CTA Case No. 4444 (Decision)

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DECISION- C.TA. CASE NO. 4444 - Pa~2- Corporation (PHILSECO). T1le objective 1,,las for KHI t() provide tec11nic::t.l assistance to PHI LSECO for the u )nstru.ction. ooenJtion ' �� ..L ,�)f tllP. .::.:1-I�lr�, r�;::.r-.::.1�!. t--:> ,-�l�litt�P.e: F'HI L"Er�n '�-=-�~t-1�t-_1 r�r���=-~r-I �1:_:\-;.:,:-,.�---�,;.!:.,t�r��Ior;::.tlt� 'v l. - �� � -..J v ~-�''-'� .-J- !- J. ' -' '.J ' .J lt�.-���=-~tp.,�-1 J.l.. . �. ) �. ��- � �-��..- � - (.}. "' .,...._ - � �-� �- � � in C::fl);::tngan Pt. 1v!u.nicipality of Subic. Zam1)a1es provinr:::e. o, On 1viarch 29, 197 KHI ~"'las able to est;::tblish a representative office in 1vianila (11erein petitioner) du1;,;r registered 111litl1 tlle Securities and Exc11ange Cornrnission \�11itll the pri�:::rr �.:1..,rr�)p-�'r�'��-���'1Tl -�:::.-'..l '��-)�1- B'>""t-"l -)!- t-~�"--1'r"::"; .. �- o. I... t_. It-I1';rv.u.e_.:t-r��r�1t�:'�r1t.c-.J� 1. To oversee t11e implementation ()f tlw Joint. 'lentu.re Agreernent betvleen the Pllilippine C.Tovernment (t11rouJ�-:�l1 NIDC) a.w:l Kc1.Vla.:;;:1.1:i Heavy Industries Ltd.; .-, Tr:) conduct and ma. ke survev' s and studies of ~. market. economic: and financial conditions in the Philippines; and __"}). To aJ:ivi:;e a.wl reti'::ler assi:Jance to lo(:ai (listril)U.t�.)fS / indentor::; :md custorner:: in t11e Pllilip pines . 2l�-, O�- t-1 �~.~; rr-,��r-1�1 , ' tc-?.�0��'!J~ .� rn-~�t'"itt�r,t�-l�,::'."!- f1�1,:�-:�..-�-�1 ,~J i�-~�r�-,� r�1t.t.�-,-.._.._,'-,�.,_t,.,,.,r�'�e-:� n�-.J:�1_�.c-1.rt.-1:r1�l~/r Percentage Tax Return for the first qu:3.rter ending 1�..-Iardl .31, 19e.0. n._r. �1 Jl.lJ.nI..r�t�l ? -; c..~ .� 1I:.)-!V~I.!.~J, rn-�,:.:,. t.,t"t-�t�..-)r�1~- r� 1rJ �o:::t..i. �."l t_l.lP'". .--:1.t�rl\.-.,1-1�t�1t.. ....-.Jf F).":)- t.-.,.�);� N!~ C): f.,.. 7,1_:.:.. !�".�1pre.r:-.ent.�.11�1g� t.l1e (�.. .O�Ht.r.~:.K��t}�A, � '�r=-� t�.a."~<.~T 1�u.� t� t_l_�1.e� dt� �t���=-��t, - qu.::J.rter of 1r:~l .e.a. The pa.yment V�ta:3 covered by BIR P::r;.rment OrrJer No . C 2.:32599;3 and CB Confirmation Receipt No . B14600.~. 64. ' On t11e query posed tq PHILSECO tf.) the Bureau of Internal RevenEe reg;:J.rding the liability of petitioner v..rith respect to t.lle

