CTA Case No. 5070 (Decision)

I REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY INTEL PHILIPPINES C.T.A. CASE NOS. 5070 & 5113 MANUFACTURING, INC., - h -Pr-o-mu-1-ga_t_e_d=_OC_-r_�_0_2_19_9_7 Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION This Is a oonsol ldated oase involving olalms for refund of Input value-added tax <VAT for brevity) for the periods Maroh 1, 1992 to May 31, 1992 (first quarter> and June 1, 1992 to August 31, 1992 ( seoond quarter> In the respective amounts of P2,089,563.07 and P2,037,631.76. Petitioner, Intel Phi I lpplnes Manufacturing, I no., Is a oorporatlon duly organized and existing under and by virtue of the laws of the Phi I lpplnes. It Is prlnolpal ly engaged In the business of designing, developing, manufacturing and exporting advanced and large scale Integrated olroult components commonly referred to as "VLSI" or "IC's". As such, It registered Itself as a VAT entity and was Issued a VAT Registration Certificate No. 32A-3-002649, effective January 1, 1988.1 For the periods March 1, 1992 to May 31, 1992 and June 1, 1992 to August 31, 1992, petitioner generated zero-rated export sales In the amounts o1' 1Exh. E, Petitioner, CTA Cases No. 5070 & 5113.

DECISION - C.T.A. CASE NOS. 5070 & 5113. - 2- P226,191,485.422 and P325,726,148.123, respectively. These amounts were paid to petitioner In acceptable foreign currency Inwardly remitted to the Phil lpplnes In aooordanoe with the rules and regulations of the Central Bank of the Philippines. For the same periods, petitioner paid Input taxes on Its domestic purchases of taxable goods and services as wei I as on Its Importations In the sum of P6,768,697.79�, Itemized as follows. Period Covered Domestic Importation Total 1st Quarter 1992 P3,367,313.69 P20, 165.00 P3,387,478.69 2nd Quarter 1992 3,361,375.80 19,843.30 3,381,219.10 T0 TAL P6,768,697.79 P6,728,689.49 P40,008.30 Out of the tot a I Input taxes paId, petItIoner a I Ieges that the amounts of P3,359,397.67, for the first quarter, and P3,342,296.59, for the second quarter, were not applied against any of Its output tax I labl I ltles. On November 11, 1992 and .January 18, 1993, petitioner fl led with the Bureau of Internal Revenue, through the One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance, appl loatlons for the Issuance of tax credit certificates corresponding to the aforementioned amounts representing 2Exhs. A-3, B to B-3 I 131 I c to C-1,032 and F-1, Petitioner, CTA Case No. 5070. 3Exhs. A-3, B to B-3,355, c to C-1,060 and F-1, tit loner, CTA Case No. 5113. �Exhs. F, F-3 and F-4, Petitioner, CTA Cases No. & 5113. 1073

DECISION - C.T.A. CASE NOS. 5070 & 5113. - 3- Input taxes paid on domestlo purchases of taxable goods and services and Input taxes paid on Importations.� The breakdown of which are as follows. Period Covered Domestic Importation Total 1st Quarter 1992 P3,355,799.67 p 3,598.00 P3,359,397.67 2nd Quarter 1992 3,331,966.59 10,330.00 3,342,296.59 T0 TAL P6,687,766.26 P13,928.00 P6,701 1694.26 on December 16, 1992, respondent granted a partial refund In the amount of P1,269,834.60, representing Input taxes for the first quarter of 1992 as evidenced by Tax Credit Certificate No. SN 002062. 8 On March 2, 1993, another partial refund was granted ooverlng the second quarter of 1992 In the amount of P1,304,664.83 as evidenced by Tax Credit Certificate No. SN 002011.1 Hence, there stl I I remains a balance of P2,089,563.07 and P2,037,631.76 for said quarters which are now being claimed by the petitioner by way of these petitions for review and docketed as CTA Case Nos. 5070 and 5113, respectively. The petition for review In CTA Case No. 5070 was fl led on March 1, 1994 whl lethe petition for review for CTA Case No. 5113 was fl led on May 27, 1994. These oases �Exhs. H and H-1, Petitioner, CTA Cases No. 5070 & 5113. e~xh. I, Petitioner, CTA Case No. 5070. 7Exh. I, Petitioner, CTA Case No. 5113. 10'74

