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PHILIPPINE AIRLINES, INC., petitioner,
Value-Added Tax
1. Tolentino v. Sec. of Finance and CIR, G.R. No. 115455, Oct. 30, 1995
https://lawphil.net/judjuris/juri1995/oct1995/gr_115455_1995.html
MENDOZA, J.:
G.R. No. 115455 October 30, 1995
ARTURO M. TOLENTINO, petitioner,
vs. THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE, respondents.
G.R. No. 115525 October 30, 1995
JUAN T. DAVID, petitioner,
vs. TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO
DE OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO,
as Commissioner of Internal Revenue; and their AUTHORIZED
AGENTS OR REPRESENTATIVES, respondents.
G.R. No. 115543 October 30, 1995
RAUL S. ROCO and the IBP, petitioners,
vs. THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE
COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND
BUREAU OF CUSTOMS, respondents.
G.R. No. 115544 October 30, 1995
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.;
KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE
JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.
DIMALANTA, petitioners,
vs. HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of
Internal Revenue; HON. TEOFISTO T. GUINGONA, JR., in his capacity
as Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his
capacity as Secretary of Finance, respondents.
G.R. No. 115754 October 30, 1995
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.,
(CREBA), petitioner,
vs. THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781 October 30, 1995
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME
CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM
TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE
TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V.
VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT
OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND
NATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBT COALITION,
INC., and PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO
TAÑADA, petitioners,
vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE,
THE COMMISSIONER OF INTERNAL REVENUE and THE
COMMISSIONER OF CUSTOMS, respondents.
G.R. No. 115852 October 30, 1995
vs. THE SECRETARY OF FINANCE and COMMISSIONER OF
INTERNAL REVENUE, respondents.
G.R. No. 115873 October 30, 1995
COOPERATIVE UNION OF THE PHILIPPINES, petitioner,
vs. HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner
of Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary, and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115931 October 30, 1995
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and
ASSOCIATION OF PHILIPPINE BOOK SELLERS, petitioners,
vs. HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance;
HON. LIWAYWAY V. CHATO, as the Commissioner of Internal
Revenue; and HON. GUILLERMO PARAYNO, JR., in his capacity as
the Commissioner of Customs, respondents.
RESOLUTION
MENDOZA, J.:
These are motions seeking reconsideration of our decision dismissing
the petitions filed in these cases for the declaration of unconstitutionality
of R.A. No. 7716, otherwise known as the Expanded Value-Added Tax
Law. The motions, of which there are 10 in all, have been filed by the
several petitioners in these cases, with the exception of the Philippine
Educational Publishers Association, Inc. and the Association of
Philippine Booksellers, petitioners in G.R. No. 115931.
The Solicitor General, representing the respondents, filed a consolidated
comment, to which the Philippine Airlines, Inc., petitioner in G.R. No.
115852, and the Philippine Press Institute, Inc., petitioner in G.R. No.
115544, and Juan T. David, petitioner in G.R. No. 115525, each filed a
reply. In turn the Solicitor General filed on June 1, 1995 a rejoinder to
the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I. Power of the Senate to propose amendments to revenue bills . Some
of the petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL),
Roco, and Chamber of Real Estate and Builders Association (CREBA))
reiterate previous claims made by them that R.A. No. 7716 DID NOT
"originate exclusively" in the House of Representatives as required by
Art. VI, §24 of the Constitution. Although they admit that H. No. 11197
was filed in the House of Representatives where it passed three
readings and that afterward it was sent to the Senate where after first
reading it was referred to the Senate Ways and Means Committee, they
complain that the Senate did not pass it on second and third readings.
Instead what the Senate did was TO PASS ITS OWN VERSION (S. No.
1630) which it approved on May 24, 1994. Petitioner Tolentino adds that
what the Senate committee should have done was to amend H. No.
11197 by striking out the text of the bill and substituting it with the text of
S. No. 1630. That way, it is said, "the bill remains a House bill and the
Senate version just becomes the text (only the text) of the House bill."
The contention has no merit.

The enactment of S. No. 1630 is not the only instance in which the
Senate proposed an amendment to a House revenue bill by enacting its
own version of a revenue bill. On at least two occasions during
the Eighth Congress, the Senate passed its own version of revenue bills,
which, in consolidation with House bills earlier passed, became the
enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS
CODE OF 1987 BY EXTENDING FROM FIVE (5) YEARS TO TEN
YEARS THE PERIOD FOR TAX AND DUTY EXEMPTION AND TAX
CREDIT ON CAPITAL EQUIPMENT) which was approved by the
President on April 10, 1992. This Act is actually a consolidation of H. No.
34254, which was approved by the House on January 29, 1992, and S.
No. 1920, which was approved by the Senate on February 3, 1992.
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO
WHOEVER SHALL GIVE REWARD TO ANY FILIPINO ATHLETE
WINNING A MEDAL IN OLYMPIC GAMES) which was approved by the
President on May 22, 1992. This Act is a consolidation of H. No. 22232,
which was approved by the House of Representatives on August 2,
1989, and S. No. 807, which was approved by the Senate on October
21, 1991.
On the other hand, the Ninth Congress  passed revenue laws which
were also the result of the consolidation of House and Senate bills.
These are the following, with indications of the dates on which the laws
were approved by the President and dates the separate bills of the two
chambers of Congress were respectively passed:
1. R.A. NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION,
AMENDING FOR THIS PURPOSE THE PERTINENT SECTIONS OF
THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992).
House Bill No. 2165, October 5, 1992
Senate Bill No. 32, December 7, 1992
2. R.A. NO. 7643
AN ACT TO EMPOWER THE COMMISSIONER OF IR TO REQUIRE
THE PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND
TO ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT
REVENUE, AMENDING FOR THIS PURPOSE CERTAIN SECTIONS
OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3. R.A. NO. 7646
AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL
REVENUE TO PRESCRIBE THE PLACE FOR PAYMENT OF
INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDING
FOR THIS PURPOSE CERTAIN PROVISIONS OF THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED (February 24, 1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4. R.A. NO. 7649
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AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS
POLITICAL SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES
INCLUDING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS (GOCCS) TO DEDUCT AND WITHHOLD THE
VALUE-ADDED TAX DUE AT THE RATE OF THREE PERCENT (3%)
ON GROSS PAYMENT FOR THE PURCHASE OF GOODS AND SIX
PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES RENDERED
BY CONTRACTORS (April 6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
5. R.A. NO. 7656
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS TO DECLARE DIVIDENDS UNDER CERTAIN
CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOR OTHER
PURPOSES (November 9, 1993)
House Bill No. 11024, November 3, 1993
Senate Bill No. 1168, November 3, 1993
6. R.A. NO. 7660
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND
ADMINISTRATION OF THE DOCUMENTARY STAMP TAX,
AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR
OTHER PURPOSES (December 23, 1993)
House Bill No. 7789, May 31, 1993
Senate Bill No. 1330, November 18, 1993
7. R.A. NO. 7717
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE
OF SHARES OF STOCK LISTED AND TRADED THROUGH THE
LOCAL STOCK EXCHANGE OR THROUGH INITIAL PUBLIC
OFFERING, AMENDING FOR THE PURPOSE THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED, BY INSERTING A NEW
SECTION AND REPEALING CERTAIN SUBSECTIONS THEREOF
(May 5, 1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the
Senate, in the exercise of its power to propose amendments to bills
required to originate in the House, passed its own version of a House
revenue measure. It is noteworthy that, in the particular case of S. No.
1630, petitioners Tolentino and Roco, as members of the Senate, voted
to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged by
petitioner Tolentino, concerns a mere matter of form. Petitioner has not
shown what substantial difference it would make if, as the Senate
actually did in this case, a separate bill like S. No. 1630 is instead
enacted as a substitute measure, "taking into
Consideration . . . H.B. 11197."

Indeed, so far as pertinent, the Rules of the Senate only provide:
RULE XXIX
AMENDMENTS
xxx xxx xxx
§68. Not more than one amendment to the original amendment shall be
considered.
No amendment by substitution shall be entertained unless the text
thereof is submitted in writing.
Any of said amendments may be withdrawn before a vote is taken
thereon.
§69. No amendment which seeks the inclusion of a legislative provision
foreign to the subject matter of a bill (rider) shall be entertained.
xxx xxx xxx
§70-A. A bill or resolution shall not be amended by substituting it with
another which covers a subject distinct from that proposed in the original
bill or resolution. (emphasis added).
Nor is there merit in petitioners' contention that, with regard to revenue
bills, the Philippine Senate possesses less power than the U.S. Senate
because of textual differences between constitutional provisions giving
them the power to propose or concur with amendments.
Art. I, §7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of
Representatives; but the Senate may propose or concur with
amendments as on other Bills.
Art. VI, §24 of our Constitution reads:
All appropriation, revenue or tariff bills, bills authorizing increase of the
public debt, bills of local application, and private bills
shall originate exclusively in the House of Representatives, but the
SENATE may PROPOSE or CONCUR with amendments.
The addition of the word "exclusively" in the Philippine Constitution and
the decision to drop the phrase "as on other Bills" in the American
version, according to petitioners, shows the intention of the framers of
our Constitution to restrict the Senate's power to propose amendments
to revenue bills. Petitioner Tolentino contends that the word "exclusively"
was inserted to modify "originate" and "the words 'as in any other bills'
(sic) were eliminated so as to show that these bills were not to be like
other bills but must be treated as a special kind."
The history of this provision does not support this contention. The
supposed indicia of constitutional intent are nothing but the relics of an
unsuccessful attempt to limit the power of the Senate. It will be recalled
that the 1935 Constitution originally provided for a unicameral National
Assembly. When it was decided in 1939 to change to a bicameral
legislature, it became necessary to provide for the procedure for
lawmaking by the Senate and the House of Representatives. The work
of proposing amendments to the Constitution was done by the National
Assembly, acting as a constituent assembly, some of whose members,
jealous of preserving the Assembly's lawmaking powers, sought to
curtail the powers of the proposed Senate. Accordingly they proposed
the following provision:
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All bills appropriating public funds, revenue or tariff bills, bills of local
application, and private bills shall originate exclusively in the Assembly,
but the Senate may propose or concur with amendments. In case of
disapproval by the Senate of any such bills, the Assembly may repass
the same by a two-thirds vote of all its members, and thereupon, the bill
so repassed shall be deemed enacted and may be submitted to the
President for corresponding action. In the event that the Senate should
fail to finally act on any such bills, the Assembly may, after thirty days
from the opening of the next regular session of the same legislative
term, reapprove the same with a vote of two-thirds of all the members of
the Assembly. And upon such reapproval, the bill shall be deemed
enacted and may be submitted to the President for corresponding
action.
The special committee on the revision of laws of the Second National
Assembly vetoed the proposal. It deleted everything after the first
sentence. As rewritten, the proposal was approved by the National
Assembly and embodied in Resolution No. 38, as amended by
Resolution No. 73. (J. ARUEGO, KNOW YOUR CONSTITUTION 65-66
(1950)). The proposed amendment was submitted to the people and
ratified by them in the elections held on June 18, 1940.
This is the history of Art. VI, §18 (2) of the 1935 Constitution, from which
Art. VI, §24 of the present Constitution was derived. It explains why the
word "exclusively" was added to the American text from which the
framers of the Philippine Constitution borrowed and why the phrase "as
on other Bills" was not copied. Considering the defeat of the proposal,
the power of the Senate to propose amendments must be understood to
be full, plenary and complete "as on other Bills." Thus, because revenue
bills are required to originate exclusively in the House of
Representatives, the Senate cannot enact revenue measures of its own
without such bills. After a revenue bill is passed and sent over to it by
the House, however, the Senate certainly can pass its own version on
the same subject matter. This follows from the coequality of the two
chambers of Congress.
That this is also the understanding of book authors of the scope of the
Senate's power to concur is clear from the following commentaries:
The power of the Senate to PROPOSE or CONCUR with amendments
is apparently without restriction. It would seem that by virtue of this
power, the Senate can practically re-write a bill required to come from
the House and leave only a trace of the original bill. For example, a
general revenue bill passed by the lower house of the United States
Congress contained provisions for the imposition of an inheritance tax .
This was changed by the Senate into a corporation tax. The amending
authority of the Senate was declared by the United States Supreme
Court to be sufficiently broad to enable it to make the alteration. [Flint v.
Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389].
(L. TAÑADA AND F. CARREON, POLITICAL LAW OF THE
PHILIPPINES 247 (1961))
The above-mentioned bills are supposed to be initiated by the House of
Representatives because it is more numerous in membership and
therefore also more representative of the people. Moreover, its members
are presumed to be more familiar with the needs of the country in regard
to the enactment of the legislation involved.
The Senate is, however, allowed much leeway in the exercise of its
power to propose or concur with amendments to the bills initiated by the
House of Representatives. Thus, in one case, a bill introduced in the

