THE COMMISIONER OF INTERNAL REVENUE vs. ACESITE (PHILIPPINES) HOTEL CORPORATION
G.R. No. 147295 February 16, 2007
Facts:
1. Acesite is the owner and operator of the Holiday Inn Manila Pavilion Hotel along United Nations Avenue in Manila.
2. It leases 6,768.53 square meters of the hotel’s premises to the PAGCOR for casino operations.
3. It also caters food and beverages to PAGCOR’s casino patrons through the hotel’s restaurant outlets.
4. Acesite incurred VAT amounting to P30,152,892.02 from its rental income and sale of food and beverages to PAGCOR.
5. Acesite tried to shift the said taxes to PAGCOR by incorporating it in the amount assessed to PAGCOR but the latter refused to pay the taxes on account of its tax exempt status.
6. Thus, PAGCOR paid the amount due to Acesite minus the P30,152,892.02 VAT while the latter paid the VAT to the CIR as it feared the legal consequences of nonpayment of the tax.
7. However, Acesite belatedly arrived at the conclusion that its transaction with PAGCOR was subject to zero rate as it was rendered to a tax-exempt entity.
8. Acesite filed an administrative claim for refund with the CIR but the latter failed to resolve the same.
9. Acesite filed a petition with the CTA which was decided in this wise: Petitioner is subject to zero percent tax pursuant to Section 102 (b)(3) [now 106(A)(C)] insofar as its gross income from rentals and sales to PAGCOR, a tax exempt entity by virtue of a special law. Accordingly, it ordered the refund of the tax paid.
10. the CA affirmed in toto the decision of the CTA holding that PAGCOR was not only exempt from direct taxes but was also exempt from indirect taxes like the VAT and consequently, the transactions between respondent Acesite and PAGCOR were "effectively zero-rated" because they involved the rendition of services to an entity exempt from indirect taxes.
Issues:
(1) Whether PAGCOR’s tax exemption privilege includes the indirect tax of VAT to entitle Acesite to 0% VAT rate; and
(2) Whether the zero percent (0%) VAT rate under then Section 102 (b)(3) of the Tax Code (now Section 108 (B)(3) of the Tax Code of 1997) legally applies to Acesite.
You can support our page by clicking any of the following links:
|
Ruling:
1. First Issue:
Yes. It is undisputed that P.D. 1869, the charter creating PAGCOR, grants the latter an exemption from the payment of taxes. – it clearly gives PAGCOR a blanket exemption to taxes with no distinction on whether the taxes are direct or indirect.
Indirect tax of VAT, as in the instant case, can be shifted or passed to the buyer, transferee, or lessee of the goods, properties, or services subject to VAT. Thus, by extending the tax exemption to entities or individuals dealing with PAGCOR in casino operations, it is exempting PAGCOR from being liable to indirect taxes.
2. Second Issue:
While it was proper for PAGCOR not to pay the 10% VAT charged by Acesite, the latter is not liable for the payment of it as it is exempt in this particular transaction by operation of law to pay the indirect tax. Such exemption falls within the former Section 102 (b) (3) of the 1977 Tax Code, as amended (now Sec. 108 [b] [3] of R.A. 8424) - (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero (0%) rate
There are undoubtedly erroneous payments of the VAT pertaining to the effectively zero-rate transactions between Acesite and PAGCOR. Verily, Acesite has clearly shown that it paid the subject taxes under a mistake of fact, that is, when it was not aware that the transactions it had with PAGCOR were zero-rated at the time it made the payments.
You can support our page by clicking any of the following links:
|
0 comments:
Post a Comment