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Silicon Philippines Intel Philippines Manufacturing vs. CIR Facts:Silicon Philippines, Inc.

is a corporation duly organized andexisting under the laws of the Philippines. It is registered with theBIR das a VAT-taxpayer and with the BOI as a preferred pioneer enterprise.Then, on May, 1999, Silicon filed with the CIR an application for credit/refund of unutilized input VAT for the period of Oct. 1,1998 to Dec. 31, 1998.Due to the inaction of the CIR, Silicon, on Dec. 27, 2000, filed aPetition for Review with the CTA Division. Silicon alleged that the 4th quarter of 1998, it generated and recorded zero-ratedexport sales paid to Silicon in acceptable foreign currency andthat for the said period, Silicon paid input VAT in the totalamount which have not been applied to any output VAT.The CIR, on the other hand, raised the defenses that: 1. Silicon did not show that it complied with the provisions of Sec. 229 of the Tax Code; 2. That claims for refund are construed strictly against the claimant similar to the nature of exemption fromtaxes; and that Silicon failed to prove that is entitled for refund.The CTA Division granted Silicons claim for refund of unutilized input VAT on capital goods. However, it deniedSil icons claim for credit/refund of input VAT attributable to its zero-rated export sales. It is because Silicon failed to present anAuthority to Print (ATP) from the BIR neither did it print on its export sales invoices the ATP and the word zero-rated.Silicon moved for reconsideration claiming that it is not required to secure an ATP since it has a Permit to Adopt ComputerizedAccounting Documents such as Sales Invoice and OfficialReceipts from the BIR. And that the printing of the word zero-rated on its export sales invoices is not necessary because all its finished products are exported to its mother company, Intel Corp.,a non-resident corporation and a non-VAT registered entity. ISSUE: W/N Silicon entitled to claim from refund of Input VATattributable to its zero-rated sales.Ruling: no.There are two types of input VAT credits:1.A credit/refund of input VAT attributable to zero-ratedsales under Sec. 112(A) of the NIRC; and2.A credit/refund of input VAT on capital goods pursuantto Sec. 112(B) of the same Code.To claim for credit/refund of input VAT attributable to zero-ratedsales, Sec. 112(A) laid down 4 requisites:1.The taxpayer must be a VAT-registered; 2.The taxpayer must be engaged in sales which are zero-rated or effectively zero-rated;3.The claim must be filed within 2 years after the close of the taxable quarter when such sales were made; and 4.The creditable input tax due or paid must be attributableto such sales, except the transitional input tax, to the extent that such input tax has not been applied againstthe output tax. A. Printing the ATP on the invoices or receipts is notrequired. In a case, the SC ruled that ATP need not be reflected or indicated in the invoices or receipts because there is no lawor regulation requiring it.Thus, failure to print the ATP on the invoices or receiptsshould not result in the outright denial of a claim or theinvalidation of the invoices or receipts for purposes of claiming a refund. B.ATP must be secured from the BIR Sec. 238 of the NIRC expressly requires persons engaged in business to secure an ATP from the BIR prior to printinginvoices or receipts. Failure to do so, makes the person liableunder Sec. 264 of the Tax Code. W/N a claimant for unutilized input VAT on zero-rated sales isrequired to present proof that it has secured an ATP from theBIR prior to the printing of its invoices or receipts. YES. Since ATP is not indicated in the invoices or receipts, theonly way to verify whether the invoices or receipts are dulyregistered is by requiring the claimant to present its ATP from theBIR. Without which, the invoices would have no probative valuefor the purpose of refund. Failure to print the word zero-rated on the sales invoices isfatal to a claim for refund of input VAT. In compliance with Sec. 4.108-1 of RR 7-95, requiring the printing of the word zero-rated on the invoice covering zerorate sales is essential as this regulation proceeds from therulemaking authority of the Secretary of Finance under Sec. 244of the NIRC. In this case, Silicon failed to present its ATP and to print the wordzero-rated on its export sales invoices.Thus, the claim for credit/refund of input VAT attributable to itszero-rated sales must be denied. MICROSOFT PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE- VAT ZERO RATING FACTS: Microsoft renders marketing services to two affiliated nonresident foreign corporations with their services being paid for in foreign currency. Microsoft filed a claim for refund for unutilized input VAT but the CTA denied the same on the basis that the official receipts issued did not bear the imprinted word zero-rated on its face and are thus not valid evidence of Microsofts sales. ISSUE: Is Microsoft entitled to a refund?

