CIR v. AICHI FORGING COMPANY OF ASIA, INC.
Petitioner filed a Motion for Partial Reconsideration, insisting that the administrative
G.R. No. 184823 October 6, 2010
Del Castillo, J.
Doctrine:
– 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 vat. 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.
– 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
indebitirequiring the return of taxes erroneously or illegally collected. In both cases,
a taxpayer must prove not only his entitlement to a refund but also his compliance
with the procedural due process.
– As between the Civil Code and the Administrative Code of 1987, it is the latter that
must prevail being the more recent law, following the legal maxim, Lex posteriori
derogat priori.
– The phrase “within two (2) years x x x apply for the issuance of a tax credit
certificate or refund” under Subsection (A) of Section 112 of the NIRC refers to
applications for refund/credit filed with the CIR and not to appeals made to the CTA.
Facts:
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. The CTA 2nd Division partially granted
respondent’s claim for refund/credit.
and the judicial claims were filed beyond the two-year period to claim a tax
refund/credit provided for under Sections 112(A) and 229 of the NIRC. He reasoned
that since the year 2004 was a leap year, the filing of the claim for tax refund/credit
on September 30, 2004 was beyond the two-year period, which expired on
September 29, 2004. He cited as basis Article 13 of the Civil Code, which provides
that when the law speaks of a year, it is equivalent to 365 days. In addition, petitioner
argued that the simultaneous filing of the administrative and the judicial claims
contravenes Sections 112 and 229 of the NIRC. According to the petitioner, a prior
filing of an administrative claim is a “condition precedent” before a judicial claim can
be filed.
The CTA denied the MPR thus the case was elevated to the CTA En Banc for
review. The decision was affirmed. Thus the case was elevated to the Supreme
Court.
Respondent contends that the non-observance of the 120-day period given to the
CIR to act on the claim for tax refund/credit in Section 112(D) is not fatal because
what is important is that both claims are filed within the two-year prescriptive period.
In support thereof, respondent cited Commissioner of Internal Revenue v. Victorias
Milling Co., Inc. [130 Phil 12 (1968)] where it was ruled that “if the CIR takes time in
deciding the claim, and the period of two years is about to end, the suit or proceeding
must be started in the CTA before the end of the two-year period without awaiting the
decision of the CIR.”
Issues:
1. Whether or not the claim for refund was filed within the prescribed period
2. Whether or not the simultaneous filing of the administrative and the judicial claims
contravenes Section 229 of the NIRC, which requires the prior filing of an
administrative claim, and violates the doctrine of exhaustion of administrative close of the taxable quarter when the sales were made, apply for the issuance of a

remedies tax credit certificate or refund of creditable input tax due or paid attributable to

such sales.” The phrase “within two (2) years x x x apply for the issuance of a tax
Held: credit certificate or refund” refers to applications for refund/credit filed with the CIR
1. Yes. As ruled in the case of Commissioner of Internal Revenue v. Mirant Pagbilao and not to appeals made to the CTA.
Corporation (G.R. No. 172129, September 12, 2008), the two-year period should be

reckoned from the close of the taxable quarter when the sales were made. The case of Commissioner of Internal Revenue v. Victorias Milling, Co., Inc. is

inapplicable as the tax provision involved in that case is Section 306, now Section
In Commissioner of Internal Revenue v. Primetown Property Group, Inc (G.R. No. 229 of the NIRC. Section 229 does not apply to refunds/credits of input VAT.
162155, August 28, 2007, 531 SCRA 436), we said that as between the Civil Code,

which provides that a year is equivalent to 365 days, and the Administrative Code of The premature filing of respondent’s claim for refund/credit of input VAT before the

1987, which states that a year is composed of 12 calendar months, it is the latter that CTA warrants a dismissal inasmuch as no jurisdiction was acquired by the CTA.

must prevail being the more recent law, following the legal maxim, Lex posteriori

derogat priori.

Thus, applying this to the present case, the two-year period to file a claim for tax

refund/credit for the period July 1, 2002 to September 30, 2002 expired on

September 30, 2004. Hence, respondent’s administrative claim was timely filed.