DEC1SION- C.TA .CASE NO. 4444 - Page 3 - Revenu-?. Ruling No. 25-000 -00 - 136- 69. da.t.+:l Ju.ly 4_, 1 9�~i 9, t11at: 1 nu;::.�-�t� (��rl�=- 1 .., �:-.�1.-l � h;::.l.t'o �..( l-_�.;:) w. ., - ~�1 l��r-.lt. ;-:�:�-.�..-l.�-.l.;::�-.� 1~ -�~-��� !- ,:::. ,-1 �' .::... �- <1 �- ., v 41;:, 1. �Ji '-� �-� ' are t1eret�y ansvrered jointiy. KHI Manila Representative is not a resident foreign corporation since it is not engaged in any income generating business in the Philippines_ A re:;ident foreign corporation is a. ioreign corpon:tt.ion engaged in tr:::,_cle or business in the :Philippines [Sed .ion 2O(h). Taz Code J. VH I .: >r-t t,-., 6 ..- !- I .� L J.~..-.-.,�.~-� ..1, 1�,.-. t-.,� 1� t=1 y � t r~~I I ,-11� 1-1ol'~ "�-=-�'- t-11�1 ��:--, � .;a �1-1(�-1� ... c-u �-1 � ~-� _j .. ._. -� �- � r-1.-' (�.�-,1..,;r-lA~� _..__ .... .a._, �- :;:t .L.a. v hence_. it is exempt frorn filing (if the corporate income tax return . (BIR Ruling No_-~.70 - .~) 7) � � 4.,_1 � -� - KHI is a non -resident foreign corporation since it is a foreign coq:..;)ra.tion not engaged in trade or business in the Philippines [Sec. 20(i)_. Ta:z Code]. Th.,;- tec:llnk:al service fee:; V�lhicll ;.1ou remit to KHI are con:;;i(:lere(l roy:::,Jtie:; since they are in consideration for the "technica.l advice, as:;istance or services renden:d in connection V�Tit11 tec11nic::J.1 rnan:::1.gement or a<:lr:ninistration of any sd E:-nt11K, iwlustrial or cotntilen::ia.l undertaking, ~lenture. project or :;clieme". (Sec_ 36(;:!.)U)(F), il)id .] Said technk;::1.l service fees being Philippine ::;ource income of KHI �=�ut--,1� "".---t -.-.t"" � 11- \- � ..:.:>, .,_, . ~_. .., ,_. t.. t .-.) �._) P�l-11.11.rr-��.f--'�1�1-lAv .-. � (..�..-,v-��t- }~�� t_., l (.). ... .l t-1,'v-� .�--�� r-rl.::�->� "':-. ., t_,_~,. ...... :._: ,_.1_... t_}..-...1".".,' ra.te of 35% [Sec. 2~)(b)( 1)_, ibi(i.J V�lllic11 sllall be �v..rithheld by you. as the payc�r -.::orporation and paid in the sarne manner and subject to tlre s;3_me (:(;.tJ.dit.k:rns as provided in Sec. 51 of tlw Tax Code. �'l ] 1�}-,1� .i f { (' .~;:->"J(� , C: (I {\.'.:-.r,. .� } -� �- . '-\ _} �� � .-, ~- 3. KHI Manila Office is not subject to VAT since it is not engaged in any income- generating business activity in the Philippines. A person is subject to VAT if it 1 20