�� DECISION - C.T.A. CASE NOS. 5070 & 5113. - 4- were consolidated on December 7, 1995a and were tried jointly. The Issue that Is presented before this Court Is whether or not petitioner Is entitled to the refund of the remaining Input taxes In the amounts of P2,089,563.07 and P2,037,631.76 corresponding to the periods of March 1, 1992 to May 31, 1992 and June 1, 1992 to August 31, 1992, respectively. There Is no argument that the sales of petitioner are considered as export sales subject to 0% rate of VAT pursuant to Section 100(&) of the Tax Code. This was even oonflrmed by the respondent In VAT Rul lng No. 102(a)(1)-402-88e. In fact, this confirmation was made manifest by respondent's grant of a partial refund of the Input taxes o IaImed, thus, sett I I ng the Iega I Issue of petitioner's entitlement to the refund of Input taxes In question. ' The Issue that now confronts the Court this time, Is the veracity of petitioner's olalm of the balance of Input taxes In the tota I amount of P4,127,194.83 corresponding to P2,089,563.07 for the first quarter of 1992 and P2,037,631.76 for the second quarter of 1992. Before we delve on this factual Issue, It Is noteworthy to mention that whl le these oases were pending asee Minute of the Session, dated December 7, 1995, CTA Case No. 5070, p. 192, CTA records. MExh. G, Petitioner, CTA Cases No. 5070 & 6113. 107fi

DECISION - C.T.A. CASE NOS. 5070 & 5113. - 5- trIa I, another Investigation was conducted on petitioner's claim for refund. A Letter of Authority No. 00087728, dated August 6, 1993, was Issued on August 13, 1993 authorizing Revenue Officer Norlne L. Cruz to examine petitioner's books of accounts and other accounting records for VAT refund purposes. 10 As a result, Ms. Norlne L. Cruz recommended that a tax oredlt oertlfloate In the total amount of P10,577,574.77 be Issued to petitioner representing Input taxes on domestic purchases of taxable goods and services as wei I as on Importations for the first to the fourth quarters of taxable year 1992.11 The computation of which Is as fol lowsa Period Covered Np u T TAX .!2!.!! 1m12ortatlon 1st quarter Domestic p 3,598.00 p 3,359,397.67 2nd quarter 3,342,296.59 3rd quarter p 3,355,799.67 10,330.00 5,309,919.63 4th quarter 3,331,966.59 998,242.84 613831937.28 4,311,676.79 Total 81574.65 P18 1395 1551.17 6~3751362.63 P1 1020 1 745.49 P17;374 1 805.68 Less deductions made by the examlnera 1. Tax oredlt Issued under RAMO 3-91 Period Covered Amount p 6,764,774.84 1st quarter P1,269,834,60 2nd quarter 1,304,664.83 3rd quarter 1,645,680.80 4th quarter 2 1544 1594.61 1oexh. 1, Respondent, p. 426, BIR records. 1 1 Exhs. 2 to 3-c, Respondent, pp. 412 to 415, BIR records. 1076

�� DECISION - C.T.A. CASE NOS. 6070 & 6113. - 6- 2. VIolation of VAT lnvololng requirement Period Covered Amount 732,181.47 1st quarter p 504,184.59 321,020.09 2nd quarter 27,460.32 p 7,817,976.40 3rd quarter 174,540.71 P10,577,574.77 4th quarter 25,995.85 3. Output tax on sale of sorap and equipment added baok by petitioner Period Covered Amount 1st quarter p 179,058.36 2nd quarter 129,338.15 3rd quarter 656.50 4th quarter 11,967.08 Total disallowances Amount recommended for refund for the first to the fourth quarters of taxable year 1992 A comparative analysis of the present olalm for refund for the first and seoond quarters of the taxable period oonoerned and the total amount of P10,577,574.77 recommended by Revenue Examiner Norlne Cruz, shows that petitioner Is no longer entitled to any more refund of Input taxes beoause the amounts originally claimed In these petitions (CTA Case Nos. 5070 and 5113) have already been Included In the sum of P10,577,574.77. In I lne with this reoommendatlon, Tax Credit Certificate No. 002521, dated May 4, 1994, was Issued by the respondent In favor of the petitioner In the amount of P9,585,969.70 representing Input taxes on domestto purchases of taxable goods and servloes for the period Maroh 1, 1992 to 1077

