HEDCOR SIBULAN, INC., v.
COMMISSINER OF INTERNAL REVENUE Issue: Whether or not petitioner is entitled to a refund or of issuance of tax
MADAMBA
TOPIC: SALE OF POWER GENERATED THROUGH RENEWABLE SOURCES OF
ENERGY
DOCTRINE:
 In an action for refund the burden of proof is on the taxpayer
 No person may engage in the generation of electricity as a new
Generation Company unless such person has received a COC from
the ERC
FACTS
 Petitioner is a domestic corporation who is engage in the business
of owning, developing, constructing, operating, repairing, and
maintaining of hydro electric power plant systems.
 Also, petitioner owns a hydro-electric power plant which consists
of 2 independent hydro-electric powers. (Upstream Plant A and
Downstream Plant B) as the company claims these power plants
has been duly certified by DOE
 On March 27, 2007, petitioner entered into a power supply
agreement with Davao Light and power company, Inc. through
which the petitioner will sell its generated power through hydro-
electric power DLPCI
 Petitioner filed an amended quarterly VAT return for the first qtr
of 2008- May 20, 2008.
 On March 29, 2010, petitioner filed an administrative claim for the
refund or issuance of tax credit certificate for its alleged unutilized
input VAT in the amount of P9,379,866.27
Respondents Contention:
 Services of petitioner which was attributable to its zero rated
sales of generated power was not properly documented.
credit certificate – NO
Ruling:
Section 112(A) of the NIRC of 1997, as amended, in order to establish the
right to refund the following requisites must first satisfy the following
requirements
1. that there must be zero-rated or effectively zero rated sales;
2. that input taxes were incurred or paid;
3. that such input taxes are attributable to zero rated sales or
effectively zero-rated sales;
4. that the input taxes were not applied against any output VAT
liability during and in the succeeding quarters; and
5. that the claim for refund was filed within the two year
prescriptive period.
also, as implemented in Section 4.108-3 of RR No. 16-2005 as amended by
RR No. 4-2007
To be qualified for VAT zero-rating under the foregoing
provisions, petitioner must be able to prove that it is a generation
company and that it is engaged in the sale of power or fuel
generated through renewable source of energy.
In this case, Petitioner was able to prove that it is engaged in the business
of selling power generated through a renewable source of energy which is
subjected to a zero-rated VAT. However, what it failed to prove was that it
was a generation company as defined in Section 4 of RA 9136 which
requires the securing of a Certificate of Compliance from Energy
Regulatory Commission. Such compliance is needed before a company can
operate the facilities used for the generation of electricity. Having failed to
show any certification, herein petitioner is not entitled to VAT REFUND.
Commissioner of Internal Revenue vs. Court of appeals and
commonwealth management and Services Corporation.
Madamba
Topic: Meaning if “In the course of trade or business”
Doctrine:
 VAT is a tax on transactions, imposed at every stage of the
distribution process on the sale, barter, exchange of goods or
property, and on the performance of services, even in the absence
of profit attributable thereto.
Facts:
 Herein Private Respondent (COMASERCO) is a corporation
organized under Philippine law and is an affiliate of Philippine
American Life Insurance co., it was organized by PHILAM to
perform collection, consultative and other technical services,
including functioning as an internal auditor for it and its other
affiliates.
 BIR assessed COMASERCO for deficiency in Value Added tax
amounting to P351,851.01 for taxable year 2008.
 COMASERCO filed a letter protest with the BIR, also it filed an
annual corporate income tax return indicating a net loss in its
operations in the amount of P6,077.00
 Comaserco contented that the services that it had rendered to
Philamlife and its affiliates were on a “no –profit, reimbursement
of cost-basis only” and that it was established to ensure
operational orderliness and administrative efficiency of Philamlife
and its affiliates and since it was not profit motivated it was not
engaged in business.
 COMASERCO contends that the term “in the course of trade or
business” requires that the “business” is carried on with a view to
profit or livelihood.
Issue:
Whether Comaserco was engaged in the sale of services and thus liable to
pay VAT? – YES
RULING:
Republic Act No. 7716, the Expanded VAT Law (EVAT), amending among
other sections, Section 99 of the Tax Code. Provides who are liable for VAT
SEC. 105. Persons Liable.—Any person who, in the course
of trade or business, sells, barters, exchanges, leases goods or
properties, renders services, and any person who imports goods
shall be subject to the value-added tax (VAT) imposed in Sections
106 and 108 of this Code.
VAT is a tax on transactions, imposed at every stage, of the distribution
process on the sale, barter, exchange of goods or property, and on the
performance of services, even in the absence of profit attributable thereto.
The term “in the course of trade or business” requires the regular conduct
or pursuit of a commercial or an economic activity, regardless of whether
or not the entity is profit oriented – the regular conduct or pursuit of a
commercial or an economic activity, including transactions incidental
thereto, by any person regardless of whether or not the person engaged
therein is a nonstock, nonprofit or government entity. The purpose of yje
corporation as in this case, as comaserco claimiong that it is engaged in a
no profit, reimbursement cost basis” , is immaterial for as long as the
entity provides service for a fee, remuneration or consideration, then the
service rendered is subject to VAT
Therefore, COMASERCO was held liable.