G.R. No. 184360 & 184361, February 19, 2014
SILICON PHILIPPINES, INC. vs. COMMISSIONER OF INTERNAL REVENUE

FACTS

Silicon Philippines, Inc., a BOI-registered pioneer enterprise engaged in manufacturing and exporting integrated circuits, filed separate administrative claims for refund or tax credit of unutilized input VAT attributable to its zero-rated export sales for the first quarter of 1999 and the second quarter of 2000. Due to the inaction of the Commissioner of Internal Revenue (CIR), Silicon elevated the claims to the Court of Tax Appeals (CTA) to toll the two-year prescriptive period. The CTA Division denied both claims. For the 1999 claim, it held that Silicon failed to substantiate its zero-rated export sales because its sales invoices were not duly registered with the BIR and lacked required information. It also ruled that Silicon did not present proper evidence, like machine-validated import entries, to prove actual payment of VAT on imported capital goods. For the 2000 claim, the CTA Division denied it, finding that Silicon’s export sales did not qualify for zero-rating under the relevant tax code provisions. The CTA En Banc affirmed these denials.

ISSUE

The core issue is whether Silicon is entitled to a refund or tax credit of its claimed input VAT attributable to its zero-rated export sales for the stated periods.

RULING

The Supreme Court denied Silicon’s claims. The Court emphasized that a claim for tax refund is in the nature of a tax exemption and must be construed strictly against the taxpayer, who bears the burden of proving the factual basis of the claim by substantial evidence. For the 1999 claim, the Court agreed with the CTA that Silicon failed to substantiate its zero-rated sales. Its sales invoices were not registered with the BIR and did not contain the BIR Authority to Print, violating Sections 113 and 237 of the Tax Code, thus rendering them without probative value. Other documents like airway bills were insufficient to prove actual exportation. Regarding the input VAT on importations, Silicon did not submit the required import entry documents or Bureau of Customs receipts to prove actual VAT payment, nor did it prove the imported items qualified as capital goods under revenue regulations. For the 2000 claim, the Court affirmed that Silicon’s export sales were not subject to 0% VAT under the applicable law, Section 106(A)(2)(a)(1) of the NIRC, as it failed to prove it was an export-oriented enterprise as defined therein. Consequently, having failed to discharge its burden of proof for both periods, Silicon is not entitled to the claimed refund or tax credit.