Silicon Philippines v. Commissioner of Internal Revenue
REITERATIONFacts
The Antecedents: Petitioner Silicon Philippines, Inc. (formerly INTEL PHILIPPINES MANUFACTURING, INC.) filed an application for credit/refund of unutilized input VAT for the period October 1, 1998 to December 31, 1998, amounting to ₱31,902,507.50. This amount comprised input VAT on imported/locally purchased capital equipment and total VAT paid on purchases during the period. Procedural History: Due to the respondent Commissioner of Internal Revenue's inaction, petitioner filed a Petition for Review with the Court of Tax Appeals (CTA) Division. Petitioner claimed zero-rated export sales and unutilized input VAT. The CTA Division partially granted the refund for input VAT on capital goods (₱9,898,867.00) but denied the claim for input VAT attributable to zero-rated sales due to the failure to present an Authority to Print (ATP) and to print "zero-rated" on export sales invoices. Both parties filed motions for reconsideration, which were denied. The case was elevated to the CTA En Banc, which affirmed the CTA Division's decision. Petitioner's subsequent motion for reconsideration was also denied. The Petition: Petitioner filed a Petition for Review on Certiorari with the Supreme Court, raising issues regarding the denial of its claim for credit/refund of input VAT attributable to zero-rated sales and the classification of certain items as capital goods.
Issue(s)
Whether the CTA En Banc erred in denying petitioner’s claim for credit/refund of input VAT attributable to its zero-rated sales due to its failure to show that it secured an ATP from the BIR and to indicate the same in its export sales invoices, and to print the word "zero-rated" in its export sales invoices. Whether the CTA En Banc erred in ruling that only the amount of ₱9,898,867.00 can be classified as input VAT paid on capital goods.
Ruling
The Supreme Court denied the petition for review on certiorari and affirmed the Decision and Resolution of the Court of Tax Appeals En Banc. The Court ruled that the denial of the claim for credit/refund of input VAT attributable to zero-rated sales was proper, and the reduction in the refundable input VAT on capital goods was also in order.
Ratio Decidendi
On the denial of the claim for credit/refund of input VAT attributable to zero-rated sales: The Court held that while there is no law requiring the Authority to Print (ATP) to be reflected on the invoices or receipts, Section 238 of the National Internal Revenue Code (NIRC) expressly requires persons engaged in business to secure an ATP from the BIR prior to printing invoices or receipts. To prove that zero-rated sales were made, duly registered invoices or receipts must be presented. Without proof of securing an ATP, the invoices or receipts lack probative value for refund purposes. Furthermore, the Court reiterated its ruling in Panasonic Communications Imaging Corporation of the Philippines v. Commissioner of Internal Revenue that failure to print the word "zero-rated" on the sales invoices or receipts is fatal to a claim for credit/refund of input VAT on zero-rated sales, as this is a specific requirement under Section 4.108-1 of Revenue Regulations (RR) No. 7-95. Thus, the non-presentation of the ATP and the failure to indicate the word "zero-rated" in the invoices were fatal to petitioner's claim. On the classification of input VAT on capital goods: The Court affirmed the CTA's finding that training materials, office supplies, posters, banners, T-shirts, books, and other similar items are not capital goods as defined under Section 4.106-1(b) of RR No. 7-95. The definition of capital goods requires goods or properties with an estimated useful life greater than one year, treated as depreciable assets, and used directly or indirectly in the production or sale of taxable goods or services. The petitioner failed to duly prove that these items were used, directly or indirectly, in the production or sale of taxable goods or services. Consequently, the reduction in the refundable input VAT on capital goods from ₱15,170,082.00 to ₱9,898,867.00 was deemed in order.
Main Doctrine
Failure to secure an Authority to Print (ATP) from the BIR and to print the word "zero-rated" on export sales invoices are fatal to a claim for credit/refund of input VAT attributable to zero-rated sales. However, the ATP itself need not be printed on the invoices.