G.R. No. 226592, July 27, 2021
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. CARRIER AIR CONDITIONING PHILIPPINES, INC., RESPONDENT.

FACTS

On November 29, 2011, respondent Carrier Air Conditioning Philippines, Inc. (Carrier) filed an administrative claim for refund or issuance of a tax credit certificate (TCC) for overpaid final withholding taxes (FWT). Ten days later, on December 9, 2011, and without waiting for any action from petitioner Commissioner of Internal Revenue (CIR) on its administrative claim, Carrier filed a judicial claim for refund before the Court of Tax Appeals (CTA). Carrier argued it had to file the judicial claim on that date to preserve its right to seek a refund, as the two-year prescriptive period was to expire the following day, December 10, 2011. The CTA Division granted Carrier’s claim, a decision affirmed by the CTA En Banc. The CIR contends before the Supreme Court that Carrier’s judicial claim was prematurely filed, violating the principle of exhaustion of administrative remedies, and that the CTA had no appellate jurisdiction without a prior decision or ruling from the CIR on the administrative claim.

ISSUE

Whether the judicial claim for refund under Section 229 of the National Internal Revenue Code (NIRC) was prematurely filed for being filed only ten days after the administrative claim and without awaiting a decision from the CIR.

RULING

No. The judicial claim was not prematurely filed. Section 229 of the NIRC only requires: (1) that an administrative claim be first duly filed with the CIR, and (2) that the judicial suit or proceeding be filed within two years from the date of tax payment. The law does not provide a specific period within which the CIR must decide the administrative claim. Consequently, a taxpayer may file the judicial claim a few days after the administrative claim, or even without awaiting the CIR’s decision, provided both claims are filed within the two-year prescriptive period. The filing of the administrative claim serves as a condition precedent and a notice to the CIR. The absence of a statutory period for the CIR to act can only be addressed by legislation, not by judicial fiat. Furthermore, the doctrines of exhaustion of administrative remedies and primary jurisdiction are not violated because the taxpayer complied with the mandatory prior administrative filing and needed to seek judicial relief to comply with the two-year prescriptive period mandated by Section 229. The CTA’s jurisdiction over such a claim is proper as the Revised CTA Rules explicitly require that a petition for review be filed with the CTA prior to the expiration of the two-year period under Section 229.