CIR vs.

COMASERCO
(G.R. No. 125355, 30 March 2000)
Ponente Justice Pardo
Type of Action/Appeal Petition for Review on Certiorari of the Court of Appeals decision,
which reversed the CTA decision affirming with modification decision of the Commissioner of
Internal Revenue ruling that Commonwealth Management and Services Corporation, is liable for
value-added tax for services to clients during taxable year 1988.
Facts Domestic corp. and affiliate of Philippine American Life Insurance Commonwealth
Management and Services Corporation (COMASERCO), was organized to collection,
consultative and other technical services, including functioning as an internal auditor of
Philamlife and its other affiliates.
BIR issued on 24 January 1992 assessment to private respondent COMASERCO for deficiency
value-added tax (VAT) amounting to P351,851.01, for taxable year 1988.
COMASERCO filed with the BIR on 10 February 1992 a letter-protest objecting to the latters
finding of deficiency VAT. Then Commissioner of Internal Revenue sent a collection letter to
COMASERCO on 20 August 1992 demanding payment of deficiency VAT.
COMASERCO filed with the Court of Tax Appeals on 29 September 1992 petition for review
contesting the Commissioner's assessment petition for review contesting the Commissioner's
assessment, where it asserted that the services it rendered to Philamlife and its affiliates,
relating to collections, consultative and other technical assistance, including functioning as
an internal auditor, were on a "no-profit, reimbursement-of-cost-only" basis, and averred that it
was not engaged in the business of providing services to Philamlife and its affiliates. The
Court of Tax Appeals rendered decision in favor of the Commissioner of Internal Revenue on 22
June 1995. COMASERCO averred that since it was not engaged in business, it was not liable to
pay VAT.
Issue Whether COMASERCO was engaged in the sale of services, and thus liable to pay
VAT?
Held The Supreme Court held that the services rendered by COMASERCO to Philamlife and
its affiliates for collection, consultative and other technical services, including functioning as an
internal auditor of Philamlife and its other affiliates, are subject to VAT and that performance of
all kinds of services for others for a fee, remuneration or consideration is considered as sale of
services subject to VAT.

/archibald.manansala
Archibald Jose T. Manansala
CEU School of Law and Jurisprudence, A.Y. 2015-2016