CIR vs CA (2)

Jaz Jazem A. An Ansama sama

1118663 86631 1

CIR vs. CA and Comaserco G.R. No. 125355 March 30, 2000 Facs!

Commonwealth Management and Services Corporation (COMASERCO) is a domestic corporation. It is an affiliate of Philippine American ife Ins!rance Co. (Philamlife). It was organi"ed #$ the latter to perform collection% cons!ltative and other technical services% incl!ding f!nctioning as an internal a!ditor% of Philamlife and its other affiliates. In &''% the !rea! of Internal Reven!e (IR) iss!ed an assessment to private respondent COMASERCO for deficienc$ val!e*added ta+ (,A-) amo!nting to P/&%0/&.11 for ta+a#le $ear &'00. In the same $ear% COMASERCO filed with the IR% a letter*protest o#2ecting to the latter3s finding of deficienc$ ,A-. Afterwards% the Commissioner of Internal Reven!e sent a collection letter to COMASERCO demanding pa$ment of the deficienc$ ,A-. -he following month of the same $ear% COMASERCO filed with the C-A a petition for review contesting the Commissioner3s assessment. COMASERCO asserted that4 &) it was on a 5no*profit% reim#!rsement*of*cost*onl$6 #asis7 ) it was not engaged in the #!siness of providing services to Philamlife and its affiliates7 ) COMASERCO was esta#lished to ens!re operational orderliness and administrative efficienc$ of Philamlife and its affiliates% not on the sale of services7 and 8) it even did not generate profit #!t s!ffered a net loss in ta+a#le $ear &'00. -h!s% it was not lia#le to pa$ ,A-. In &''/% the C-A rendered a decision in favor of the Commissioner with slight modifications. COMASERCO was lia#le to pa$ the amo!nt of P/%0&.1&. 9!ring the same $ear% COMASERCO filed with the CA% a petition for review of the decision of the C-A. -he CA r!led in favor of the respondent and #ased its decision in another ta+ case involving the same parties where it was held that COMASERCO was not lia#le to pa$ fi+ed and contractor3s ta+ and it was not engaged in #!siness of providing services to Philamlife and its affiliates. :ence% this petition was filed #efore the SC. Iss"e!

;hether or not COMASERCO is engaged in the sale of services% th!s lia#le to pa$ ,A-. #e$d!

!ires the reg!lar cond!ct or p!rs!it of a commercial or an economic activit$% regardless of whether or not the entit$ is profit*oriented.  As long as as the entit$ entit$ provides provides service for for a fee% rem!neratio rem!neration n or consideration% consideration% then then the service rendered is s!#2ect to ,A-. eca!se ta+es are the life#lood of the nation% stat!tes that allow e+emptions are constr!ed strictl$ against the grantee and li#erall$ in favor of the government. Section &1' of the -a+ Code en!merates the transactions e+empted from ,A-. -he services rendered #$ COMASERCO do not fall within the e+emptions. It falls !nder Section &10 of the -a+ Code in which it defines the phrase 5sale of services6 as the performance of all =inds of services for others for a fee% rem!neration or consideration.