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Case Digests in Taxation II (12) Contex Corporation vs Commissioner of Internal Revenue (G.R. No.151135, July 2, 2!) "a#ts$ Petitioner Contex Corporation Corporation (CONTEX) is a domestic corporation engaged in the business of manufacturing hospital textiles and garments garments and other hospital supplies supplies for export. export. Petitioner’s Petitioner’s place of business is at the ubic ubic !a" #reeport #reeport $one $one (!#$). %t is dul" registered registered &ith the ubic !a" 'etropolitan uthorit" (!') as a ubic !a" #reeport Enterprise pursuant to the pro*isions of + ,--,. s an !'registered /rm petitioner petitione r is exempt from all local and national internal re*enue taxes except except for the 01 preferential tax pro*ided pro*ided in + + ,--,. Petitioner also registered registered &ith the !%+ as a The Court of ppeals ppeals re*ersed the the CT’s CT’s ruling hence this petition. petition. Issue%s$ 2as CO'E+CO CO'E+CO engaged in the sale of ser*ices and thus liable to pa" 3T4 &el'$ 5es. 5es. ection 66 of the National %nternal %nternal +e*enue +e*enue Code of 7689 pro*ides that: ;n" person &ho in the course of trade or business business sells barters or exchanges goods renders ser*ices or engages in similar transactions and an" person &ho imports goods shall be subigher Court clari/ed the meaning of the term ;in the course of trade or business? b" citing ection 7=0 of + 8@-@ &hich tooA eBect on anuar" anuar" 7 7668. The phrase ;in ;in the course of trade or business? means the regular conduct or pursuit of a commercial or an economic acti*it" including transactions incidental thereto b" an" person regardless of &hether or not the person engaged therein is a nonstocA nonpro/t nonpro/t organiDation (irrespecti*e of the disposition of its net income and &hether or not it sells exclusi*el" to members or their guests) or go*ernment entit". %t is immaterial &hether the primar" purpose of a corporation indicates that it recei*es pa"ments for ser*ices rendered rendered to its aliates on a reimbursementof reimbursementofcost cost basis onl" &ithout realiDing pro/t for purposes of determining liabilit" for 3T on ser*ices rendered. rendered. s long as the entit" pro*ides pro*ides ser*ices for a fee remuneration remuneration or consideration then the ser*ice rendered rendered is sub
Case Digests in Taxation II econdl" it is a rule that business taxes are are the lifeblood of the nation statutes that allo& exemptions are construed strictl" against the grantee and and liberall" in fa*or of the go*ernment. go*ernment. Other&ise stated an" exemption from from the pa"ment of a tax must be clearl" stated in the language of the la& it cannot be merel" implied therefrom. %n the case of the 3 3T ection 7=6 + 8@-@ clearl" enumerates the transactions transacti ons exempted exempted from 3 3T. The ser*ices rendered b" CO'E+CO do not fall &ithin the exemptions.
