Computing Prescriptive Periods: Calendar Months vs Fixed Days in Tax Refund Claims

The two-year prescriptive period for filing judicial claims for tax refund or tax credit can be a trap for the unwary taxpayer. A seemingly minor question—whether that period is counted in fixed days or calendar months—can determine whether a claim survives or is dismissed. In Commissioner of Internal Revenue v. Primetown Property Group, Inc. (G.R. No. 162155, August 28, 2007), the Supreme Court settled this question: the period is computed in calendar months, not fixed days.

The Facts of the Case

Primetown Property Group, Inc. filed its final adjusted income tax return on April 14, 1998, reporting losses for the year 1997. Despite the losses, Primetown had paid quarterly corporate income taxes and remitted creditable withholding taxes totaling P26,318,398.32. Believing it was entitled to a refund, Primetown filed an administrative claim with the Bureau of Internal Revenue on March 11, 1999. When the BIR failed to act, Primetown filed a petition for review with the Court of Tax Appeals (CTA) on April 14, 2000.

The Dispute: How to Count Two Years

The CTA dismissed the petition for being filed out of time. It applied the Civil Code provision on legal periods, which the CTA interpreted as fixing a "year" at 365 days. Because the year 2000 was a leap year, the CTA counted 731 days from April 15, 1998 to April 14, 2000—one day beyond the supposed 730-day limit.

The Court of Appeals reversed, ruling that a year is always 365 days regardless of leap years. The Supreme Court, however, took a different approach.

The Ruling: Administrative Code Governs

The Supreme Court held that the governing rule is not the Civil Code but the Administrative Code of 1987. That code provides that a "year" shall be understood to be twelve calendar months. A calendar month is a period running from a certain numbered day of one month up to, but not including, the corresponding numbered day of the next month. If the next month lacks sufficient days, the period runs up to and including the last day of that month.

The Court reasoned that the Administrative Code, being the more recent law, impliedly repealed the inconsistent provision of the Civil Code under the principle lex posteriori derogat priori. The two laws dealt with the same subject matter—computation of legal periods—but in manifestly incompatible ways. The Civil Code fixed a year at 365 days, while the Administrative Code treats a year as twelve calendar months, making the number of days irrelevant.

Application to the Facts

Applying the calendar-month rule, the Court computed Primetown's two-year period as follows:

• Year 1: April 15, 1998 to April 14, 1999 (12 calendar months)
• Year 2: April 15, 1999 to April 14, 2000 (12 calendar months)

The 24th calendar month ended on April 14, 2000. Since Primetown filed its petition on that exact date, the filing was timely. The Court remanded the case to the CTA for further proceedings.

Practical Takeaways

• The two-year prescriptive period for tax refund claims under the National Internal Revenue Code is computed in calendar months, not fixed days. Leap years do not add an extra day.
• The Administrative Code of 1987 governs the computation of legal periods, superseding the Civil Code's fixed-day rule for this purpose.
• To compute a calendar month, exclude the first day and include the last day. For example, a period starting April 15 ends May 14 of the same year.
• Taxpayers should file judicial claims well before the deadline. Even with the calendar-month rule, the safest approach is to file early and document the date of filing of the final adjusted return, which starts the prescriptive period.
• The rule applies to claims for refund or credit of erroneously, illegally, or excessively collected taxes.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.