U.S. House of Representatives was changed by the Senate to make a
proposed inheritance tax a corporation tax. It is also accepted practice
for the Senate to introduce what is known as an amendment by
substitution, which may entirely replace the bill initiated in the House of
Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, §24 provides that all appropriation, revenue or tariff
bills, bills authorizing increase of the public debt, bills of local
application, and private bills must "originate exclusively in the House of
Representatives," it also adds, "but the Senate may propose or concur
with amendments." In the exercise of this power, the Senate may
propose an entirely new bill as a substitute measure. As petitioner
Tolentino states in a high school text, a committee to which a bill is
referred may do any of the following:
(1) to endorse the bill without changes; (2) to make changes in the bill
omitting or adding sections or altering its language; (3) to make and
endorse an entirely new bill as a substitute, in which case it will be
known as a committee bill; or (4) to make no report at all.
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258
(1950))
To except from this procedure the amendment of bills which are required
to originate in the House by prescribing that the number of the House bill
and its other parts up to the enacting clause must be preserved although
the text of the Senate amendment may be incorporated in place of the
original body of the bill is to insist on a mere technicality. At any rate
there is no rule prescribing this form. S. No. 1630, as a substitute
measure, is therefore as much an amendment of H. No. 11197 as any
which the Senate could have made.
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic
error is that they assume that S. No. 1630 is an independent and distinct
bill. Hence their repeated references to its certification that it was passed
by the Senate "in substitution of S.B. No. 1129, taking into
consideration P.S. Res. No. 734 and H.B. No. 11197," implying that
there is something substantially different between the reference to S.
No. 1129 and the reference to H. No. 11197. From this premise, they
conclude that R.A. No. 7716 originated both in the House and in the
Senate and that it is the product of two "half-baked bills because neither
H. No. 11197 nor S. No. 1630 was passed by both houses of Congress."
In point of fact, in several instances the provisions of S. No. 1630,
clearly appear to be mere amendments of the corresponding provisions
of H. No. 11197. The very tabular comparison of the provisions of H. No.
11197 and S. No. 1630 attached as Supplement A to the basic petition
of petitioner Tolentino, while showing differences between the two bills,
at the same time indicates that the provisions of the Senate bill were
precisely intended to be amendments to the House bill.
Without H. No. 11197, the Senate could not have enacted S. No. 1630.
Because the Senate bill was a mere amendment of the House bill, H.
No. 11197 in its original form did not have to pass the Senate on second
and three readings. It was enough that after it was passed on first
reading it was referred to the Senate Committee on Ways and Means.
Neither was it required that S. No. 1630 be passed by the House of
Representatives before the two bills could be referred to the Conference
Committee.
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There is legislative precedent for what was done in the case of H. No.
11197 and S. No. 1630. When the House bill and Senate bill, which
became R.A. No. 1405 (Act prohibiting the disclosure of bank deposits),
were referred to a conference committee, the question was raised
whether the two bills could be the subject of such conference,
considering that the bill from one house had not been passed by the
other and vice versa. As Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If
a House bill is passed by the House but not passed by the Senate, and
a Senate bill of a similar nature is passed in the Senate but never
passed in the House, can the two bills be the subject of a conference,
and can a law be enacted from these two bills ? I understand that the
Senate bill in this particular instance does not refer to investments in
government securities, whereas the bill in the House, which was
introduced by the Speaker, covers two subject matters: not only
investigation of deposits in banks but also investigation of investments in
government securities. Now, since the two bills differ in their subject
matter, I believe that no law can be enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel,
Jr.) said:
THE SPEAKER. The report of the conference committee is in order. It is
precisely in cases like this where a conference should be had. If the
House bill had been approved by the Senate, there would have been no
need of a conference; but precisely because the Senate  passed another
bill on the same subject matter, the conference committee had to be
created, and we are now considering the report of that committee.
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III. The President's certification. The fallacy in thinking that H. No. 11197
and S. No. 1630 are distinct and unrelated measures also accounts for
the petitioners' (Kilosbayan's and PAL's) contention that because the
President separately certified to the need for the immediate enactment
of these measures, his certification was ineffectual and void. The
certification had to be made of the version of the same revenue bill
which at the moment was being considered. Otherwise, to follow
petitioners' theory, it would be necessary for the President to certify as
many bills as are presented in a house of Congress even though the
bills are merely versions of the bill he has already certified. It is enough
that he certifies the bill which, at the time he makes the certification, is
under consideration. Since on March 22, 1994 the Senate was
considering S. No. 1630, it was that bill which had to be certified. For
that matter on June 1, 1993 the President had earlier certified H. No.
9210 for immediate enactment because it was the one which at that time
was being considered by the House. This bill was later substituted,
together with other bills, by H. No. 11197.
As to what Presidential certification can accomplish, we have already
explained in the main decision that the phrase "except when the
President certifies to the necessity of its immediate enactment, etc." in
Art. VI, §26 (2) qualifies not only the requirement that "printed copies [of
a bill] in its final form [must be] distributed to the members three days
before its passage" but also the requirement that before a bill can
become a law it must have passed "three readings on separate days."
There is not only textual support for such construction but historical
basis as well.
Art. VI, §21 (2) of the 1935 Constitution originally provided:

(2) No bill shall be passed by either House unless it shall have been
printed and copies thereof in its final form furnished its Members at least
three calendar days prior to its passage, except when the President
shall have certified to the necessity of its immediate enactment. Upon
the last reading of a bill, no amendment thereof shall be allowed and the
question upon its passage shall be taken immediately thereafter, and
the yeas and nays entered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII,
§19 (2):
(2) No bill shall become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form have been
distributed to the Members three days before its passage, except when
the Prime Minister certifies to the necessity of its immediate enactment
to meet a public calamity or emergency. Upon the last reading of a bill,
no amendment thereto shall be allowed, and the vote thereon shall be
taken immediately thereafter, and the yeas  and nays  entered in the
Journal.
This provision of the 1973 document, with slight modification, was
adopted in Art. VI, §26 (2) of the present Constitution, thus:
(2) No bill passed by either House shall become a law unless it has
passed three readings on separate days, and printed copies thereof in
its final form have been distributed to its Members three days before its
passage, except when the President certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. Upon the
last reading of a bill, no amendment thereto shall be allowed, and the
vote thereon shall be taken immediately thereafter, and
the yeas and nays entered in the Journal.
The exception is based on the prudential consideration that if in all
cases three readings on separate days are required and a bill has to be
printed in final form before it can be passed, the need for a law may be
rendered academic by the occurrence of the very emergency or public
calamity which it is meant to address.
Petitioners further contend that a "growing budget deficit" is not an
emergency, especially in a country like the Philippines where budget
deficit is a chronic condition. Even if this were the case, an enormous
budget deficit does not make the need for R.A. No. 7716 any less urgent
or the situation calling for its enactment any less an emergency.
Apparently, the members of the Senate (including some of the
petitioners in these cases) believed that there was an urgent need for
consideration of S. No. 1630, because they responded to the call of the
President by voting on the bill on second and third readings on the same
day. While the judicial department is not bound by the Senate's
acceptance of the President's certification, the respect due coequal
departments of the government in matters committed to them by the
Constitution and the absence of a clear showing of grave abuse of
discretion caution a stay of the judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough
consideration in the Senate where it was discussed for six days. Only its
distribution in advance in its final printed form was actually dispensed
with by holding the voting on second and third readings on the same day
(March 24, 1994). Otherwise, sufficient time between the submission of
the bill on February 8, 1994 on second reading and its approval on
March 24, 1994 elapsed before it was finally voted on by the Senate on
third reading.
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The purpose for which three readings on separate days is required is
said to be two-fold: (1) to inform the members of Congress of what they
must vote on and (2) to give them notice that a measure is progressing
through the enacting process, thus enabling them and others interested
in the measure to prepare their positions with reference to it. (1 J. G.
SUTHERLAND, STATUTES AND STATUTORY CONSTRUCTION
§10.04, p. 282 (1972)). These purposes were substantially achieved in
the case of R.A. No. 7716.
IV. Power of Conference Committee. It is contended (principally by
Kilosbayan, Inc. and the Movement of Attorneys for Brotherhood,
Integrity and Nationalism, Inc. (MABINI)) that in violation of the
constitutional policy of full public disclosure and the people's right to
know (Art. II, §28 and Art. III, §7) the Conference Committee met for two
days in executive session with only the conferees present.
As pointed out in our main decision, even in the United States it was
customary to hold such sessions with only the conferees and their staffs
in attendance and it was only in 1975 when a new rule was adopted
requiring open sessions. Unlike its American counterpart, the Philippine
Congress has not adopted a rule prescribing open hearings for
conference committees.
It is nevertheless claimed that in the United States, before the adoption
of the rule in 1975, at least staff members were present. These were
staff members of the Senators and Congressmen, however, who may be
presumed to be their confidential men, not stenographers as in this case
who on the last two days of the conference were excluded. There is no
showing that the conferees themselves did not take notes of their
proceedings so as to give petitioner Kilosbayan basis for claiming that
even in secret diplomatic negotiations involving state interests,
conferees keep notes of their meetings. Above all, the public's right to
know was fully served because the Conference Committee in this case
submitted a report showing the changes made on the differing versions
of the House and the Senate.
Petitioners cite the rules of both houses which provide that conference
committee reports must contain "a detailed, sufficiently explicit statement
of the changes in or other amendments." These changes are shown in
the bill attached to the Conference Committee Report. The members of
both houses could thus ascertain what changes had been made in the
original bills without the need of a statement detailing the changes.
The same question now presented was raised when the bill which
became R.A. No. 1400 (Land Reform Act of 1955) was reported by the
Conference Committee. Congressman Bengzon raised a point of order.
He said:
MR. BENGZON. My point of order is that it is out of order to consider the
report of the conference committee regarding House Bill No. 2557  by
reason of the provision of Section 11, Article XII, of the Rules of this
House which provides specifically that the conference report must be
accompanied by a detailed statement of the effects of the amendment
on the bill of the House. This conference committee report is not
accompanied by that detailed statement, Mr. Speaker. Therefore it is out
of order to consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in
connection with the point of order raised by the gentleman from
Pangasinan.

There is no question about the provision of the Rule cited by the
gentleman from Pangasinan, but this provision applies to those cases
where only portions of the bill have been amended . In this case before
us an entire bill is presented; therefore, it can be easily seen from the
reading of the bill what the provisions are. Besides, this procedure has
been an established practice.
After some interruption, he continued:
MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into
the reason for the provisions of the Rules, and the reason for the
requirement in the provision cited by the gentleman from Pangasinan is
when there are only certain words or phrases inserted in or deleted from
the provisions of the bill included in the conference report, and we
cannot understand what those words and phrases mean and their
relation to the bill. In that case, it is necessary to make a detailed
statement on how those words and phrases will affect the bill as a
whole; but when the entire bill itself is copied verbatim in the conference
report, that is not necessary. So when the reason for the Rule does not
exist, the Rule does not exist.
(2 CONG. REC. NO. 2, p. 4056. (emphasis added))
Congressman Tolentino was sustained by the chair. The record shows
that when the ruling was appealed, it was upheld by viva voce and when
a division of the House was called, it was sustained by a vote of 48 to 5.
(Id.,
p. 4058)
Nor is there any doubt about the power of a conference committee to
insert new provisions as long as these are germane to the subject of the
conference. As this Court held in Philippine Judges Association
v. Prado, 227 SCRA 703 (1993), in an opinion written by then Justice
Cruz, the jurisdiction of the conference committee is not limited to
resolving differences between the Senate and the House. It may
propose an entirely new provision. What is important is that its report is
subsequently approved by the respective houses of Congress. This
Court ruled that it would not entertain allegations that, because new
provisions had been added by the conference committee, there was
thereby a violation of the constitutional injunction that "upon the last
reading of a bill, no amendment thereto shall be allowed."
Applying these principles, we shall decline to look into the petitioners'
charges that an amendment was made upon the last reading of the
bill that eventually became R.A. No. 7354 and that copies thereof in its
final form were not distributed among the members of each House. Both
the enrolled bill and the legislative journals certify that the measure was
duly enacted i.e., in accordance with Article VI, Sec. 26 (2) of the
Constitution. We are bound by such official assurances from a
coordinate department of the government, to which we owe, at the very
least, a becoming courtesy.
(Id. at 710. (emphasis added))
It is interesting to note the following description of conference
committees in the Philippines in a 1979 study:
Conference committees may be of two types: free or instructed. These
committees may be given instructions by their parent bodies or they may
be left without instructions. Normally the conference committees are
without instructions, and this is why they are often critically referred to as
"the little legislatures." Once bills have been sent to them, the conferees
have almost unlimited authority to change the clauses of the bills and in
JDTAX2 | DONOR’S TAX |Cases | 6
fact sometimes introduce new measures that were not in the original
legislation. No minutes are kept, and members' activities on conference
committees are difficult to determine. One congressman known for his
idealism put it this way: "I killed a bill on export incentives for my interest
group [copra] in the conference committee but I could not have done so
anywhere else." The conference committee submits a report to both
houses, and usually it is accepted. If the report is not accepted, then the
committee is discharged and new members are appointed.
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES
AND LEGISLATURES: A COMPARATIVE ANALYSIS 163 (J. D. LEES
AND M. SHAW, eds.)).
In citing this study, we pass no judgment on the methods of conference
committees. We cite it only to say that conference committees here are
no different from their counterparts in the United States whose vast
powers we noted in Philippine Judges Association v. Prado, supra. At all
events, under Art. VI, §16(3) each house has the power "to determine
the rules of its proceedings," including those of its committees. Any
meaningful change in the method and procedures of Congress or its
committees must therefore be sought in that body itself.
V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A.
No. 7716 violates Art. VI, §26 (1) of the Constitution which provides that
"Every bill passed by Congress shall embrace only one subject which
shall be expressed in the title thereof." PAL contends that the
amendment of its franchise by the withdrawal of its exemption from the
VAT is not expressed in the title of the law.
Pursuant to §13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its
gross revenue "in lieu of all other taxes, duties, royalties, registration,
license and other fees and charges of any kind, nature, or description,
imposed, levied, established, assessed or collected by any municipal,
city, provincial or national authority or government agency, now or in the
future."
PAL was exempted from the payment of the VAT along with other
entities by §103 of the National Internal Revenue Code, which provides
as follows:
§103. Exempt transactions. — The following shall be exempt from the
value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws or international
agreements to which the Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that
granted to PAL, by amending §103, as follows:
§103. Exempt transactions. — The following shall be exempt from the
value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws, except those
granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .
The amendment of §103 is expressed in the title of R.A. No. 7716 which
reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM,
WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION,

