account t"e fact t"at t"e year 2003 +as a leap year, petitioner submits t"at t"e t+o-year period to file a claim for ta, refund/ credit for t"e period July 1, 2002 to September 30, 2002 e,pired on September 2/, 2003 @3>A

<e do not a&ree

1n Commissioner of Internal Re enue ! 4rimetown 4roperty 7roup, Inc ,@3/A +e said t"at as bet+een t"e #ivil #ode, +"ic" provides t"at a year is e5uivalent to 367 days, and t"e $dministrative #ode of 1/>?, +"ic" states t"at a year is composed of 12 calendar mont"s, it is t"e latter t"at must prevail follo+in& t"e le&al ma,im, =e" posteriori derogat priori @70A !"us: ;ot" $rticle 13 of t"e #ivil #ode and Section 31, #"apter B111, ;oo4 1 of t"e $dministrative #ode of 1/>? deal +it" t"e same sub*ect matter H t"e computation of le&al periods Knder t"e #ivil #ode, a year is e5uivalent to 367 days +"et"er it be a re&ular year or a leap year Knder t"e $dministrative #ode of 1/>?, "o+ever, a year is composed of 12 calendar mont"s 0eedless to state, under t"e $dministrative #ode of 1/>?, t"e number of days is irrelevant !"ere obviously e,ists a manifest incompatibility in t"e manner of computin& le&al periods under t"e #ivil #ode and t"e $dministrative #ode of 1/>? For t"is reason, +e "old t"at Section 31, #"apter B111, ;oo4 1 of t"e $dministrative #ode of 1/>?, bein& t"e more recent la+, &overns t"e computation of le&al periods =e" posteriori derogat priori! $pplyin& Section 31, #"apter B111, ;oo4 1 of t"e $dministrative #ode of 1/>? to t"is case, t"e t+o-year prescriptive period -rec4oned from t"e time respondent filed its final ad*usted return on $pril 13, 1//>. consisted of 23 calendar mont"s, computed as follo+s: =ear 1 1st calendar mont" 2nd calendar mont" 3rd calendar mont" 3t" calendar mont" 7t" calendar mont" 6t" calendar mont" ?t" calendar mont" >t" calendar mont" /t" calendar mont" 10t" calendar mont" 11t" calendar mont" 12t" calendar mont" =ear 2 13t" calendar mont" 13t" calendar mont" 17t" calendar mont" 16t" calendar mont" 1?t" calendar mont" 1>t" calendar mont" 1/t" calendar mont" 20t" calendar mont" 21st calendar mont" 22nd calendar mont" 23rd calendar mont" 23t" calendar mont" $pril 17, 1//> to (ay 13, 1//> (ay 17, 1//> to June 13, 1//> June 17, 1//> to July 13, 1//> July 17, 1//> to $u&ust 13, 1//> $u&ust 17, 1//> to September 13, 1//> September 17, 1//> to Cctober 13, 1//> Cctober 17, 1//> to 0ovember 13, 1//> 0ovember 17, 1//> to %ecember 13, 1//> %ecember 17, 1//> to January 13, 1/// January 17, 1/// to February 13, 1/// February 17, 1/// to (arc" 13, 1/// (arc" 17, 1/// to $pril 13, 1/// $pril 17, 1/// to (ay 13, 1/// (ay 17, 1/// to June 13, 1/// June 17, 1/// to July 13, 1/// July 17, 1/// to $u&ust 13, 1/// $u&ust 17, 1/// to September 13, 1/// September 17, 1/// to Cctober 13, 1/// Cctober 17, 1/// to 0ovember 13, 1/// 0ovember 17, 1/// to %ecember 13, 1/// %ecember 17, 1/// to January 13, 2000 January 17, 2000 to February 13, 2000 February 17, 2000 to (arc" 13, 2000 (arc" 17, 2000 to $pril 13, 2000

<e t"erefore "old t"at respondentMs petition -filed on $pril 13, 2000. +as filed on t"e last day of t"e 23t" calendar mont" from t"e day respondent filed its final ad*usted return 2ence, it +as filed +it"in t"e re&lementary period @71A

$pplyin& t"is to t"e present case, t"e t+o-year period to file a claim for ta, refund/credit for t"e period July 1, 2002 to September 30, 2002 e,pired on September 30, 2003 2ence, respondent's administrative claim +as timely filed The filing of the 4udicial clai" &as pre"ature

