10 Silicon Philippines Inc. v. CIR

3/2/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 639
Note.—Every judge must be the embodiment of

competence, integrity and independence. A judge should
not only be aware of the bare outlines of the law but also its
nuances and ramifications, otherwise, he would not be able
to come up with decisions which are intrinsically fair.
(Amatan vs. Aujero, 248 SCRA 511 [1995])
——o0o——
G.R. No. 172378. January 17, 2011.*
SILICON PHILIPPINES, INC., (Formerly INTEL

PHILIPPINES MANUFACTURING, INC.), petitioner, vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
Taxation; Value Added Tax; There are two types of input

Value Added Tax (VAT) credits. One is a credit/refund of input
VAT attributable to zero-rated sales under Section 112 (A) of the
National Internal Revenue Code (NIRC), and the other is a
credit/refund of input Value Added Tax (VAT) on capital goods
pursuant to Section 112 (B) of the same Code.—Before us are two
types of input VAT credits. One is a credit/refund of input VAT
attributable to zero-rated sales under Section 112 (A) of the
NIRC, and the other is a credit/refund of input VAT on capital
goods pursuant to Section 112 (B) of the same Code. In a claim for
credit/refund of input VAT attributable to zero-rated sales,
Section 112 (A) of the NIRC lays down four requisites, to wit: 1)
the taxpayer must be 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 two years after the close of the
taxable quarter when such sales were made; and 4) the creditable
input tax due or paid must be attributable to such sales, except
the transitional input tax, to the extent that such input tax has
not been applied against the output tax.
_______________
* FIRST DIVISION.
522
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522 SUPREME COURT REPORTS ANNOTATED
Silicon Philippines, Inc. vs. Commissioner Internal Revenue
Same; Same; Failure to print the word “zero-rated” on the

sales invoices or receipts is fatal to a claim for credit/refund of
input Value Added Tax (VAT) on zero-rated sales.—All told, the
non-presentation of the ATP and the failure to indicate the word
“zero-rated” in the invoices or receipts are fatal to a claim for
credit/refund of input VAT on zero-rated sales. The failure to
indicate the ATP in the sales invoices or receipts, on the other
hand, is not. In this case, petitioner failed to present its ATP and
to print the word “zero-rated” on its export sales invoices. Thus,
we find no error on the part of the CTA in denying outright
petitioner’s claim for credit/refund of input VAT attributable to its
zero-rated sales.
Same; Same; Words and Phrases; “Capital goods or
properties” refer to goods or properties with estimated useful life
greater that one year and which are treated as depreciable assets.
—To claim a refund of input VAT on capital goods, Section 112 (B)
of the NIRC requires that: 1. the claimant must be a VAT
registered person; 2. the input taxes claimed must have been paid
on capital goods; 3. the input taxes must not have been applied
against any output tax liability; and 4. the administrative claim
for refund must have been filed within two (2) years after the
close of the taxable quarter when the importation or purchase was
made. Corollarily, Section 4.106-1 (b) of RR No. 7-95 defines
capital goods as follows: “Capital goods or properties” refer to
goods or properties with estimated useful life greater that one
year and which are treated as depreciable assets under Section 29
(f), used directly or indirectly in the production or sale of taxable
goods or services.
PETITION for review on certiorari of the decision and

resolution of the Court of Tax Appeals.
The facts are stated in the opinion of the Court.
Noval and Buñag Law Office for petitioner.
The Solicitor General for respondent.
DEL CASTILLO, J.:

The burden of proving entitlement to a refund lies with
the claimant.
523
VOL. 639, JANUARY 17, 2011 523

Silicon Philippines, Inc. vs. Commissioner Internal
Revenue
This Petition for Review on Certiorari under Rule 45 of

the Rules of Court seeks to set aside the September 30,
2005 Decision1 and the April 20, 2006 Resolution2 of the
Court of Tax Appeals (CTA) En Banc.
Factual Antecedents
Petitioner Silicon Philippines, Inc., a corporation duly
organized and existing under and by virtue of the laws of
the Republic of the Philippines, is engaged in the business
of designing, developing, manufacturing and exporting
advance and large-scale integrated circuit components or
“IC’s.”3 Petitioner is registered with the Bureau of Internal
Revenue (BIR) as a Value Added Tax (VAT) taxpayer4 and
with the Board of Investments (BOI) as a preferred pioneer
enterprise.5
On May 21, 1999, petitioner filed with the respondent
Commissioner of Internal Revenue (CIR), through the One-
Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center of the Department of Finance (DOF), an application
for credit/refund of unutilized input VAT for the period
October 1, 1998 to December 31, 1998 in the amount of
P31,902,507.50, broken down as follows:
_______________
1 Rollo, pp. 15-46; penned by Associate Justice Erlinda P. Uy and