AND FOR THESE PURPOSES AMENDING AND REPEALING THE
RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE
CODE, AS AMENDED, AND FOR OTHER PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-
ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND
ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR
OTHER PURPOSES," Congress thereby clearly expresses its intention
to amend any provision of the NIRC which stands in the way of
accomplishing the purpose of the law.
PAL asserts that the amendment of its franchise must be reflected in the
title of the law by specific reference to P.D. No. 1590. It is unnecessary
to do this in order to comply with the constitutional requirement, since it
is already stated in the title that the law seeks to amend the pertinent
provisions of the NIRC, among which is §103(q), in order to widen the
base of the VAT. Actually, it is the bill which becomes a law that is
required to express in its title the subject of legislation. The titles of H.
No. 11197 and S. No. 1630 in fact specifically referred to §103 of the
NIRC as among the provisions sought to be amended. We are satisfied
that sufficient notice had been given of the pendency of these bills in
Congress before they were enacted into what is now R.A.
No. 7716.
In Philippine Judges Association v. Prado, supra, a similar argument as
that now made by PAL was rejected. R.A. No. 7354 is entitled AN ACT
CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING
ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING
FOR REGULATION OF THE INDUSTRY AND FOR OTHER
PURPOSES CONNECTED THEREWITH. It contained a provision
repealing all franking privileges. It was contended that the withdrawal of
franking privileges was not expressed in the title of the law. In holding
that there was sufficient description of the subject of the law in its title,
including the repeal of franking privileges, this Court held:
To require every end and means necessary for the accomplishment of
the general objectives of the statute to be expressed in its title would not
only be unreasonable but would actually render legislation impossible.
[Cooley, Constitutional Limitations, 8th Ed., p. 297] As has been
correctly explained:
The details of a legislative act need not be specifically stated in its title,
but matter germane to the subject as expressed in the title, and adopted
to the accomplishment of the object in view, may properly be included in
the act. Thus, it is proper to create in the same act the machinery by
which the act is to be enforced, to prescribe the penalties for its
infraction, and to remove obstacles in the way of its execution. If such
matters are properly connected with the subject as expressed in the title,
it is unnecessary that they should also have special mention in the title.
(Southern Pac. Co. v. Bartine, 170 Fed. 725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty . We have held that, as
a general proposition, the press is not exempt from the taxing power of
the State and that what the constitutional guarantee of free press
prohibits are laws which single out the press or target a group belonging
to the press for special treatment or which in any way discriminate
against the press on the basis of the content of the publication, and R.A.
No. 7716 is none of these.
JDTAX2 | DONOR’S TAX |Cases | 7
Now it is contended by the PPI that by removing the exemption of the
press from the VAT while maintaining those granted to others, the law
discriminates against the press. At any rate, it is averred, "even
nondiscriminatory taxation of constitutionally guaranteed freedom is
unconstitutional."
With respect to the first contention, it would suffice to say that since the
law granted the press a privilege, the law could take back the privilege
anytime without offense to the Constitution. The reason is simple: by
granting exemptions, the State does not forever waive the exercise of its
sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the press
to the same tax burden to which other businesses have long ago been
subject. It is thus different from the tax involved in the cases invoked by
the PPI. The license tax in Grosjean v. American Press Co., 297 U.S.
233, 80 L. Ed. 660 (1936) was found to be discriminatory because it was
laid on the gross advertising receipts only of newspapers whose weekly
circulation was over 20,000, with the result that the tax applied only to
13 out of 124 publishers in Louisiana. These large papers were critical of
Senator Huey Long who controlled the state legislature which enacted
the license tax. The censorial motivation for the law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota
Comm'r of Revenue, 460 U.S. 575, 75 L. Ed. 2d 295 (1983), the tax was
found to be discriminatory because although it could have been made
liable for the sales tax or, in lieu thereof, for the use tax on the privilege
of using, storing or consuming tangible goods, the press was not.
Instead, the press was exempted from both taxes. It was, however, later
made to pay a special use tax on the cost of paper and ink which made
these items "the only items subject to the use tax that were component
of goods to be sold at retail." The U.S. Supreme Court held that the
differential treatment of the press "suggests that the goal of regulation is
not related to suppression of expression, and such goal is presumptively
unconstitutional." It would therefore appear that even a law that favors
the press is constitutionally suspect. (See the dissent of Rehnquist, J. in
that case)
Nor is it true that only two exemptions previously granted by E.O. No.
273 are withdrawn "absolutely and unqualifiedly" by R.A. No. 7716.
Other exemptions from the VAT, such as those previously granted to
PAL, petroleum concessionaires, enterprises registered with the Export
Processing Zone Authority, and many more are likewise totally
withdrawn, in addition to exemptions which are partially withdrawn, in an
effort to broaden the base of the tax.
The PPI says that the discriminatory treatment of the press is highlighted
by the fact that transactions, which are profit oriented, continue to enjoy
exemption under R.A. No. 7716. An enumeration of some of these
transactions will suffice to show that by and large this is not so and that
the exemptions are granted for a purpose. As the Solicitor General says,
such exemptions are granted, in some cases, to encourage agricultural
production and, in other cases, for the personal benefit of the end-user
rather than for profit. The exempt transactions are:
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their original
state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and
poultry feeds) and goods or services to enhance agriculture (milling of
palay, corn, sugar cane and raw sugar, livestock, poultry feeds, fertilizer,
ingredients used for the manufacture of feeds).

(b) Goods used for personal consumption or use (household and
personal effects of citizens returning to the Philippines) or for
professional use, like professional instruments and implements, by
persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be
used for manufacture of petroleum products subject to excise tax and
services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary
services, and services rendered under employer-employee relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international
agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not
exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for
Reconsideration, pp. 58-60)
The PPI asserts that it does not really matter that the law does not
discriminate against the press because "even nondiscriminatory taxation
on constitutionally guaranteed freedom is unconstitutional." PPI cites in
support of this assertion the following statement in Murdock
v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The
protection afforded by the First Amendment is not so restricted. A
license tax certainly does not acquire constitutional validity because it
classifies the privileges protected by the First Amendment along with the
wares and merchandise of hucksters and peddlers and treats them all
alike. Such equality in treatment does not save the ordinance. Freedom
of press, freedom of speech, freedom of religion are in preferred
position.
The Court was speaking in that case of a license tax, which, unlike an
ordinary tax, is mainly for regulation. Its imposition on the press is
unconstitutional because it lays a prior restraint on the exercise of its
right. Hence, although its application to others, such those selling goods,
is valid, its application to the press or to religious groups, such as the
Jehovah's Witnesses, in connection with the latter's sale of religious
books and pamphlets, is unconstitutional. As the U.S. Supreme Court
put it, "it is one thing to impose a tax on income or property of a
preacher. It is quite another thing to exact a tax on him for delivering a
sermon."
A similar ruling was made by this Court in American Bible Society v. City
of Manila, 101 Phil. 386 (1957) which invalidated a city ordinance
requiring a business license fee on those engaged in the sale of general
merchandise. It was held that the tax could not be imposed on the sale
of bibles by the American Bible Society without restraining the free
exercise of its right to propagate.
The VAT is, however, different. It is not a license tax. It is not a tax on
the exercise of a privilege, much less a constitutional right. It is imposed
on the sale, barter, lease or exchange of goods or properties or the sale
or exchange of services and the lease of properties purely for revenue
purposes. To subject the press to its payment is not to burden the
exercise of its right any more than to make the press pay income tax or
JDTAX2 | DONOR’S TAX |Cases | 8
subject it to general regulation is not to violate its freedom under the
Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it sells
bibles, the proceeds derived from the sales are used to subsidize the
cost of printing copies which are given free to those who cannot afford to
pay so that to tax the sales would be to increase the price, while
reducing the volume of sale. Granting that to be the case, the resulting
burden on the exercise of religious freedom is so incidental as to make it
difficult to differentiate it from any other economic imposition that might
make the right to disseminate religious doctrines costly. Otherwise, to
follow the petitioner's argument, to increase the tax on the sale of
vestments would be to lay an impermissible burden on the right of the
preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by §107 of
the NIRC, as amended by §7 of R.A. No. 7716, although fixed in
amount, is really just to pay for the expenses of registration and
enforcement of provisions such as those relating to accounting in §108
of the NIRC. That the PBS distributes free bibles and therefore is not
liable to pay the VAT does not excuse it from the payment of this fee
because it also sells some copies. At any rate whether the PBS is liable
for the VAT must be decided in concrete cases, in the event it is
assessed this tax by the Commissioner of Internal Revenue.
VII. Alleged violations of the due process, equal protection and contract
clauses and the rule on taxation . CREBA asserts that R.A. No. 7716 (1)
impairs the obligations of contracts, (2) classifies transactions as
covered or exempt without reasonable basis and (3) violates the rule
that taxes should be uniform and equitable and that Congress shall
"evolve a progressive system of taxation."
With respect to the first contention, it is claimed that the application of
the tax to existing contracts of the sale of real property by installment or
on deferred payment basis would result in substantial increases in the
monthly amortizations to be paid because of the 10% VAT. The
additional amount, it is pointed out, is something that the buyer did not
anticipate at the time he entered into the contract.
The short answer to this is the one given by this Court in an early case:
"Authorities from numerous sources are cited by the plaintiffs, but none
of them show that a lawful tax on a new subject, or an increased tax on
an old one, interferes with a contract or impairs its obligation, within the
meaning of the Constitution. Even though such taxation may affect
particular contracts, as it may increase the debt of one person and
lessen the security of another, or may impose additional burdens upon
one class and release the burdens of another, still the tax must be paid
unless prohibited by the Constitution, nor can it be said that it impairs
the obligation of any existing contract in its true legal sense." (La Insular
v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)).
Indeed not only existing laws but also " the reservation of the essential
attributes of sovereignty, is . . . read into contracts as a postulate of the
legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22
SCRA 135, 147 (1968)) Contracts must be understood as having been
made in reference to the possible exercise of the rightful authority of the
government and no obligation of contract can extend to the defeat of
that authority. (Norman v. Baltimore and Ohio R.R., 79 L. Ed. 885
(1935)).
It is next pointed out that while §4 of R.A. No. 7716 exempts such
transactions as the sale of agricultural products, food items, petroleum,
and medical and veterinary services, it grants no exemption on the sale

of real property which is equally essential. The sale of real property for
socialized and low-cost housing is exempted from the tax, but CREBA
claims that real estate transactions of "the less poor," i.e., the middle
class, who are equally homeless, should likewise be exempted.
The sale of food items, petroleum, medical and veterinary services, etc.,
which are essential goods and services was already exempt under
§103, pars. (b) (d) (1) of the NIRC before the enactment of R.A. No.
7716. Petitioner is in error in claiming that R.A. No. 7716 granted
exemption to these transactions, while subjecting those of petitioner to
the payment of the VAT. Moreover, there is a difference between the
"homeless poor" and the "homeless less poor" in the example given by
petitioner, because the second group or middle class can afford to rent
houses in the meantime that they cannot yet buy their own homes. The
two social classes are thus differently situated in life. "It is inherent in the
power to tax that the State be free to select the subjects of taxation, and
it has been repeatedly held that 'inequalities which result from a singling
out of one particular class for taxation, or exemption infringe no
constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153
(1955). Accord, City of Baguio v. De Leon, 134 Phil. 912 (1968); Sison,
Jr. v. Ancheta, 130 SCRA 654, 663 (1984); Kapatiran ng mga
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 371
(1988)).
Finally, it is contended, for the reasons already noted, that R.A. No.
7716 also violates Art. VI, §28(1) which provides that "The rule of
taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation."
Equality and uniformity of taxation means that all taxable articles or
kinds of property of the same class be taxed at the same rate. The
taxing power has the authority to make reasonable and natural
classifications for purposes of taxation. To satisfy this requirement it is
enough that the statute or ordinance applies equally to all persons,
forms and corporations placed in similar situation. (City of Baguio v. De
Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A.
No. 7716 was enacted. R.A. No. 7716 merely expands the base of the
tax. The validity of the original VAT Law was questioned in Kapatiran ng
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383
(1988) on grounds similar to those made in these cases, namely, that
the law was "oppressive, discriminatory, unjust and regressive in
violation of Art. VI, §28(1) of the Constitution." (At 382) Rejecting the
challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax.
It is uniform. . . .
The sales tax adopted in EO 273 is applied similarly on all goods and
services sold to the public, which are not exempt, at the constant rate of
0% or 10%.
The disputed sales tax is also equitable. It is imposed only on sales of
goods or services by persons engaged in business with an aggregate
gross annual sales exceeding P200,000.00. Small corner sari-sari stores
are consequently exempt from its application. Likewise exempt from the
tax are sales of farm and marine products, so that the costs of basic
food and other necessities, spared as they are from the incidence of the
VAT, are expected to be relatively lower and within the reach of the
general public.
(At 382-383)
JDTAX2 | DONOR’S TAX |Cases | 9
The CREBA claims that the VAT is regressive. A similar claim is made
by the Cooperative Union of the Philippines, Inc. (CUP), while petitioner
Juan T. David argues that the law contravenes the mandate of Congress
to provide for a progressive system of taxation because the law imposes
a flat rate of 10% and thus places the tax burden on all taxpayers
without regard to their ability to pay.
The Constitution does not really prohibit the imposition of indirect taxes
which, like the VAT, are regressive. What it simply provides is that
Congress shall "evolve  a progressive system of taxation." The
constitutional provision has been interpreted to mean simply that "direct
taxes are . . . to be preferred [and] as much as possible, indirect taxes
should be minimized." (E. FERNANDO, THE CONSTITUTION OF THE
PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to
Congress is not to prescribe, but to evolve, a progressive tax system.
Otherwise, sales taxes, which perhaps are the oldest form of indirect
taxes, would have been prohibited with the proclamation of Art. VIII,
§17(1) of the 1973 Constitution from which the present Art. VI, §28(1)
was taken. Sales taxes are also regressive.
Resort to indirect taxes should be minimized but not avoided entirely
because it is difficult, if not impossible, to avoid them by imposing such
taxes according to the taxpayers' ability to pay. In the case of the VAT,
the law minimizes the regressive effects of this imposition by providing
for zero rating of certain transactions (R.A. No. 7716, §3, amending
§102 (b) of the NIRC), while granting exemptions  to other transactions.
(R.A. No. 7716, §4, amending §103 of the NIRC).
Thus, the following transactions involving basic and essential goods and
services are exempted from the VAT:
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their original
state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and
poultry feeds) and goods or services to enhance agriculture (milling of
palay, corn sugar cane and raw sugar, livestock, poultry feeds, fertilizer,
ingredients used for the manufacture of feeds).
(b) Goods used for personal consumption or use (household and
personal effects of citizens returning to the Philippines) and or
professional use, like professional instruments and implements, by
persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be
used for manufacture of petroleum products subject to excise tax and
services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary
services, and services rendered under employer-employee relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international
agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not
exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for
Reconsideration, pp. 58-60)

