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166732
INTEL
TECHNOLOGY
PHILIPPINES,
INC., Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari filed by
Intel Technology Philippines, Inc. (petitioner) seeking to reverse
and set aside the Decision1 dated August 12, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 79327. The assailed decision
affirmed that of the Court of Tax Appeals denying petitioners
claim for a refund or issuance of a tax credit certificate in the
amount of P11,770,181.70, allegedly representing the valueadded input taxes it had paid on domestic purchases of goods
and services for the period of April 1, 1998 to June 30, 1998.
Likewise sought to be reversed and set aside is the appellate
courts Resolution2 dated January 14, 2005 denying petitioners
Motion for Reconsideration.
The Antecedents
Petitioner is a domestic corporation engaged primarily in the
business of designing, developing, manufacturing and exporting
advanced and large- scale integrated circuit components (ICs). 3 It
is registered with the Bureau of Internal Revenue (BIR) as a
value-added tax (VAT) entity in 1996 under Certificate of
Registration RDO Control No. 96-540-000713.4 It is likewise
registered with the Philippine Economic Zone Authority (PEZA) as
an Ecozone export enterprise.5
As a VAT-registered entity, petitioner filed with the Commission of
Internal Revenue its Monthly VAT Declarations and Quarterly VAT
Return for the second quarter of 1998 declaring zero-rated export
sales of P2,538,906,840.16 and VAT input taxes from domestic
sales will not result to any VAT output tax pursuant to Sec.
106(A)(2)(a)(1) and Sec. 108(B)(1) of the Tax Code;
10. Petitioner, for the period covering April 01, 1998 to June
30, 1998, having generated zero-rated sales and paid VAT
input taxes in the course of its trade or business, which VAT
input taxes are attributable to the zero-rated sales and have
not been applied to any VAT output tax liability of the
Petitioner for said period or any succeeding quarter or
quarters nor has been issued any tax credit certificate, it
follows that petitioner is entitled to the issuance of a tax
credit certificate for VAT input taxes in the amount of
PhP11,770,181.70 x x x.
xxxx
11. On May 18, 1999, petitioner in compliance with the
requisites provided for by law for the issuance of a tax credit
certificate filed a claim for tax credit in the total amount of
PhP11,770,181.70, with respondent through the One Stop
Shop Inter-Agency Tax Credit and Duty Drawback Center per
BIR Form No. 2552 entitled APPLICATION FOR TAX
CREDIT/REFUND OR VALUE-ADDED TAX PAID and Claimant
Information Sheet No. 35418. x x x
12. Respondent, however, despite such application for the
issuance of a tax credit certificate above-mentioned and
notwithstanding presentation of documentary evidences in
support of such application, failed to grant the tax credit
applied for. x x x8
Petitioner prayed that, after due proceedings, judgment be
rendered in its favor, as follows:
WHEREFORE, it is respectfully prayed that this Honorable Court
after trial render judgment:
1. Declaring Petitioner entitled to the issuance of tax credit
certificate in the amount of PhP11,770,181.70 representing
VAT input taxes paid by it during the period from April 01,
1998 to June 30, 1998, for which no tax credit certificate
was issued;
2. Ordering respondent to issue the tax credit certificate in
favor of petitioner in the amount of PhP11,770,181.70
referred to above; and
3. Granting petitioner such other reliefs as may be just and
equitable under the premises.9
The Commissioner, as respondent, opposed the petition and
prayed for its dismissal. The following special and affirmative
defenses were raised:
4. Petitioner, being allegedly registered with the Philippine
Economic Zone Authority, is exempt from all taxes, including
value-added tax, pursuant to Section 24 of Republic Act No.
7916, in relation to Section 103 of the Tax Code, as
amended by RA 7716. Since its sales are not zero-rated but
are exempt from VAT, petitioner is not entitled to refund of
input tax pursuant to Section 4.106-1 and 4.103-1 of
Revenue Regulations No. 7-95;
5. Petitioners alleged claim for refund is subject to
administrative routinary investigation/examination by the
Bureau;
6. The amount of P47,582,813.72 being claimed by
petitioner as alleged VAT input taxes for the period of 01
July 1997 to 31 December 1997 was not properly
documented;
7. In an action for refund the burden of proof is on the
taxpayer to establish its right to refund, and failure to
sustain the burden is fatal to the claim for refund/credit;
DESCRIPTION
PURPOSE
A copy of Petitioners
Certificate
of
Registration No. 95133
issued
by
To
prove
that
Intel
Technology
Philippines,
Inc. is registered with
PEZA as Ecozone Export
Philippine
Economic Enterprise.
