FACTS:

Panasonic Communications Imaging Corporation of the Philippines (Panasonic) is a registered value-added tax (VAT) enterprise that produces and exports plain paper copiers and their sub-assemblies, parts, and components. From April 1 to September 30, 1998, and from October 1, 1998, to March 31, 1999, Panasonic generated export sales totaling US$24,678,964.93. Panasonic believed that these export sales were zero-rated for VAT under the 1997 National Internal Revenue Code. As a result, Panasonic paid input VAT amounting to P9,368,482.40 for the two periods. On March 12, 1999, and July 20, 1999, Panasonic filed separate applications for refund or tax credit with the Bureau of Internal Revenue (BIR) after the BIR did not act on the applications, Panasonic filed a petition for review with the Court of Tax Appeals (CTA) on December 16, 1999, claiming the inaction of the Commissioner of Internal Revenue (CIR). The CTA's First Division denied the petition, stating that although Panasonic's export sales were subject to 0% VAT, they did not qualify for zero-rating because the word "zero-rated" was not printed on Panasonic's export invoices, violating the invoicing requirements under Revenue Regulations (RR) 7-95. Panasonic appealed to the CTA en banc, which upheld the First Division's decision and resolution. Panasonic's motion for reconsideration was also denied. Thus, Panasonic filed the present petition questioning the CTA en banc's denial of its claim for refund based on the failure to print "zero-rated" on its sales invoices.

ISSUES:

RULING:

PRINCIPLES:

• The requirement to indicate "zero-rated" on the sales invoices for zero-rated sales under Section 4.108-1 of Revenue Regulations 7-95.