concurred in by Associate Justices Juanito C. Castañeda, Jr., Lovell R.
Bautista, Caesar A. Casanova, and Olga Palanca-Enriquez; with
Concurring and Dissenting Opinion of Presiding Justice Ernesto D.
Acosta, and Separate Concurring Opinion of Associate Justice Juanito C.
Castañeda, Jr.
2 Id., at pp. 47-53, with Dissenting Opinion of Presiding Justice
Ernesto D. Acosta.
3 Id., at p. 187.
4 Id.
5 Id.
524

Revenue
Amount
Tax Paid on Imported/Locally P 15,170,082.00
Purchased Capital Equipment
Total VAT paid on Purchases per 16,732,425.50

Invoices Received During the
Period for which this Application
is Filed
Amount of Tax Credit/Refund P31,902,507.506
Applied For
Proceedings before the CTA Division

On December 27, 2000, due to the inaction of the
respondent, petitioner filed a Petition for Review with the
CTA Division, docketed as CTA Case No. 6212. Petitioner
alleged that for the 4th quarter of 1998, it generated and
recorded zero-rated export sales in the amount of
P3,027,880,818.42, paid to petitioner in acceptable foreign
currency and accounted for in accordance with the rules
and regulations of the Bangko Sentral ng Pilipinas;7 and
that for the said period, petitioner paid input VAT in the
total amount of P31,902,507.50,8 which have not been
applied to any output VAT.9To this, respondent filed an
Answer10 raising the following special and affirmative
defenses, to wit:
“8. The petition states no cause of action as it does not allege

the dates when the taxes sought to be refunded/credited were
actually paid;
9. It is incumbent upon herein petitioner to show that it
complied with the provisions of Section 229 of the Tax Code as
amended;
10. Claims for refund are construed strictly against the
claimant, the same being in the nature of exemption from taxes
_______________
6 Id., at p. 188.
7 Id., at p. 163.
8 Id.
9 Id., at p. 166.
10 Id., at pp. 180-182.
525
VOL. 639, JANUARY 17, 2011 525

(Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95;

Manila Electric Co. vs. Commissioner of Internal Revenue, 67
SCRA 35);
11. One who claims to be exempt from payment of a

particular tax must do so under clear and unmistakable terms
found in the statute (Asiatic Petroleum vs. Llanes, 49 Phil. 466;
Union Garment Co. vs. Court of Tax Appeals, 4 SCRA 304);
12. In an action for refund, the burden is upon the taxpayer
to prove that he is entitled thereto, and failure to sustain the
same is fatal to the action for refund. Furthermore, as pointed out
in the case of William Li Yao vs. Collector (L-11875, December 28,
1963), amounts sought to be recovered or credited should be
shown to be taxes which are erroneously or illegally collected; that
is to say, their payment was an independent single act of
voluntary payment of a tax believed to be due and collectible and
accepted by the government, which had therefor become part of
the State moneys subject to expenditure and perhaps already
spent or appropriated; and
13. Taxes paid and collected are presumed to have been made
in accordance with the law and regulations, hence not
refundable.”11
On November 18, 2003, the CTA Division rendered a

Decision12 partially granting petitioner’s claim for refund of
unutilized input VAT on capital goods. Out of the amount
of P15,170,082.00, only P9,898,867.00 was allowed to be
refunded because training materials, office supplies,
posters, banners, T-shirts, books, and other similar items
purchased by petitioner were not considered capital goods
under Section 4.106-1(b) of Revenue Regulations (RR) No.
7-95 (Consolidated Value-Added Tax Regulations).13 With
regard to petitioner’s claim for credit/refund of input VAT
attributable to its zero-rated export sales, the CTA Division
denied the same because petitioner failed to present an
Authority to Print (ATP) from the BIR;14 neither did it
print on its export sales
_______________

