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Legal Updates
Supreme Court Clarifies the Reckoning of Processing Periods for VAT Refund Claims Under Section 112(A) of the Tax Code
By: Veronica Jude E. Abarquez and Apryll B. Bulintao
The Supreme Court in Commissioner of Internal Revenue v. Team Sual Corporation (formerly Mirant Sual Corporation) has clarified and updated the summary of rules governing the reckoning of the processing period for unutilized input VAT refund claims under Section 112(A) of the National Internal Revenue Code (“Tax Code”).
In doing so, the Supreme Court harmonized its earlier summary of the rules, as laid down in Commissioner of Internal Revenue v. Dohle Shipmanagement Philippines Corporation, with the numerous amendments introduced by the TRAIN Law (RA 10963), the Ease of Paying Taxes Act (RA 11976), the CREATE More Act (RA 12066), as well as subsequent revenue issuances.
Period of Filing of Administrative Claim | Applicable Rule |
Prior to 11 June 2014 | 1. The 120-day period is reckoned from the date of the filing of the administrative claim when (a) the taxpayer submits complete documents with the administrative claim or; (b) the taxpayer manifests that the taxpayer will no longer submit additional supporting documents. 2. If the BIR, pursuant to RMC 49-2003, finds that the documents submitted are insufficient, it shall notify the taxpayer of such and the taxpayer has 30 days to submit the requested documents unless given further extension by the BIR. In this case, the 120-day period is reckoned from the submission of the requested documents or lapse of the period given. 3. If the BIR did not notify the taxpayer of insufficiency of the documents already submitted, and the taxpayer submits additional supporting documents, the 120-day period is reckoned from the submission of said supporting documents. 4. The filing of the administrative claim for refund and submission of supporting documents must be done within two years from the close of the taxable quarter pursuant to Section 112(A) of the 1997 Tax Code. |
11 June 2014 – 31 December 2017 | 1. The 120-day period is reckoned from the date of the filing of the administrative claim with complete supporting documents; 2. Pursuant to RMC 54-2014, the taxpayer is barred from submitting additional documents after the filing of the administrative claim for refund. |
1 January 2018 – 18 January 2021
(The TRAIN Law, which took effect on January 1,2018, shortened the 120-day period for the CIR to process administrative claims for VAT refund to 90 days) | 1. The 90-day period is reckoned from the submission of the official receipts or invoices and other documents in support of the application for VAT refund. 2. Pursuant to RMC 47-2019, the failure on the part of the taxpayer-claimant to submit the complete documents in support of the claim shall result in non-acceptance of the application. Once an administrative claim for VAT refund is filed and duly received by the BIR, no additional document/s shall be subsequently requested/required from the taxpayer. Failure on the part of the taxpayer-claimant to submit the complete documents in support of the claim shall result in non-acceptance of the applications. Any unsupported claim shall be outrightly disallowed, resulting in full/partial denial of the claim. |
19 January 2021 – 30 June 2023 | 1. The 90-day period is reckoned from the submission of the official receipts or invoices and other documents in support of the application for VAT refund. 2. Pursuant to RMO No. 47-2020, only applications with complete documentary requirements, as enumerated in the Checklist of Requirements, which are filed within the prescribed period, shall be received by the authorized processing office. |
1 July 2023 – 17 October 2024 | 1. The 90-day period is reckoned from the submission of the official receipts or invoices and other documents in support of the application for VAT refund. 2. Only applications with complete documentary requirements as enumerated in the Checklist of Requirements prescribed in RMC No. 71-2023 and RMO No. 23-2023 shall be received and processed by the authorized processing office. |
18 October 2024 – 31 March 2025 | 1. The 90-day period is reckoned from the time of acceptance of the processing office of the claim or application for VAT refund with complete documentary requirements as a result of the check-listing procedure discussed in Q&A No. 3 of RMC No. 115-2024. 2. Non-compliance with the completeness of mandatory requirements as enumerated in the Checklist of Requirements prescribed in RMC No. 115-2024 shall result in the non-acceptance of the VAT refund application. |
Beginning 1 April 2025 onwards | 1. The 90-day period is reckoned from the date of the submission of the certified true copies of the invoices or official receipts and other documents in support of the application. 2. Only applications with complete documentary requirements as enumerated in the applicable Checklist of Requirements prescribed in RMC No. 37-2025 shall be received and processed by the authorized processing office. |
The 2025 Case of Commissioner of Internal Revenue v. Team Sual Corporation
Team Sual Corporation (“TSC”) is a VAT-registered domestic corporation engaged in the generation and sale of electricity to the National Power Corporation (“NPC”) under a Build-Operate-Transfer (“BOT”) arrangement. The zero-rating status of the sale of TSC’s power generation services to NPC was approved by the Revenue District Office having jurisdiction over TSC. TSC then filed an administrative claim for the refund or issuance of a tax credit certificate for its unutilized input VAT attributable to taxable year 2003 with the Bureau of Internal Revenue (“BIR”) on 20 December 2004, which claim was made well within the 2-year period required under Section 112(D) of the Tax Code.
