CIR v. CA, G.R. No.

125355, March 30, 2000

Doctrine: Performance of all kinds of services for others for a fee, remuneration, or consideration is considered a sale of
services subject to value-added tax (VAT). The term "in the course of trade or business" requires the regular conduct or
pursuit of a commercial or economic activity, regardless of whether the entity is profit-oriented. As long as an entity
provides services for a fee, remuneration, or consideration, the service rendered is subject to VAT. Additionally, any
exemption from the payment of tax must be clearly stated in the language of the law and cannot be merely implied.

Facts:Commonwealth Management and Services Corporation (COMASERCO) is a corporation affiliated with

Philippine American Life Insurance Co. (Philamlife), organized to perform collection, consultative, and other
technical services, including functioning as an internal auditor, for Philamlife and its affiliates.

The Bureau of Internal Revenue (BIR) issued an assessment to COMASERCO for deficiency value-added tax
(VAT) amounting to P351,851.01 for taxable year 1988. COMASERCO contested the assessment, claiming it
was not engaged in the business of providing services and was operating on a "no-profit, reimbursement-of-
cost-only" basis.

The Court of Tax Appeals ruled in favor of the Commissioner of Internal Revenue, but the Court of Appeals
reversed this decision, citing a previous case involving the same parties where COMASERCO was held not
liable for fixed and contractor's tax. The Commissioner of Internal Revenue appealed to the Supreme Court.

Issue:Whether or not COMASERCO is liable for VAT on the services it rendered to Philamlife and its affiliates.

Ruling:Yes, the Supreme Court held that COMASERCO is liable for VAT on the services it rendered.

The Court clarified that the term "in the course of trade or business" includes any activity conducted
regularly, regardless of profit motive. Even a non-stock, non-profit organization or government entity is liable
to pay VAT on the sale of goods or services.

The Court also emphasized that VAT is imposed on transactions, including the performance of services, even
in the absence of profit. As long as an entity provides services for a fee, remuneration, or consideration, the
service rendered is subject to VAT. The Court upheld the decision of the Court of Tax Appeals and reversed
the decision of the Court of Appeals, reinstating the assessment of deficiency VAT against COMASERCO.

The petition is granted, and the decision of the Court of Appeals is reversed. The decision of the Court of Tax
Appeals is reinstated.