DECISION- C.TA. CASE NO. 4444 - Page 4 - renders service �in the course of trade or ""u<::-tn""'ss� r�-. Ll ~ v - {�.�.:,_l:~~�(��-�. (�1r1 ' ':- �:� .' ~1 .�:-1...:7~ ._.',) '�-�1;:�-:�. .��.~ ... . .. . .. - "':.7 "?;T ": ~ p�n11�;::.,.-l v: Y " '~ ~ ......~ ......{ 'r�1 .~L..Jr. 1�1tr�l :. .=�.\�.=...�� 1��.=. ..� �.=...�. t:1' r ~� .. .. .'1� �� Petitioner filed on April 19. 1990 0:1. claim fo r �rMund in tlle r�� ��r� +�.�-=:-~. ~'��� f '��-�-�'��� +�-�!�1'�:�:.�' 1!�-.=_,�t, (�-11J...i!-+t_!.:.-::.'!- r��-'t� l- 1��"�-"~I9,) f".!' \'.r:�.J�J.tL-))-':-:-:'�(v� +�-� !-Ii�-:.:1�. tut':�:�:'l- ( 1 t�1. �11�,.-:). Ir)�.;,::�.-�tt".�tL'(-�'t.�1� �r� ��=��;�:-�:.(�-��'-�-����H��'��"�l '�-�i.1J.d.-.1��ti :-."!- () 1(\�:jtpJ �!,~! (,..:-..�.J.tL-�. _I. ;�:-:.r., t, lr.�id.-.t,t_;.:.,:.!- ��.�)� t� i�~-�T~�~'�~ \~...o-1..--:>..'.:-7. I'��TF.-). . "..�4. .I,.�)) .� � ) r� � tt .�.�. p 1 � tl� ;�. r .- �! .d-.1"I.l!..-)1J'.I�-l t,t"r�1)-:�; t.!�.') . 0Q i.') _. i�:). 'I> .n�:' iJ, _. _. 1a '�� (-11.1.".:-1.!"t):-:.:' \) 1i-'~j (0H0) (\ :.-:.,l_lt".�)l� i.:-"(�..i_+. ~lll.d.-. �.� "':::'1 C~� f (-.T1.1i.�~ C:;� :;.,:. f�,To <~J.jC-:.()i", -�:.:1.t..�. I-1 (:.11'�l -t.1�!�11~~; tr:. . ]:'� 1 11r")- _, 1 t��, 7I . .~_J L.-�:'1. .�. l.Cof<_ll_t..�. t_� t1} C-1lL--=--t1��-t.P.r !. � -� _ ._ __\ __ ---1 ,. �)f 19ae. (;:unou.nting._, to p 199.. 1rY-:). it.);. ;::1.1lci the first (111J.;:J.rter �:)f 1969 (arnount.ing to P1 60.979.12). t �� '~1~I' 1. t.t~�1....-J��lJ� �� 'Y\r�'=- �11. � t�.�i.l.�.l�tCbi f�C.! t� re~:pcndent's �::leci:;ion on said clairn fc:�r rduw:l. petitioner fil.s-d t11is p~ tition on i�~pril 20. 1990 pur::u.a.nt to Section 230 .-)[ the L J.X ��1 tl� ..-;:,..~:1.t�1��l':�:�:�' 1�ld-.t-.�-1L��!;::.�.. \�)�f -d1. 1 Av'.:Y�-..~t:r�n'1r.--'+l-.i 1-~.,-�J�..l ..-:.1.�1�1�-- . 1;-:.�:.J�.-'-:-7-f!,--~..�1-<�.C�.. >,..:�.J~-.l(._i.l-ll��r"�-l ~;.--1..'�:�::�' .�~-.�'.--).i�-l�;:�.t��1�u'�::�:'.�.�.�i (� tlTT t�< ��r� �1 ��r�� ,.-:..Jt--1�1� .... .. ? :�=:.1...;o=�'�-�:.t.l�t�.�L,�=���t_. t:.,t.01�l,;.�_;.;: ...:.r...~.:'n:."J�������:�~.T)'Tt:::' . TJ. .~1.lP--~.- hL�'u'.1. ~- "�::�:1�.�1. 1�..-J. 1-) 1 t~1�1�p�.r. t�.a:-1...�:�~ iJ.-1�-:-~.u,v <�-.=->1�� t)�.�)� Ia support �:.f it::: claim for rt?fun(l, petitioner offered t11e (! �");�., 1��('�;' 11...('��', ;::.\il. ��ip.l-1(�;::. � �..,pl1� t"1 CQ f -.. t�. �.�1_lt���J1. ;:':-'.1�1t_�=._t,t�-.~;r >J I '... �,r 'J '�" , J. 1(_ T~u-..- f��t�'�::'f 11 . (.,�..1-0:l.l�!-1"1 f r; t� .t��~�'f'l1I "1'��-i �','�'a�' 1�t~�1�1 t1���1"�:;�; rnr .P.LJ l 1. r�.+l ��-: .tt�--�~��=.�--�i J.,".-,J. l~)- �� �l 1 1 _, v .1. "1 1 1 c:;-.