Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue

FIRST DIVISION [CA-G.R. SP No. 79328. October 20, 2004.] INTEL TECHNOLOGY PHILIPPINES, INC. , petitioner-appellant , vs . COMMISSIONER OF INTERNAL REVENUE, respondent-appellee. D E C I S I O N SABIO , J p : In this petition for review under Rule 43 of the 1997 Rules of Procedure, petitioner-appellant Intel Technology, Inc. seeks to annul and set aside the Decision dated April 3, 2003 of the Court of Tax Appeals in C.T.A. Case No. 6169 denying its application for tax credit/refund for the third quarter of 1998 in the amount of P8,219,916.15; and, the Resolution dated September 2, 2003 likewise denying its Motion for Reconsideration and Supplemental Motion for Reconsideration. I. The Factual Background Petitioner is a corporation duly registered with the Securities and Exchange Commission and is primarily engaged in the business of designing, developing, manufacturing and exporting advance and large-scale integrated circuit components or the IC's. On December 8, 1995, the Philippine Economic Zone Authority (PEZA) issued a Certificate of Registration No. 95-133 declaring petitioner to be an Ecozone Export Enterprise with a pioneer status. Further, on January 30, 1996, it was registered with the Bureau of Internal Revenue (BIR) as a Value Added Tax (VAT) entity with Certificate of Registration No. 96-540-000713. On May 18, 1999, petitioner filed with the Department of Finance through its One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center an application for tax credit/refund in the total amount of P8,219,916.15. Petitioner alleged that from July 1, 1998 to September 30, 1998, it generated and recorded a zero-rated export sales in the sum of P5,460,060,824.03 which was paid to it in acceptable foreign currency and the same was inwardly remitted in accordance with the existing regulations of the Central Bank of the Philippines. Also, for the same period, from July 1, 1998 to September 30, 1998, it paid the amount of P8,219,916.15 for its domestic purchases of goods and/or services which, it alleged, should have all been attributed to its zero-rated sales of P5,460,060,824.03. On September 29, 2000, fearing that the prescriptive period to file an action for refund was about to lapse without any action from the respondent, petitioner filed a petition for review before the Court of Tax Appeals docketed as CTA Case No. 6169. In his Answer, filed on October 19, 2000, respondent Commissioner of Internal Revenue alleged the following special and affirmative defenses: "4. 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 4.103-1 of Revenue Regulations 7-95. 5. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau; 6. The amount of P8,219,916.15 being claimed by petitioner as alleged VAT input taxes for the period of 01 July 1998 to 30 September 1998 was not properly documented; 7. 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; 8. 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; 9. Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation." On December 20, 2000, the court a quo approved the "Joint Stipulation of Facts and Simplification of Issues" submitted by both the petitioner and respondent. The following were the issues for resolution: "(a) Whether or not Petitioner's sales were actually export sales subject to zero-rated for VAT purposes. (b) Whether or not the export proceeds of Petitioner were inwardly remitted in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas. (c) Whether or not the VAT input taxes have not been applied to the output tax for the period covered in its claim or any succeeding quarter or quarters. (d) Whether or not the VAT input taxes on domestic purchases of goods and services are attributable to Petitioner's zero rated sales. (e) Whether or not Petitioner is entitled to a refund of the VAT input taxes arising from domestic purchases of taxable goods and services from July 1, 1998 to September 30, 1998 in the amount of P8,219,916.15." Also, on the same date, petitioner filed a Motion to Commission an Independent CPA alleging that on account of its voluminous documents and/or accounts such as receipts or invoices, the services of an independent CPA would save the precious time of the court. Subsequently, an Order dated December 26, 2000 was issued commissioning Mr. Eliseo Aurellado as the independent CPA. On October 23, 2001, Auditor Aurellado submitted his partial report with the following findings: "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. I believe that the amount of P4,409,773.64 represents a valid claim for tax credit. This is net of the P3,806,779.54 (Exception B) which may be valid VAT transactions but are not supported by available copies of invoices, hence, excluded from my evaluation, and the P3,362.97 (Exception A) This report is complete except for my conclusion on the test of zero-rated sales and inward remittances relative thereto. I have not been able to complete my test on zero-rated sales because the client