G.R. No. 182737 . March 02, 2016.
SILICON PHILIPPINES, INC. (FORMERLY INTEL PHILIPPINES MANUFACTURING, INC.), PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FACTS

Petitioner Silicon Philippines, Inc., a VAT-registered exporter, filed administrative claims for refund or tax credit of its alleged excess/unutilized input VAT on imported capital goods for the second, third, and fourth quarters of 2001, totaling ₱25,041,116.22. Due to the inaction of the Commissioner of Internal Revenue, petitioner elevated the claims to the Court of Tax Appeals (CTA) via separate petitions, which were later consolidated.
The CTA Second Division denied the claims. For the claim pertaining to zero-rated sales, the court found petitioner failed to substantiate its export sales with the required documents, such as export declarations and proof of foreign currency remittance, presenting only a general certificate of inward remittances for the entire year. For the claim on input VAT on capital goods, the court ruled petitioner failed to prove that the imported items for the second quarter were capital goods with a useful life of more than one year and treated as depreciable assets. For the third and fourth quarters, petitioner failed to submit competent evidence that the claimed input VAT was not offset against any output VAT liability.

ISSUE

Whether the CTA correctly denied petitioner’s claim for refund or tax credit of its alleged excess/unutilized input VAT.

RULING

Yes, the Supreme Court affirmed the CTA’s denial. The claim for refund is strictly construed against the taxpayer, who bears the burden of proof. For a refund based on zero-rated sales under Section 112(A) of the National Internal Revenue Code (NIRC), the taxpayer must prove the fact of zero-rated sales. The Court agreed with the CTA that petitioner did not present the specific documents, like bills of lading and bank credit advices, to substantiate each zero-rated transaction for the pertinent quarters, rendering its reported export sales unqualified for zero-rating.
For a refund of input VAT on capital goods under Section 112(B), the taxpayer must prove, among others, that the purchases are capital goods. The Court upheld the CTA’s finding that for the second quarter, petitioner’s summary list included non-depreciable items and it failed to present general ledgers or financial statements to show the items were capitalized and depreciated. For the third and fourth quarters, the photocopy of a document purporting to show non-application of the input VAT was correctly denied admission for being a mere photocopy without compliance with the rules on evidence. Consequently, petitioner failed to discharge its burden of proof for both legal bases for the refund.