-. �2�J. �"::}1 0- t. [E.yui�l::-; . ;.. - t-.(-)' .1","'j. - _, (),! 1�1�1 t�_�:11-1�":'";1�uY ;..,,.]1� l. l.! C.&. I 2. Letter of petitioner 's Genera.l !vianager aut11orizing Atty. Dou.glas G. Baa.rde t.() file a claim for refund on t�e.lla.U of r� 1J. lr�--'.t�ti ;�:-:�. t..�). 1�1 ,~�. [l.Li.".l:l.-.J1. ..-.:�.. 1P}. .�:-1.t�l rj .P1.). - J �.�1 ...... 124

DEOSION- C.T .A. CASE NO. 4.444 - Page 5 - -~ SEC Re!�-2� "istration Certificate [Exh. C] and C.OI I. ..-�.-�r�tif1. V.JJtl101_1�r� y [Evt1c- D tr1 [� �-;1- ��-�~ 1� 1-1(-� lJlc-l� ,,~J � �--~~t �-� .1 .1 .. . -� �- -� .&.:.1 �-'. -��� .1. - �~ -� - -�J , '.,.? 1 ._.... .. f._.,_ . ./::: 1,., ._..l_r 4. Contract.o:)r�s Quarterly .Percent::1.ge T::Jx Retu.rn for the first qu.arter ending 1vla.rc11 .31 , 196�!~i [Ezl1s . E. E-1 to E-3, inclusive]; s. o-.1-!U-' (.Jt:v� .(._�.(_-:.!-1!-1�t_-1-11..:~1.t'~1.(.) l-1 rD-�~... c- e- 1.rr)t~ 111T0- . vt:� 6. P,IH Revenue Ru.lin!2�-�� No. 2~_~) - 000 -00-1 ._�~. 6- ,!:;9 dated July 4. 19.39 [Ex11s. H, H-1 to H-4, inclusive]. 1�1-1 1�c- 1-� �-� t 1-i.,_.~r t_..r_1~~---�11� 1-1.:,:-:, l-...�'t:J_c._1�t�l-1r"v-"-c..J��c-�� 1�t_. 1 t., h~.... Pt-l,J11. 11�f.1-1�_n. 1� 1-1.r~.,�=~' t_.t1-i..~.. r�- ~._.t-�t-.; t- 6 �-= .1 1-...' ~ ���r-1...,tt._t. l�t:-'�r._i t.r..J� '0" tlle refund claim. To bolster 11er cla.im t11a.t netitioner is not ~ entitled to the refund sought, respondent oifered the following evidence: 1 I�Evt-1 11 t.--� 'c� �::qJt1-1..-i!_1.7P.tl (l(�(i J -' �-� � ..:il , ._f. .n1�' r - f.�.-��; V p tl-i�~t 1-V~�c-�-r�r)(��' �t-!'�f-i�,P�.t-l't ._t PJ.' .Y.:~:~!�--� !-11� 1-1~ 1- ~Ih~T1�:_:1<,.C_�1 -1 I �� �' 1_1, �. � �-� 1_ 1, - � , � V ..... �.r �� t .-. r.. ()!- .-11,-l �-..,tt- �-� -.,)11!-,tl' tl�-.. ).) t-::~!J�:.�vi�.-d.t-1-11� !-�"" )t::-:;.t.�l' t��t� f,~)- r-! ;v::.t- ' c- t-)�!-.'-Jf-..r)!.'\l..r-..c..J�. -.. .-. !- :.-:f..(y�. �.�.(.}JJ._t,-r1 �.-~-~� ::1. �.+ t.�.���11'=::" �1:���r.�-..1.�.,. �� -� ~ �� .::,. J.'�.� �-J a11y re~c-(�)t-<-..1:-::; r-(-i!- t.l.-1.:-;- ~,1e-::1-.t- 1'-:-.~-co� O.-. tk-� o-:.lp._..t._.e- t-t!-1- 1��H- e- - ~ o:-.1e-f1�U-�e-.lt�-._~.�1 e--:~. 1-o-:.:rt- T, �vT r��~� Percent.a.Q�e Tax and ,Donuilentarv Sta.rnp' Tax,� v ' b. Memorandum Report of the examiners d;::tt.ed November 1992 [Exh . 2] recommending the denial of t.11e (:lc:t.irn for refund a.nd the issuance of an assessment n�:)tice atn�:::.unting to C. The testimony of 1v1r. ~~,ntonio Jomlt.h;3Jl 11�-�p.t- I F ()ffl. 'P.~lP.!-!;�:-:�. ?!C 1-;::.c�r-�,,-;t-l t�_-lP�.� .t1t '�cJ� V.'ll. t.t,�l;:v:.c._cr.�J c._r t� -�:~::\>tl�!-lCbf �L:t.. �c-' fr'\-,.���l i'r�-.�;<\,\,lC�.J", L\ . . .� 1 ._. �.� ._, . � �-� .1 ._. j, ~-� �., } ' - ��- ' }