11 Id., at p. 181.
12 Id., at pp. 186-197.
13 Id., at p. 195.
14 Id., at p. 192.
526

Revenue
invoices the ATP and the word “zero-rated.”15 Thus, the

CTA Division disposed of the case in this wise:
“WHEREFORE, in view of the foregoing the instant petition

for review is hereby PARTIALLY GRANTED. Respondent is
ORDERED to ISSUE A TAX CREDIT CERTIFICATE in favor of
petitioner in the reduced amount of P9,898,867.00 representing
input VAT on importation of capital goods. However, the claim for
refund of input VAT attributable to petitioner's alleged zero-rated
sales in the amount of P16,732,425.50 is hereby DENIED for lack
of merit.
SO ORDERED.”16
Not satisfied with the Decision, petitioner moved for

reconsideration.17 It claimed that it is not required to
secure an ATP since it has a “Permit to Adopt
Computerized Accounting Documents such as Sales Invoice
and Official Receipts” from the BIR.18 Petitioner further
argued that because all its finished products are exported
to its mother company, Intel Corporation, a non-resident
corporation and a non-VAT registered entity, the printing
of the word “zero-rated” on its export sales invoices is not
necessary.19
On its part, respondent filed a Motion for Partial
Reconsideration20 contending that petitioner is not entitled
to a credit/refund of unutilized input VAT on capital goods
because it failed to show that the goods
imported/purchased are indeed capital goods as defined in
Section 4.106-1 of RR No. 7-95.21
The CTA Division denied both motions in a Resolution22
dated August 10, 2004. It noted that:
_______________
15 Id., at pp. 192-193.

16 Id., at p. 196.
17 Id., at pp. 198-215 and 216-222.
18 Id., at pp. 201-202.
19 Id., at p. 207.
20 CTA Division Rollo, pp. 169-172.
21 Id., at p. 170.
22 Rollo, pp. 223-239.
527
VOL. 639, JANUARY 17, 2011 527

Revenue
“[P]etitioner’s request for Permit to Adopt Computerized

Accounting Documents such as Sales Invoice and Official Receipt
was approved on August 31, 2001 while the period involved in this
case was October 31, 1998 to December 31, 1998 x x x. While it
appears that petitioner was previously issued a permit by the BIR
Makati Branch, such permit was only limited to the use of
computerized books of account x x x. It was only on August 31,
2001 that petitioner was permitted to generate computerized
sales invoices and official receipts [provided that the BIR Permit
Number is printed] in the header of the document x x x.
xxxx
Thus, petitioner’s contention that it is not required to show its
BIR permit number on the sales invoices runs counter to the
requirements under the said “Permit.” This court also wonders
why petitioner was issuing computer generated sales invoices
during the period involved (October 1998 to December 1998) when
it did not have an authority or permit. Therefore, we are
convinced that such documents lack probative value and should
be treated as inadmissible, incompetent and immaterial to prove
petitioner’s export sales transaction.
xxxx
ACCORDINGLY, the Motion for Reconsideration and the
Supplemental Motion for Reconsideration filed by petitioner as
well as the Motion for Partial Reconsideration of respondent are
hereby DENIED for lack of merit. The pronouncement in the
assailed decision is REITERATED.
SO ORDERED.”23
Ruling of the CTA En Banc

Undaunted, petitioner elevated the case to the CTA En
Banc via a Petition for Review,24 docketed as EB Case No.
23.
On September 30, 2005, the CTA En Banc issued the
assailed Decision25 denying the petition for lack of merit.
Pertinent portions of the Decision read:
_______________
23 Id., at pp. 226-227; 229.

24 Id., at pp. 240-268.
25 Id., at pp. 15-46.
528

Revenue
“This Court notes that petitioner raised the same issues which
have already been thoroughly discussed in the assailed Decision,
as well as, in the Resolution denying petitioner's Motion for
Partial Reconsideration.
With regard to the first assigned error, this Court reiterates
that, the requirement of [printing] the BIR permit to print on the
face of the sales invoices and official receipts is a control
mechanism adopted by the Bureau of Internal Revenue to
safeguard the interest of the government.
This requirement is clearly mandated under Section 238 of the
1997 National Internal Revenue Code, which provides that:
SEC. 238. Printing of Receipts or Sales or Commercial
Invoice.—All persons who are engaged in business shall
secure from the Bureau of Internal Revenue an authority to
print receipts or sales or commercial invoices before a
printer can print the same.
The above mentioned provision seeks to eliminate the use of
unregistered and double or multiple sets of receipts by striking at
the very root of the problem—the printer (H. S. de Leon, The
National Internal Revenue Code Annotated, 7th Ed., p. 901). And
what better way to prove that the required permit to print was
secured from the Bureau of Internal Revenue than to show or
print the same on the face of the invoices. There can be no other
valid proof of compliance with the above provision than to show
the Authority to Print Permit number [printed] on the sales
invoices and official receipts.
With regard to petitioner’s failure to print the word “zero-
rated” on the face of its export sales invoices, it must be
emphasized that Section 4.108-1 of Revenue Regulations No. 7-95
specifically requires that all value-added tax registered persons
shall, for every sale or lease of goods or properties or services,
issue duly registered invoices which must show the word “zero-
rated” [printed] on the invoices covering zero-rated sales.
It is not enough that petitioner prove[s] that it is entitled to its
claim for refund by way of substantial evidence. Well settled in
our jurisprudence [is] that tax refunds are in the nature of tax
exemptions and as such, they are regarded as in derogation of
sovereign authority (Commissioner of Internal Revenue vs.
Ledesma, 31 SCRA 95). Thus, tax refunds are construed in
strictissimi juris against the person or entity claiming the same
(Commissioner of Internal Reve-
529
VOL. 639, JANUARY 17, 2011 529

