G.R. No. 183531 March 25, 2015
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

Eastern Telecommunications Philippines, Inc. (ETPI), a domestic corporation and VAT-registered taxpayer, filed an administrative claim with the BIR on January 25, 2000, for a refund of P9,265,913.42 representing excess input VAT attributable to its zero-rated sales of services to non-resident foreign corporations for the taxable year 1998. Pending BIR review, ETPI filed a Petition for Review before the Court of Tax Appeals (CTA) on February 21, 2000. The CTA denied the petition, finding that the VAT official receipts presented by ETPI to support its claim failed to imprint the word “zero-rated” on their faces, violating the invoicing requirements under Section 4.108-1 of Revenue Regulations (RR) No. 7-95. The CTA also noted ETPI’s failure to present sales invoices covering its VATable and exempt sales for allocating input taxes and criticized the late filing of its 1998 audited financial records. The CTA en banc affirmed the denial, stating that the invoicing requirements are mandatory. ETPI filed the present petition.

ISSUE

Whether or not the CTA erred in denying ETPI’s claim for refund of input taxes resulting from its zero-rated sales.

RULING

The Supreme Court denied the petition, affirming the CTA’s decision. The Court held that an applicant for a tax refund or credit must prove not only entitlement but also compliance with all documentary and evidentiary requirements. The failure to indicate the word “zero-rated” on the invoices and receipts issued by a VAT-registered taxpayer, as required by Section 4.108-1 of RR No. 7-95, results in the disallowance of the claim for input tax. The invoicing requirements are mandatory, and non-compliance justifies the denial of the refund claim. The Court accorded respect to the findings of the CTA, a specialized court on tax matters, and found no grave abuse of discretion or palpable error in its decision.