A recent Supreme Court decision involving Team Sual Corporation highlights an important procedural issue in claims for refund of unutilized input VAT: the reckoning of the period within which the Bureau of Internal Revenue (BIR) must act on the taxpayer’s administrative claim. The case also clarifies the respective responsibilities of the taxpayer and the BIR in determining when the supporting documents for a VAT refund claim are considered complete.

In Commissioner of Internal Revenue v. Team Sual Corporation (formerly Mirant Sual Corporation) (G.R. Nos. 203547 and 203561, 3 December 2025) the Supreme Court considered whether the BIR could effectively prevent the 120-day period for acting on a VAT refund claim from commencing by asserting that the taxpayer had not submitted complete supporting documents. The Court rejected the Commissioner of Internal Revenue’s (CIR) position and emphasized that, for purposes of determining when the 120-day period begins to run, it is the taxpayer who ultimately determines when its supporting documents have been submitted.

The ruling is significant for businesses claiming VAT refunds. While taxpayers remain responsible for proving their entitlement to a refund and submitting the documents necessary to support their claims, the BIR cannot indefinitely leave a claim in limbo by simply asserting that additional documents are required without properly notifying the taxpayer of the alleged deficiency.

The 120-Day Rule for VAT Refund Claims

When Team Sual filed its administrative claim on 20 December 2004, Section 112(D) of the 1997 Tax Code, as then in force, gave the Commissioner of Internal Revenue 120 days from the submission of complete documents supporting the claim within which to grant or deny the refund. If the CIR denied the claim, the taxpayer could appeal to the Court of Tax Appeals (CTA) within 30 days from receipt of the denial. If the CIR failed to act within the 120-day period, the taxpayer could likewise appeal the inaction to the CTA within 30 days after the expiration of the period.

The Supreme Court has previously characterized compliance with the 120-day period, together with the subsequent 30-day period for judicial appeal, as mandatory and jurisdictional (it must stressed that the treatment of the periods depends on the date of filing and the applicable statutory and administrative regime as will be discussed infra).

The difficulty, however, lies in identifying when the 120-day period actually begins to run.

If the BIR could unilaterally determine that the documents submitted by the taxpayer were incomplete, it could effectively postpone the commencement of the 120-day period indefinitely. The BIR could wait until more than 120 days had passed before informing the taxpayer that additional documents were supposedly necessary, and then take the position that the 120-day period had not yet commenced because the original submission was incomplete. Such an arrangement could leave taxpayers uncertain as to when the BIR’s period to act had begun and, consequently, when their right to seek judicial relief had arisen. More importantly, it would allow the BIR to delay the processing of a refund claim simply by withholding a determination that the taxpayer’s submission was complete.

The Supreme Court rejected that approach.

The Taxpayer Determines When Its Documents Are Complete

In Team Sual, the CIR argued that the taxpayer’s administrative claim should be considered pro forma because it allegedly failed to submit the complete supporting documents required under Revenue Memorandum Order No. 53-98 within the prescribed period.

In rejecting the position of the CIR, the Court explained that it is the taxpayer who determines when the complete documents have been submitted for purposes of commencing the running of the 120-day period. This does not mean, however, that a taxpayer can simply declare its claim complete and thereby prevent the BIR from requesting additional documents. The BIR may still require additional documents when necessary to properly evaluate a claim. What is important is that the taxpayer must be informed of what the BIR considers lacking.

In that case, if the BIR believes that additional documents are necessary, it must communicate that requirement to the taxpayer. Without such notice, the taxpayer cannot reasonably be faulted for failing to submit documents that the BIR never specifically requested. This approach prevents the BIR from controlling the commencement of the statutory period merely by withholding its determination as to whether the documents submitted are “complete.”

But the Taxpayer Still Bears the Burden of Proving Its Claim

The ruling, however, should not be understood as relieving taxpayers of their responsibility to properly substantiate VAT refund claims. A claim for tax refund is not presumed to be valid. The taxpayer remains responsible for establishing its entitlement to the refund and for submitting the evidence necessary to prove its claim. In this regard, the Supreme Court has repeatedly emphasized that tax refunds are construed strictly against the taxpayer; and that the taxpayer bears the burden of proving compliance with the statutory and administrative requirements for obtaining a refund.

The ruling therefore strikes a balance.

The taxpayer cannot simply file an empty or unsupported application and expect the BIR to act on it. At the same time, the BIR cannot indefinitely prevent the statutory period from running by simply asserting, without properly notifying the taxpayer, that additional documents are required. The taxpayer must substantiate its claim. The BIR must likewise act within the framework prescribed by law.

The Rules Have Changed Over Time

It must also be stressed that the applicable rules depend on when the administrative claim was filed, as the rules governing VAT refund claims have changed over time.