On the other hand, the transactions which are subject to the VAT are
those which involve goods and services which are used or availed of
mainly by higher income groups. These include real properties held
primarily for sale to customers or for lease in the ordinary course of
trade or business, the right or privilege to use patent, copyright, and
other similar property or right, the right or privilege to use industrial,
commercial or scientific equipment, motion picture films, tapes and
discs, radio, television, satellite transmission and cable television time,
hotels, restaurants and similar places, securities, lending investments,
taxicabs, utility cars for rent, tourist buses, and other common carriers,
services of franchise grantees of telephone and telegraph.
The problem with CREBA's petition is that it presents broad claims of
constitutional violations by tendering issues not at retail but at wholesale
and in the abstract. There is no fully developed record which can impart
to adjudication the impact of actuality. There is no factual foundation to
show in the concrete  the application of the law to actual contracts  and
exemplify its effect on property rights. For the fact is that petitioner's
members have not even been assessed the VAT. Petitioner's case is not
made concrete by a series of hypothetical questions asked which are no
different from those dealt with in advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges
arbitrariness. A mere allegation, as here, does not suffice. There must
be a factual foundation of such unconstitutional taint. Considering that
petitioner here would condemn such a provision as void on its face, he
has not made out a case. This is merely to adhere to the authoritative
doctrine that where the due process and equal protection clauses are
invoked, considering that they are not fixed rules but rather broad
standards, there is a need for proof of such persuasive character as
would lead to such a conclusion. Absent such a showing, the
presumption of validity must prevail.
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a
concrete case. It may be that postponement of adjudication would result
in a multiplicity of suits. This need not be the case, however.
Enforcement of the law may give rise to such a case. A test case,
provided it is an actual case and not an abstract or hypothetical one,
may thus be presented.
Nor is hardship to taxpayers alone an adequate justification for
adjudicating abstract issues. Otherwise, adjudication would be no
different from the giving of advisory opinion that does not really settle
legal issues.
We are told that it is our duty under Art. VIII, §1, ¶2 to decide whenever
a claim is made that "there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government." This duty can only arise if an actual
case or controversy is before us. Under Art . VIII, §5 our jurisdiction is
defined in terms of "cases" and all that Art. VIII, §1, ¶2 can plausibly
mean is that in the exercise of that jurisdiction  we have the judicial
power  to determine questions of grave abuse of discretion by any
branch or instrumentality of the government.
Put in another way, what is granted in Art. VIII, §1, ¶2 is "judicial power,"
which is "the power of a court to hear and decide cases pending
between parties who have the right to sue and be sued in the courts of
law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as
distinguished from legislative and executive power. This power cannot
JDTAX2 | DONOR’S TAX |Cases | 10
be directly appropriated until it is apportioned among several courts
either by the Constitution, as in the case of Art. VIII, §5, or by statute, as
in the case of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary
Reorganization Act of 1980 (B.P. Blg. 129). The power thus apportioned
constitutes the court's "jurisdiction," defined as "the power conferred by
law upon a court or judge to take cognizance of a case, to the exclusion
of all others." (United States v. Arceo, 6 Phil. 29 (1906)) Without an
actual case coming within its jurisdiction, this Court cannot inquire into
any allegation of grave abuse of discretion by the other departments of
the government.
VIII. Alleged violation of policy towards cooperatives. On the other hand,
the Cooperative Union of the Philippines (CUP), after briefly surveying
the course of legislation, argues that it was to adopt a definite policy of
granting tax exemption to cooperatives that the present Constitution
embodies provisions on cooperatives. To subject cooperatives to the
VAT would therefore be to infringe a constitutional policy. Petitioner
claims that in 1973, P.D. No. 175 was promulgated exempting
cooperatives from the payment of income taxes and sales taxes but in
1984, because of the crisis which menaced the national economy, this
exemption was withdrawn by P.D. No. 1955; that in 1986, P.D. No. 2008
again granted cooperatives exemption from income and sales taxes until
December 31, 1991, but, in the same year, E.O. No. 93 revoked the
exemption; and that finally in 1987 the framers of the Constitution
"repudiated the previous actions of the government adverse to the
interests of the cooperatives, that is, the repeated revocation of the tax
exemption to cooperatives and instead upheld the policy of
strengthening the cooperatives by way of the grant of tax exemptions,"
by providing the following in Art. XII:
§1. The goals of the national economy are a more equitable distribution
of opportunities, income, and wealth; a sustained increase in the amount
of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the quality of
life for all, especially the underprivileged.
The State shall promote industrialization and full employment based on
sound agricultural development and agrarian reform, through industries
that make full and efficient use of human and natural resources, and
which are competitive in both domestic and foreign markets. However,
the State shall protect Filipino enterprises against unfair foreign
competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions
of the country shall be given optimum opportunity to develop. Private
enterprises, including corporations, cooperatives, and similar collective
organizations, shall be encouraged to broaden the base of their
ownership.
§15. The Congress shall create an agency to promote the viability and
growth of cooperatives as instruments for social justice and economic
development.
Petitioner's contention has no merit. In the first place, it is not true that
P.D. No. 1955 singled out cooperatives by withdrawing their exemption
from income and sales taxes under P.D. No. 175, §5. What P.D. No.
1955, §1 did was to withdraw the exemptions and preferential
treatments theretofore granted to private business enterprises in
general, in view of the economic crisis which then beset the nation. It is
true that after P.D. No. 2008, §2 had restored the tax exemptions of
cooperatives in 1986, the exemption was again repealed by E.O. No. 93,
§1, but then again cooperatives were not the only ones whose
 JDTAX2 | DONOR’S TAX |Cases | 11

exemptions were withdrawn. The withdrawal of tax incentives applied to

all, including government and private entities . In the second place, the
Constitution does not really require that cooperatives be granted tax
exemptions in order to promote their growth and viability. Hence, there is
no basis for petitioner's assertion that the government's policy toward
cooperatives had been one of vacillation, as far as the grant of tax
privileges was concerned, and that it was to put an end to this indecision
that the constitutional provisions cited were adopted. Perhaps as a
matter of policy cooperatives should be granted tax exemptions, but that
is left to the discretion of Congress. If Congress does not grant
exemption and there is no discrimination to cooperatives, no violation of
any constitutional policy can be charged.

Indeed, petitioner's theory amounts to saying that under the Constitution

cooperatives are exempt from taxation . Such theory is contrary to the
Constitution under which only the following are exempt from taxation:
charitable institutions, churches and parsonages, by reason of Art. VI,
§28 (3), and non-stock, non-profit educational institutions by reason of
Art. XIV, §4 (3).

CUP's further ground for seeking the invalidation of R.A. No. 7716 is that
it denies cooperatives the equal protection of the law because electric
cooperatives are exempted from the VAT. The classification between
electric and other cooperatives (farmers cooperatives, producers
cooperatives, marketing cooperatives, etc.) apparently rests on a
congressional determination that there is greater need to provide
cheaper electric power to as many people as possible, especially those
living in the rural areas, than there is to provide them with other
necessities in life. We cannot say that such classification is
unreasonable.

We have carefully read the various arguments raised against the

constitutional validity of R.A. No. 7716. We have in fact taken the
extraordinary step of enjoining its enforcement pending resolution of
these cases. We have now come to the conclusion that the law suffers
from none of the infirmities attributed to it by petitioners and that its
enactment by the other branches of the government does not constitute
a grave abuse of discretion. Any question as to its necessity, desirability
or expediency must be addressed to Congress as the body which is
electorally responsible, remembering that, as Justice Holmes has said,
"legislators are the ultimate guardians of the liberties and welfare of the
people in quite as great a degree as are the courts." (Missouri, Kansas &
Texas Ry. Co. v. May, 194 U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It
is not right, as petitioner in G.R. No. 115543 does in arguing that we
should enforce the public accountability of legislators, that those who
took part in passing the law in question by voting for it in Congress
should later thrust to the courts the burden of reviewing measures in the
flush of enactment. This Court does not sit as a third branch of the
legislature, much less exercise a veto power over legislation.

WHEREFORE, the motions for reconsideration are denied with finality

and the temporary restraining order previously issued is hereby lifted.

SO ORDERED.
 JDTAX2 | DONOR’S TAX |Cases | 12

(VAT) taxpayer effective March 1988 and was issued VAT Registration
Certificate No. 088445 bearing VAT Registration No. 32A-3-004868. For
the period January 1, 1997 to December 31, 1997, [respondent] filed
with the BIR its quarterly VAT returns as follows:

Exhibit Period Covered Date Filed

D 1997 1st Qtr. April 18, 1997

F 2nd Qtr. July 21, 1997

G 3rd Qtr. October 2, 1997

H 4th Qtr. January 20, 1998

2. CIR v. American Express Int’l, G.R. No. 152609, June 29, 2005 "On March 23, 1999, however, [respondent] amended the aforesaid
returns and declared the following:
https://lawphil.net/judjuris/juri2005/jun2005/gr_152609_2005.html Exh 1997 Taxable Sales Output Zero-rated Domestic Input
VAT Sales Purchases VAT
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs. AMERICAN EXPRESS INTERNATIONAL, INC. (PHILIPPINE I 1st qtr ₱59,597.20 ₱5,959.72 ₱17,513,801.11 ₱6,778,182.30 ₱677,818.23
BRANCH), Respondent.
J 2nd qtr 67,517.20 6,751.72 17,937,361.51 9,333,242.90 933,324.29
PANGANIBAN, J.:
K 3rd qtr 51,936.60 5,193.66 19,627,245.36 8,438,357.00 843,835.70
As a general rule, the value-added tax (VAT) system uses the
destination principle. However, our VAT law itself provides for a clear
L 4th qtr 67,994.30 6,799.43 25,231,225.22 13,080,822.10 1,308,082.21
exception, under which the supply of service shall be zero-rated when
the following requirements are met: (1) the service is performed in the
Philippines; (2) the service falls under any of the categories provided in
Section 102(b) of the Tax Code; and (3) it is paid for in acceptable
Total ₱247,045.30 ₱24,704.53 ₱80,309,633.20 ₱37,630,604.30 ₱3,763,060.43
foreign currency that is accounted for in accordance with the regulations
of the Bangko Sentral ng Pilipinas. Since respondent’s services meet
these requirements, they are zero-rated. Petitioner’s Revenue
Regulations that alter or revoke the above requirements are ultra
vires  and invalid. "On April 13, 1999, [respondent] filed with the BIR a letter-request for the
refund of its 1997 excess input taxes in the amount of ₱3,751,067.04,
The Case
which amount was arrived at after deducting from its total input VAT paid
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, of ₱3,763,060.43 its applied output VAT liabilities only for the third and
assailing the February 28, 2002 Decision2 of the Court of Appeals (CA) fourth quarters of 1997 amounting to ₱5,193.66 and ₱6,799.43,
in CA-GR SP No. 62727. The assailed Decision disposed as follows: respectively. [Respondent] cites as basis therefor, Section 110 (B) of the
1997 Tax Code, to state:
"WHEREFORE, premises considered, the petition is
hereby DISMISSED for lack of merit. The assailed decision of the Court ‘Section 110. Tax Credits. -
of Tax Appeals (CTA) is AFFIRMED  in toto."3
xxxxxxxxx
The Facts
‘(B) Excess Output or Input Tax. - If at the end of any taxable quarter the
Quoting the CTA, the CA narrated the undisputed facts as follows: output tax exceeds the input tax, the excess shall be paid by the VAT-
registered person. If the input tax exceeds the output tax, the excess
"[Respondent] is a Philippine branch of American Express International, shall be carried over to the succeeding quarter or quarters. Any input tax
Inc., a corporation duly organized and existing under and by virtue of the attributable to the purchase of capital goods or to zero-rated sales by a
laws of the State of Delaware, U.S.A., with office in the Philippines at the VAT-registered person may at his option be refunded or credited against
Ground Floor, ACE Building, corner Rada and de la Rosa Streets, other internal revenue taxes, subject to the provisions of Section 112.’
Legaspi Village, Makati City. It is a servicing unit of American Express
International, Inc. - Hongkong Branch (Amex-HK) and is engaged "There being no immediate action on the part of the [petitioner],
primarily to facilitate the collections of Amex-HK receivables from card [respondent’s] petition was filed on April 15, 1999.
members situated in the Philippines and payment to service
"In support of its Petition for Review, the following arguments were
establishments in the Philippines.
raised by [respondent]:
"Amex Philippines registered itself with the Bureau of Internal Revenue
(BIR), Revenue District Office No. 47 (East Makati) as a value-added tax

A. Export sales by a VAT-registered person, the consideration for which
is paid for in acceptable foreign currency inwardly remitted to the
Philippines and accounted for in accordance with existing regulations of
the Bangko Sentral ng Pilipinas, are subject to [VAT] at zero percent
(0%). According to [respondent], being a VAT-registered entity, it is
subject to the VAT imposed under Title IV of the Tax Code, to wit:
‘Section 102.(sic) Value-added tax on sale of services.-  (a) Rate and
base of tax. - There shall be levied, assessed and collected, a value-
added tax equivalent to 10% percent of gross receipts derived by any
person engaged in the sale of services. The phrase "sale of services"
means the performance of all kinds of services for others for a fee,
remuneration or consideration, including those performed or rendered by
construction and service contractors: stock, real estate, commercial,
customs and immigration brokers; lessors of personal property; lessors
or distributors of cinematographic films; persons engaged in milling,
processing, manufacturing or repacking goods for others; and similar
services regardless of whether o[r] not the performance thereof calls for
the exercise or use of the physical or mental faculties:  Provided That the
following services performed in the Philippines by VAT-registered
persons shall be subject to 0%:
(1) x x x
(2) Services other than those mentioned in the preceding subparagraph,
the consideration is paid for in acceptable foreign currency which is
remitted inwardly to the Philippines and accounted for in accordance
with the rules and regulations of the BSP. x x x.’
In addition, [respondent] relied on VAT Ruling No. 080-89, dated April 3,
1989, the pertinent portion of which reads as follows:
‘In Reply, please be informed that, as a VAT registered entity whose
service is paid for in acceptable foreign currency which is remitted
inwardly to the Philippines and accounted for in accordance with the
rules and regulations of the Central [B]ank of the Philippines, your
service income is automatically zero rated effective January 1, 1998.
[Section 102(a)(2) of the Tax Code as amended].4 For this, there is no
need to file an application for zero-rate.’
B. Input taxes on domestic purchases of taxable goods and services
related to zero-rated revenues are available as tax refund in accordance
with Section 106 (now Section 112) of the [Tax Code] and Section 8(a)
of [Revenue] Regulations [(RR)] No. 5-87, to state:
‘Section 106. Refunds or tax credits of input tax. -
(A) Zero-rated or effectively Zero-rated Sales. -  Any VAT-registered
person, except those covered by paragraph (a) above, whose sales are
zero-rated or are effectively zero-rated, may, within two (2) years after
the close of the taxable quarter when such sales were made, apply for
the issuance of tax credit certificate or refund of the input taxes due or
attributable to such sales, to the extent that such input tax has not been
applied against output tax. x x x. [Section 106(a) of the Tax Code]’5
‘Section 8. Zero-rating.  - (a) In general. - A zero-rated sale is a taxable
transaction for value-added tax purposes. A sale by a VAT-registered
person of goods and/or services taxed at zero rate shall not result in any
output tax. The input tax on his purchases of goods or services related
to such zero-rated sale shall be available as tax credit or refundable in
accordance with Section 16 of these Regulations. x x x.’ [Section 8(a),
[RR] 5-87].’6
JDTAX2 | DONOR’S TAX |Cases | 13
"[Petitioner], in his Answer filed on May 6, 1999, claimed by way of
Special and Affirmative Defenses that:
7. The claim for refund is subject to investigation by the Bureau of
Internal Revenue;
8. Taxes paid and collected are presumed to have been made in
accordance with laws and regulations, hence, not refundable. Claims for
tax refund are construed strictly against the claimant as they partake of
the nature of tax exemption from tax and it is incumbent upon the
[respondent] to prove that it is entitled thereto under the law and he who
claims exemption must be able to justify his claim by the clearest grant
of organic or statu[t]e law. An exemption from the common burden
[cannot] be permitted to exist upon vague implications;
9. Moreover, [respondent] must prove that it has complied with the
governing rules with reference to tax recovery or refund, which are found
in Sections 204(c) and 229 of the Tax Code, as amended, which are
quoted as follows:
‘Section 204. Authority of the Commissioner to Compromise, Abate and
Refund or Credit Taxes. - The Commissioner may - x x x.
(C) Credit or refund taxes erroneously or illegally received or penalties
imposed without authority, refund the value of internal revenue stamps
when they are returned in good condition by the purchaser, and, in his
discretion, redeem or change unused stamps that have been rendered
unfit for use and refund their value upon proof of destruction. No credit
or refund of taxes or penalties shall be allowed unless the taxpayer files
in writing with the Commissioner a claim for credit or refund within two
(2) years after payment of the tax or penalty: Provided, however, That a
return filed with an overpayment shall be considered a written claim for
credit or refund.’
‘Section 229. Recovery of tax erroneously or illegally collected.-  No suit
or proceeding shall be maintained in any court for the recovery of any
national internal revenue tax hereafter alleged to have been erroneously
or illegally assessed or collected, or of any penalty claimed to have been
collected without authority, or of any sum alleged to have been
excessively or in any manner wrongfully collected, until a claim for
refund or credit has been duly filed with the Commissioner; but such suit
or proceeding may be maintained, whether or not such tax, penalty or
sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be begun (sic) after the
expiration of two (2) years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after
payment: Provided, however,  That the Commissioner may, even without
written claim therefor, refund or credit any tax, where on the face of the
return upon which payment was made, such payment appears clearly to
have been erroneously paid.’
"From the foregoing, the [CTA], through the Presiding Judge Ernesto D.
Acosta rendered a decision7 in favor of the herein respondent holding
that its services are subject to zero-rate pursuant to Section 108(b) of
the Tax Reform Act of 1997 and Section 4.102-2 (b)(2) of Revenue
Regulations 5-96, the decretal portion of which reads as follows:
‘WHEREFORE, in view of all the foregoing, this Court finds the [petition]
meritorious and in accordance with law. Accordingly, [petitioner] is
hereby ORDERED to REFUND to [respondent] the amount of
₱3,352,406.59 representing the latter’s excess input VAT paid for the
year 1997.’"8