DECISION- C.T.A. CASE NO. 4444 - Page 6 - ..ATTY . SEGUI In perteictioomnemre�:n; dcilnai'2r�-n�� tlle denial of t11e for refund. v~TlE1.t v.r:1.::; r�r� t-�::-..:���=� '"l-1-lt=�-�- "-'~�1�-� .) ~lT�..�...�,_n,t- (�-l.:�:-�.t.-11�<�;:.;.1 �~.� A. f.;3.sed on our investigation, v-te are denying the refund on the ba.sis ()f the follo\�1ling rea.sons: 1. The financial ::.t.at2.ment oCf otr1n1peat.an}yq:..::oiat'vei:r:; a:; ;3.uditeo:l l)y SGV a.nd st;3J.e(l tlnt Ka-o;,~,r.J::;ati Heavy Industrie-:;, Ltd., throug11 its tv-Ia.nila Office, is (ioing bu::;ine::;::; in the J?hilippine::;_; �1�1.:..-�1 -,i. � ~11-1t=�--� ~'1� l�t_:::; ,_-:o~.��.,T.t-1 t�~�r- .,.a.~.a.f..o l-;_,;~~7'-~" !- i\1-1-=i�� I t-lto:-l i ��� �- ..J' income a.nd busine:;s tax returns and 11�:� ilt=:-(�1�-�.t- '-~\T'I l�!-10L:!�~. . .~"1" 0:-:'.!-;.y.. :�-:;'.~::� .t"0...:...(..'.0..:...1. f~.,+t,;.::�, 1. .tj-, 1.!-...,.,..-�..J !"I"lt=;. ... .... ~� c." 'V f(:�r the perio(l undc?.r inve:::tig;3.tion aw:i_; _3,. The taxpayer failed t-:) '3U.bmit through re-vat. our findi noud:::. Under Section q- 9.. of tlw NatiorH:tl Internal Rev~nue Code it �s t 1 nr-�t�.-._-.l':.ll-~�.1 t-;-"� t-_1 t~..-J,.-.:...1--. c�1.�.t-I',..l p../o' �:-�.t��~-�r...l.n...... !"0�-:�.!1....r...�..l..:....t�l�.�-L�~cc;. . service in t11e course of trade or busine::s in the Philippines should file a return . Hen(:e filing ;::1. return, tlle n t- t_.�.:_:... ~':-..~J...�,'--::". \Irt�=-�:.t- 1� �.=_.� r�-l.:..:..,t=._.-1rr�",'t�=-�:..'."--1+ r-� ,�--�J 1n�t�=�:-�.t-1'/ ~ t.�=-_1_�.z.-~(_l ,_-_:.1-.!. its gross receipts and income_" I!-1 t,T,�..T, (.) �i="��t�1�-I-11�l.�=:.'~>t" \.-,.u.-,.,:-..�e,-=~� 1.!1T..T. C"l1'T.T, 1�rle,-:,,- t_l."1A._. ,.:-;..-.-:1.r. ��H,::._,. 1p_,�-:-.1.r�t_l.�A._.�-�=��.. t.'-I�.r~i-,=-�� l�_�.�\.-_.,J-�'�t�.t_. lias reo:::entlv ruled: ' "Tile applkat:�le provision of laV�l is Section 99 of tlie National Internal Hevenue Code, quoted hereunder : 1 26

