COMMISSIONER

OF INTERNAL
REVENUE
V.
TEAM SUAL
C O R P O R AT I O N
G.R. NO. 201225-26, 201132, 201133
APRIL 18, 2018
REYES, JR., J.
FACTS
• TSC is a domestic corporation with principal
office at Barangay Pangascasan, Sual,
Pangasinan. It is principally engaged in the
business of power generation and
subsequent sale thereof to the National
Power Corporation (NPC) under a Build ,
Operate, and Transfer scheme.
• On December 2000, TSC filed with the BIR
an application for zero-rating arising from
its sale of power generation services to
NPC for the taxable year 2001.
 On March 20, 2003, TSC filed with the BIR an
administrative claim for refund in the amount of
P166,720,367.79 for its unutilized input VAT for taxable
year 2001.

TSC subsequently For the 1st quarter refund on

filed Two PETITIONS March 31, 2003
FOR REVIEW with For the 2nd to 4th quarter refund on
the CTA Division: July 23, 2003

CI R V. T EA M SUA L CO R P O RAT IO N | G R NO . 2 0 1 225 - 26, 2 0 1 1 32, 2 0 1 133 A P R I L 1 8, 2 0 1 8

 • CTA Division partially granted TSC’s claim. It
allowed the refund for the 1st, 3rd, and 4th
quarters of 2001 but denied the claim for the
CTA 2nd quarter for it did not fall under the two-year
DIVISION prescriptive period.

RULING • After a Motion for Partial Consideration filed by

the CIR, the court amended its decision
allowing the refund for the 2nd quarter.
 CTA EN BANC
RULING
• CTA En Banc granted
TSC’s claim for
refund of input VAT
for the 2nd to 4th
quarter of 2001.
• It denied the claim
for the 1st quarter as
it was prematurely
filed.
 IS TSC ENTITLED TO
CLAIM TAX REFUNDS
FOR INPUT VAT FOR ALL
THE QUARTERS OF
TAXABLE YEAR 2001?

ISSUE
SUPREME
COURT’S
RULING
 In order for the CTA to acquire jurisdiction
over a judicial claim for refund or tax
credit arising from unutilized input VAT, the
said claim must first comply with the
mandatory 120+30-day waiting period.
Any judicial claim for refund or tax credit
NO. TSC IS NOT filed in contravention of said period is
ENTITLED TO rendered premature, depriving the CTA of
CLAIM REFUNDS jurisdiction to act on it.
FOR THE 1 ST
QUARTER OF 2001.
120-DAY PERIOD RULE
Section 112, Subsections (A) and (C) of
the NIRC:
Any taxpayer seeking a refund or tax
credit arising from unutilized input VAT
from zero-rated or effectively zero-rated
sales should first file an initial
administrative claim with the BIR. This
claim for refund or tax credit must be
filed within two years after the close of
the taxable quarter when the sales were
made.
120-DAY PERIOD RULE
The CIR is then given a period of 120-
days from the submission of complete
documents in support of the application
to either grant or deny the claim. If the
claim is denied by the CIR or the latter
has not acted on it within the 120-day
period, the taxpayer-claimant is then
given a period of 30 days to file a judicial
claim via petition for review with the CTA.
Failure to observe the said period renders
the judicial claim premature, divesting
the CTA of jurisdiction to act on it.
 It is only the second judicial claim which complied
with the mandatory waiting period of 120 days and
was filed within the prescriptive period of 30 days from
the CIR's action or inaction.
The first judicial claim was premature because TSC
APPLICATION filed it a mere 11 days after filing its administrative
claim. Therefore, the CTA division only acquired
jurisdiction over TSC's second judicial claim for refund
covering its second, third, and fourth quarters of
taxable year 2001. As such, TSC is only entitled for
refunds on the said three quarters.
Tax refunds or tax credits, just like tax
exemptions, are strictly construed against
the taxpayer-claimant. A claim for tax refund
is a statutory privilege and the mere
existence of unutilized input VAT does not
entitle the taxpayer, as a matter of right, to it.
As such, the rules and procedure in claiming
a tax refund should be faithfully complied
with. Non-compliance with the pertinent laws
should render any judicial claim fatally
defective.