Ruling of the Court of Appeals
In affirming the CTA, the CA held that respondent’s services fell under
the first type enumerated in Section 4.102-2(b)(2) of RR 7-95, as
amended by RR 5-96. More particularly, its "services were not of the
same class or of the same nature as project studies, information, or
engineering and architectural designs" for non-resident foreign clients;
rather, they were "services other than the processing, manufacturing or
repacking of goods for persons doing business outside the Philippines."
The consideration in both types of service, however, was paid for in
acceptable foreign currency and accounted for in accordance with the
rules and regulations of the Bangko Sentral ng Pilipinas.
Furthermore, the CA reasoned that reliance on VAT Ruling No. 040-98
was unwarranted. By requiring that respondent’s services be consumed
abroad in order to be zero-rated, petitioner went beyond the sphere of
interpretation and into that of legislation. Even granting that it is valid,
the ruling cannot be given retroactive effect, for it will be harsh and
oppressive to respondent, which has already relied upon VAT Ruling
No. 080-89 for zero rating.
Hence, this Petition. 9
The Issue
Petitioner raises this sole issue for our consideration:
"Whether or not the Court of Appeals committed reversible error in
holding that respondent is entitled to the refund of the amount of
₱3,352,406.59 allegedly representing excess input VAT for the year
1997."10
The Court’s Ruling
The Petition is unmeritorious.
Sole Issue:
Entitlement to Tax Refund
Section 102 of the Tax Code11 provides:
"Sec. 102. Value-added tax on sale of services and use or lease of
properties. -- (a) Rate and base of tax. -- There shall be levied,
assessed and collected, a value-added tax equivalent to ten percent
(10%) of gross receipts derived from the sale or exchange of services x
x x.
"The phrase 'sale or exchange of services' means the performance of all
kinds of services in the Philippines for others for a fee, remuneration or
consideration, including those performed or rendered by x x x persons
engaged in milling, processing, manufacturing or repacking goods for
others; x x x services of banks, non-bank financial intermediaries and
finance companies; x x x and similar services regardless of whether or
not the performance thereof calls for the exercise or use of the physical
or mental faculties. The phrase 'sale or exchange of services' shall
likewise include:
xxxxxxxxx
‘(3) The supply of x x x commercial knowledge or information;
‘(4) The supply of any assistance that is ancillary and subsidiary to and
is furnished as a means of enabling the application or enjoyment of x x x
any such knowledge or information as is mentioned in subparagraph (3);
JDTAX2 | DONOR’S TAX |Cases | 14
xxxxxxxxx
‘(6) The supply of technical advice, assistance or services rendered in
connection with technical management or administration of any x x x
commercial undertaking, venture, project or scheme;
xxxxxxxxx
"The term 'gross receipts’ means the total amount of money or its
equivalent representing the contract price, compensation, service fee,
rental or royalty, including the amount charged for materials supplied
with the services and deposits and advanced payments actually or
constructively received during the taxable quarter for the services
performed or to be performed for another person, excluding value-added
tax.
"(b) Transactions subject to zero percent (0%) rate. -- The following
services performed in the Philippines by VAT-registered persons shall
be subject to zero percent (0%) rate[:]
‘(1) Processing, manufacturing or repacking goods for other persons
doing business outside the Philippines which goods are subsequently
exported, where the services are paid for in acceptable foreign currency
and accounted for in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas (BSP);
‘(2) Services other than those mentioned in the preceding subparagraph,
the consideration for which is paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the
[BSP];’"
xxxxxxxxx
Zero Rating of "Other" Services
The law is very clear. Under the last paragraph quoted above, services
performed by VAT-registered persons in the Philippines (other than the
processing, manufacturing or repacking of goods for persons doing
business outside the Philippines), when paid in acceptable foreign
currency and accounted for in accordance with the rules and regulations
of the BSP, are zero-rated.
Respondent is a VAT-registered person that facilitates the collection and
payment of receivables belonging to its non-resident foreign client, for
which it gets paid in acceptable foreign currency inwardly remitted and
accounted for in conformity with BSP rules and regulations. Certainly,
the service it renders in the Philippines is not in the same category as
"processing, manufacturing or repacking of goods" and should,
therefore, be zero-rated. In reply to a query of respondent, the BIR
opined in VAT Ruling No. 080-89 that the income respondent earned
from its parent company’s regional operating centers (ROCs) was
automatically zero-rated effective January 1, 1988.12
Service has been defined as "the art of doing something useful for a
person or company for a fee"13 or "useful labor or work rendered or to be
rendered by one person to another."14 For facilitating in the Philippines
the collection and payment of receivables belonging to its Hong Kong-
based foreign client, and getting paid for it in duly accounted acceptable
foreign currency, respondent renders service falling under the category
of zero rating. Pursuant to the Tax Code, a VAT of zero percent should,
therefore, be levied upon the supply of that service.15
The Credit Card System and Its Components

For sure, the ancillary business of facilitating the said collection is
different from the main business of issuing credit cards.16 Under the
credit card system, the credit card company extends credit
accommodations to its card holders for the purchase of goods and
services from its member establishments, to be reimbursed by them
later on upon proper billing. Given the complexities of present-day
business transactions, the components of this system can certainly
function as separate billable services.
Under RA 8484,17 the credit card that is issued by banks18 in general, or
by non-banks in particular, refers to "any card x x x or other credit device
existing for the purpose of obtaining x x x goods x x x or services x x x
on credit;"19 and is being used "usually on a revolving basis." 20 This
means that the consumer-credit arrangement that exists between the
issuer and the holder of the credit card enables the latter to procure
goods or services "on a continuing basis as long as the outstanding
balance does not exceed a specified limit." 21 The card holder is,
therefore, given "the power to obtain present control of goods or service
on a promise to pay for them in the future."22
Business establishments may extend credit sales through the use of the
credit card facilities of a non-bank credit card company to avoid the risk
of uncollectible accounts from their customers. Under this system, the
establishments do not deposit in their bank accounts the credit card
drafts23 that arise from the credit sales. Instead, they merely record their
receivables from the credit card company and periodically send the
drafts evidencing those receivables to the latter.
The credit card company, in turn, sends checks as payment to these
business establishments, but it does not redeem the drafts at full price.
The agreement between them usually provides for discounts to be taken
by the company upon its redemption of the drafts. 24 At the end of each
month, it then bills its credit card holders for their respective drafts
redeemed during the previous month. If the holders fail to pay the
amounts owed, the company sustains the loss.25
In the present case, respondent’s role in the consumer credit26 process
described above primarily consists of gathering the bills and credit card
drafts of different service establishments located in the Philippines and
forwarding them to the ROCs outside the country. Servicing the bill is
not the same as billing. For the former type of service alone, respondent
already gets paid.
The parent company -- to which the ROCs and respondent belong --
takes charge not only of redeeming the drafts from the ROCs and
sending the checks to the service establishments, but also of billing the
credit card holders for their respective drafts that it has redeemed. While
it usually imposes finance charges27 upon the holders, none may be
exacted by respondent upon either the ROCs or the card holders.
Branch and Home Office
By designation alone, respondent and the ROCs are operated as
branches. This means that each of them is a unit, "an offshoot, lateral
extension, or division"28 located at some distance from the home
office29 of the parent company; carrying separate inventories; incurring
their own expenses; and generating their respective incomes. Each may
conduct sales operations in any locality as an extension of the principal
office.30
The extent of accounting activity at any of these branches depends upon
company policy,31 but the financial reports of the entire business
enterprise -- the credit card company to which they all belong -- must
JDTAX2 | DONOR’S TAX |Cases | 15
always show its financial position, results of operation, and changes in
its financial position as a single unit. 32 Reciprocal accounts are
reconciled or eliminated, because they lose all significance when the
branches and home office are viewed as a single entity.33 In like manner,
intra-company profits or losses must be offset against each other for
accounting purposes.
Contrary to petitioner’s assertion,34 respondent can sell its services to
another branch of the same parent company. 35 In fact, the business
concept of a transfer price allows goods and services to be sold
between and among intra-company units at cost or above cost.36 A
branch may be operated as a revenue center, cost center, profit center
or investment center, depending upon the policies and accounting
system of its parent company.37 Furthermore, the latter may choose not
to make any sale itself, but merely to function as a control center, where
most or all of its expenses are allocated to any of its branches.38
Gratia argumenti that the sending of drafts and bills by service
establishments to respondent is equivalent to the act of sending them
directly to its parent company abroad, and that the parent company’s
subsequent redemption of these drafts and billings of credit card holders
is also attributable to respondent, then with greater reason should the
service rendered by respondent be zero-rated under our VAT system.
The service partakes of the nature of export sales as applied to
goods,39 especially when rendered in the Philippines by a VAT-
registered person40 that gets paid in acceptable foreign currency
accounted for in accordance with BSP rules and regulations.
VAT Requirements for the Supply of Service
The VAT is a tax on consumption 41 "expressed as a percentage of the
value added to goods or services" 42 purchased by the producer or
taxpayer.43 As an indirect tax44 on services,45 its main object is the
transaction46 itself or, more concretely, the performance of all kinds of
services47 conducted in the course of trade or business in the
Philippines.48 These services must be regularly conducted in this
country; undertaken in "pursuit of a commercial or an economic
activity;"49 for a valuable consideration; and not exempt under the Tax
Code, other special laws, or any international agreement.50
Without doubt, the transactions respondent entered into with its Hong
Kong-based client meet all these requirements.
First, respondent regularly renders in the Philippines the service of
facilitating the collection and payment of receivables belonging to a
foreign company that is a clearly separate and distinct entity.
Second, such service is commercial in nature; carried on over a
sustained period of time; on a significant scale; with a reasonable
degree of frequency; and not at random, fortuitous or attenuated.
Third, for this service, respondent definitely receives consideration in
foreign currency that is accounted for in conformity with law.
Finally, respondent is not an entity exempt under any of our laws or
international agreements.
Services Subject to Zero VAT
As a general rule, the VAT system uses the destination principle as a
basis for the jurisdictional reach of the tax. 51 Goods and services are
taxed only in the country where they are consumed. Thus, exports are
zero-rated, while imports are taxed.