DELlSION- C.TA. CASE NO. 4444 - Page7- �sec_ 99- Persons Liable_ - .Anv l~)erson >.:..:ho.. in the u::-urs.::.- o:A tnv:le or busine::::s_. sells_. b::lrter~: or exch:Jng�-��e::: ;;:�oods. renders services or enga;;ces in I ( ) ' -' r- r,t-1�:� �1-� '- ' . ��=-�' t- 11-1'11 -'~-1� d1" t��.-1-~�1-1�-1.:.-_-u~_1, �� �� �.� �-' -~~ ..l-. l i�-� 1 �~7:.j 1-1 ~� Ir.�l,:�.:,�:.t- �.:-:.�(�-) t-1 ~�.�.I .1 (�..i- '- . 11 irnports goods s11:::1.11 t�e sul)ject t;) the value-added t.3.X (\l.6.T) imposed in Sections 100 to 102 oi this Code.� in it:: aInfovreiemvlenoitiothneedfinrdu.ilnirH2�-�;s�-:�� of the BI.R a.s em t..;: .di-ed Petitioner is not th:::~_t enga~ed in any incorne generating business activity in the P11ilippines. this Court lil::.eV�Tise believe:; that it V�li!l not l)e sul)jecte.J to value-:::v:lclecl taz pu.r:;u::mt to the aforequoted Secti�:::.n 99 of the Tax (()(ie. \l;JJue - :v:lded t:u~ is imposable only against per:3on, individual or l�uridical entitv'.. in the cc�ur:::e of t11dr +t--r--�-:j..(�1�-~- ._-)-_r .�:->. '-::-!�111. r1cCc�J t-.}-.c,tt-+L-J�;'j"r-l�.t-lc0c c.-'r- . ~L-)1-v-�~�t-11;:..:..�-:-;-t-Q=- �c=t.'�~.�t.�l� v,�1� t.1�1.:-;.:'�.;-,. exc11anging of good:::, or rew;lering service:: for a fee or other similar transaction. HesP'::.ndent fails-d t<::. f. t ll-,:::..:�,:::.l�-1t (i,:::.l-1(�,:::. t1�1;1 n,:::.t1�ti r�,f!Al- �� ~,1-1~ 1 A~ll. ~ l. li.ll ,.:-J. 1-1 ('��', ~�.1 ft-1 �~t II /1 .,r.. 1_ , � 'J � - � �~� � C.t 1'1 �.� I '� �. � V �../' � r '�' �- � � ' f,, '>&. ' � ' .,(, 'J' A' >t-1.t-c:/-�1�;c=c, ;_:.:.,rl 1�11 �rt� ' � 1;:-' 1-1:=�-1- -~=�� ~--, ,-:~::..,_:.::~.t-1 '-~-,'�1-1j�1 ..--, 1- t}-1;::..:-,:::. (()1-1 �-�, t-1-11. .\-~. -=1 t� t-i-~ I +l--~j .�:-:�. ��:-�'.� IJ v - �� -- � --� �-� -� --� \J '- o... . v at least t(:. disnr-�u.te its OV�lil iindin!2'--'s contained in the :::aid BIR Ruling." [Kawasaki Heavy Industries Ltd_ (Manila Office} v _ Commr_ of Internal Revenue. CTA Case No_ 4473. June 11. 1993~ Kawasaki Heavy Industries Ltd_ {Manila Office}, v_ Commr_ of Internal Revenue, CTA Case flo_ 4507, July 2 1, 1993J given V�leig11t considering tlla.t until novo! t11e :::atne v;as never 1-."-=.-' .�f.(-}-1�'�'e- '�j 1-1�.-:-:�.r-1'----�,�::-:�... l�t st.-, 1-1�.-jr--:>- t -- tJ���-e �c:.,>1)r1r)�lt"'�---��-:1-.1-__)1~�--. T1L-le-. '.-,',1.--1' -111..�--~)1-1 ..-)-r- _j'�----'��=~�e-. T'--T�. J . J:!. J'} Ong:, tl1en Cornmi:::sioner of Interna.l Revenue) tl1at petitk:oner is .1---::l:.t..�.,:t::.. � ,.:.:-:.1-1cn,C�<.'.o;=-;,::._:....��-f Ji..-lL, i-1�1-l~'l t��r-�C-1.�\-.1;:..:... I-.)--1- t-}�1_1�.=_1�1�1-l,:._:�:.�r:-J�.oJ:� �.,=_:.1�1-1(-J.'t.:-:.f 1-t�� 1��.-:-� (���Jt-ll'T,~ -,.-_1_ force . It ~,voulcllia.ve t>een easier for respondent to ha.ve revoted