Zone Authority (PEZA).
This
was
already
subject of stipulation
of facts.
"B"
A copy of Petitioners
BIR
Certificate
of
Registration with RDO
Control No. 96-540000713
issued
on
January 30, 1996 by
Revenue District Office
No. 54.
This
was
already
subject of stipulation
of facts.
"C"
"D"
"C-1"
"D-1"
&
"E"
"E-1"
of 1998.
quarter of 1998.
"F-4"
"F-5"
"F-6"
"G"
to
"L" and
"H-2"
and "K2"
"G-1" to
"L-1"
1998.
quarter of 1998.
Copies of Petitioners
Quarterly VAT Returns
for the third and fourth
quarters of 1998 and
first
and
second
quarters
of
1999
including the amended
returns for the third
quarter
and
first
quarter of 1998 and
1999, respectively.
&
Copies of Petitioners
& Claimant Information
Sheet
No.
35418
including BIR Form No.
2552 for the period
April 1, 1998 to June
30, 1998 filed with the
One-Stop-Shop InterAgency Tax Credit and
Duty Drawback Center
of the Department of
Finance duly stamped
received last 05-18-99.
"O"
"O-1"
"O-2"
"P"
"P-1"
"P-2"
Certification of inward
remittance
dated
March 08, 2000 issued
by CITIBANK
Certification of inward
remittance
dated
March 09, 2000 issued
by RCBC
Head
Export To
prove
that
the
Certification was properly
signed
by
RCBCs
Amount
of
inward authorized representative.
remittance
in
the
amount
of To prove the amount of
US$102,499,965.00
inward remittance in the
amount
of
US$102,499,965.00.
"Q"
Copy
of
the
"Q-1"
and "Q- Certification issued by
Mr. Eliseo A. Aurellado,
2"
independent
CPA
commissioned by the
Honorable Court of Tax
Appeals.
"T"
"T-1"
Copy of schedule of
input VAT paid with
exception attached as
Annex "B" to the
Certification marked as
"Annex "Q."
"U-1" to
"U-375,"
"V-1" to
V-665"
and "W1"
to
"W-424"
Copies of Petitioners
supplier invoices and
official receipts for the
second
quarter
of
1998.
Copies of Petitioners
summary of export
sales, sales invoices,
official receipts, airway
"X"
to bills,
export
"X-669" declarations
and
certification of inward
remittances for the
second
quarter
of
1998.
"Y"
I.
THE DECISION OF THE COURT OF APPEALS AFFIRMING THE
DENIAL OF PETITIONERS CLAIM FOR TAX CREDIT/REFUND IS
CONTRARY TO PROVISIONS OF THE TAX CODE AND APPLICABLE
REGULATIONS AND DECISIONS OF THE HONORABLE SUPREME
COURT.
II.
SECTIONS 113 AND 237 OF THE TAX CODE DO NOT REQUIRE
PETITIONER TO REFLECT ITS AUTHORITY TO PRINT IN ITS
INVOICES. PETITIONER IS NOT REQUIRED BY ANY LAW OR
REGULATION TO REFLECT ITS AUTHORITY TO PRINT UPON ITS
INVOICES. NEITHER IS THE FAILURE PENALIZED BY ANY LAW OR
STATUTE SUCH THAT THE INVOICES ARE RENDERED
INADMISSIBLE.
III.
THE FAILURE TO STATE THE TIN-V IN PETITIONERS EXPORT
SALES INVOICES SHOULD NOT INVALIDATE PETITIONERS
CLAIM. PETITIONERS EXPORT SALES INVOICES, WHICH ARE
ADMISSIBLE,
COMPETENT
AND
MATERIAL
EVIDENCE,
26
SUFFICIENTLY PROVE PETITIONERS EXPORT SALES.