has not yet provided me with the related documents and records. I expect to complete my audit 30 days after I have received such documents and records from the client. xxx xxx xxx" In his final report, submitted on February 26, 2002, Auditor Aurellado made this conclusion, to wit: "In performing the above procedures, the total revenue which amounts to P5,460,060,824.03 for the third quarter as shown in Annex A are all export sales. These export sales are duly supported by sales invoice, airway bills and export declaration. No output VAT has been imputed on these export sales. As mentioned in my initial report, out of the P8,219,916.15 application for tax credit, I believe that the amount of P4,409,773.64 represents a valid claim. This is net of the P3,806,779.54 which may be a valid VAT transactions but are not supported by available copies of invoices, hence, excluded from my evaluation, and the P3,362.97 which is due to incorrect computation of input VAT xxx xxx xxx." On April 9, 2003, the assailed decision was promulgated denying petitioner's claim for the issuance of tax credit certificate. The Court of Tax Appeals held that although petitioner is a VAT and PEZA-registered entity legally entitled to claim a refund of its unutilized input VAT on domestic purchases of goods and services attributable to its zero-rated sales, still, it failed to fully substantiate its claim. It held, thus: "Petitioner offered in evidence, among others, its export sales invoices. After a scrutiny of the documents, the court found that all the export sales invoices (Exhibits Y-1 to Y-608) have no BIR permit to print and some do not even have the Taxpayer's Identification Number-VAT (TIN-V) (Exhibits Y-183, 187, 191, 203, 205, 206, 208, 209, and 211). Thus, we find the documents not valid evidence to prove export sales of goods for VAT purposes for they violate the provisions of Section 113(A)(1), in relation to Section 237 of the 1997 Tax Code, hereunder reproduced for easy reference, to wit: SEC. 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 (TIN) . 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's Identification Number (TIN) of the purchaser . (Emphasis supplied)" In petitioner's motion for reconsideration of the aforementioned decision, it argued, among others, that it substantially proved its export sales by submitting the following documents: certificate of inward remittances in the aggregate amount of P5,460,060,824.03, air way bills, export declarations, and, certifications by Auditor Aurellado that petitioner indeed made the said export sales from July 1, 1998 to September 30, 1998; that it was authorized by the BIR to print its receipt and invoices; and, that denying its claim for tax credit/refund on account that some of the invoices or receipts failed to show the BIR permit to print and the Taxpayer's Identification Number-VAT would not warrant the invalidation of the rest of the documents. Petitioner also posited that Sections 113(A)(1) and 237 of the Tax Code requiring that the invoice or receipt should indicate the following requirements: a statement that the seller is VAT-registered, the seller's TIN and the name, business style and address of the purchaser, customer or client would only find relevance with respect to domestic or local sales. Since no input VAT may be claimed in connection with the petitioner's export sales by its foreign purchaser which is not a VAT-registered entity in the Philippines, then such requirement should not be strictly used against it. In its Supplemental Motion for Reconsideration, petitioner attached a letter dated April 17, 1997 signed by a certain Sol Hubahib, Regional Director, Revenue Region No. 9 of the BIR approving petitioner's request of using computerized sales invoices subject to the requirements and further condition that all data intended to be reflected therein must be typewritten. Respondent, in its Opposition, averred that the requirements set forth in Sections 113 in relation to Section 237 of the 1997 Tax Code as well as Section 4.108.1 of Revenue Regulations No. 7-95 do not distinguish between export or domestic sale. Moreover, the letter-authority attached to the Supplemental Motion for Reconsideration was inadmissible considering that an original copy or a certified true copy thereof was not formally offered in evidence. On September 2, 2003, the Court of Tax Appeals ruled in favor of the respondent and denied, for lack of merit, the motion for reconsideration. It held, in this wise: "As regards the contention of petitioner that its export sales can still be proven by its presentation of other documents such as the certification of inward remittances, export declarations and airway bills, we do not agree. In the case of The Commissioner of Internal Revenue vs. Philippine Bobbin Corporation , CA-G.R. SP No. 59452, promulgated on February 19, 2001, it was ruled that the best means to prove the exportation of goods are the said export documents and the commercial invoices or receipts, taken