Kepco vs. Cir

KEPCO VS.
CIR
G.R. No. 181858. November 24, 2010.
KEPCO PHILIPPINES CORPORATION, petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
Topic: INVOICING AND REGISTRATION REQUIREMENTS
FACTS:
Petitioner KEPCO Philippines Corporation (Kepco) is a VAT-registered independent power

producer engaged in the business of generating electricity. It exclusively sells electricity to
National Power Corporation (NPC), an entity exempt from taxes under Section 13 of Republic
Act No. 6395.
Kepco filed an application for zero-rated sales with the Revenue District Office. Kepco’s
application was approved under VAT Ruling 64-01. Accordingly, for taxable year 2002, it filed
four Quarterly VAT Returns declaring zero-rated sales.
In the course of doing business with NPC, Kepco claimed expenses with input VAT reportedly
sustained in connection with the production and sale of electricity with NPC.
Thus, on April 20, 2004, Kepco filed before the Commissioner of Internal Revenue (CIR) a
claim for tax refund covering unutilized input VAT payments attributable to its zero-rated
sales transactions for taxable year 2002. Two days later, on April 22, 2004, it filed a petition for
review before the CTA Division. CTA Second Division partially granted Kepco’s claim for
refund.
Court of Tax Appeals En Banc (CTA) in C.T.A. EB No. 299, which ruled that “in order for
petitioner to be entitled to its claim for refund/issuance of tax credit certificate representing
unutilized input VAT attributable to its zero-rated sales for taxable year 2002, it must comply
with the substantiation requirements under the appropriate Revenue Regulations.”i.e. Revenue
Regulations 7-95.” Thus, it concluded that “the Court in Division was correct in disallowing a
portion of Kepco’s claim for refund on the ground that input taxes on Kepco’s purchase of goods
and services were not supported by invoices and receipts printed with“TIN-VAT.”
ISSUE:
Whether the word “zero-rated” should be imprinted on invoices and/or official receipts as part of
the invoicing requirement.
RULING:
Yes.
The necessity of indicating“zero-rated” into Value Added Tax (VAT) invoices/receipts became
more apparent when the provisions of this revenue regulation was later integrated into RA No.
9337, the amendatory law of the 1997 National Internal Revenue Code (NIRC).
Section 113, in relation to Section 237 of the 1997 NIRC, as amended by RA No. 9337, now
reads:
“SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons.—
(A) Invoicing Requirements.—A VAT-registered person shall issue:
(1) A VAT invoice for every sale, barter or exchange of goods or properties; and
(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or
exchange of services.
Usodan, Colyne
(B) Information Contained in the VAT Invoice or VAT Official Receipt.—The following
information shall be indicated in the VAT invoice or VAT official receipt:
(1) A statement that the seller is a VAT-registered person, followed by his taxpayer’s
identification number (TIN);
(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:Provided, That:
(a) The amount of the tax shall be shown as a separate item inthe invoice or receipt;
(b) If the sale is exempt from value-added tax, the term “VAT-exempt sale” shall be
written or printed prominently on the invoice or receipt;
(c) If the sale is subject to zero percent (0%) value-added tax,the term “zero-rated sale”
shall be written or printed prominently on the invoice or receipt;
(3) In the case of sales in the amount of one thousand pesos (P1,000)or more where the sale
or transfer is made to a VAT-registered person, the name, business style, if any, address and
taxpayer identification number(TIN) of the purchaser, customer or client.
Section 264 (formerly Section263) of the 1997 NIRC was not intended to excuse the compliance
of the substantive invoicing requirement needed to justify a claim for refund on input VAT
payments.
[T]o be considered a ‘VAT invoice,’ the TIN-VAT must be printed, and not merely stamped.
Consequently, purchases supported by invoices or official receipts, wherein the TIN-VAT is not
printed thereon,shall not give rise to any input VAT. Likewise, input VAT on purchases
supported by invoices or official receipts which are NON-VAT aredisallowed because these
invoices or official receipts are not considered as‘VAT Invoices.
Under the law, a VAT invoice is necessary for every sale, barter or exchange of goods or
properties while a VAT official receipt properly pertains to every lease of goods or properties,
and for every sale,barter or exchange of services. In Commissioner of Internal Revenue
v.Manila Mining Corporation, 468 SCRA 571 (2005), the Court distinguished an invoice from a
receipt, thus: A “sales or commercial invoice” is a written account of goods sold or services
rendered indicating the prices charged therefor or a list by whatever name it is known which is
used in the ordinary course of business evidencing sale and transfer or agreement to sell or
transfer goods and services. A “receipt” on the other hand is a written acknowledgment of the
fact of payment in money or other settlement between seller and buyer of goods, debtor or
creditor, or person rendering services and client or customer.
Usodan, Colyne

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KEPCO VS.

G.R. No. 181858. November 24, 2010.

KEPCO PHILIPPINES CORPORATION, petitioner,

Topic: INVOICING AND REGISTRATION REQUIREMENTS

Petitioner KEPCO Philippines Corporation (Kepco) is a VAT-registered independent power

“SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons.—

(A) Invoicing Requirements.—A VAT-registered person shall issue:

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