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Case #14


Abad, J
FACTS: Petitioner Panasonic Communications Imaging Corporation of
the Philippines (Panasonic) produces and exports plain paper copiers and
their sub-assemblies, parts, and components. It is registered with the
Board of Investments as a preferred pioneer enterprise under the Omnibus
Investments Code of 1987. It is also a registered value-added tax (VAT)

For the effective zero rating of such transactions, however, the taxpayer
requirements. Interpreting these requirements, respondent CIR ruled that
under Revenue Memorandum Circular (RMC) 42-2003, the taxpayers failure
to comply with invoicing requirements will result in the disallowance of his
claim for refund. RMC 42-2003 provides:
A-13. Failure by the supplier to comply with the invoicing requirements on
the documents supporting the sale of goods and services will result to the
disallowance of the claim for input tax by the purchaser-claimant.

From April 1 to September 30, 1998 and from October 1, 1998 to March 31,
1999, petitioner Panasonic generated export sales amounting to
US$12,819,475.15 and US$11,859,489.78, respectively, for a total of
US$24,678,964.93. Believing that these export sales were zero-rated for
VAT under Section 106(A)(2)(a)(1) of the 1997 National Internal Revenue
Code as amended by Republic Act (R.A.) 8424 (1997 NIRC), Panasonic paid
input VAT of P4,980,254.26 and P4,388,228.14 for the two periods or a
total of P9,368,482.40 attributable to its zero-rated sales. Claiming that the
input VAT it paid remained unutilized or unapplied, on March 12, 1999 and
July 20, 1999 petitioner Panasonic filed with the Bureau of Internal Revenue
(BIR) two separate applications for refund or tax credit of what it paid.

If the claim for refund/TCC is based on the existence of zero-rated sales by

the taxpayer but it fails to comply with the invoicing requirements in the
issuance of sales invoices (e.g., failure to indicate the TIN), its claim for tax
credit/refund of VAT on its purchases shall be denied considering that the
invoice it is issuing to its customers does not depict its being a VATregistered taxpayer whose sales are classified as zero-rated
sales. Nonetheless, this treatment is without prejudice to the right of the
taxpayer to charge the input taxes to the appropriate expense account or
asset account subject to depreciation, whichever is applicable. Moreover,
the case shall be referred by the processing office to the concerned BIR
office for verification of other tax liabilities of the taxpayer.


This Court held that, since the BIR authority to print is not one of the items
required to be indicated on the invoices or receipts, the BIR erred in
denying the claim for refund. Here, however, the ground for denial of
petitioner Panasonics claim for tax refund the absence of the word
zero-rated on its invoices is one which is specifically and precisely
included in the above enumeration. Consequently, the BIR correctly denied
Panasonics claim for tax refund.

Zero-rated transactions generally refer to the export sale of goods and
services. The tax rate in this case is set at zero. When applied to the tax
base or the selling price of the goods or services sold, such zero rate
results in no tax chargeable against the foreign buyer or customer. But,
although the seller in such transactions charges no output tax, he can
claim a refund of the VAT that his suppliers charged him. The seller thus
enjoys automatic zero rating, which allows him to recover the input taxes
he paid relating to the export sales, making him internationally

Ruling: Wherefore, the petition is DENIED for lack of merit. Cost

against petitioner. SO ORDERED.