collectively. The court cannot consider the letter-authority submitted by petitioner to prove that it was authorized to use computer-generated invoices. The same was not presented during the trial of the case. . . We do not subscribe to petitioner's view that the compliance requirement under the Tax Code finds relevance only with respect to domestic or local sales. The provisions of law regarding invoicing requirements, specifically Section 113 in relation to Section 237 of the 1997 Tax Code as well as Section 4.108.1 of Revenue Regulations No. 7-95 did not make any distinction as to whether the sale is export or domestic." Hence, petitioner initiated this petition for review, arguing that: "THE HONORABLE COURT OF TAX APPEALS FAILED TO TAKE INTO CONSIDERATION AND TO APPRECIATE THE OTHER DOCUMENTS PRESENTED BY INTEL TECH TO PROVE ITS EXPORT SALES IN THE AMOUNT OF PHP5,460,060,824.03. THE FINDINGS OF THE HONORABLE COURT OF TAX APPEALS THAT THE EXPORT SALES INVOICES HAVE NO BIR PERMIT TO PRINT AND THAT SOME OF THEM DO NOT HAVE TAXPAYER'S IDENTIFICATION NUMBER (TIN-VAT) DO NOT INVALIDATE THE SAID EXPORT SALES INVOICES TO PROVE EXPORT SALES, MUCH LESS NEGATE THE ACTUAL EXPORT BY INTEL TECH OF ITS FINISHED PRODUCTS ABROAD. THE HONORABLE COURT OF TAX APPEALS ERRED IN RELYING UPON THE PROVISIONS OF SECTION 113, IN RELATION TO SECTION 237, OF THE 1997 TAX CODE IN OUTRIGHTLY DENYING INTEL TECH'S CLAIM FOR REFUND/ISSUANCE OF TAX CREDIT CERTIFICATE. TO SERVE THE HIGHER INTERESTS OF JUSTICE, EQUITY AND FAIRNESS, INTEL TECH SHOULD BE ENTITLED TO REFUND OR TO THE ISSUANCE OF TAX CREDIT CERTIFICATE CONSIDERING THAT DURING THE HEARING AT THE COURT OF TAX APPEALS, IT HAS ESTABLISHED ITS OVERWHELMING RIGHT THERETO." II. The Issue The sole issue in this instant case is whether or not petitioner's export sales were fully substantiated. Corollarily, were the provisions of Section 113 in relation to Section 237 of the Tax Code violated when petitioner presented sales invoices that do not have BIR permit to print and some do not even have the Taxpayer's Identification Number-VAT? Are these alleged infractions fatal to its claim for tax credit/refund? III. Discussion The petition is meritorious. Section 112 (A) of the Tax Code explicitly provides that an exporter who is a VAT-registered person may, within two 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 the input tax attributable to the good exported, to the extent that such input tax has not been applied to output tax and upon presentation of proof that the foreign exchange proceeds has been accounted for in accordance with the regulations of the Central Bank of the Philippines. Aside from, the requirement of two-year period to claim for a tax credit/refund, claimants for tax credit certificate or refund must prove that 1) the input tax has not yet been applied to the output tax, and 2) the foreign exchange proceeds has been inwardly remitted and accounted for in accordance with the regulations of the Bangko Sentral ng Pilipinas. In addition, Section 2 of Revenue Regulation No. 3-88, amending Section 16 (c) of Revenue Regulation No. 5-87, requires that in case of export sales, the following documents shall be attached to the application for tax credit/refund: 1) photocopies of the purchase invoice or receipt: 2) photocopies of export documents showing the amount of export, and the date and destination of the goods exported, and 3) statement from the Central Bank or any of its accredited agent banks that the proceeds of the sale in acceptable foreign currency has been inwardly remitted and accounted with applicable banking regulations. cDAITS The evidence at hand reveals that the aforequoted requirements were complied with by the petitioner. First, it clearly established that its input tax for the third quarter of 1998 was not applied against any of its output tax for the same quarter or during the succeeding periods. Secondly, it submitted voluminous photocopies of export documents evidencing its export sales. The records are replete with petitioner's sales invoices, airway bills and export declarations (Exhibits Y-7 to Y-608). There are also the two reports submitted by the duly commissioned auditor both affirming that petitioner generated a total of P5,460,060,824.03 export sales while the amount of P4,409,773.64 represents a valid claim for tax credit/refund (Exhibits P and S). Finally, the Rizal Commercial Banking Corporation (RCBC), thru its Head of the Export Department, Araceli V. Dyoco, certified on March 9, 2000 that petitioner's foreign exchange proceeds amounting to US $102,499,965.00 from its export sales from May 1998 to September 1998 were inwardly remitted to the said bank in accordance with the applicable banking regulation (Exhibit Y-1). It is the contention, however, of respondent that the sales invoices, airway bills, export declarations and the Commissioner's Reports are not sufficient to prove its export sales. Also, the Resolution dated September 2, 2003 denying the motion for