The Issues
The issues to be resolved in the instant case are (1) whether the
absence of the BIR authority to print or the absence of the TIN-V
in petitioners export sales invoices operates to forfeit its
entitlement to a tax refund/credit of its unutilized input VAT
attributable to its zero-rated sales; and (2) whether petitioners
failure to indicate "TIN-V" in its sales invoices automatically
invalidates its claim for a tax credit certification.
Petitioners Arguments
Petitioner contends that Sections 113 and 237 of the Tax Code,
and even RR 7-95, do not require the taxpayer to reflect its
authority to print in its invoices. 27 Failure to print such authority is
not even penalized by any law or statute such that the invoices
which do not contain the BIR authority for petitioner to print its
sales are rendered inadmissible in evidence.28 Further, the
authority to print under Section 238 of the Tax Code is a
requirement that is separate from and independent of the
information that ought to be reflected in the invoice or official
receipt as mandated by Section 113, in relation to Section 237 of
the Tax Code.29 The BIR has even ruled, in BIR Ruling DA-375-03,
that receipts which do not reflect that the taxpayer is VATregistered do not automatically invalidate the claim for an input
tax credit.30 Moreover, RR 2-90 (which the appellate court cited in
the assailed decision) does not state that failure to reflect the
authority to print on the face of a sales invoice or receipt results
in the outright invalidation of such sales invoice or of the claim for
tax credit/refund.31 It insists that RMC No. 42-03, which the CA
likewise relied on in the assailed decision, does not apply, for it
relates to non-compliance with invoicing requirements; the
authority to print is not among the information required by law or
any regulation to be reflected in petitioners invoices.32
Petitioner asserts that even if it were assumed for the sake of
argument that the BIR has issued a regulation to the effect that
failure to indicate the authority to print on the face of a sales
invoice would render it invalid, such regulation cannot prevail
over the law that it seeks to implement. It insists that any
additional requirement imposed by the BIR for a valid claim other
than those mandated by law is invalid, 33 and that the provisions
of a taxing act are not to be extended by implication.34
Further, petitioner contends that it was authorized by the BIR to
use a computerized accounting system35 through the letterauthority dated April 17, 1997. 36 It avers that even if the letterauthority was not offered in evidence, the Court ought to take
judicial notice thereof as an official act of the Executive
Branch.37 Petitioner asserts that since its export sales invoices
extent that such input tax has not been applied against output
tax: Provided, however, That in the case of zero-rated sales under
Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and
(2), the acceptable foreign currency exchange proceeds thereof
had been duly accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP): Provided,
further, That where the taxpayer is engaged in zero-rated or
effectively zero-rated sale and also in taxable or exempt sale of
goods or properties or services, and the amount of creditable
input tax due or paid cannot be directly and entirely attributed to
any one of the transactions, it shall be allocated proportionately
on the basis of the volume of sales.60
Under Sections 106 (A)(2)(a)(1) in relation to 112(A) of the Tax
Code, a taxpayer engaged in zero-rated or effectively zero-rated
transactions may apply for a refund or issuance of a tax credit
certificate for input taxes paid attributable to such sales upon
complying with the following requisites: (1) the taxpayer is
engaged in sales which are zero-rated (like export sales) or
effectively zero-rated; (2) the taxpayer is VAT-registered; (3) the
claim must be filed within two years after the close of the taxable
quarter when such sales were made; (4) the creditable input tax
due or paid must be attributable to such sales, except the
transitional input tax, to the extent that such input tax has not
been applied against the output tax; and (5) in case of zero-rated
sales under Section 106(A)(2)(a)(1) and (2), Section 106(B), and
Section 108(B)(1) and (2), the acceptable foreign currency
exchange proceeds thereof had been duly accounted for in
accordance with BSP rules and regulations. It is added that,
"where the taxpayer is engaged in zero-rated or effectively zerorated sale and also in taxable or exempt sale of goods or
properties or services, and the amount of creditable input tax due
or paid cannot be directly or entirely attributed to any one of the
transactions, it shall be allocated proportionately on the basis of
the volume of the sales."
In this connection, petitioner, in order to prove that it was
engaged in export sales during the second quarter of 1998,