Confusion in zero rating arises because petitioner equates
the performance of a particular type of service with the consumption of
its output abroad. In the present case, the facilitation of the collection  of
receivables is different from the utilization or consumption of the
outcome of such service. While the facilitation is done in the Philippines,
the consumption is not. Respondent renders assistance to its foreign
clients -- the ROCs outside the country -- by receiving the bills of service
establishments located here in the country and forwarding them to the
ROCs abroad. The consumption contemplated by law, contrary to
petitioner’s administrative interpretation,52 does not imply that the service
be done abroad in order to be zero-rated.
Consumption is "the use of a thing in a way that thereby exhausts
it."53 Applied to services, the term means the performance or "successful
completion of a contractual duty, usually resulting in the performer’s
release from any past or future liability x x x." 54 The services rendered by
respondent are performed or successfully completed upon its sending to
its foreign client the drafts and bills it has gathered from service
establishments here. Its services, having been performed in the
Philippines, are therefore also consumed in the Philippines.
Unlike goods, services cannot be physically used in or bound for a
specific place when their destination is determined. Instead, there can
only be a "predetermined end of a course" 55 when determining the
service "location or position x x x for legal purposes." 56 Respondent’s
facilitation service has no physical existence, yet takes place upon
rendition, and therefore upon consumption, in the Philippines. Under the
destination principle, as petitioner asserts, such service is subject to
VAT at the rate of 10 percent.
Respondent’s Services Exempt from the Destination Principle
However, the law clearly provides for an exception to the destination
principle; that is, for a zero percent VAT rate for services that
are performed in the Philippines, "paid for in acceptable foreign currency
and accounted for in accordance with the rules and regulations of the
[BSP]."57 Thus, for the supply of service to be zero-rated as an
exception, the law merely requires that first, the service be performed in
the Philippines; second, the service fall under any of the categories in
Section 102(b) of the Tax Code; and, third,  it be paid in acceptable
foreign currency accounted for in accordance with BSP rules and
regulations.
Indeed, these three requirements for exemption from the destination
principle are met by respondent. Its facilitation service is performed in
the Philippines. It falls under the second category found in Section
102(b) of the Tax Code, because it is a service other than "processing,
manufacturing or repacking of goods" as mentioned in the provision.
Undisputed is the fact that such service meets the statutory condition
that it be paid in acceptable foreign currency duly accounted for in
accordance with BSP rules. Thus, it should be zero-rated.
Performance of Service versus Product Arising from Performance
Again, contrary to petitioner’s stand, for the cost of respondent’s service
to be zero-rated, it need not be tacked in as part of the cost of goods
exported.58 The law neither imposes such requirement nor associates
services with exported goods. It simply states that
the services performed by VAT-registered persons in the Philippines --
services other than the processing, manufacturing or repacking of goods
for persons doing business outside this country -- if paid in acceptable
foreign currency and accounted for in accordance with the rules and
JDTAX2 | DONOR’S TAX |Cases | 16
regulations of the BSP, are zero-rated. The service rendered by
respondent is clearly different from the product that arises from the
rendition of such service. The activity that creates the income must not
be confused with the main business in the course of which that income
is realized.59
Tax Situs of a Zero-Rated Service
The law neither makes a qualification nor adds a condition in
determining the tax situs of a zero-rated service. Under this criterion, the
place where the service is rendered determines the jurisdiction 60 to
impose the VAT.61 Performed in the Philippines, such service is
necessarily subject to its jurisdiction,62 for the State necessarily has to
have "a substantial connection"63 to it, in order to enforce a zero
rate.64 The place of payment is immaterial; 65 much less is the place
where the output of the service will be further or ultimately used.
Statutory Construction or Interpretation Unnecessary
As mentioned at the outset, Section 102(b)(2) of the Tax Code is very
clear. Therefore, no statutory construction or interpretation is needed.
Neither can conditions or limitations be introduced where none is
provided for. Rewriting the law is a forbidden ground that only Congress
may tread upon.
The Court may not construe a statute that is free from doubt. 66 "[W]here
the law speaks in clear and categorical language, there is no room for
interpretation. There is only room for application."67 The Court has no
choice but to "see to it that its mandate is obeyed."68
No Qualifications Under RR 5-87
In implementing the VAT provisions of the Tax Code, RR 5-87 provides
for the zero rating of services other than the processing, manufacturing
or repacking of goods -- in general and without qualifications -- when
paid for by the person to whom such services are rendered in
acceptable foreign currency inwardly remitted and duly accounted for in
accordance with the BSP (then Central Bank) regulations. Section 8 of
RR 5-87 states:
"SECTION 8. Zero-rating. -- (a) In general. -- A zero-rated sale is a
taxable transaction for value-added tax purposes. A sale by a VAT-
registered person of goods and/or services taxed at zero rate shall not
result in any output tax. The input tax on his purchases of goods or
services related to such zero-rated sale shall be available as tax credit
or refundable in accordance with Section 16 of these Regulations.
xxxxxxxxx
" (c) Zero-rated sales of services. -- The following services rendered by
VAT-registered persons are zero-rated:
‘(1) Services in connection with the processing, manufacturing or
repacking of goods for persons doing business outside the Philippines,
where such goods are actually shipped out of the Philippines to said
persons or their assignees and the services are paid for in acceptable
foreign currency inwardly remitted and duly accounted for under the
regulations of the Central Bank of the Philippines.
xxxxxxxxx
‘(3) Services performed in the Philippines other than those mentioned in
subparagraph (1) above which are paid for by the person or entity to
whom the service is rendered in acceptable foreign currency inwardly

remitted and duly accounted for in accordance with Central Bank
regulations. Where the contract involves payment in both foreign and
local currency, only the service corresponding to that paid in foreign
currency shall enjoy zero-rating. The portion paid for in local currency
shall be subject to VAT at the rate of 10%.’"
RR 7-95 Broad Enough
RR 7-95, otherwise known as the "Consolidated VAT
Regulations,"69 reiterates the above-quoted provision and further
presents as examples only the services performed in the Philippines by
VAT-registered hotels and other service establishments. Again, the
condition remains that these services must be paid in acceptable foreign
currency inwardly remitted and accounted for in accordance with the
rules and regulations of the BSP. The term "other service
establishments" is obviously broad enough to cover respondent’s
facilitation service. Section 4.102-2 of RR 7-95 provides thus:
"SECTION 4.102-2. Zero-Rating. -- (a) In general. -- A zero-rated sale
by a VAT registered person, which is a taxable transaction for VAT
purposes, shall not result in any output tax. However, the input tax on
his purchases of goods, properties or services related to such zero-rated
sale shall be available as tax credit or refund in accordance with these
regulations.
"(b) Transaction subject to zero-rate. -- The following services performed
in the Philippines by VAT-registered persons shall be subject to 0%:
‘(1) Processing, manufacturing or repacking goods for other persons
doing business outside the Philippines which goods are subsequently
exported, where the services are paid for in acceptable foreign currency
and accounted for in accordance with the rules and regulations of the
BSP;
‘(2) Services other than those mentioned in the preceding subparagraph,
e.g. those rendered by hotels and other service establishments, the
consideration for which is paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the BSP;’"
xxxxxxxxx
Meaning of "as well as" in RR 5-96
Section 4.102-2(b)(2) of RR 7-95 was subsequently amended by RR 5-
96 to read as follows:
"Section 4.102-2(b)(2) -- ‘Services other than processing, manufacturing
or repacking for other persons doing business outside the Philippines for
goods which are subsequently exported, as well as services by a
resident to a non-resident foreign client such as project studies,
information services, engineering and architectural designs and other
similar services, the consideration for which is paid for in acceptable
foreign currency and accounted for in accordance with the rules and
regulations of the BSP.’"
Aside from the already scopious coverage of services in Section 4.102-
2(b)(2) of RR 7-95, the amendment introduced by RR 5-96 further
enumerates specific services entitled to zero rating. Although
superfluous, these sample services are meant to be merely illustrative.
In this provision, the use of the term "as well as" is not restrictive. As a
prepositional phrase with an adverbial relation to some other word, it
simply means "in addition to, besides, also or too."70
JDTAX2 | DONOR’S TAX |Cases | 17
Neither the law nor any of the implementing revenue regulations
aforequoted categorically defines or limits the services that may be sold
or exchanged for a fee, remuneration or consideration. Rather, both
merely enumerate the items of service that fall under the term "sale or
exchange of services."71
Ejusdem Generis
Inapplicable
The canon of statutory construction known as ejusdem generis or "of the
same kind or specie" does not apply to Section 4.102-2(b)(2) of RR 7-95
as amended by RR 5-96.
First, although the regulatory provision contains an enumeration of
particular or specific words, followed by the general phrase "and other
similar services," such words do not constitute a readily discernible class
and are patently not of the same kind.72 Project studies involve
investments or marketing; information services focus on data
technology; engineering and architectural designs require creativity.
Aside from calling for the exercise or use of mental faculties or perhaps
producing written technical outputs, no common denominator to the
exclusion of all others characterizes these three services. Nothing sets
them apart from other and similar general services that may involve
advertising, computers, consultancy, health care, management,
messengerial work -- to name only a few.
Second, there is the regulatory intent to give the general phrase "and
other similar services" a broader meaning. 73 Clearly, the preceding
phrase "as well as" is not meant to limit the effect of "and other similar
services."
Third, and most important, the statutory provision upon which this
regulation is based is by itself not restrictive. The scope of the word
"services" in Section 102(b)(2) of the Tax Code is broad; it is not
susceptible of narrow interpretation.741avvphi1.zw+
VAT Ruling Nos. 040-98 and 080-89
VAT Ruling No. 040-98 relied upon by petitioner is a less general
interpretation at the administrative level, 75 rendered by the BIR
commissioner upon request of a taxpayer to clarify certain provisions of
the VAT law. As correctly held by the CA, when this ruling states that the
service must be "destined for consumption outside of the
Philippines"76 in order to qualify for zero rating, it contravenes both the
law and the regulations issued pursuant to it.77 This portion of VAT
Ruling No. 040-98 is clearly ultra vires  and invalid.78
Although "[i]t is widely accepted that the interpretation placed upon a
statute by the executive officers, whose duty is to enforce it, is entitled to
great respect by the courts,"79 this interpretation is not conclusive and
will have to be "ignored if judicially found to be erroneous" 80 and "clearly
absurd x x x or improper."81 An administrative issuance that overrides
the law it merely seeks to interpret, instead of remaining consistent and
in harmony with it, will not be countenanced by this Court.82
In the present case, respondent has relied upon VAT Ruling No. 080-89,
which clearly recognizes its zero rating. Changing this status will
certainly deprive respondent of a refund of the substantial amount of
excess input taxes to which it is entitled.
Again, assuming arguendo  that VAT Ruling No. 040-98 revoked VAT
Ruling No. 080-89, such revocation could not be given retroactive effect
if the application of the latter ruling would only be prejudicial to

respondent.83 Section 246 of the Tax Code categorically declares that
"[a]ny revocation x x x of x x x any of the rulings x x x promulgated by
the Commissioner shall not be given retroactive application if the
revocation x x x will be prejudicial to the taxpayers."84
It is also basic in law that "no x x x rule x x x shall be given retrospective
effect85 unless explicitly stated."86 No indication of such retroactive
application to respondent does the Court find in VAT Ruling No. 040-98.
Neither do the exceptions enumerated in Section 24687 of the Tax Code
apply.
Though vested with the power to interpret the provisions of the Tax
Code88 and not bound by predecessors’ acts or rulings, the BIR
commissioner may render a different construction to a statute 89 only
if the new interpretation is in congruence with the law. Otherwise, no
amount of interpretation can ever revoke, repeal or modify what the law
says.
"Consumed Abroad" Not Required by Legislature
Interpellations on the subject in the halls of the Senate also reveal a
clear intent on the part of the legislators not to impose the condition of
being "consumed abroad" in order for services performed in the
Philippines by a VAT-registered person to be zero-rated. We quote the
relevant portions of the proceedings:
"Senator Maceda: Going back to Section 102 just for the moment. Will
the Gentleman kindly explain to me - I am referring to the lower part of
the first paragraph with the ‘Provided’. Section 102. ‘Provided that the
following services performed in the Philippines by VAT registered
persons shall be subject to zero percent.’ There are three here. What is
the difference between the three here which is subject to zero percent
and Section 103 which is exempt transactions, to being with?
"Senator Herrera: Mr. President, in the case of processing and
manufacturing or repacking goods for persons doing business outside
the Philippines which are subsequently exported, and where the
services are paid for in acceptable foreign currencies inwardly remitted,
this is considered as subject to 0%. But if these conditions are not
complied with, they are subject to the VAT.
"In the case of No. 2, again, as the Gentleman pointed out, these three
are zero-rated and the other one that he indicated are exempted from
the very beginning. These three enumerations under Section 102 are
zero-rated provided that these conditions indicated in these three
paragraphs are also complied with. If they are not complied with, then
they are not entitled to the zero ratings. Just like in the export of
minerals, if these are not exported, then they cannot qualify under this
provision of zero rating.
"Senator Maceda: Mr. President, just one small item so we can leave
this. Under the proviso, it is required that the following services be
performed in the Philippines.
"Under No. 2, services other than those mentioned above includes, let
us say, manufacturing computers and computer chips or repacking
goods for persons doing business outside the Philippines. Meaning to
say, we ship the goods to them in Chicago or Washington and they send
the payment inwardly to the Philippines in foreign currency, and that is,
of course, zero-rated.lawphil.net
"Now, when we say ‘services other than those mentioned in the
preceding subsection[,’] may I have some examples of these?
JDTAX2 | DONOR’S TAX |Cases | 18
"Senator Herrera: Which portion is the Gentleman referring to?
"Senator Maceda: I am referring to the second paragraph, in the same
Section 102. The first paragraph is when one manufactures or packages
something here and he sends it abroad and they pay him, that is
covered. That is clear to me. The second paragraph says ‘Services
other than those mentioned in the preceding subparagraph, the
consideration of which is paid for in acceptable foreign currency…’
"One example I could immediately think of -- I do not know why this
comes to my mind tonight -- is for tourism or escort services. For
example, the services of the tour operator or tour escort -- just a good
name for all kinds of activities -- is made here at the Midtown Ramada
Hotel or at the Philippine Plaza, but the payment is made from outside
and remitted into the country.
"Senator Herrera: What is important here is that these services are paid
in acceptable foreign currency remitted inwardly to the Philippines.
"Senator Maceda: Yes, Mr. President. Like those Japanese tours which
include $50 for the services of a woman or a tourist guide, it is zero-
rated when it is remitted here.
"Senator Herrera: I guess it can be interpreted that way, although this
tourist guide should also be considered as among the professionals. If
they earn more than ₱200,000, they should be covered.
xxxxxxxxx
Senator Maceda: So, the services by Filipino citizens outside the
Philippines are subject to VAT, and I am talking of all services. Do big
contractual engineers in Saudi Arabia pay VAT?
"Senator Herrera: This provision applies to a VAT-registered person.
When he performs services in the Philippines, that is zero-rated.
"Senator Maceda: That is right."90
Legislative Approval By Reenactment
Finally, upon the enactment of RA 8424, which substantially carries over
the particular provisions on zero rating of services under Section 102(b)
of the Tax Code, the principle of legislative approval of administrative
interpretation by reenactment clearly obtains. This principle means that
"the reenactment of a statute substantially unchanged is persuasive
indication of the adoption by Congress of a prior executive
construction."91
The legislature is presumed to have reenacted the law with full
knowledge of the contents of the revenue regulations then in force
regarding the VAT, and to have approved or confirmed them because
they would carry out the legislative purpose. The particular provisions of
the regulations we have mentioned earlier are, therefore, re-enforced.
"When a statute is susceptible of the meaning placed upon it by a ruling
of the government agency charged with its enforcement and the
[l]egislature thereafter [reenacts] the provisions [without] substantial
change, such action is to some extent confirmatory that the ruling carries
out the legislative purpose."92
In sum, having resolved that transactions of respondent are zero-rated,
the Court upholds the former’s entitlement to the refund as determined
by the appellate court. Moreover, there is no conflict between the
decisions of the CTA and CA. This Court respects the findings and
conclusions of a specialized court like the CTA "which, by the nature of