DEOSION- C.TA. CASE NO. 44.44 - Page 8 - tl---:Jt 1-t t1� �_=_�:��:-1�..i:.'-�..I,. n.. ._'l,1l. 1t-i'~-,. (.,.-.I-.-)-r._ ici.��l ....:-~. ��~ tr;-' r�t�!-1..-::-,,- -� 1~.. ~� -lr� .. l�c._~ �\ �-� '-~ ~'1-tl-tl�t-1 1\-l. Ir:;.;'!- ~1,-'-l-}-~,�~/:r'...:.:�:.r� �. .) r__ �.} .c_-;�,.r_.-f l.l.. .!'ir�-l�-t.�'t- .l � - Se�2.tion 246 of the Ta.x Code. �sec_ 2 46 _ Non -retroactivity of rulings _ - .~..nv re1.tocatlon. modific:atk:.tl. or rever::;al of anv ofI � � I and in ac(:OFhHKe --r the rules T\~�lt' H.-..1� t.-l-J..t~:' regu ulation:; Dr oI..-_.,1n- lu.d-.�lrg1u-�/:�at�<.e)�fd t'.I�lt-:. ~ rI--�1t�;�.-:'.....~~~'----1+t't-L� ;1=1� ..-::�,.:.:.:..(..�t...i. .\--.}-1-1 t ' l--~'- l t' t...�.,L ;.=-..�.-=.� l.) .1 circulars promulgated by- the Commi:;:;ioner shall not be given retroactive application if the re'lO(:ation. modification, or r.:::-versal vli11 be� prejudicia.l to t.h~ t::tX..T.I..);3.,.vers exce.p.. t in t11e fo1hYV�lin8-�~ cases: (;::!.) V�lhere mtilaetertiualr1-)f;a3_v'd�esr deliberatelv tni::;states or omits frotn lli3 retu'.rn or in a.nv dc~~-.::ument 1�;-:-�.,.�--�i l_a''r_ ,�:-:�, r--i (~ll- 1�-rl�t-"lJ'1 t-..~,.J 1�--� 1-1v~ ,P_.,,.J.�1-.:.._.. -,:_1_u'', ..v--. r- Ir-J.t_;.:.._.t�t-1� ::'-~1-1 �P�..;_.:.v, f,?t-_iJ_P_._.,� 0)) vt!lere tlle iact:; :;utlS'(1UE>nt1v '2at1wre.:l bv tlle "' I '-' f P......t�Jt.�.::�.:_,.. -:>p nt- In.1 t_.t�';tt-tl�::.:.>\. l R.,.:v::.�v;,:v::.!11J?. �>-� 0'=..'~. r�-~� nlll.�:>�:t1.,:--:-:---.r�t��1::1>. l 11 .~1! !.._-.;_1�!-"1,:�-:�:.t-.c..... n..I;.>.C. -1..- (_J_._\ �-� f 1"'(�-)!'I'l t-l�l?>�-� f��=- 1� -c� t_c__�, (-l�".L';l t\t,:rl-,,;.1�..�--�-ll t�-1� �1,.:.:..; !"1._1._.1.. t' t-1C;::f; 1�:,_:.- t~y- :'.-�':-��,-:�:-:~. r�-� i � \_'.lr {(_:-.) - J \ ~Nhere the taxpayer ar:::t.:::-cl in bad faith .- The �-� fiw:lin~�s of the revenue exa.miners tl1at the r.s-presentations made by PHI LSECCJ for and in behali of p.s-titioner - hav.s- been endors.s-d to the Commi:;sioner of Interna.l R.s-venue for rr.-lr�-V--~-r.-:-'-r~-1- �":�.�.r,� t_1.�1.J-.L�-l. ~A�r.-::�;1�(_�1;-:-�. 1't?\.t) -H- t~l�l-t-:.'1�1- !-t:~''-~--~V- r�1�-ltll,:--:�:.n1-r�'�t c�"�.tl� i.-). 11 t-i_'.!� - +!.-H"'t-:' ' 1� ..:->-:~:>-J--,~-�:~.