nue vs. Procter & Gamble Philippines Manufacturing Corporation,

204 SCRA 377; Commissioner of Internal Revenue vs. Tokyo
Shipping Co., Ltd., 244 SCRA 332).
In this case, not only should petitioner establish that it is
entitled to the claim but it must most importantly show proof of
compliance with the substantiation requirements as mandated by
law or regulations.
The rest of the assigned errors pertain to the alleged errors of
the First Division: in finding that the petitioner failed to comply
with the substantiation requirements provided by law in proving
its claim for refund; in reducing the amount of petitioner’s tax
credit for input vat on importation of capital goods; and in
denying petitioner’s claim for refund of input vat attributable to
petitioner’s zero-rated sales.
It is petitioner’s contention that it has clearly established its
right to the tax credit or refund by way of substantial evidence in
the form of material and documentary evidence and it would be
improper to set aside with haste the claimed input VAT on capital
goods expended for training materials, office supplies, posters,
banners, t-shirts, books and the like because Revenue Regulations
No. 7-95 defines capital goods as to include even those goods
which are indirectly used in the production or sale of taxable
goods or services.
Capital goods or properties, as defined under Section 4.106-1(b)
of Revenue Regulations No. 7-95, refer “to goods or properties
with estimated useful life greater than one year and which are
treated as depreciable assets under Section 29 (f), used directly or
indirectly in the production or sale of taxable goods or services.”
Considering that the items (training materials, office supplies,
posters, banners, t-shirts, books and the like) purchased by
petitioner as reflected in the summary were not duly proven to
have been used, directly or indirectly[,] in the production or sale
of taxable goods or services, the same cannot be considered as
capital goods as defined above[. Consequently,] the same may not
x x x then [be] claimed as such.
WHEREFORE, in view of the foregoing, this instant Petition
for Review is hereby DENIED DUE COURSE and hereby
DISMISSED for lack of merit. This Court's Decision of November
18,
530

2003 and Resolution of August 10, 2004 are hereby AFFIRMED

in all respects.
SO ORDERED.”26
Petitioner sought reconsideration of the assailed

Decision but the CTA En Banc denied the Motion27 in a
Resolution28 dated April 20, 2006.
Issues
Hence, the instant Petition raising the following issues

for resolution:
(1) whether the CTA En Banc erred in denying petitioner’s claim for
credit/refund of input VAT attributable to its zero-rated sales in
the amount of P16,732,425.00 due to its failure:
(a) to show that it secured an ATP from the BIR and to
indicate the same in its export sales invoices; and
(b) to print the word “zero-rated” in its export sales
invoices.29
(2) whether the CTA En Banc erred in ruling that only the amount
of P9,898,867.00 can be classified as input VAT paid on capital
goods.30
Petitioner’s Arguments
Petitioner posits that the denial by the CTA En Banc of
its claim for refund of input VAT attributable to its zero-
rated sales has no legal basis because the printing of the
ATP and the word “zero-rated” on the export sales invoices
are not required under Sections 113 and 237 of the
National Internal
_______________
26 Id., at pp. 19-22.

27 Id., at pp. 269-297.
28 Id., at pp. 47-53.
29 Id., at p. 80.
30 Id., at p. 98.
531
VOL. 639, JANUARY 17, 2011 531

Revenue
Revenue Code (NIRC).31 And since there is no law

requiring the ATP and the word “zero-rated” to be
indicated on the sales invoices,32 the absence of such
information in the sales invoices should not invalidate the
petition33 nor result in the outright denial of a claim for tax
credit/refund.34 To support its position, petitioner cites
Intel Technology Philippines, Inc. v. Commissioner of