its functions, is dedicated exclusively to the study and consideration of
tax cases and has necessarily developed an expertise on the subject."93
Furthermore, under a zero-rating scheme, the sale or exchange of a
particular service is completely freed from the VAT, because the seller is
entitled to recover, by way of a refund or as an input tax credit, the tax
that is included in the cost of purchases attributable to the sale or
exchange.94 "[T]he tax paid or withheld is not deducted from the tax
base."95 Having been applied for within the reglementary
period,96 respondent’s refund is in order.
WHEREFORE, the Petition is hereby DENIED, and the assailed
Decision AFFIRMED. No pronouncement as to costs.
SO ORDERED
3. CIR v. COMASERCO, G.R. No. 125355, March 30, 2000
https://lawphil.net/judjuris/juri2000/mar2000/gr_125355_2000.html
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs. COURT OF APPEALS and COMMONWEALTH MANAGEMENT
AND SERVICES CORPORATION, respondents.
PARDO, J.:
What is before the Court is a petition for review on certiorari of the decision of the
Court of Appeals,1 reversing that of the Court of Tax Appeals, 2 which affirmed with
modification the decision of the Commissioner of Internal Revenue ruling that
Commonwealth Management and Services Corporation, is liable for value added
tax for services to clients during taxable year 1988.
Commonwealth Management and Services Corporation (COMASERCO,
for brevity), is a corporation duly organized and existing under the laws
of the Philippines. It is an affiliate of Philippine American Life Insurance
Co. (Philamlife), organized by the letter to perform collection,
consultative and other technical services, including functioning as an
internal auditor, of Philamlife and its other affiliates.
On January 24, 1992, the Bureau of Internal Revenue (BIR) issued an
assessment to private respondent COMASERCO for deficiency value-
added tax (VAT) amounting to P351,851.01, for taxable year 1988,
computed as follows:
Taxable sale/receipt
P1,679,155.00
============
10% tax due thereon 167,915.50
25% surcharge 41,978.88
JDTAX2 | DONOR’S TAX |Cases | 19
20% interest per annum 125,936.63
Compromise penalty for late payment 16,000.00
TOTAL AMOUNT DUE AND COLLECTIBLE 3
P351,831.01
============
COMASERCO's annual corporate income tax return ending December
31, 1988 indicated a net loss in its operations  in the amount of
P6,077.00.
On February 10, 1992, COMASERCO filed with the BIR, a letter-protest
objecting to the latter's finding of deficiency VAT. On August 20, 1992,
the Commissioner of Internal Revenue sent a collection letter to
COMASERCO demanding payment of the deficiency VAT.
On September 29, 1992, COMASERCO filed with the Court of Tax
Appeals4 a petition for review contesting the Commissioner's
assessment. COMASERCO asserted that the services it rendered to
Philamlife and its affiliates, relating to collections, consultative and other
technical assistance, including functioning as an internal auditor, were
on a "no-profit, reimbursement-of-cost-only" basis. It averred that it was
not engaged in the business of providing services to Philamlife and its
affiliates. COMASERCO was established to ensure operational
orderliness and administrative efficiency of Philamlife and its affiliates,
and not in the sale of services. COMASERCO stressed that it was not
profit-motivated, thus not engaged in business. In fact, it did not
generate profit but suffered a net loss in taxable year 1988.
COMASERCO averred that since it was not engaged in business, it was
not liable to pay VAT.
On June 22, 1995, the Court of Tax Appeals rendered decision in favor
of the Commissioner of Internal Revenue, the dispositive portion of
which reads:
WHEREFORE, the decision of the Commissioner of Internal Revenue
assessing petitioner deficiency value-added tax for the taxable year
1988 is AFFIRMED with slight modifications. Accordingly, petitioner is
ordered to pay respondent Commissioner of Internal Revenue the
amount of P335,831.01 inclusive of the 25% surcharge and interest plus
20% interest from January 24, 1992 until fully paid pursuant to Section
248 and 249 of the Tax Code.
The compromise penalty of P16,000.00 imposed by the respondent in
her assessment letter shall not be included in the payment as there was
no compromise agreement entered into between petitioner and
respondent with respect to the value-added tax deficiency.5
On July 26, 1995, respondent filed with the Court of Appeals, a petition
for review of the decision of the Court of Appeals.
After due proceedings, on May 13, 1996, the Court of Appeals rendered
decision reversing that of the Court of Tax Appeals, the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
REVERSING and SETTING ASIDE the questioned Decision
promulgated on 22 June 1995. The assessment for deficiency value-
added tax for the taxable year 1988 inclusive of surcharge, interest and

penalty charges are ordered CANCELLED for lack of legal and factual
basis. 6
The Court of Appeals anchored its decision on the ratiocination in
another tax case involving the same parties,7 where it was held that
COMASERCO was not liable to pay fixed and contractor's tax for
services rendered to Philamlife and its affiliates. The Court of Appeals,
in that case, reasoned that COMASERCO was not engaged in business
of providing services to Philamlife and its affiliates. In the same manner,
the Court of Appeals held that COMASERCO was not liable to pay VAT
for it was not engaged in the business of selling services.
On July 16, 1996, the Commissioner of Internal Revenue filed with this
Court a petition for review on certiorari assailing the decision of the
Court of Appeals.
On August 7, 1996, we required respondent COMASERCO to file
comment on the petition, and on September 26, 1996, COMASERCO
complied with the resolution.8
We give due course to the petition.
At issue in this case is whether COMASERCO was engaged in the sale
of services, and thus liable to pay VAT thereon.
Petitioner avers that to "engage in business" and to "engage in the sale
of services" are two different things. Petitioner maintains that the
services rendered by COMASERCO to Philamlife and its affiliates, for a
fee or consideration, are subject to VAT. VAT is a tax on the value
added by the performance of the service. It is immaterial whether profit
is derived from rendering the service.
We agree with the Commissioner.
Sec. 99 of the National Internal Revenue Code of 1986, as amended by
Executive Order (E. O.) No. 273 in 1988, provides that:
Sec. 99. Persons liable. — Any person who, in the course of trade or
business, sells, barters or exchanges goods, renders services, or
engages in similar transactions and any person who, imports goods
shall be subject to the value-added tax (VAT) imposed in Sections 100
to 102 of this Code. 9
COMASERCO contends that the term "in the course of trade or
business" requires that the "business" is carried on with a view to profit
or livelihood. It avers that the activities of the entity must be profit-
oriented. COMASERCO submits that it is not motivated by profit, as
defined by its primary purpose in the articles of incorporation, stating
that it is operating "only on reimbursement-of-cost basis, without any
profit." Private respondent argues that profit motive is material in
ascertaining who to tax for purposes of determining liability for VAT.
We disagree.
On May 28, 1994, Congress enacted Republic Act No. 7716, the
Expanded VAT Law (EVAT), amending among other sections, Section
99 of the Tax Code. On January 1, 1998, Republic Act 8424, the
National Internal Revenue Code of 1997, took effect. The amended law
provides that:
Sec. 105. Persons Liable. — Any person who, in the course of trade or
business, sells, barters, exchanges, leases goods or properties, renders
services, and any person who imports goods shall be subject to the
value-added tax (VAT) imposed in Sections 106 and 108 of this Code.
JDTAX2 | DONOR’S TAX |Cases | 20
The value-added tax is an indirect tax and the amount of tax may be
shifted or passed on to the buyer, transferee or lessee of the goods,
properties or services. This rule shall likewise apply to existing sale or
lease of goods, properties or services at the time of the effectivity of
Republic Act No. 7716.
The phrase "in the course of trade or business" means the regular
conduct or pursuit of a commercial or an economic activity, including
transactions incidental thereto, by any person regardless of whether or
not the person engaged therein is a nonstock, nonprofit organization
(irrespective of the disposition of its net income and whether or not it
sells exclusively to members of their guests), or government entity.
The rule of regularity, to the contrary notwithstanding, services as
defined in this Code rendered in the Philippines by nonresident foreign
persons shall be considered as being rendered in the course of trade or
business.
Contrary to COMASERCO's contention the above provision clarifies that
even a non-stock, non-profit, organization or government entity, is liable
to pay VAT on the sale of goods or services. VAT is a tax on
transactions, imposed at every stage of the distribution process on the
sale, barter, exchange of goods or property, and on the performance of
services, even in the absence of profit attributable thereto. The term "in
the course of trade or business" requires the regular conduct or pursuit
of a commercial or an economic activity regardless of whether or not the
entity is profit-oriented.
The definition of the term "in the course of trade or business" present
law applies to all transactions even to those made prior to its enactment.
Executive Order No. 273 stated that any person who, in the course of
trade or business, sells, barters or exchanges goods and services, was
already liable to pay VAT. The present law merely stresses that even a
nonstock, nonprofit organization or government entity is liable to pay
VAT for the sale of goods and services.
Sec. 108 of the National Internal Revenue Code of 1997 10 defines the
phrase "sale of services" as the "performance of all kinds of services for
others for a fee, remuneration or consideration." It includes "the supply
of technical advice, assistance or services rendered in connection with
technical management or administration of any scientific, industrial or
commercial undertaking or project." 11
On February 5, 1998, the Commissioner of Internal Revenue issued BIR
Ruling No. 010-98 12 emphasizing that a domestic corporation that
provided technical, research, management and technical assistance to
its affiliated companies and received payments on a reimbursement-of-
cost basis, without any intention of realizing profit, was subject to VAT
on services rendered. In fact, even if such corporation was organized
without any intention realizing profit, any income or profit generated by
the entity in the conduct of its activities was subject to income tax.
Hence, it is immaterial whether the primary purpose of a corporation
indicates that it receives payments for services rendered to its affiliates
on a reimbursement-on-cost basis only, without realizing profit, for
purposes of determining liability for VAT on services rendered. As long
as the entity provides service for a fee, remuneration or consideration,
then the service rendered is subject to VAT.1awp++i1
At any rate, it is a rule that because taxes are the lifeblood of the nation,
statutes that allow exemptions are construed strictly against the grantee
and liberally in favor of the government. Otherwise stated, any
exemption from the payment of a tax must be clearly stated in the

language of the law; it cannot be merely implied therefrom. 13 In the case
of VAT, Section 109, Republic Act 8424 clearly enumerates the
transactions exempted from VAT. The services rendered by
COMASERCO do not fall within the exemptions.
Both the CIR and the CTA correctly ruled that the services rendered by
COMASERCO to Philamlife and its affiliates are subject to VAT. As
pointed out by the Commissioner, the performance of all kinds of
services for others for a fee, remuneration or consideration is considered
as sale of services subject to VAT. As the government agency charged
with the enforcement of the law, the opinion of the Commissioner of
Internal Revenue, in the absence of any showing that it is plainly wrong,
is entitled to great weight. 14 Also, it has been the long standing policy
and practice of this Court to respect the conclusions of quasi-judicial
agencies, such as the Court of Tax Appeals which, by the nature of its
functions, is dedicated exclusively to the study and consideration of tax
cases and has necessarily developed an expertise on the subject,
unless there has been an abuse or improvident exercise of its
authority. 15
There is no merit to respondent's contention that the Court of Appeals'
decision in CA-G.R. No. 34042, declaring the COMASERCO as not
engaged in business and not liable for the payment of fixed and
percentage taxes, binds petitioner. The issue in CA-G.R. No. 34042 is
different from the present case, which involves COMASERCO's liability
for VAT. As heretofore stated, every person who sells, barters, or
exchanges goods and services, in the course of trade or business, as
defined by law, is subject to VAT.
WHEREFORE, the Court GRANTS the petition and REVERSES the
decision of the Court of Appeals in CA-G.R. SP No. 37930. The Court
hereby REINSTATES the decision of the Court of Tax Appeals in C. T.
A. Case No. 4853.
4. Contex v. CIR, G.R. No. 151135, July 2, 2004
https://lawphil.net/judjuris/juri2004/jul2004/gr_151135_2004.html
CONTEX CORPORATION, petitioner,
vs. HON. COMMISSIONER OF INTERNAL REVENUE, respondent.
QUISUMBING, J.:
For review is the Decision 1 dated September 3, 2001, of the Court of Appeals, in
CA-G.R. SP No. 62823, which reversed and set aside the decision 2 dated
October 13, 2000, of the Court of Tax Appeals (CTA). The CTA had ordered the
Commissioner of Internal Revenue (CIR) to refund the sum of P683,061.90 to
petitioner as erroneously paid input value-added tax (VAT) or in the alternative, to
issue a tax credit certificate for said amount. Petitioner also assails the appellate
court’s Resolution,3 dated December 19, 2001, denying the motion for
reconsideration.
Petitioner is a domestic corporation engaged in the business of
manufacturing hospital textiles and garments and other hospital supplies
for export. Petitioner’s place of business is at the Subic Bay Freeport
Zone (SBFZ). It is duly registered with the Subic Bay Metropolitan
Authority (SBMA) as a Subic Bay Freeport Enterprise, pursuant to the
provisions of Republic Act No. 7227. 4 As an SBMA-registered firm,
petitioner is exempt from all local and national internal revenue taxes
except for the preferential tax provided for in Section 12 (c)5 of Rep. Act
No. 7227. Petitioner also registered with the Bureau of Internal Revenue
(BIR) as a non-VAT taxpayer under Certificate of Registration RDO
Control No. 95-180-000133.
JDTAX2 | DONOR’S TAX |Cases | 21
From January 1, 1997 to December 31, 1998, petitioner purchased
various supplies and materials necessary in the conduct of its
manufacturing business. The suppliers of these goods shifted unto
petitioner the 10% VAT on the purchased items, which led the petitioner
to pay input taxes in the amounts of P539,411.88 and P504,057.49 for
1997 and 1998, respectively.6
Acting on the belief that it was exempt from all national and local taxes,
including VAT, pursuant to Rep. Act No. 7227, petitioner filed two
applications for tax refund or tax credit of the VAT it paid. Mr. Edilberto
Carlos, revenue district officer of BIR RDO No. 19, denied the first
application letter, dated December 29, 1998.
Unfazed by the denial, petitioner on May 4, 1999, filed another
application for tax refund/credit, this time directly with Atty. Alberto
Pagabao, the regional director of BIR Revenue Region No. 4. The
second letter sought a refund or issuance of a tax credit certificate in the
amount of P1,108,307.72, representing erroneously paid input VAT for
the period January 1, 1997 to November 30, 1998.
When no response was forthcoming from the BIR Regional Director,
petitioner then elevated the matter to the Court of Tax Appeals, in a
petition for review docketed as CTA Case No. 5895. Petitioner stressed
that Section 112(A)7 if read in relation to Section 106(A)(2)(a) 8 of the
National Internal Revenue Code, as amended and Section 12(b) 9 and (c)
of Rep. Act No. 7227 would show that it was not liable in any way for
any value-added tax.
In opposing the claim for tax refund or tax credit, the BIR asked the CTA
to apply the rule that claims for refund are strictly construed against the
taxpayer. Since petitioner failed to establish both its right to a tax refund
or tax credit and its compliance with the rules on tax refund as provided
for in Sections 20410 and 22911 of the Tax Code, its claim should be
denied, according to the BIR.
On October 13, 2000, the CTA decided CTA Case No. 5895 as follows:
WHEREFORE, in view of the foregoing, the Petition for Review is
hereby PARTIALLY GRANTED. Respondent is hereby ORDERED to
REFUND or in the alternative to ISSUE A TAX CREDIT CERTIFICATE
in favor of Petitioner the sum of P683,061.90, representing erroneously
paid input VAT.
SO ORDERED.12
In granting a partial refund, the CTA ruled that petitioner misread
Sections 106(A)(2)(a) and 112(A) of the Tax Code. The tax court
stressed that these provisions apply only to those entities registered as
VAT taxpayers whose sales are zero-rated. Petitioner does not fall
under this category, since it is a non-VAT taxpayer as evidenced by the
Certificate of Registration RDO Control No. 95-180-000133 issued by
RDO Rosemarie Ragasa of BIR RDO No. 18 of the Subic Bay Freeport
Zone and thus it is exempt from VAT, pursuant to Rep. Act No. 7227,
said the CTA.
Nonetheless, the CTA held that the petitioner is exempt from the
imposition of input VAT on its purchases of supplies and materials. It
pointed out that under Section 12(c) of Rep. Act No. 7227 and the
Implementing Rules and Regulations of the Bases Conversion and
Development Act of 1992, all that petitioner is required to pay as a
SBFZ-registered enterprise is a 5% preferential tax.

