Western Mindanao Power Corp vs CIR

Case Digest GR 181136 June 13 2012

Facts:

WMPC, engaged in the production and sale of electricity, is registered as a VAT taxpayer. It sells electricity
solely to the National Power Corporation (NPC), which is in turn exempt from the payment of all forms of
taxes, duties, fees and imposts, pursuant to its charter. Also, pursuant to Section 108(B) (3) of the NIRC,
WMPCs power generation services to NPC is zero-rated. Thus, WMPC tried to file an application for tax
credit certificates on input VAT paid to its zero-rated sales. However, its application was denied because
of WMPCs failure to comply with the invoicing requirements under Section 113 of the NIRC in relation to
Sec 4.108-1 of RR 7-95.

Issue: W/N denial of application for tax refund or tax credit on the ground that the taxpayers Official
Receipts do not contain the phrase zero-rated is proper

Yes. Failure to indicate the term zero-rated in the invoice or receipt for zero-rated transactions is fatal.

In a claim for tax refund or tax credit, the taxpayer must prove not only entitled to the grant of claim under
substantive law, but must also show satisfaction of all the documentary and evidentiary requirements for
an administrative claim of a refund or tax credit. Hence, the mere fact that the applicants zero-rating has
been approved by the CIR does not, by itself, justify the grant of a refund or tax credit. The taxpayer must
further comply with the invoicing and accounting requirements mandated by the NIRC, as well as the
revenue regulations implementing them.

Under the NIRC, a creditable input tax should be evidenced by a VAT receipt or Official Receipt, which may
only be considered as such when it complies with the requirements of RR 7-95 particulary Section 4.108-
1 thereof. This section requires, among others, that if the sale is subject to zero-percent VAT, the term
zero-rated sale shall be written or printed prominently on the invoice or receipt