Internal Revenue,35 where Intel’s failure to print the ATP
on the sales invoices or receipts did not result in the
outright denial of its claim for tax credit/refund.36 Although
the cited case only dealt with the printing of the ATP,
petitioner submits that the reasoning in that case should
also apply to the printing of the word “zero-rated.”37 Hence,
failure to print of the word “zero-rated” on the sales
invoices should not result in the denial of a claim.
As to the claim for refund of input VAT on capital goods,
petitioner insists that it has sufficiently proven through
testimonial and documentary evidence that all the goods
purchased were used in the production and manufacture of
its finished products which were sold and exported.38
Respondent’s Arguments
To refute petitioner’s arguments, respondent asserts
that the printing of the ATP on the export sales invoices,
which serves as a control mechanism for the BIR, is
mandated by Section 238 of the NIRC;39 while the printing
of the word “zero-rated” on the export sales invoices, which
seeks to pre-
_______________
31 Id., at pp. 80-82.

32 Id., at p. 80.
33 Id., at p. 90.
34 Id., at p. 374.
35 G.R. No. 166732, April 27, 2007, 522 SCRA 657.
36 Id., at p. 696.
37 Rollo, p. 373 (unpaged).
38 Id., at p. 98.
39 Id., at p. 324.
532

Revenue
vent purchasers of zero-rated sales or services from

claiming non-existent input VAT credit/refund,40 is
required under RR No. 7-95, promulgated pursuant to
Section 244 of the NIRC.41 With regard to the unutilized
input VAT on capital goods, respondent counters that
petitioner failed to show that the goods it
purchased/imported are capital goods as defined in Section
4.106-1 of RR No. 7-95.42
Our Ruling
The petition is bereft of merit.
Before us are two types of input VAT credits. One is a
credit/refund of input VAT attributable to zero-rated sales
under Section 112 (A) of the NIRC, and the other is a
credit/refund of input VAT on capital goods pursuant to
Section 112 (B) of the same Code.
Credit/refund of input VAT on zero-rated sales
In a claim for credit/refund of input VAT attributable to
zero-rated sales, Section 112 (A)43 of the NIRC lays down
four requisites, to wit:
_______________
40 Id., at pp. 329-330.

41 Id., at p. 327.
42 Id., at p. 335.
43 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 or effectively zero-rated may, within
two (2) years after the close of the taxable quarter when the sales were
made, apply for the issuance of a tax credit certificate or refund of
creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been
applied against output tax: Provided, however, That in the case of zero-
rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108(B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had
been duly accounted for in accordance
533
VOL. 639, JANUARY 17, 2011 533

Revenue
1) the taxpayer must be 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 two years after the close of the
taxable quarter when such sales were made; and
4) the creditable input tax due or paid must be attributable to such
sales, except the transitional input tax, to the extent that such
input tax has not been applied against the output tax.
To prove that it is engaged in zero-rated sales, petitioner

presented export sales invoices, certifications of inward
remittance, export declarations, and airway bills of lading
for the fourth quarter of 1998. The CTA Division, however,
found the export sales invoices of no probative value in

establishing petitioner’s zero-rated sales for the purpose of
claiming credit/refund of input VAT because petitioner
failed to show that it has an ATP from the BIR and to
indicate the ATP and the word “zero-rated” in its export
sales invoices.44 The CTA Division cited as basis Sections
113,45
_______________
with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP):
Provided, further, That where the taxpayer is engaged in zero-rated or
effectively zero-rated sale and also in taxable or exempt sale of goods or
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, it
shall be allocated proportionately on the basis of the volume of sales.
44 Rollo, pp. 192-193.

45 SECTION 113. Invoicing and Accounting Requirements for VAT-
Registered Persons.—
(A) Invoicing Requirements.—A VAT-registered person shall, for every
sale, issue an invoice or receipt. In addition to the information required
under Section 237, the following information shall be indicated in the
invoice or receipt:
(1) A statement that the seller is a VAT-registered person,
followed by his taxpayer’s identification number; and
(2) The total amount which the purchaser pays or is
obligated to pay to the seller with the indication that
such amount includes the value-added tax.
534

Revenue
23746 and 23847 of the NIRC, in relation to Section 4.108-1

of
_______________
(B) Accounting Requirements.—Notwithstanding the provisions of

Section 233, all persons subject to the value-added tax under Sections 106
and 108 shall, in addition to the regular accounting records required,
maintain a subsidiary sales journal and subsidiary purchase journal on
which the daily sales and purchases are recorded. The subsidiary journals
shall contain such information as may be required by the Secretary of
Finance.
46 SECTION 237. Issuance of Receipts or Sales or Commercial

