[G.R. No. 153866.

February 11, 2005]

COMMISSIONER OF INTERNA RE!EN"E, #e$%$%o&er, '(. SEAGATE
TEC)NOOG* +,)II,,INES-, re(#o&.e&$.
/ E C I S I O N
,ANGANI0AN, 1.2
Business companies registered in and operating from the Special Economic Zone
in Naga, Cebu -- like herein respondent -- are entities exempt from all internal
revenue taxes and the implementing rules relevant thereto, including the value-
added taxes or V!" lthough export sales are not deemed exempt transactions,
the# are nonetheless $ero-rated" %ence, in the present case, the distinction
bet&een exempt entities and exempt transactions has little significance, because
the net result is that the taxpa#er is not liable for the V!" 'espondent, a V!-
registered enterprise, has complied &ith all re(uisites for claiming a tax refund of
or credit for the input V! it paid on capital goods it purchased" !hus, the Court
of !ax ppeals and the Court of ppeals did not err in ruling that it is entitled to
such refund or credit"
T3e Ca(e
Before us is a )etition for 'evie& under 'ule *+ of the 'ules of Court, seeking
to set aside the ,a# -., -//- 0ecision of the Court of ppeals 1C2 in C-3' S)
No" 44/56" !he decretal portion of the 0ecision reads as follo&s7
45)EREFORE, foregoing premises considered, the petition for revie& is /ENIE/
for lack of merit"
T3e Fa6$(
!he C (uoted the facts narrated b# the Court of !ax ppeals 1C!2, as
follo&s7
8s 9ointl# stipulated b# the parties, the pertinent facts x x x involved in this case
are as follo&s7
:" ;'espondent< is a resident foreign corporation dul# registered &ith the
Securities and Exchange Commission to do business in the )hilippines,
&ith principal office address at the ne& Cebu !o&nship =ne, Special
Economic Zone, Baranga# Cantao-an, Naga, Cebu>
-" ;)etitioner< is sued in his official capacit#, having been dul# appointed
and empo&ered to perform the duties of his office, including, among
others, the dut# to act and approve claims for refund or tax credit>
6" ;'espondent< is registered &ith the )hilippine Export Zone uthorit#
1)EZ2 and has been issued )EZ Certificate No" 5.-/** pursuant to
)residential 0ecree No" 44, as amended, to engage in the manufacture
of recording components primaril# used in computers for export" Such
registration &as made on 4 ?une :55.>
*" ;'espondent< is V! ;1Value dded !ax2<-registered entit# as
evidenced b# V! 'egistration Certification No" 5.-/@6-///4//-V
issued on - pril :55.>
+" V! returns for the period : pril :55@ to 6/ ?une :555 have been
filed b# ;respondent<>
4" n administrative claim for refund of V! input taxes in the amount of
)-@,645,--4"6@ &ith supporting documents 1inclusive of the
):-,-4.,5@:"/* V! input taxes sub9ect of this )etition for 'evie&2,
&as filed on * =ctober :555 &ith 'evenue 0istrict =ffice No" @6,
!alisa# Cebu>
." No final action has been received b# ;respondent< from ;petitioner< on
;respondentAs< claim for V! refund"
8!he administrative claim for refund b# the ;respondent< on =ctober *, :555 &as
not acted upon b# the ;petitioner< prompting the ;respondent< to elevate the case
to ;the C!< on ?ul# -:, -/// b# &a# of )etition for 'evie& in order to toll the
running of the t&o-#ear prescriptive period"
8Bor his part, ;petitioner< x x x raised the follo&ing Special and ffirmative
0efenses, to &it7
:" ;'espondentAs< alleged claim for tax refundCcredit is sub9ect to
administrative routinar# investigationCexamination b# ;petitionerAs<
Bureau>
-" Since Dtaxes are presumed to have been collected in accordance &ith
la&s and regulations,A the ;respondent< has the burden of proof that the
taxes sought to be refunded &ere erroneousl# or illegall# collected x x
x>
6" En Citibank, N"" vs" Court of ppeals, -@/ SC' *+5 1:55.2, the
Supreme Court ruled that7
8 claimant has the burden of proof to establish
the factual basis of his or her claim for tax
creditCrefund"F
*" Claims for tax refundCtax credit are construed in Dstrictissimi 9urisA
against the taxpa#er" !his is due to the fact that claims for
refundCcredit ;partake of< the nature of an exemption from tax" !hus,
it is incumbent upon the ;respondent< to prove that it is indeed entitled
to the refundCcredit sought" Bailure on the part of the ;respondent< to
prove the same is fatal to its claim for tax credit" %e &ho claims
exemption must be able to 9ustif# his claim b# the clearest grant of
organic or statutor# la&" n exemption from the common burden cannot
be permitted to exist upon vague implications>
+" 3ranting, &ithout admitting, that ;respondent< is a )hilippine Economic
Zone uthorit# 1)EZ2 registered Eco$one Enterprise, then its business
is not sub9ect to V! pursuant to Section -* of 'epublic ct No" 1;'<2
.5:4 in relation to Section :/6 of the !ax Code, as amended" s
;respondentAs< business is not sub9ect to V!, the capital goods and
services it alleged to have purchased are considered not used in V!
taxable business" s such, ;respondent< is not entitled to refund of
input taxes on such capital goods pursuant to Section *":/4": of 'evenue
'egulations No" 1;''<2.-5+, and of input taxes on services pursuant to
Section *":/6 of said regulations"
4" ;'espondent< must sho& compliance &ith the provisions of Section -/*
1C2 and --5 of the :55. !ax Code on filing of a &ritten claim for refund
&ithin t&o 1-2 #ears from the date of pa#ment of tax"A
8=n ?ul# :5, -//:, the !ax Court rendered a decision granting the claim for
refund"F
Ru7%&8 o9 $3e Cour$ o9 A##ea7(
!he C affirmed the 0ecision of the C! granting the claim for refund or
issuance of a tax credit certificate 1!CC2 in favor of respondent in the reduced
amount of ):-,:--,5--"44" !his sum represented the unutili$ed but substantiated
input V! paid on capital goods purchased for the period covering pril :, :55@ to
?une 6/, :555"
!he appellate court reasoned that respondent had availed itself onl# of the
fiscal incentives under Executive =rder No" 1E=2 --4 1other&ise kno&n as the
=mnibus Envestment Code of :5@.2, not of those under both )residential 0ecree
No" 1)02 44, as amended, and Section -* of ' .5:4" 'espondent &as, therefore,
considered exempt onl# from the pa#ment of income tax &hen it opted for the
income tax holida# in lieu of the + percent preferential tax on gross income earned"
s a V!-registered entit#, though, it &as still sub9ect to the pa#ment of other
national internal revenue taxes, like the V!"
,oreover, the C held that neither Section :/5 of the !ax Code nor Sections
*":/4-: and *":/6-: of '' .-5+ &ere applicable" %aving paid the input V! on the
capital goods it purchased, respondent correctl# filed the administrative and
9udicial claims for its refund &ithin the t&o-#ear prescriptive period" Such
pa#ments &ere -- to the extent of the refundable value -- dul# supported b# V!
invoices or official receipts, and &ere not #et offset against an# output V!
liabilit#"
%ence this )etition"
So7e I((ue
)etitioner submits this sole issue for our consideration7
8Ghether or not respondent is entitled to the refund or issuance of !ax Credit
Certificate in the amount of ):-,:--,5--"44 representing alleged unutili$ed input
V! paid on capital goods purchased for the period pril :, :55@ to ?une 6/, :555"F
T3e Cour$:( Ru7%&8
!he )etition is unmeritorious"