G.R. No. 194105 ; February 5, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. TEAM SUAL CORPORATION (formerly MIRANT SUAL CORPORATION), Respondent.

FACTS

Team Sual Corporation (TSC), a VAT-registered power generation company with zero-rated sales to the National Power Corporation, filed an administrative claim for refund of unutilized input VAT for the year 2000 on March 11, 2002. Without awaiting the Commissioner of Internal Revenue’s (CIR) decision, TSC filed a judicial petition for review with the Court of Tax Appeals (CTA) on April 1, 2002, within the two-year prescriptive period. The CIR argued the petition was prematurely filed, as Section 112(C) of the Tax Code grants a 120-day period to decide the administrative claim, and the judicial claim can only be filed after this period lapses or after a denial.
The CTA First Division granted TSC a reduced refund, ruling the judicial claim was not premature. It held that the 120-day period is subsumed within the two-year prescriptive period, and a taxpayer need not await the CIR’s action before seeking judicial relief. The CTA en banc affirmed this decision. The CIR elevated the case to the Supreme Court, insisting on strict adherence to the 120+30-day periods under Section 112.

ISSUE

Whether TSC’s judicial claim for refund was prematurely filed for having been instituted before the lapse of the 120-day period given to the CIR to act on the administrative claim.

RULING

The Supreme Court denied the petition and affirmed the CTA’s rulings. The Court explained that Section 112 of the National Internal Revenue Code establishes a two-tiered process: an administrative claim followed by a judicial claim. The two-year prescriptive period under Section 112(A) applies to the filing of both the administrative and judicial claims. The 120-day period for the CIR to decide under Section 112(C) is inclusive and runs within this two-year period.
The legal logic is that the two-year period is peremptory. A taxpayer must file the administrative claim and subsequently the judicial claim within this two-year window. To require the taxpayer to await the full 120 days before going to court could result in the judicial claim being filed beyond the two-year limit if the administrative claim was filed late in the prescriptive period. This would unjustly deprive the taxpayer of the judicial remedy due to the CIR’s inaction. Therefore, once an administrative claim is filed within two years, the corresponding judicial claim may be filed anytime within the remaining period, even before the 120 days lapse, to prevent the claim from being time-barred. TSC complied by filing both claims within the two-year period.