Invoices.—All persons subject to an internal revenue tax shall, for each
sale or transfer of merchandise or for services rendered valued at Twenty-
five pesos (P25.00) or more, issue duly registered receipts or sales or
commercial invoices, prepared at least in duplicate, showing the date of
transaction, quantity, unit cost and description of merchandise or nature
of service: Provided, however, That in the case of sales, receipts or
transfers in the amount of One Hundred Pesos (P100.00) or more, or
regardless of amount, where the sale or transfer is made by a person liable
to value-added tax to another person also liable to value-added tax; or
where the receipt is issued to cover payment made as rentals,
commissions, compensations or fees, receipts or invoices shall be issued
which shall show the name, business style, if any, and address of the
purchaser, customer or client; Provided, further, That where the
purchaser is a VAT-registered person, in addition to the information
herein required, the invoice or receipt shall further show the Taxpayer
Identification Number (TIN) of the purchaser.
The original of each receipt or invoice shall be issued to the purchaser,
customer or client at the time the transaction is effected, who, if engaged
in business or in the exercise of profession, shall keep and preserve the
same in his place of business for a period of three (3) years from the close
of the taxable year in which such invoice or receipt was issued, while the
duplicate shall be kept and preserved by the issuer, also in his place of
business, for a like period.
The Commissioner may, in meritorious cases, exempt any person
subject to an internal revenue tax from compliance with the provisions of
this Section.
47 SECTION 238. Printing of Receipts or Sales or Commercial
Invoices.—All persons who are engaged in business shall secure from the
Bureau of Internal Revenue an authority to print receipts or sales or
commercial invoices before a printer can print the same.
545
VOL. 639, JANUARY 17, 2011 545

Revenue
RR No. 7-95.48
_______________
No authority to print receipts or sales or commercial invoices shall be

granted unless the receipts or invoices to be printed are serially numbered
and shall show, among other things, the name, business style, Taxpayer
Identification Number (TIN) and business address of the person or entity
to use the same, and such other information that may be required by rules
and regulations to be promulgated by the Secretary of Finance, upon

recommendation of the Commissioner.
All persons who print receipt or sales or commercial invoices shall
maintain a logbook/register of taxpayer who availed of their printing
services. The logbook/register shall contain the following information:
(1) Names, Taxpayer Identification Numbers of the
persons or entities for whom the receipts or sales or
commercial invoices are printed; and
(2) Number of booklets, number of sets per booklet,
number of copies per set and the serial numbers of the
receipts or invoices in each booklet.
48 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 must
show:
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. the word “zero rated” [printed] on the invoice covering zero-rated
sales; and
6. the invoice value or consideration.
In the case of sale of real property subject to VAT and where the zonal
or market value is higher than the actual consideration, the VAT shall be
separately indicated in the invoice or receipt.
Only VAT-registered persons are required to print their TIN followed
by the word “VAT” in their invoice or receipts and this shall be considered
as a “VAT Invoice.” All purchases covered by invoices other than “VAT
Invoice” shall not give rise to any input tax.
536

Revenue
We partly agree with the CTA.

Printing the ATP on the invoices or
receipts is not required
It has been settled in Intel Technology Philippines, Inc.
v. Commissioner of Internal Revenue49 that the ATP need
not be reflected or indicated in the invoices or receipts
because there is no law or regulation requiring it.50 Thus,
in the absence of such law or regulation, failure to print the
ATP on the invoices or receipts should not result in the
outright denial of a claim or the invalidation of the invoices

or receipts for purposes of claiming a refund.51
ATP must be secured from the BIR
But while there is no law requiring the ATP to be
printed on the invoices or receipts, Section 238 of the NIRC
expressly requires persons engaged in business to secure
an ATP from the BIR prior to printing invoices or receipts.
Failure to do so makes the person liable under Section
26452 of the NIRC.
_______________
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 buyer and the duplicate to be retained by the
seller as part of his accounting records.
49 Supra note 35.
50 Id., at pp. 687 and 693.
51 Id., at p. 694.
52 SECTION 264. Failure or Refusal to Issue Receipts or Sales or
Commercial Invoices, Violations Related to the Printing of such Receipts or
Invoices and Other Violations.—
(a) Any person who, being required under Section 237 to issue
receipts or sales or commercial invoices, fails or refuses to issue such
receipts or invoices, issues receipts or invoices that do not truly
537
VOL. 639, JANUARY 17, 2011 537