For administrative claims filed before 11 June 2014, the 120-day period is generally reckoned from the filing of the administrative claim when the taxpayer submits complete documents or manifests that it will no longer submit additional supporting documents. If the BIR finds that the documents submitted are insufficient, it must notify the taxpayer of the deficiency and request the additional documents. The taxpayer then has thirty (30) days from the BIR’s request to submit the requested documents, unless the BIR grants a further extension. The 120-day period is reckoned from the submission of the requested documents or, if the taxpayer fails to submit them within the period given, from the lapse of that period.

For claims filed from 11 June 2014 to December 2017, the 120-day period is reckoned from the filing of the administrative claim with complete supporting documents. Under the Revenue Memorandum Circular No. 54-2014, taxpayers were required to submit their complete supporting documents together with the administrative claim and were no longer permitted to submit additional documents after filing.

For claims filed from 1 January 2018, the TRAIN Law reduced the BIR’s processing period from 120 days to 90 days. The period is reckoned from the submission of the official receipts or invoices and other documents supporting the VAT refund claim. Revenue Memorandum Circular No. 47-2019 subsequently provided that incomplete applications would not be accepted for processing and that, once a claim had been duly received, the BIR would not subsequently request additional documents from the taxpayer.

The rules have since been further modified by subsequent legislation and BIR issuances, including the Ease of Paying Taxes Act and the CREATE MORE Act. The applicable reckoning therefore depends not only on the nature of the VAT refund claim, but also on the date on which the administrative claim was filed and the rules then in force. Taxpayers should accordingly avoid applying the procedure from an earlier VAT refund case without first determining which statutory and administrative framework govers their particular claim.

Filing Too Early Can Be Just as Problematic as Filing Too Late

The case also illustrates why taxpayers must be particularly careful with the timing of VAT refund claims.

In Team Sual, one of the taxpayer’s judicial claims was found to have been filed prematurely because it was brought before the lapse of the period within which the CIR was required to act. Another claim was dismissed because it was filed beyond the applicable period.

The Supreme Court consequently emphasized the importance of observing the statutory sequence:

Administrative claim → submission of supporting documents → period for CIR action → denial or inaction → judicial appeal within the prescribed period.

The precise periods and procedural requirements applicable to a particular claim must, as mentioned, be determined based on the law governing the claim and the date when the relevant transactions and applications were made.

For taxpayers, the lesson is straightforward: a meritorious VAT refund claim may nevertheless fail if the procedural requirements governing its filing and judicial appeal are not properly observed.

What Taxpayers Should Do

For businesses regularly claiming VAT refunds, Team Sual offers several practical lessons.

First, taxpayers should maintain a complete documentary record of their administrative claims. This should include not only the documents supporting the substantive entitlement to the refund, but also proof of when the claim and its supporting documents were submitted to the BIR.

Second, taxpayers should carefully document communications from the BIR concerning deficiencies or requests for additional documents. If the BIR requires additional documentation, the taxpayer should determine precisely what is being requested and ensure that the response is properly documented.

Third, taxpayers should independently monitor the applicable statutory periods. The absence of action from the BIR does not mean that the taxpayer can simply wait indefinitely. Once the applicable period expires, the taxpayer must determine whether judicial relief should be pursued and ensure that the appeal is filed within the prescribed period.

Finally, taxpayers should distinguish between the substantive validity of the refund claim and the procedural requirements for obtaining it. A taxpayer may have a legitimate entitlement to a refund, but that entitlement must still be established through competent documentary evidence and pursued within the periods prescribed by law.

Final Word

Commissioner of Internal Revenue v. Team Sual Corporation is a significant reminder that VAT refund claims are governed not only by substantive requirements, but also by carefully defined procedural periods.

The taxpayer carries the burden of proving its entitlement to a refund. The BIR, however, cannot indefinitely delay the commencement of the statutory period by simply asserting that the taxpayer’s documents are incomplete, particularly where the taxpayer has submitted its supporting documents and the BIR has not properly notified it of any deficiency.

To this end, the Court’s ruling places particular importance on certainty. Taxpayers should know when their claim has been submitted, what additional documents the BIR requires, when the period for the BIR to act begins to run, and when judicial relief may properly be sought. For businesses with substantial VAT refund claims, these are not merely procedural details. The proper documentation and monitoring of the applicable periods can determine whether a valid refund claim is ultimately heard—or lost on jurisdictional grounds.

Kristoffer Monico S. Ng is a Philippine lawyer whose practice focuses on labor and employment, corporate and commercial law, tax, energy law, and civil and criminal litigation. He advises businesses and individuals on legal risk, regulatory compliance, taxation, dispute resolution, and complex commercial matters, representing clients before courts, quasi-judicial agencies, and administrative bodies, while also providing strategic legal advice outside the courtroom. He also regularly writes on developments in Philippine jurisprudence and regulation, providing practical insights on legal issues affecting businesses and individuals.

If you require legal advice concerning the issues discussed in this article, or any other legal matter within these practice areas, you may reach him through e-mail at nico@nlaw.ph to discuss your particular circumstances.