The CTA also disallowed all refunds of input VAT paid by the petitioner
prior to June 29, 1997 for being barred by the two-year prescriptive
period under Section 229 of the Tax Code. The tax court also limited the
refund only to the input VAT paid by the petitioner on the supplies and
materials directly used by the petitioner in the manufacture of its goods.
It struck down all claims for input VAT paid on maintenance, office
supplies, freight charges, and all materials and supplies shipped or
delivered to the petitioner’s Makati and Pasay City offices.
Respondent CIR then filed a petition, docketed as CA-G.R. SP No.
62823, for review of the CTA decision by the Court of Appeals.
Respondent maintained that the exemption of Contex Corp. under Rep.
Act No. 7227 was limited only to direct taxes and not to indirect taxes
such as the input component of the VAT. The Commissioner pointed out
that from its very nature, the value-added tax is a burden passed on by a
VAT registered person to the end users; hence, the direct liability for the
tax lies with the suppliers and not Contex.
Finding merit in the CIR’s arguments, the appellate court decided CA-
G.R. SP No. 62823 in his favor, thus:
WHEREFORE, premises considered, the appealed decision is hereby
REVERSED AND SET ASIDE. Contex’s claim for refund of erroneously
paid taxes is DENIED accordingly.
SO ORDERED.13
In reversing the CTA, the Court of Appeals held that the exemption from
duties and taxes on the importation of raw materials, capital, and
equipment of SBFZ-registered enterprises under Rep. Act No. 7227 and
its implementing rules covers only "the VAT imposable under Section
107 of the [Tax Code], which is a direct liability of the importer, and in no
way includes the value-added tax of the seller-exporter the burden of
which was passed on to the importer as an additional costs of the
goods."14 This was because the exemption granted by Rep. Act No.
7227 relates to the act of importation and Section 107 15 of the Tax Code
specifically imposes the VAT on importations. The appellate court
applied the principle that tax exemptions are strictly construed against
the taxpayer. The Court of Appeals pointed out that under the
implementing rules of Rep. Act No. 7227, the exemption of SBFZ-
registered enterprises from internal revenue taxes is qualified as
pertaining only to those for which they may be directly liable. It then
stated that apparently, the legislative intent behind Rep. Act No. 7227
was to grant exemptions only to direct taxes, which SBFZ-registered
enterprise may be liable for and only in connection with their importation
of raw materials, capital, and equipment as well as the sale of their
goods and services.
Petitioner timely moved for reconsideration of the Court of Appeals
decision, but the motion was denied.
Hence, the instant petition raising as issues for our resolution the
following:
A. WHETHER OR NOT THE EXEMPTION FROM ALL LOCAL AND
NATIONAL INTERNAL REVENUE TAXES PROVIDED IN REPUBLIC
ACT NO. 7227 COVERS THE VALUE ADDED TAX PAID BY
PETITIONER, A SUBIC BAY FREEPORT ENTERPRISE ON ITS
PURCHASES OF SUPPLIES AND MATERIALS.
B. WHETHER OR NOT THE COURT OF TAX APPEALS CORRECTLY
HELD THAT PETITIONER IS ENTITLED TO A TAX CREDIT OR
JDTAX2 | DONOR’S TAX |Cases | 22
REFUND OF THE VAT PAID ON ITS PURCHASES OF SUPPLIES
AND RAW MATERIALS FOR THE YEARS 1997 AND 1998.16
Simply stated, we shall resolve now the issues concerning: (1) the
correctness of the finding of the Court of Appeals that the VAT
exemption embodied in Rep. Act No. 7227 does not apply to petitioner
as a purchaser; and (2) the entitlement of the petitioner to a tax refund
on its purchases of supplies and raw materials for 1997 and 1998.
On the first issue, petitioner argues that the appellate court’s restrictive
interpretation of petitioner’s VAT exemption as limited to those covered
by Section 107 of the Tax Code is erroneous and devoid of legal basis.
It contends that the provisions of Rep. Act No. 7227 clearly and
unambiguously mandate that no local and national taxes shall be
imposed upon SBFZ-registered firms and hence, said law should govern
the case. Petitioner calls our attention to regulations issued by both the
SBMA and BIR clearly and categorically providing that the tax exemption
provided for by Rep. Act No. 7227 includes exemption from the
imposition of VAT on purchases of supplies and materials.
The respondent takes the diametrically opposite view that while Rep. Act
No. 7227 does grant tax exemptions, such grant is not all-encompassing
but is limited only to those taxes for which a SBFZ-registered business
may be directly liable. Hence, SBFZ locators are not relieved from the
indirect taxes that may be shifted to them by a VAT-registered seller.
At this juncture, it must be stressed that the VAT is an indirect tax. As
such, the amount of tax paid on the goods, properties or services
bought, transferred, or leased may be shifted or passed on by the seller,
transferor, or lessor to the buyer, transferee or lessee. 17 Unlike a direct
tax, such as the income tax, which primarily taxes an individual’s ability
to pay based on his income or net wealth, an indirect tax, such as the
VAT, is a tax on consumption of goods, services, or certain transactions
involving the same. The VAT, thus, forms a substantial portion of
consumer expenditures.
Further, in indirect taxation, there is a need to distinguish between the
liability for the tax and the burden of the tax. As earlier pointed out, the
amount of tax paid may be shifted or passed on by the seller to the
buyer. What is transferred in such instances is not the liability for the tax,
but the tax burden. In adding or including the VAT due to the selling
price, the seller remains the person primarily and legally liable for the
payment of the tax. What is shifted only to the intermediate buyer and
ultimately to the final purchaser is the burden of the tax. 18 Stated
differently, a seller who is directly and legally liable for payment of an
indirect tax, such as the VAT on goods or services is not necessarily the
person who ultimately bears the burden of the same tax. It is the final
purchaser or consumer of such goods or services who, although not
directly and legally liable for the payment thereof, ultimately bears the
burden of the tax.19
Exemptions from VAT are granted by express provision of the Tax Code
or special laws. Under VAT, the transaction can have preferential
treatment in the following ways:
(a) VAT Exemption. An exemption means that the sale of goods or
properties and/or services and the use or lease of properties is not
subject to VAT (output tax) and the seller is not allowed any tax credit on
VAT (input tax) previously paid.20 This is a case wherein the VAT is
removed at the exempt stage (i.e., at the point of the sale, barter or
exchange of the goods or properties).

The person making the exempt sale of goods, properties or services
shall not bill any output tax to his customers because the said
transaction is not subject to VAT. On the other hand, a VAT-registered
purchaser of VAT-exempt goods/properties or services which are
exempt from VAT is not entitled to any input tax on such purchase
despite the issuance of a VAT invoice or receipt.21
(b) Zero-rated Sales. These are sales by VAT-registered persons which
are subject to 0% rate, meaning the tax burden is not passed on to the
purchaser. A zero-rated sale by a VAT-registered person, which is a
taxable transaction for VAT purposes, shall not result in any output tax.
However, the input tax on his purchases of goods, properties or services
related to such zero-rated sale shall be available as tax credit or refund
in accordance with these regulations.22
Under Zero-rating, all VAT is removed from the zero-rated goods,
activity or firm. In contrast, exemption only removes the VAT at the
exempt stage, and it will actually increase, rather than reduce the total
taxes paid by the exempt firm’s business or non-retail customers. It is for
this reason that a sharp distinction must be made between zero-rating
and exemption in designating a value-added tax.23
Apropos, the petitioner’s claim to VAT exemption in the instant case for
its purchases of supplies and raw materials is founded mainly on
Section 12 (b) and (c) of Rep. Act No. 7227, which basically exempts
them from all national and local internal revenue taxes, including VAT
and Section 4 (A)(a) of BIR Revenue Regulations No. 1-95.24
On this point, petitioner rightly claims that it is indeed VAT-Exempt and
this fact is not controverted by the respondent. In fact, petitioner is
registered as a NON-VAT taxpayer per Certificate of
Registration25 issued by the BIR. As such, it is exempt from VAT on all its
sales and importations of goods and services.
Petitioner’s claim, however, for exemption from VAT for its purchases of
supplies and raw materials is incongruous with its claim that it is VAT-
Exempt, for only VAT-Registered entities can claim Input VAT
Credit/Refund.
The point of contention here is whether or not the petitioner may claim a
refund on the Input VAT erroneously passed on to it by its suppliers.
While it is true that the petitioner should not have been liable for the VAT
inadvertently passed on to it by its supplier since such is a zero-rated
sale on the part of the supplier, the petitioner is not the proper party to
claim such VAT refund.
Section 4.100-2 of BIR’s Revenue Regulations 7-95, as amended, or the
"Consolidated Value-Added Tax Regulations" provide:
Sec. 4.100-2. Zero-rated Sales. A zero-rated sale by a VAT-registered
person, which is a taxable transaction for VAT purposes, shall not result
in any output tax. However, the input tax on his purchases of goods,
properties or services related to such zero-rated sale shall be available
as tax credit or refund in accordance with these regulations.
The following sales by VAT-registered persons shall be subject to 0%:
(a) Export Sales
"Export Sales" shall mean
...
JDTAX2 | DONOR’S TAX |Cases | 23
(5) Those considered export sales under Articles 23 and 77 of Executive
Order No. 226, otherwise known as the Omnibus Investments Code of
1987, and other special laws, e.g. Republic Act No. 7227, otherwise
known as the Bases Conversion and Development Act of 1992.
...
(c) Sales to persons or entities whose exemption under special laws,
e.g. R.A. No. 7227 duly registered and accredited enterprises with Subic
Bay Metropolitan Authority (SBMA) and Clark Development Authority
(CDA), R. A. No. 7916, Philippine Economic Zone Authority (PEZA), or
international agreements, e.g. Asian Development Bank (ADB),
International Rice Research Institute (IRRI), etc. to which the Philippines
is a signatory effectively subject such sales to zero-rate."
Since the transaction is deemed a zero-rated sale, petitioner’s supplier
may claim an Input VAT credit with no corresponding Output VAT
liability. Congruently, no Output VAT may be passed on to the petitioner.
On the second issue, it may not be amiss to re-emphasize that the
petitioner is registered as a NON-VAT taxpayer and thus, is exempt from
VAT. As an exempt VAT taxpayer, it is not allowed any tax credit on
VAT (input tax) previously paid. In fine, even if we are to assume that
exemption from the burden of VAT on petitioner’s purchases did exist,
petitioner is still not entitled to any tax credit or refund on the input tax
previously paid as petitioner is an exempt VAT taxpayer.
Rather, it is the petitioner’s suppliers who are the proper parties to claim
the tax credit and accordingly refund the petitioner of the VAT
erroneously passed on to the latter.
Accordingly, we find that the Court of Appeals did not commit any
reversible error of law in holding that petitioner’s VAT exemption under
Rep. Act No. 7227 is limited to the VAT on which it is directly liable as a
seller and hence, it cannot claim any refund or exemption for any input
VAT it paid, if any, on its purchases of raw materials and supplies.
WHEREFORE, the petition is DENIED for lack of merit. The Decision
dated September 3, 2001, of the Court of Appeals in CA-G.R. SP No.
62823, as well as its Resolution of December 19, 2001 are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
 JDTAX2 | DONOR’S TAX |Cases | 24

6. CIR v. Seagate Technology (PHL), G.R. No. 153866, Feb. 11, 2005

https://lawphil.net/judjuris/juri2005/feb2005/gr_153866_2005.html

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs. SEAGATE TECHNOLOGY (PHILIPPINES), respondent.

PANGANIBAN, J.:

7. FSM Cinemas, Inc. v. CIR, CTA Case No. 8551, March 2, 2016

8. BATELEC v. CIR, CTA Case No. 8423, June 1, 2018

9. Nippon Express Corp. v. CIR, G.R. No. 191495, July 23, 2018

https://www.lawphil.net/judjuris/juri2018/jul2018/gr_191495_2018.html

NIPPON EXPRESS (PHILIPPINES) CORPORATION, Petitioner

vs. COMMISSIONER OF INTERNAL REVENUE, Respondent

MARTIRES, J.:

10. Luzon Hydro Corp. v. Commissioner 721 Phil 202 (2013)

https://lawphil.net/judjuris/juri2013/nov2013/gr_188260_2013.html

LUZON HYDRO CORPORATION, Petitioner,

vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

BERSAMIN, J.:

Facts:

Petitioner, Luzon

5. Toshiba Information Equipment (Phils.) Inc. v. CIR, G.R. No. 157594,

March 9, 2010 11. Kepco Philippines Corporation v. Commissioner 650 Phil. 525, 542
(2010)
https://lawphil.net/judjuris/juri2010/mar2010/gr_157594_2010.html
https://lawphil.net/judjuris/juri2010/nov2010/gr_181858_2010.html
TOSHIBA INFORMATION EQUIPMENT (PHILS.), INC., Petitioner,
vs. COMMISSIONER OF INTERNAL REVENUE, Respondent. KEPCO PHILIPPINES CORPORATION, Petitioner,
vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.
LEONARDO-DE CASTRO, J.:
MENDOZA, J.:

FACTS:

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

This is a Petition for Review on Certiorari under Rule 45 of the Rules of independ
Court, petitioner Toshiba seeks the reversal and setting aside of the
Decision of the CA and the Resolution of the appellate court in the same
case, which denied the Motion for Reconsideration of Toshiba.  
 JDTAX2 | DONOR’S TAX |Cases | 25

TEAM ENERGY CORPORATION G.R. No. 197663/G.R. No.197770

-versus-

COMMISSIONER OF INTERNAL

REVENUE,

13. CIR v. San Roque, G.R. No. 187845, Feb. 12, 2013

https://lawphil.net/judjuris/juri2013/feb2013/gr_187485_2013.html

G.R. No. 187485               February 12, 2013

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs. SAN ROQUE POWER CORPORATION, Respondent.

G.R. No. 196113

TAGANITO MINING CORPORATION, Petitioner,

vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

G.R. No. 197156

PHILEX MINING CORPORATION, Petitioner,

vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

CARPIO, J.:

12. Team Energy Corporation v. CIR

Republic of the Philippines v. Team Energy Corporation G.R. Nos.

197663 & 197770, 14 March 2018