2o+ever, not+it"standin& t"e timely filin& of t"e administrative claim, +e are constrained to deny respondent's claim for ta, refund/credit for "avin& been filed in violation of Section 112-%. of t"e 01)#, +"ic" provides t"at: S:# 112 )efunds or !a, #redits of 1nput !a, H ,,,, -%. Period +it"in +"ic" )efund or !a, #redit of 1nput !a,es s"all be (ade H 1n proper cases, t"e #ommissioner s"all &rant a refund or issue t"e ta, credit certificate for creditable input ta,es +#t,#$ o$e ,%$&re& t+e$t- 51206 &!-" .ro/ t,e &!te o. "%b/#""#o$ o. co/) ete &oc%/e$t" #$ "%))ort o. t,e !)) #c!t#o$ .# e& #$ !ccor&!$ce +#t, S%b"ect#o$" 5A6 !$& 5<6 ,ereo.. 1n case of full or partial denial of t"e claim for ta, refund or ta, credit, or t"e failure on t"e part of t"e #ommissioner to act on t"e application +it"in t"e period prescribed above, t,e t!()!-er !..ecte& /!-, +#t,#$ t,#rt- 5306 &!-" .ro/ t,e rece#)t o. t,e &ec#"#o$ &e$-#$* t,e c !#/ or !.ter t,e e()#r!t#o$ o. t,e o$e ,%$&re& t+e$t- &!-8)er#o&, !))e! t,e &ec#"#o$ or t,e %$!cte& c !#/ +#t, t,e Co%rt o. 0!( A))e! ". -:mp"asis supplied .

Section 112-%. of t"e 01)# clearly provides t"at t"e #1) "as 8120 days, from t"e date of t"e submission of t"e complete documents in support of t"e application @for ta, refund/creditA,9 +it"in +"ic" to &rant or deny t"e claim 1n case of full or partial denial by t"e #1), t"e ta,payer's recourse is to file an appeal before t"e #!$ +it"in 30 days from receipt of t"e decision of t"e #1) 2o+ever, if after t"e 120-day period t"e #1)

fails to act on t"e application for ta, refund/credit, t"e remedy of t"e ta,payer is to appeal t"e inaction of t"e #1) to #!$ +it"in 30 days

1n t"is case, t"e administrative and t"e *udicial claims +ere simultaneously filed on September 30, 2003 Cbviously, respondent did not +ait for t"e decision of t"e #1) or t"e lapse of t"e 120-day period For t"is reason, +e find t"e filin& of t"e *udicial claim +it" t"e #!$ premature

)espondent's assertion t"at t"e non-observance of t"e 120-day period is not fatal to t"e filin& of a *udicial claim as lon& as bot" t"e administrative and t"e *udicial claims are filed +it"in t"e t+o-year prescriptive period@72A "as no le&al basis

!"ere is not"in& in Section 112 of t"e 01)# to support respondent's vie+ Subsection -$. of t"e said provision states t"at 8any B$!re&istered person, +"ose sales are zero-rated or effectively zero-rated may, +#t,#$ t+o -e!r" after t"e close of t"e ta,able 5uarter +"en t"e sales +ere made, !)) - .or t,e #""%!$ce o. ! t!( cre&#t cert#.#c!te or re.%$& of creditable input ta, due or paid attributable to suc" sales 9 !"e p"rase 8+it"in t+o -2. years , , , apply for t"e issuance of a ta, credit certificate or refund9 refers to applications for refund/credit filed +it" t"e #1) and not to appeals made to t"e #!$ !"is is apparent in t"e first para&rap" of subsection -%. of t"e same provision, +"ic" states t"at t"e #1) "as 8120 days from t"e submission of complete documents in support of t"e !)) #c!t#o$ filed in accordance +it" S%b"ect#o$" 5A6 and -;.9 +it"in +"ic" to decide on t"e claim

1n fact, applyin& t"e t+o-year period to *udicial claims +ould render nu&atory Section 112-%. of t"e 01)#, +"ic" already provides for a specific period +it"in +"ic" a ta,payer s"ould appeal t"e decision or inaction of t"e #1) !"e second para&rap" of Section 112-%. of t"e 01)# envisions t+o scenarios: -1. +"en a decision is issued by t"e #1) before t"e lapse of t"e 120-day periodG and -2. +"en no decision is made after t"e 120-day period 1n bot" instances, t"e ta,payer "as 30 days +it"in +"ic" to file an appeal +it" t"e #!$ $s +e see it t"en, t"e 120-day period is crucial in filin& an appeal +it" t"e #!$

<it" re&ard to Commissioner of Internal Re enue ! 1ictorias 2illing, Co!, Inc @73A relied upon by respondent, +e find t"e same inapplicable as t"e ta, provision involved in t"at case is Section 306, no+ Section 22/ of t"e 01)# $nd as already discussed, Section 22/ does not apply to refunds/credits of input B$!, suc" as t"e instant case

1n fine, t"e premature filin& of respondent's claim for refund/credit of input B$! before t"e #!$ +arrants a dismissal inasmuc" as no *urisdiction +as ac5uired by t"e #!$

=H2R2FOR2, t"e Petition is "ereby GRAN02D. !"e assailed July 30, 200> %ecision and t"e Cctober 6, 200> )esolution of t"e #ourt of !a, $ppeals are "erebyR212RS2D and S20 ASID2. !"e #ourt of !a, $ppeals Second %ivision is %1):#!:% to dismiss #!$ #ase 0o ?067 for "avin& been prematurely filed