G.R. Nos. 201225-26, 201132, & 201133. April 18, 2018.
TEAM SUAL CORPORATION (FORMERLY MIRANT SUAL CORPORATION), PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. (Consolidated Cases)

FACTS

Team Sual Corporation (TSC), a power generation company, filed administrative claims for refund of unutilized input Value-Added Tax (VAT) for the year 2001, attributing these to its effectively zero-rated sales to the National Power Corporation. Without awaiting the Commissioner of Internal Revenue’s (CIR) decision on these administrative claims, TSC subsequently filed judicial claims with the Court of Tax Appeals (CTA). The CTA Division partially granted the refund. The CIR appealed, arguing the judicial claims were prematurely filed for non-compliance with the mandatory 120-day waiting period under Section 112(D) of the National Internal Revenue Code (NIRC).
The CTA En Banc upheld the refund but reduced the amount. It ruled that while TSC’s judicial claims were indeed filed prematurely, this procedural lapse was excused. The court applied the doctrine from the 2010 case of Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., which held that the 120-day period is mandatory and jurisdictional. However, the CTA En Banc found that the premature filing was justified because the BIR had not yet acted on the claims for an unreasonable length of time, and TSC was compelled to seek judicial relief to prevent the expiration of the two-year prescriptive period.

ISSUE

Whether the Court of Tax Appeals En Banc correctly excused TSC’s premature filing of its judicial claims for VAT refund.

RULING

No. The Supreme Court reversed the CTA En Banc. The legal logic is anchored on the mandatory and jurisdictional nature of the 120-day waiting period prescribed under Section 112(D) of the NIRC. The Court, reiterating its ruling in Aichi, held that the taxpayer must observe the 120-day period for the CIR to act on the administrative claim. Filing a judicial appeal before the expiration of this period is fatal, as it deprives the CTA of jurisdiction over the appeal.
The Court rejected the application of the “unreasonable delay” exception invoked by the CTA En Banc. It clarified that the Aichi doctrine, which strictly enforces the 120-day rule, applies prospectively from its promulgation on October 6, 2010. However, for cases where the judicial claim was filed prior to Aichi, the Court applies the previous interpretation in Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, which also required the observance of the 120-day period. Since TSC filed its judicial claims in 2003, the Mirant Pagbilao rule governs. Under this rule, premature filing remains a jurisdictional defect. The CTA En Banc’s finding of “unreasonable delay” by the BIR does not cure this defect, as the law provides a specific timeframe for both administrative and judicial recourse. Consequently, TSC’s failure to wait for the CIR’s decision or the lapse of 120 days before going to court rendered its petitions invalid for lack of jurisdiction.