2. Yes. We find the filing of the judicial claim with the CTA premature.

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.

Subsection (A) of Section 112 of the NIRC states that “any VAT-registered person,

whose sales are zero-rated or effectively zero-rated may, within two years after the
COMMISSIONER OF INTERNAL REVENUE vs. AICHI (2) YES. Section 112 mandates that the taxpayer filing the refund must

either wait for the decision of the CIR or the lapse of the 120-day period
FORGING COMPANY OF ASIA, INC.- Tax Refund
provided therein before filing its judicial claim. Failure to observe this rule is

fatal to a claim. Thus, Section 112 (A) was interpreted to refer only to claims

FACTS: filed with the CIR and not appeals to the CTA given that the word used is

“application”. Finally, the Court said that applying the 2-year period even to
On September 30, 2004, Aichi Forging filed a claim for refund/credit of input VAT
judicial claims would render nugatory Section 112 (D) which already
attributable to its zero-rated sales for the period July 1, 2002 to September 30, 2002
provides for a specific period to appeal to the CTA --- i.e., (a) within 30 days
with the CIR through the DOF One-Stop Shop. On the same day, Aichi Forging filed
after a decision within the 120-day period and (b) upon expiry of the 120-
a Petition for Review with the CTA for the same action. The BIR disputed the claim
day without a decision.
and alleged that the same was filed beyond the two-year period given that 2004 was

a leap year and thus the claim should have been filed on September 29, 2004. The

CIR also raised issues related to the reckoning of the 2-year period and the

simultaneous filing of the administrative and judicial claims.

ISSUES:

(1) Was the Petitioner’s administrative claim filed out of time?

(2) Was the filing of the judicial claim premature?

HELD:

(1) NO. The right to claim the refund must be reckoned from the “close of the

taxable quarter when the sales were made” – in this case September 30,

2004. The Court added that the rules under Sections 204 (C) and 229 as

cross-referred to Section 114 do not apply as they only cover erroneous

payments or illegal collections of taxes which is not the case for refund of

unutilized input VAT. Thus, the claim was filed on time even if 2004 was a

leap year since the sanctioned method of counting is the number of

months.
 or partial denial by the CIR, the recourse is to 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,
the remedy is to appeal the inaction of the CIR to the CTA within 30
DIVISION days.
CIR v. Aichi Forging Company (2010)
G.R. No. 184823 October 6, 2010
DEL CASTILLO, J.

Lessons Applicable: Legal Period: 1 year = 12 months, Exhaust

Administrative Claim Before Judicial Claim, Lex Posterioni Derogati
Priori

Laws Applicable:

FACTS:

 Aichi forging, a VAT entity filed a claim for refund of input VAT for its
zero-rated sales with the Dept. of Finance One-Stop Inter-Agency
Tax Credit and Duty Drawback Center on Sept 30, 2004.
 On the same date, it filed a Petition for Review with the CTA.
 CTA partially granted the refund by reducing the leaseless claims.
 CIR filed a Motion for Reconsideration insisting that they were filed
beyond the prescriptive period in accordance to Art. 13 that: 1 year =
365 days and that filing an administrative claim is a condition
precedent before a judicial claim can be filed with the CTA.
 CTA and CTA En Banc denied petition.
ISSUE:
1. W/N the claim was filed with the prescriptive period of 2 year provided
under Sec. 112 (A) NIRC
2. W/N filing an administrative claim is a condition precedent to a judicial
claim for refund.

HELD:
1. Yes. Sec. 204 (c) and 229 are applied only in instances of erroneous
payment and illegal collection. Sec. 112 (A) of NIRC applies here. Sec.
31 Chapter VIII Book I of the Administrative Code of 1987 being the
more recent law governing legal period applies making 1 year = 12
months. The principle of Lex Posterioni Derogati Priori applies. Thus,
since it is filed on exactly Sept. 30, 2004 filing is timely.

2. Yes. Sec. 112 (D) of the NIRC clearly provides that the CIR has 120
days from date of the submission of the complete documents in support
of the application within which to grant or deny the claim. In case of full