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Updated 24th February 2025
Commissioner of Internal Revenue vs. Primetown Property Group, Inc
The Supreme Court resolved a dispute over the computation of the two-year prescriptive period for filing tax refund claims, ruling that the 1987 Administrative Code (not the Civil Code) governs the calculation of legal periods. The Court held Primetown’s petition was timely filed.

Primary Holding

The two-year prescriptive period under Section 229 of the National Internal Revenue Code (NIRC) must be computed as 24 calendar months under the Administrative Code, not 730 days under the Civil Code.

Background

Primetown Property Group, a real estate company, suffered losses in 1997 due to the Asian Financial Crisis and sought a refund for overpaid quarterly income taxes. The Bureau of Internal Revenue (BIR) delayed acting on the claim, leading to a judicial dispute.

History

  • March 11, 1999: Primetown filed administrative claim for refund.

  • April 14, 2000: Primetown filed judicial claim in the Court of Tax Appeals (CTA).

  • December 15, 2000: CTA dismissed the petition as time-barred (731 days).

  • August 1, 2003: Court of Appeals (CA) reversed CTA, ruling the claim was timely.

  • February 9, 2004: CA denied reconsideration.

  • August 28, 2007: Supreme Court affirmed CA’s conclusion but modified the legal basis.

Facts

  • 1. Primetown paid ₱26.3M in quarterly income and withholding taxes in 1997 but reported a net loss of ₱71.8M. It sought a refund, arguing no tax liability existed due to losses.

Arguments of the Petitioners

  • 1. The BIR argued the two-year period under Section 229 NIRC should be strictly applied as 730 days (excluding leap years). Primetown’s filing on April 14, 2000, was one day late.

Arguments of the Respondents

  • 1. Primetown contended the period should account for the leap year (2000) and that its filing complied with the 24-month calendar method under the Administrative Code.

Issues

  • 1. Whether the two-year prescriptive period under Section 229 NIRC should be computed as 730 days or 24 calendar months.
  • 2. Whether the Administrative Code of 1987 impliedly repealed Article 13 of the Civil Code on legal periods.

Ruling

  • 1. The Supreme Court applied Section 31 of the Administrative Code, holding that a “year” means 12 calendar months. The 24-month period ended on April 14, 2000, making Primetown’s filing timely.

Rationale

  • 1. Lex posteriori derogat priori: A later law prevails over an earlier inconsistent one.
  • 2. Implied repeal doctrine: Incompatible laws cannot coexist; the Administrative Code’s calendar-month method superseded the Civil Code’s fixed-day count.

Precedents Cited

  • 1. National Marketing Corp. v. Tecson (1969): Affirmed a year as 365 days under the Civil Code, later superseded by this case.
  • 2. CIR v. CA (1999): Cited to confirm the two-year period starts upon filing the final adjusted return.

Statutory and Constitutional Provisions

  • 1. Section 229, NIRC (tax refund prescriptive period).
  • 2. Article 13, Civil Code (computation of legal periods).
  • 3. Section 31, Chapter VIII, Book I, Administrative Code of 1987 (calendar-month method).