Case Digest (G.R. No. 181858)
Facts:
Kepco Philippines Corporation v. Commissioner of Internal Revenue, G.R. No. 181858, November 24, 2010, Supreme Court Second Division, Mendoza, J., writing for the Court.Petitioner Kepco Philippines Corporation (Kepco) is a VAT-registered independent power producer that exclusively sold electricity to the National Power Corporation (NPC), an entity exempt from taxes under RA No. 6395. Kepco applied for zero-rating with the BIR (RDO No. 54) on December 4, 2001; its application was approved under VAT Ruling 64-01. For taxable year 2002 Kepco filed four quarterly VAT returns declaring zero-rated sales totaling P3,285,308,055.85.
Kepco claimed input VAT of P11,710,868.86 attributable to those zero-rated sales. On April 20, 2004 Kepco filed with the Commissioner of Internal Revenue (CIR) a claim for refund of unutilized input VAT for taxable year 2002 and two days later (April 22, 2004) filed a petition for review with the Court of Tax Appeals (CTA), docketed C.T.A. Case No. 6965. In its Answer the CIR asserted that refund claims are strictly construed against taxpayers and that the taxpayer bears the burden of proving the illegality or error of the tax paid.
At the CTA hearings Kepco presented an independent CPA, Victor O. Machacon, to audit its documentary proof (invoices, official receipts, vouchers). On February 26, 2007 the CTA Second Division found Kepco had properly substantiated only P1,451,788,865.52 of the declared zero-rated sales (44.19% of the total) and disallowed portions of the claimed input VAT principally for failure to comply with invoicing/substantiation requirements (notably where the TIN-VAT was stamped rather than printed and where documents were non-VAT). The Division allowed a partial refund of P2,890,005.96 and denied the rest; its decision was memorialized in a dispositive WHEREFORE ordering that refund. Kepco's motion for reconsideration was denied on June 28, 2007.
Kepco elevated the case to the CTA En Banc, contending that additional amounts should have been allowed and that non-compliance with certain invoicing formalities should not lead to automatic denial. On February 20, 2008 the CTA En Banc dismissed the petition, affirming that substantiation must comply with Revenue Regulations (specifically RR No. 7-95) and agreeing with the Division's disallowances where the required imprints (e.g., “TIN-VAT” or “zero-rated”) were absent or only stamped. Presiding Justice Ernesto Acosta concurred in the majority's finding of lack of proper substantiation but dissented as to denial of specific amounts (arguing against automatic invalidation of documents not imprinted with “TIN-VAT” and urging interchangeability of invoices and receipts).
Kepco then filed a petition for review on certiorari under ...(Subscriber-Only)
Issues:
- Is the present petition properly brought under Rule 45 when it imputes grave abuse of discretion (jurisdictional error) usually raised in a Rule 65 petition?
- Did the CTA correctly deny Kepco’s claimed input VAT refunds for lack of compliance with invoicing/substantiation requirements (including absence of the words “zero-rated” and failure to have TIN-VAT printed) under RR No. 7-95 and the NIRC?
- Are VAT invoices and VAT official receipts interchangeable for ...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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