�.1-1-�.-_-.-,.:,::. -.r-� --)I.- ~-~:.. ..,-:)-.--~,::.�:.�..:-)-...-=~-!�-r-1 t�:-:�" t-lt-� 1"1<..-'-l�+l�~r���;-:�. t-t��l�-t�:T::"T;: �--~-}.-&.��r)�J- l� l --1 r'l -~�v,:::. C--l..1.. �-~-l--)- .i"j'�J-J�co.,c:::.:-;�-:�.��=-"-t.-.i-:'-f r..i.. .1-1�_.�)� !- t..~-L1.t�='' IJ.. l �-� '�J '�-� 0. 1. revocation of EHR Revenue Ruling No. 25-CH)0 -0 0 - 1~;6- (. 9, da.ted July 4. 19d9. This they failed t1) de� . Hence, no revoc:;:l.tion Vla.s ever made by the respondent. There being no such revoc:ttion . the sa.id Ru.ling stands. :_ : Furthermore, Section 99 of the Tax Code is clea.r on th.s- tlEtt a person is subject � to the VAT (formerly the contractor's ta.x as in this case) if it renders service "in the course of tr;::tde or business". In tlle case at bar, petitioner merely

DB.::JSIO.N - C.T .t~. CP.SE NO. 4444 r�� (l 1 r�i rr-.o }.�i 1�11�1n..r-�_�t�.t't,:_:..�_:�, .-:_:-.,_ L-. tl �':-"�t��- uv l�~c-�~�- �1�(-!�(."...'::>�. .t_il.�--:"--'-�1�1�'r_��.�l'_,tr_.'.,rt�.c_-. /,1..t"1,.-_1, A., tl't-_!.._�..,r��c-'� .�::J- !-L. .�---�-��~-1-�c--'�t-,�~�-,-�r��!-1�A.�f-"C~�� �:-:-�1-'�.--�.4'�"-'i"v' t� t"u/ !"�.---.��,�,. - t�.~-t-L�o::..t� r�1--1��:J- r�..r.�-.�.:_:..r�. T� H'- ,~_t-.- ~.-1.�-.,--..I��.�.:;,,, r-~ ~�-� t. l..t.,1.�-.�_-.r�n�.:.:_..r� 1.c.,__�, tl�._�....t_� .C_.�j_J.'"J_-.,�1_�~.-�.-�-���r-� f,_-.r..-_..r f�--1��� ~.-. -- r� f f_:>_r L1fi�d l�!-t. r.d~. r'T!-,.-,1- ,-__-.-r� f--�"=��:�:'t..�Lt.i.,.-.,t-L.::.I- t...�r-.,'::.-:.' ..:-1.1-!1--�-..-J. UH- t- '�-�' rr-�...:-:,;-l).�--~._.oo,'::)::)t�=---' �.�.'..), c_:: . -r"':�::-:"�1t�)�J�.�t:c'._���-!;:�:'t�1�t-.�t�t�1,;-:;.. t��:�:!�!r_�,�_-_.rr�1t.:,:.'~.----,1_1\:�-:' lF/ f'.".=cl_l_�.-._-1 -,~--.'.-.-...'1l_t.r�d�-.t�.�.�t_.r.._�Jr� �.c_�. t_,~i:.�t .&.~,~ 1-r.-_-1. 1- t-.~-.1'11:':�.' 1'1�1�.-:-~-�t-� 1 . ! r�,t� r.--, ,-.,.--,.::tc� 9�~3.::; �.!,.-�, n l� �";!"1(�, ( �C:.t"I"i A!"i t 11 ':"j C� ( ��1-" I �. L \, �- � '- �. . . �-�'-� ., �- � '- - ' ._.,. �� � �-� �- � �-� -' ��� SO ORDERED. l���it=>t.tf) 1 Citv n.,._ 1-1�~.';~' (") ll ..,~ �i I l " I\ll :=-!tl t' l :=--1� _t ~P '~-) ll :=lt"V Q (_l i_:J.:> . \ -� � } J. -� .1. '- -� -� ( �� J ~ LI~vvvI -1/) I " ' c-/uo-"1 I RAMOli 0 _. DE llE tR,A WE CONCUR: I lt~~�~ ER.NESTO D. ACOSTA ~r:� 1��o�:-:�..�-c:�iL.----..+11.n.u.;o:J Jll-�"�~l�Q��o�:~�.

- ra :-e 10 - iJ CE RTIFIC ATION �'--&-\12 '~ ERNESTO D_ACO STA 1 30