Supreme Court clarifies period for VAT refund claims

The Supreme Court (SC) has clarified the prescriptive periods for value-added tax (VAT) refund claims.

In a 21-page decision, the SC Third Division said the 120-day period for the Commissioner of Internal Revenue (CIR) to resolve a claim filed before June 2014 will begin once the taxpayer indicates that his submission of documents is complete.

The following are the guidelines for administrative VAT refund claims filed before June 11, 2014:

• The 120-day period begins from the date of filing the administrative claim with complete documents or when the taxpayer indicates that it will no longer submit additional documents
• If the BIR requests additional documents, the taxpayer has 30 days to comply, and the 120-day period begins upon submission or expiration of the given period
• If the BIR does not notify the taxpayer that the submission is incomplete, the 120-day period begins from the date the taxpayer voluntarily submitted additional documents
• The taxpayer must file the administrative claim within two years from the end of the taxable quarter

However, under the RMC 54-2014, dated June 11, 2014, taxpayers are required to submit all necessary documents when filing an administrative claim and cannot provide additional documents later.

Due to this, the court said following are for claims filed from June 11, 2014 to December 31, 2017:

• The 120-day period begins from the date of filing the administrative claim with complete supporting documents
• The taxpayer cannot submit additional documents
• The taxpayer must file the administrative claim within two years from the end of the taxable quarter

Meanwhile, the Tax Reform for Acceleration and Inclusion (TRAIN) Law shortened the 120-day period to 90 days starting January 1, 2018.

Due to this, the following apply to claims filed starting January 1, 2018:

• The BIR has 90 days to resolve the administrative claim from the date of its filing with complete supporting documents
• Once an administrative claim is filed, the BIR shall no longer require additional documents from the taxpayer. If the taxpayer submits an incomplete claim, it shall be disallowed outright
• The taxpayer must file the administrative claim within two years from the end of the taxable quarter or the issuance of tax clearance in instances of cancellation of registration or cessation of business

The SC ruling is over the case of Dohle Shipmanagement Philippines Corporation, which filed its claim in March 2014 and submitted additional documents on its own in July 2014.

When the CIR did not take any action on the claim, the corporation filed a petition for review before the Court of Tax Appeals (CTA), which ruled that the claim was timely filed under the National Internal Revenue Code of 1997, as amended.

For its part, the CIR argued that the corporation failed to substantially prove its entitlement to the refund claim.

The CTA En Banc affirmed the earlier decision and later denied the CIR's motion for reconsideration, prompting the CIR to file the present petition before the SC.

"The CIR in this case did not notify Dohle of the inadequacy of the documents initially submitted with its administrative claim nor did it deny its administrative claim for refund," the SC said.

The SC said the 120-day period for Dohle should begin after it submitted its additional documents in July 2014.

"Counting from this date, the CIR had 120-days to decide the claim or until November 25, 2014. With the CIR's inaction, Dohle had 30 days from the expiration of the 120-day period or until December 25, 2014 to file its judicial claim," it said.

"All told, the Court finds no reason to disturb the findings of the CTA EB. The assailed decision and resolution should perforce be affirmed," it added.

The decision, penned by Associate Justice Alfredo Caguioa, was promulgated in August 2024 but published in February 2025. — VDV, GMA Integrated News