reconsideration of petitioner held that the certification of inward remittances, export declarations and airway bills did not prove export sales. It even cited the case of " The Commissioner of Internal Revenue vs. Philippine Bobbin Corporation ", CA GR SP No. 59452, February 19, 2001, wherein the appellate court ruled that "the best means to prove the exportation of goods are the said export documents and the commercial invoices or receipts, taken collectively." Export sales, as defined by Section 106(A)(2)(a)(1) of the Tax Code of 1997, means "(t)he sale and actual shipment of goods from the Philippines to a foreign country irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas". Moreover, under Section 4.100-2 of Revenue Regulation No. 7-95, the term "considered export sales under Executive Order No. 226" means "the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents . . . ". From these definitions alone, an export sale can be proven by, sales invoices, bills of lading, inward letters of credit, landing certificates and other commercial documents. In fact, in the very same case cited above, the appellate court enumerated these commercial documents as commercial invoices or receipts, bills of lading, airway bills , and export declarations or permits . It concluded that "these documents, taken collectively, are the best means to prove the expiration of goods". The reason why the appellate court denied the claim for tax credit/refund of Philippine Bobbin Corporation was that it merely submitted export sales invoices, Solidbank credit advises and BPI memos, and CPA certification. However, in the instant case, petitioner submitted its sales invoices coupled with airway bills, export declarations, certification of RCBC of foreign remittance and Commissioner's Report. To our mind, these commercial documents sufficiently negate all doubts as to the export sales of petitioner. Petitioner's airway bills and export declarations undoubtedly stated the amount of the export, and the date and destination of the goods exported. In fact, the export declarations were filed with the Department of Trade and Industry as approved by the Export Division of the Bureau of Customs. On the other hand, the certification of RCBC that petitioner remitted its export proceeds of US$102,499,965.00 for the period May to September 1998 unquestionably proves that said foreign currency had been inwardly remitted and accounted for in accordance with the regulations of Bangko Sentral. On final note, this Court will discuss the conflicting issue on the matter of invoicing. Petitioner maintains that only purchases with respect to domestic or local sale should comply with the requirements provided for under Section 113 in relation to Section 237 of the Tax Code. It reiterates that local sellers are required to issue invoices or receipts indicating the information listed under the said provisions, to wit: a) statement that the seller is VAT-registered, b) the seller's TIN, and c) the name, business style, if any, and address of the purchaser, customer or client, so that the local purchasers will have a valid basis in claiming for the input VAT. This is not, however, the case in petitioner's export sales considering that it is subject to 0% and its foreign purchaser, not being a VAT-registered entity, can not claim an input VAT. Meanwhile, respondent argues that the said provisions do not distinguish as to local or export sales, thus, the requirements set forth therein must be strictly followed. Invoicing and accounting requirements for VAT-registered persons are provided for under Sections 113 and 237 of the Tax Code of 1997. They read, thus: "SEC. 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 (TIN); 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. xxx xxx xxx 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's Identification Number (TIN) of the purchaser ." In relation to these requirements, Section 4.104-5(a) of Revenue Regulation No. 7-95 mandates the substantiation of claims for input tax credit, in this wise, to wit: "Input taxes shall be allowed only if the domestic purchase of goods, properties or services is made in the course of trade or business. The input tax should be supported by an invoice or receipt showing the information as required under Section 108 (a) and 238 of the Code. Input tax on purchases of real property should be supported by a copy of the public instrument i.e. deed of absolute sale, deed of conditional sale, contract/agreement to sell, etc., together with the VAT receipt issued by the seller. A cash-register machine tape issued to a VAT registered buyer by a VAT-registered seller form a machine duly registered with the BIR in lieu of the regular sales invoice, shall constitute valid proof of substantiation of tax credit only if the name and TIN of the purchaser is indicated in the receipt and authenticated by a duly authorized representative of the seller. HIaTDS Reading these provisions would reveal that Section 113 speaks of