HELD: NO. The regulations in effect when the sales were made by Microsoft clearly indicate in the portion outlining the Invoicing Requirements that the word zero-rated must be imprinted in the invoice. Without such, the invoice are not considered as VAT invoices and thus could not give rise to any input tax. The Court added that the reason for enforcing this rule even if only based on regulation is that it prevents buyers from falsely claiming input VAT from their purchases when no VAT is actually paid. COMMISSIONER OF INTERNAL REVENUE VS. SEKISUI JUSHI PHILIPPINES, INC. - INPUT VAT FACTS: Sekisui Jushi is a PEZA entity engaged in manufacture and export of strapping bands and other packaging materials seeking for refund of unutilized input taxes. ISSUE: Being a PEZA exporter, can Petitioner claim its unutilized input VAT? HELD: YES. PEZA entities can avail of two alternative or subsequent incentives of ITH and 5% GIE. It is only in the latter where the VAT is not imposed on the PEZA entity on its sales. Being under ITH, it will be subject to VAT on sales and should VAT-register. However, (1) sales to the PEZA entity, regardless of incentive availed, is zero-rated on the part of the seller since PEZA is considered foreign soil and thus sales to them are considered as export sales and (2) if the PEZA entity is an exporter, its input VAT are subject to refund not by virtue of its PEZA status (and thus regardless of whether its at 5% GIE or ITH) but due to the nature of its transactions (i.e., export sales). Western Mindanao Power Corporation Vs. Commissioner of Internal RevenuePONENTE: Sereno, J. FACTS: Petitioner Western Mindanao Power Corporation (WMPC) is a domestic corporation engaged inthe production and sale of electricity. It is registered with the Bureau of Internal Revenue (BIR) as a VATtaxpayer. WMPC alleges that it sells electricity solely to the National Power Corporation (NPC), which isin turn exempt from the payment of all forms of taxes, duties, fees and imposts, pursuant to Section 131of Republic Act (R.A.) No. 6395 (An Act Revising the Charter of the National Power Corporation). In viewthereof and pursuant to Section 108(B) (3) of the NIRC, WMPC s power generation services to NPC is zero-rated.Under Section 112(A) of the NIRC, a VAT-registered taxpayer may, within two years after theclose of the taxable quarter, apply for the issuance of a tax credit or refund of creditable input tax due orpaid and attributable to zero-rated or effectively zero-rated sales. Hence, on 20 June 2000 and 13 June 2001, WMPC filed with the CIR applications for a tax credit certificate of its input VAT covering thetaxable 3 rd and 4 th quarters of 1999 (amounting to 3,675,026.67) and all the taxable quarters of 2000(amounting to 5,649,256.81). Noting that the CIR was not acting on its application, and fearing that its claim would soon bebarred by prescription, WMPC on 28 September 2001 filed with the CTA in Division a Petition forReview, seeking refund/tax credit certificates for the total amount of 9,324,283.30. The CIR filed its Comment on the CTA Petition, arguing that WMPC was not entitled to the latters claim for a tax refund in view of its failure to comply with the invoicing requirements under Section 113 of the NIRC in relation to Section 4.108-1 of RR 7-95, which provides: SECTION 4.108-1. Invoicing Requirements All VAT-registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales or commercial invoices which mustshow:1. the name, TIN and address of seller;2. date of transaction;3. quantity, unit cost and description

of merchandise or nature of service;4. the name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client;5. t he word zero rated imprinted on the invoice covering zero -rated sales; and6. the invoice value or consideration.In the case of sale of real property subject to VAT and where the zonal or market value is higherthan the actual consideration, the VAT shall be separately indicated in the invoice or receipt.Only VATregistered persons are required to print their TIN followed by the word VAT in theirinvoice or receipts and this shall be considered as a VAT Invoice. All purchases covered by invoices ot her than VAT Invoice" shall not give rise to any input tax. If the taxable person is also engaged in exempt operations, he should issue separate