Revenue
This brings us to the question of whether a claimant for

unutilized input VAT on zero-rated sales is required to
present proof that it has secured an ATP from the BIR
prior to the printing of its invoices or receipts.
We rule in the affirmative.
Under Section 112 (A) of the NIRC, a claimant must be
engaged in sales which are zero-rated or effectively zero-
rated. To prove this, duly registered invoices or receipts
evidencing zero-rated sales must be presented. However,
since the ATP is not indicated in the invoices or receipts,
the only way to verify whether the invoices or receipts are
duly registered is by requiring the claimant to present its
ATP from the BIR. Without this proof, the invoices or
receipts would have no probative value for the purpose of

refund. In the case of Intel, we emphasized that:
“It bears reiterating that while the pertinent provisions of the

Tax Code and the rules and regulations implementing them
require entities engaged in business to secure a BIR authority to
print invoices or receipts and to issue duly registered invoices or
receipts, it is not specifically required that the BIR authority to
print be re-
_______________
reflect and/or contain all the information required to be shown therein or uses
multiple or double receipts or invoices, shall, upon conviction for each act or
omission, be punished by a fine of not less than One thousand pesos (P1,000) but
not more than Fifty thousand pesos (P50,000) and suffer imprisonment of not less
than two (2) years but not more than four (4) years.
(b) Any person who commits any of the acts enumerated hereunder shall be
penalized in the same manner and to the same extent as provided for in this
Section:
(1) Printing of receipts or sales or commercial invoices
without authority from the Bureau of Internal Revenue; or
(2) Printing of double or multiple sets of invoices or receipts;
(3) Printing of unnumbered receipts or sales or commercial
invoices, not bearing the name, business style, Taxpayer
Identification Number, and business address of the person
or entity.
538

flected or indicated therein. Indeed, what is important with

respect to the BIR authority to print is that it has been
secured or obtained by the taxpayer, and that invoices or
receipts are duly registered.”53 (Emphasis supplied)
Failure to print the word “zero-rated”

on the sales invoices is fatal to a claim
for refund of input VAT
Similarly, failure to print the word “zero-rated” on the
sales invoices or receipts is fatal to a claim for credit/refund
of input VAT on zero-rated sales.
In Panasonic Communications Imaging Corporation of
the Philippines (formerly Matsushita Business Machine
Corporation of the Philippines) v. Commissioner of Internal
Revenue,54 we upheld the denial of Panasonic’s claim for
tax credit/
refund due to the absence of the word “zero-rated” in its

invoices. We explained that compliance with Section 4.108-
1 of RR 7-95, requiring the printing of the word “zero rated”
on the invoice covering zero-rated sales, is essential as this
regulation proceeds from the rule-making authority of the
Secretary of Finance under Section 24455 of the NIRC.
All told, the non-presentation of the ATP and the failure
to indicate the word “zero-rated” in the invoices or receipts
are fatal to a claim for credit/refund of input VAT on zero-
rated sales. The failure to indicate the ATP in the sales
invoices or receipts, on the other hand, is not. In this case,
petitioner failed to present its ATP and to print the word
“zero-rated” on its export sales invoices. Thus, we find no
error on the part of
_______________
53 Supra note 35 at pp. 695-696.

54 G.R. No. 178090, February 8, 2010, 612 SCRA 28, 36-37.
55 SECTION 244. Authority of Secretary of Finance to Promulgate
Rules and Regulations.—The Secretary of Finance, upon recommendation
of the Commissioner, shall promulgate all needful rules and regulations
for the effective enforcement of the provisions of this Code.
539
VOL. 639, JANUARY 17, 2011 539

Revenue
the CTA in denying outright petitioner’s claim for credit/

refund of input VAT attributable to its zero-rated sales.
Credit/refund of input VAT on capital goods
Capital goods are defined under Section
4.106-1(b) of RR No. 7-95
To claim a refund of input VAT on capital goods, Section
112 (B)56 of the NIRC requires that:
1. the claimant must be a VAT registered person;

2. the input taxes claimed must have been paid on capital goods;
3. the input taxes must not have been applied against any output
tax liability; and
4. the administrative claim for refund must have been filed within
two (2) years after the close of the taxable quarter when the
importation or purchase was made.
Corollarily, Section 4.106-1 (b) of RR No. 7-95 defines

capital goods as follows:
“Capital goods or properties” refer to goods or properties with

estimated useful life greater that one year and which are treated
as depreciable assets under Section 29 (f),57 used directly or
indirectly in the production or sale of taxable goods or services.”
_______________
56 SECTION 112. Refunds or Tax Credits of Input Tax.—

xxxx
(B) Capital Goods—A VAT-registered person may apply for the
issuance of a tax credit certificate or refund of input taxes paid on capital
goods imported or locally purchased, to the extent that such input taxes
have not been applied against output taxes. The application may be made
only within two (2) years after the close of the taxable quarter when the
importation or purchase was made.
57 Now Section 34 (f) of the NIRC.
540