the general rule of invoicing, that the sales invoice should indicate the information that 1) the seller is a VAT-registered person and his taxpayer's identification number (TIN), and 2) the total amount paid. Whereas, Section 237 distinguishes among sale of 1) P25.00 or more, 2) P100.00 or more, or 3) regardless of amount a) 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 b) where the receipt is issued to cover payment made as rentals, commissions, compensations or fees. In the second and third case, the invoice should show the name, business style, if any, and address of the purchaser, customer or client. Lastly, Section 4.104-5 of RR 7-95 requires that in case of cash-register machine tape issued in lieu of the regular sales invoice, a showing of the name and TIN of the purchaser and authentication of a duly authorized representative of the seller would suffice as valid proof of tax credit. It is, therefore, clear that in petitioner's case, it is only necessary that its invoice should show that it is VAT-registered followed by its taxpayer's number (TIN) and the amount paid. It is not even a requisite that its invoice should show the name, business style and address of its purchaser, customer or client. Section 237 explicitly provides that such information should only be indicated if the sale or transfer is made by a person liable to a value-added tax to another person also liable to the said value-added tax. Such is not the case with petitioner. Apart from the fact that its main business is exporting integrated circuit components subject to 0% rate, its customers are all foreigners not even subject to value-added tax. All of its sales invoices, with the exceptions of ten, Exhibits Y-183, Y-187, Y-191, Y-192, Y-203, Y-205, Y-206, Y-208, Y-209 and Y-211, indicated petitioner's taxpayer's number-VAT and the amount paid. This omission, however, is not prejudicial as to invalidate the rest of the documents. It is merely ten sales invoices out of the hundreds submitted by the petitioner. In fact, under Section 115 of the same Code, the Commissioner may only suspend the business operation of a VAT-registered person or order its temporary closure for failure to issue receipts or invoices, failure to file a value-added tax return as required under Section 114, or understatement of taxable sales or receipts by thirty percent or more of his correct taxable sales or receipts. Thus, denial of claim for tax credit/refund on account of missing information in sales invoice would be too strict a rule. Likewise, petitioner's failure to indicate in its invoice its BIR permit to print is not prejudicial to it. This has never been a requirement in the provisions cited above. Besides, it is duly authorized by the Revenue Region No. 9 of the BIR to use computerized sales invoices. The fact that it failed to formally offer this letter-authorization would not warrant its invalidation. This letter-authorization came from the BIR itself, hence, its very own record. Further, it is a settled principle that the rules of procedure are not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure substantial justice ( Director of Lands vs. The Hon. Court of Appeals, et al. , 303 SCRA 495). They should never be a hindrance to a fair and just adjudication of cases. Be that, as it may, this Court adopts the computation of the duly commissioned auditor in arriving at the total amount of tax credit/refund claimed for by petitioner. In his Reports, Auditor Aurellado found that out of the P8,219,916.15 tax claim of petitioner, only P4,409,773.64 represents a valid claim for tax credit/refund. He concluded that the net of P3,806,779.54 is not supported by available copies of invoices although it may be a valid VAT transactions and the P3,362.97 is due to incorrect computation of input VAT. It is to be noted that all these findings of Auditor Aurellado had been presented in the hearings before the Court of Tax Appeals and the respondent never subjected him to a cross-examination. This Court does not disregard the doctrinal principle in taxation that tax refunds are in the nature of tax exemptions and should be construed in strictissimi juris against the person or entity claiming the exemption. However, the pieces of evidence presented in this case are overwhelming and verily, the petitioner was able to overcome its burden of proof. TDESCa The highest tribunal succinctly summarized this in the case of Commissioner vs. Algue, Inc. , G.R. No. L-28896, February 17, 1988. It held, thus: "But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate, as it has here, that the law has not been observed." WHEREFORE, the instant petition is, in the light of the foregoing discussion, hereby given due course. Accordingly, the decision dated April 3, 2003 of the Court of Tax Appeals in C.T.A. Case No. 6169 is ANNULLED and SET ASIDE, and a new one entered granting the petitioner's claim for tax credit/refund in the total amount of P4,409,773.64. SO ORDERED. Verzola and Tijam, JJ., concur.