Silicon v. CIR

Facts: Petitioner, a VAT-registered Philippine corp., is engaged in the business of, among others, manufacturing and exporting advance and large-scale integrated circuit components. It filed with the CIR an application for credit/refund of unutilized input VAT for the 4th quarter of 1998. It then filed a Petition for Review with the CTA, alleging that for that same period, it generated and recorded zero-rated export sales; and that it also paid input VAT which have not been applied to any output VAT. The CTA partially granted the claim for refund of unutilized input VAT on capital goods because not all items fall within the definition of “capital goods” under the law. On its claim for credit/refund of input VAT attributable to zero-rated export sales, the CTA denied the same because petitioner failed to present an Authority to Print (ATP) from the BIR; neither did it print on its export sales invoices the ATP and the word "zero-rated”.

Issue: WON Silicon is entitled to the refund/credit of unutilized input VAT on all purchased capital goods and on those attributable to exported sales.

Held: Yes but only to the extent of the capital goods that fall within the definition of “capital goods” under the law. Under Section 4.106-1 (b) of RR No. 7-95, “capital goods or properties” refer to those with an estimated useful life greater than one year and which are treated as depreciable assets under the law, used directly or indirectly with the production of taxable goods or services. Office supplies, posters, books, and other similar items purchased by petitioner clearly do not fall within that category.

The NIRC requires persons engaged in business to secure an ATP from the BIR prior to printing invoices or receipts for registration purposes. 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. Failure also to print the word “zero-rated” is fatal to a claim for refund of input VAT.