Without waiting for the resolution of its administrative claim for refund or tax credit with the BIR, TSC filed a judicial claim before the Court of Tax Appeals (“CTA”) on 22 April 2005 covering the first quarter of taxable year 2003 (the “First Judicial Claim”), followed by another judicial claim on 22 July 2005 covering the second, third, and fourth quarters of the same year (the “Second Judicial Claim”).
The CTA partially granted TSC’s claim for refund in the First Judicial Claim, but denied the Second Judicial Claim for having been filed beyond the 30-day reglementary period for appeal. The 120-day period for the Commissioner of Internal Revenue (“CIR”) to act on the administrative claim lapsed on April 19, 2005, giving TSC 30 days from April 19, 2005 to file its appeal before the CTA or until May 19, 2005. Since the Second Judicial Claim was filed only on July 22, 2005, the same filed beyond the deadline.
In questioning the CTA’s decision partially granting the First Judicial Claim, the CIR argued that the CTA lacked jurisdiction over the First Judicial Claim because TSC failed to submit complete documentary requirements at the administrative level, pursuant to Revenue Memorandum No. 53-98, thereby preventing it from acting on TSC’s claim, and, as such, TSC had failed to exhaust administrative remedies. In turn, TSC asserted, among others, that, it had submitted the complete documents to support its claim
The Supreme Court affirmed the CTA’s decision and held that the CTA had duly acquired jurisdiction over the First Judicial Claim.
- It is the taxpayer who determines when the submission of documents is complete. From that point, the counting of the 120-day period (now 90 days) starts for the CIR to act on the refund claim.
- Unless the Bureau of Internal Revenue (BIR) specifically asks for more documents, it is the taxpayer’s duty to provide all the necessary papers to support their claim. The taxpayer carries the burden of proof, but they also have the freedom to choose what evidence to submit.
- A taxpayer’s failure to submit all of the documentary requirements to the BIR to support its claim for refund or tax credit is not by itself fatal to its claim. This holds especially true when the claim has arrived at the judicial level since the question of whether the evidence submitted by a party is sufficient to warrant the granting of its prayer lies within the sound discretion and judgment of the Court.
Key Takeaways
The TSC Decision provides a consolidated reference for the reckoning of the period for the CIR to resolve VAT refund claims under Section 112(A) of the Tax Code. The applicable rule depends on the law and revenue issuance in force at the time of filing the administrative claim.
Consistent with settled doctrine, tax refunds, being in the nature of tax exemptions, are construed strictissimi juris against the claimant. The TSC Decision underscores the continued strict adherence to both procedural and substantive requirements under prevailing policies. Accordingly, failure to comply with these requirements, especially compliance with the prescriptive period for filing an administrative and/or judicial claim, renders the VAT refund claim unavailing.
This article is only for informational and educational purposes, and it is not intended as a legal advice or opinion. For assistance and legal queries, please contact general@srmo-law.com.