VAT Ruling No.

207-90
Jose U. Ong 8 Nov 1990
Doctrine A single transaction, if done with the intent to carry on a business, constitutes as an act in the course of trade or business.
Facts  RCA Global Communications rendered technical services to Philippine Global Communication (PHILCOM), on which the BIR is
imposing VAT.
 RCA: it was an isolated transaction that does not constitute a sale made in the course of business, because it was only rendered
to one person.
 RCA: Sec. 2(j), VAT Rev. Reg No. 5-87 defines “sale of service” as performance of all kinds of services for others for a fee[…].
“Others” means several persons/contracts and not just one person.
Ratio/Issues
I. Sec. 99, NIRC

(1) “Any person who in the course of trade or business sells, barters, […] is subject to VAT.”
(2) Engagement in business is determined by intent for doing an act or a series of acts. An initial or single act may be
construed done in the course of doing business if it was done with the intent of carrying on a business.
(3) However, there may be a business without any sequence of acts. An isolated transaction with the intent of carrying on a
business is then the first transaction in an existing business, i.e. preparations to carry on the business.
(4) As applied: RCA Global Communications has been engaged in communications business at the time it contracted with
PHILCOM. There is no necessity to prove their client's intent in selling technical services to PHILCOM. It is more than
apparent your client sold its services while engaging in worldwide communications business. That its transaction with
PHILCOM was isolated may not, however, detract from the fact that the same was entered into because it was, as it is
presently, its line of business.
Prepared by: Job de Leon [Tax 2 | Prof. Laforteza]