invoices or receipts for the taxable and exempt operations. A VAT Invoice shall be issued only for sales of goods,properties or services subject to VAT imposed in Sections 100 and 102 of the Code.The invoice or receipt shall be prepared at least in duplicate, the original to be given to the buyerand the duplicate to be retained by the seller as part of his accounting records. (Underscoring supplied.) WMPC countered that the invoicing and accounting requirements laid down in RR 7-95 were merely compliance requirements, which were not indispensable to establish the claim for refund of excess and unutilized input VAT. Also, Section 113 of the NIRC prevailing at the time the salestransactions were made did not expressly state that failure to comply with all the invoicingrequirements would result in the disallowance of a tax credit refund. The express requirement that the term zero-rated sale shall be written or printed prominently on the VAT invoice or official receipt for sales subject to zero percent (0%) VAT appeared in Section 113 of the NIRC only after it wasamended by Section 11 of R.A. 9337. This amendment cannot be applied retroactively, considering thatit took effect only on 1 July 2005, or long after petitioner filed its claim for a tax refund, and consideringfurther that the RR 7-95 is punitive in nature. Further, since there was no statutory requirement for imprinting the phrase zero rated on official receipts prior to 1 July 2005, the RR 7 -95 constitutedundue expansion of the scope of the legislation it sought to implement. ISSUE: Whether or not it is correct to refuse WMPC a refund or tax credit on inout tax on the ground that the latters Official receipts do not contain the phrase zero rated. RATIO: Yes. Being a derogation of the sovereign authority, a statute granting tax exemption is strictlyconstrued against the person or entity claiming the exemption. When based on such statute, a claim fortax refund partakes of the nature of an exemption. Hence, the same rule of strict interpretation againstthe taxpayer-claimant applies to the claim. In the present case, petitioners claim for a refund or tax credit of input VAT is anchored on Section 112(A) of the NIRC, viz : Section 112. Refunds or Tax Credits of Input Tax . -(A) Zero-rated or Effectively Zero-rated Sales

. - any VAT-registered person, whose sales are zero-rated oreffectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales weremade, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paidattributable to such sales, except transitional input tax, to the extent that such input tax has not beenapplied against output tax: Provided, however, That in the case of zero-rated sales under Section106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign currency exchangeproceeds thereof had been duly accounted for in accordance with the rules and regulations of the BangkoSentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectivelyzero-rated sale and also in taxable or exempt sale of goods of 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, itshall be allocated proportionately on the basis of the volume of sales. Thus, a taxpayer engaged in zero-rated or effectively zero-rated sale may apply for the issuanceof a tax credit certificate, or refund of creditable input tax due or paid, attributable to the sale.In a claim for tax refund or tax credit, the applicant must prove not only entitlement to the grantof the claim under substantive law. It must also show satisfaction of all the documentary and evidentiaryrequirements for an administrative claim for a refund or tax credit. Hence, the mere fact that WMPCs application for zero-rating has been approved by the CIR does not, by itself, justify the grant of a refundor tax credit. The taxpayer claiming the refund must further comply with the invoicing and accountingrequirements mandated by the NIRC, as well as by revenue regulations implementing them.Under the NIRC, a creditable input tax should be evidenced by a VAT invoice or official receipt,which may only be considered as such when it complies with the requirements of RR 7-95, particularlySection 4.108-1. This section requires, among others , that (i) f the sale is subject to zero percent (0%)valueadded tax, the term zero-rated sale shall be written or printed prominently on the invoice or receipt.