(TAX 1) Scope and Limitations - 05 JRRB
(TAX 1) Scope and Limitations - 05 JRRB
(TAX 1) Scope and Limitations - 05 JRRB
JRRB
CIR v. Placer Dome claim for refund, respondent argued that the revenues it
G.R. No. 164365 | June 8, 2007| Tinga, J.: derived from services rendered to PDTSL, pursuant to the
Agreement, qualified as zero-rated sales under Section
102(b)(2) of the then Tax Code, since it was paid in foreign
FACTS currency inwardly remitted to the Philippines. When the
Commissioner of Internal Revenue (CIR) did not act on
CIR v. American Express International, Inc: Under the this claim, respondent duly filed a Petition for Review
National Internal Revenue Code of 1986, as amended, with the Court of Tax Appeals (CTA), praying for the
services performed by VAT-registered persons in the refund of its total reported excess input VAT. In its Answer
Philippines (other than the processing, manufacturing or to the Petition, the CIR merely invoked the presumption
repacking of goods for persons doing business outside that taxes are collected in accordance with law, and that
the Philippines), when paid in acceptable foreign currency claims for refund of taxes are construed strictly against
and accounted for in accordance with the rules and claimants, as the same was in the nature of an exemption
regulations of the BSP are zero-rated. from taxation.
Clean-up Ops: Placer Dome, Inc. (PDI) Placer Dome CTA sided with Placer Dome
Technical Services Limited (PDTSL), a non-resident The CTA supported respondents legal position that its
foreign corporation Placer Dome Technical Services sale of services to PDTSL constituted a zero-rated
(Philippines), Inc. (respondent), a domestic transaction under the Tax Code, as these services were
corporation and registered Value-Added Tax (VAT) paid for in acceptable foreign currency which had been
entity inwardly remitted to the Philippines in accordance with
The San Antonio Mines in Marinduque owned by the rules and regulations of the BSP. In the end, the CTA
Marcopper Mining Corporation (Marcopper), mine tailings found that only the resulting input VAT of P17.2M could
from the Taipan Pit started to escape through the be refunded the respondent
Makulapnit Tunnel and Boac Rivers, causing the cessation
of mining and milling operations, and causing potential CIR filed MR invoking Section 4.102-2(b)(2) of Revenue
environmental damage to the rivers and the immediate Regulation No. 5-961, and especially VAT Ruling No.
area. To contain the damage and prevent the further 040-982, CTA remains unpersuaded. Case was elevated
spread of the tailing leak, Placer Dome, Inc. (PDI), the to the CA which affirmed the CTA rulings; hence,
owner of 39.9% of Marcopper, undertook to perform the present petition.
clean-up and rehabilitation of the Makalupnit and Boac
Rivers, through a subsidiary. To accomplish this, PDI
engaged Placer Dome Technical Services Limited (PDTSL),
a non-resident foreign corporation with office in Canada, 1 Section 4.102(b)(2)- Services other than processing,
manufacturing or repacking for other persons doing business
to carry out the project. In turn, PDTSL engaged the
outside the Philippines for goods which are subsequently exported,
services of Placer Dome Technical Services (Philippines), as well as services by a resident to a non-resident foreign client such
Inc. (respondent), a domestic corporation and registered as project studies, information services, engineering and
Value-Added Tax (VAT) entity, to implement the project in architectural designs and other similar services, the consideration
the Philippines. for which is paid for in acceptable foreign currency and accounted
for in accordance with the rules and regulations of the BSP.
The Implementation Agreement stipulated that PDTSL
was to pay respondent an amount of money, in U.S. 2 The sales of services subject to zero percent (0%) VAT under
funds, equal to all Costs incurred for Implementation Section 108(B)(2), of the Tax Code of 1997, are limited to such sales
Services performed under the Agreement, as well as a fee which are destined for consumption outside of the Philippines in
agreed to 1% of such Costs. that such services are tacked-in as part of the cost of goods
exported. The zero-rating also extends to project studies,
information services, engineering and architectural designs and
Respondents claim for Input VAT Refund other similar services sold by a resident of the Philippines to a non-
Respondent amended its quarterly VAT returns. In the resident foreign client because these services are likewise destined
amended returns, respondent declared a total input VAT to be consumed abroad. The phrase project studies, information
payment of P43M for the said quarters, and P42.8M as its services, engineering and architectural designs and other similar
total excess input VAT for the same period. Then services does not include services rendered by travel agents to
foreign tourists in the Philippines following the doctrine of ejusdem
respondent filed an administrative claim for the refund of
generis, since such services by travel agents are not of the same
its reported total input VAT payments in relation to the class or of the same nature as those enumerated under the
project it had contracted from PDTSL, In support of this aforesaid section.
[TAX 1] Scope and Limitations 05
JRRB
and accounted for in accordance with the rules and doing business outside this country if paid in
regulations of the [BSP]." Thus, for the supply of acceptable foreign currency and accounted for in
service to be zero-rated as an exception, the law accordance with the rules and regulations of the BSP,
merely requires that first, the service be performed in are zero-rated. The service rendered by respondent is
the Philippines; second, the service fall under any of clearly different from the product that arises from
the categories in Section 102(b) of the Tax Code; and, the rendition of such service. The activity that creates
third, it be paid in acceptable foreign currency the income must not be confused with the main
accounted for in accordance with BSP rules and business in the course of which that income is
regulations. realized.
Again, contrary to petitioner's stand, for the cost of
respondent's service to be zero-rated, it need not be DISPOSITIVE PORTION
tacked in as part of the cost of goods exported. The Petition is DENIED.
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