G.R. No. 172378 - Silicon Phil., Inc. vs. Commissioner of Internal Revenue

Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) is a corporation engaged in designing, developing, manufacturing, and exporting advanced and large-scale integrated circuit components ("IC's").
It is registered with the Bureau of Internal Revenue (BIR) as a Value Added Tax (VAT) taxpayer and with the Board of Investments (BOI) as a preferred pioneer enterprise.

On May 21, 1999, petitioner 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.

₱15,170,082.00 represented VAT paid on imported/locally purchased capital equipment.
₱16,732,425.50 represented total VAT paid on purchases during the period.

Due to respondent’s inaction, petitioner filed a Petition for Review before the CTA Division on December 27, 2000 (CTA Case No. 6212).
Petitioner alleged:

It generated and recorded zero-rated export sales of ₱3,027,880,818.42 for the 4th quarter of 1998, paid in acceptable foreign currency.
Petitioner paid input VAT of ₱31,902,507.50 which have not been applied to any output VAT.

Failure to allege dates of actual tax payments.
Non-compliance with Section 229 of the Tax Code.
Claim for refund construed strictly against the claimant; claimants must prove entitlement strictly under law.
Taxes paid are presumed lawful and not refundable unless erroneously or illegally collected.

Partially granted the refund on input VAT on capital goods, allowing ₱9,898,867.00 out of ₱15,170,082.00, disallowing purchases such as training materials, office supplies, and similar items as capital goods.
Denied claim for credit/refund of input VAT attributable to zero-rated export sales for failure to present Authority to Print (ATP) from BIR and for not printing ATP and “zero-rated” on export sales invoices.

It was not required to secure ATP as it had a permit to adopt computerized accounting documents.
Printing the word “zero-rated” on export sales invoices was unnecessary because finished products were exported to its non-VAT registered mother company.

Respondent filed a Motion for Partial Reconsideration contesting classification of some goods as capital goods.
CTA Division denied all motions (August 10, 2004), emphasizing:

Petitioner’s permit to print computerized sales invoices was only granted in August 2001, after the relevant period (1998).
Computer-generated invoices for 1998 without ATP were inadmissible as proof.
Confirmed earlier Decision’s rulings.

Petitioner elevated the case to the CTA En Banc via Petition for Review (EB Case No. 23).
The CTA En Banc Decision (September 30, 2005):

Denied the petition for lack of merit; affirmed CTA Division ruling.
Emphasized that printing ATP number on invoices is a control mechanism mandated by Section 238 of the Tax Code to safeguard government interests.
Stressed that printing the word “zero-rated” on invoices is required by Section 4.108-1 of Revenue Regulations No. 7-95 for VAT purposes and non-compliance is fatal to refund claims.
Held that evidence presented failed to prove some items classified as capital goods.

Whether the CTA En Banc erred in denying petitioner’s claim for credit/refund of input VAT attributable to zero-rated sales in the amount of ₱16,732,425.00 for failure:

To show that it secured an Authority to Print (ATP) from the BIR and to indicate the same in its export sales invoices.
To print the word “zero-rated” on its export sales invoices.

Whether the CTA En Banc erred in ruling that only ₱9,898,867.00 can be classified as input VAT paid on capital goods out of the claimed ₱15,170,082.00.