G.R. NO. 166732 - INTEL TECHNOLOGY PHILIPPINES, INC., VS. COMMISSIONER OF INTERNAL REVENUE.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, it is respectfully prayed that this Honorable Court after trial render judgment: Declaring Petitioner entitled to the issuance of tax credit certificate in the amount of PhP11,770,181.70 representing VAT input taxes paid by it during the period from April 01, 1998 to June 30, 1998, for which no tax credit certificate was issued; Ordering respondent to issue the tax credit certificate in favor of petitioner in the amount of PhP11,770,181.70 referred to above; and Granting petitioner such other reliefs as may be just and equitable under the premises. [9] The Commissioner, as respondent, opposed the petition and prayed for its dismissal. The following special and affirmative defenses were raised: Petitioner, being allegedly registered with the Philippine Economic Zone Authority, is exempt from all taxes, including value-added tax, pursuant to Section 24 of Republic Act No. 7916, in relation to Section 103 of the Tax Code, as amended by RA 7716. Since its sales are not zero-rated but are exempt from VAT, petitioner is not entitled to refund of input tax pursuant to Section 4.106-1 and 4.103-1 of Revenue Regulations No. 7-95; Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau; The amount of P47,582,813.72 being claimed by petitioner as alleged VAT input taxes for the period of 01 July 1997 to 31 December 1997 was not properly documented; In an action for refund the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/credit; Petitioner must show that it has complied with the provisions of Sections 204(c) and 229 of the Tax Code on the prescriptive period for claiming tax refund/credit; Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation. [10] The CTA commissioned the services of an independent auditor, Eliseo Aurellado, to conduct an audit and evaluate petitioner's claim. On March 22, 2001, he submitted a Report to the CTA with the following conclusion: In performing the above procedures, except for the net effect of the Input VAT paid on its purchases as compared to the results of my review of supporting documents, as shown in Annex "B" no other matters came to my attention that cause me to believe that the attached Schedule of Input VAT Paid should be adjusted. We believe that only the amounts of P9,688,809.39 is a valid claim for tax credit. This report relates only to the application of Intel Technology Philippines, Inc. for tax credit/refund specified on page 1 of this report and does not extend to the Financial Statements, taken as a whole, for any period where the aforementioned tax refund is present. [11] Appended thereto were the summary of purchases, statements of input VAT exception, and statements of zero-rated export sales. [12] Petitioner adduced testimonial evidence and offered the following documents in evidenc