� DECISION - C.T.A. CASE NOS. 5070 & 5113. - 7- February 28, 1993.12 The remaining balance of P991,605.07 represents Input VAT paid on Importations so that the Issuance of the Tax Credit Certificate for this amount was referred to the Bureau of Customs In view of an agreement executed by and between the Bureau of Internal Revenue and the Bureau of Customs dated Aprl I 8, 1988.13 A further review of the olalm for refund of Input taxes on Importations pertaining to herein oases revealed that they represent Input taxes on freight charges paid to looal suppl lers whloh were already granted by the respondent as forming part of the amount of P9,585,969.70 embodied In Tax Credit Certificate No. SN 002521 1 aooounted for as fol lowsa Qtr. Involved Oomestlo�� lmportatlon�B Total 1st Quarter P1,402,722.12 p 3,598.00 p11 406 1 320 o 1;2 2nd Quarter 1,870,503.29 1,880,833.29 3rd Quarter 2,490,798.78 10,330.00 2,497,436.55 4th Quarter 3,792,805.09 8,637.77 3,801,379.74 8,574.85 Tax Credit Certificate Issued P9,585,969.70 Below Is a table showing pertinent detal Is of olalms for refund of Input taxes granted by the respondent ooverlng the periods Maroh 1, 1992 to May 31, 1992 <CTA Case No. 12Exh. 4, Respondent, p. 425, BIR records. 13Exhs. 5, 5-a, and 6, pp. 422 to 424, BIR records. 14These amounts were based net of the dlsal lowanoes made by the examiner. 1Bpp. 1 to 125, BIR records. 1078 '�'�' ' d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ._ ._ _ _ _ _ _ _ _ _ _s . . .

DECISION - C.T.A. CASE NOS. 5070 & 5113. - 8- 5070) and June 1, 1992 to August 31, 1992 (CTA Case No. 5113), to wit. \ C.T.A. CASE NO. 5070 C.T.A. CASE NO. 5113 Doustlc 11portatlon Do1estlo 11portatloa A1ount originally clalled P3,355,799.87 P3,598.00 P3,331,966.59 P10,330.00 Less tax credit certificate Issued under RAMO 3-il 1,269,834.60 TCC No. 002082 TCC No. 002077 1,304,664.83 Balance P2,085,986.07 P2,027,301.76 P10,330.00 Ltas disallowances 11de p 27,460.32 1. Invoicing requlrelent�� P 504,184.59 2. Output tax on scrap and 178,058.36 129,338.18 equlp1ent added baok by petitioner In the olal�'' Total P 683,242.95 p 158,788.47 Balance P1,402,722.12 P3,598.00 P1,870,503.29 P10,330.00 Leas a1ount forllng part 1,402,722.12 3,598.00 1,870,503.29 10,330.00 of TCC No. 002521 AMOUNT REFUNDABLE nil all nil nil Based on the above table, the olalms for refund of Input taxes of the petitioner for the first and seoond quarters Included In this petition should neoessarl ly be denied because they have already been Included In the said tax oredlt oertlfloate. Anent the dis� I lowanoes made by the examiner In these cases, this Court after olrcumspeot review found the same to be tn order. Thus, the Issue posed herein needs no further discussion for b&lng moot and aoademlo. The claims for refund of petitioner for the periods March 1, 1992 to May 1 � Ex hs � 7- a and 7- b, Respondent , p . 4oo , B1R records. See datal 1�s on pp. 387 to 398, BIR records. t7pp. 341 ~o 344, BIR records. 1079�

DECISION - C.T.A. CASE NOS. 5070 a 5113. - 9- 31, 1992 and June 1, 1992 to August 31, 1992 In the respective amounts of P2,089,563.07 and P2,037,631.76 having been granted to petitioner, We find no merit to the petition. WHEREFORE, In view of all the foregoing, the petition for review Is hereby DENIED for laok of merit. Costs against petitioner. SO ORDERED. ~IQc~ ERNESTO D. ACOSTA Presiding Judge we RAU~~~j{ Assoo Iate J~~A -r~~O~Q.~ Associate Judge CERTIFICATION hereby certify that this decision was reached after due consultation with the members of the Court of Tax Appeals In acccrdance with Section 13, Article VII I of the Constitution. (.__zlQ,~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 1080