Revenue
Based on the foregoing definition, we find no reason to

deviate from the findings of the CTA that training
materials, office supplies, posters, banners, T-shirts, books,
and the other similar items reflected in petitioner’s
Summary of Importation of Goods are not capital goods. A
reduction in the refundable input VAT on capital goods
from P15,170,082.00 to P9,898,867.00 is therefore in order.
WHEREFORE, the Petition is hereby DENIED. The
assailed Decision dated September 30, 2005 and the
Resolution dated April 20, 2006 of the Court of Tax Appeals
En Banc are hereby AFFIRMED.
SO ORDERED.
Corona (C.J., Chairperson), Velasco, Jr., Leonardo-De

Castro and Perez, JJ., concur.
Petition denied, judgment and resolution affirmed.
Note.—VAT is a tax on transactions, imposed at every

stage of the distribution process on the sale, barter,
exchange of goods or property, and on the performance of
services, even in the absence of profit attributable thereto.
The term “in the course of trade or business” requires the
regular conduct or pursuit of a commercial or an economic
activity, regardless of whether or not the entity is profit-
oriented. (Commissioner of Internal Revenue vs. Court of

Appeals, 329 SCRA 237 [2000])
——o0o——
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3/2/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 639

Note.—Every judge must be the embodiment of

G.R. No. 172378. January 17, 2011.*

SILICON PHILIPPINES, INC., (Formerly INTEL

Taxation; Value Added Tax; There are two types of input

522 SUPREME COURT REPORTS ANNOTATED

Silicon Philippines, Inc. vs. Commissioner Internal Revenue

Same; Same; Failure to print the word “zero-rated” on the

PETITION for review on certiorari of the decision and

DEL CASTILLO, J.:

VOL. 639, JANUARY 17, 2011 523

This Petition for Review on Certiorari under Rule 45 of

1 Rollo, pp. 15-46; penned by Associate Justice Erlinda P. Uy and

524 SUPREME COURT REPORTS ANNOTATED

Total VAT paid on Purchases per 16,732,425.50

Proceedings before the CTA Division

“8. The petition states no cause of action as it does not allege

VOL. 639, JANUARY 17, 2011 525

(Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95;

11. One who claims to be exempt from payment of a

On November 18, 2003, the CTA Division rendered a

526 SUPREME COURT REPORTS ANNOTATED

invoices the ATP and the word “zero-rated.”15 Thus, the

“WHEREFORE, in view of the foregoing the instant petition

Not satisfied with the Decision, petitioner moved for

15 Id., at pp. 192-193.

VOL. 639, JANUARY 17, 2011 527

“[P]etitioner’s request for Permit to Adopt Computerized

Ruling of the CTA En Banc

23 Id., at pp. 226-227; 229.

528 SUPREME COURT REPORTS ANNOTATED

VOL. 639, JANUARY 17, 2011 529

nue vs. Procter & Gamble Philippines Manufacturing Corporation,

530 SUPREME COURT REPORTS ANNOTATED

2003 and Resolution of August 10, 2004 are hereby AFFIRMED

Petitioner sought reconsideration of the assailed

Hence, the instant Petition raising the following issues

26 Id., at pp. 19-22.

VOL. 639, JANUARY 17, 2011 531

Revenue Code (NIRC).31 And since there is no law

Intel Technology Philippines, Inc. v. Commissioner of

31 Id., at pp. 80-82.

532 SUPREME COURT REPORTS ANNOTATED

vent purchasers of zero-rated sales or services from

40 Id., at pp. 329-330.

VOL. 639, JANUARY 17, 2011 533

1) the taxpayer must be VAT-registered;

To prove that it is engaged in zero-rated sales, petitioner

found the export sales invoices of no probative value in

44 Rollo, pp. 192-193.

534 SUPREME COURT REPORTS ANNOTATED

23746 and 23847 of the NIRC, in relation to Section 4.108-1

(B) Accounting Requirements.—Notwithstanding the provisions of

46 SECTION 237. Issuance of Receipts or Sales or Commercial

VOL. 639, JANUARY 17, 2011 545

No authority to print receipts or sales or commercial invoices shall be

and regulations to be promulgated by the Secretary of Finance, upon

536 SUPREME COURT REPORTS ANNOTATED

We partly agree with the CTA.

outright denial of a claim or the invalidation of the invoices