BIR Ruling [DA-175-97]

April 16, 1997 BIR RULING [DA-175-97] Philmar Construction Corporation Palmera Village, San Jose Balanga, Bataan Attention: Mr. Felipe E. Rubio, Jr. President Gentlemen : This refers to your letter dated September 24, 1996 in effect requesting approval of your application for zero-rate on your sales of goods/services to the National Power Corporation (NPC). In reply, please be informed that your request is hereby denied for lack of legal basis. In the case of Maceda vs. Macaraig, Jr. G.R. No. 88291 promulgated on May 31, 1991, the Supreme Court ruled that the exemption from direct and indirect tax on petroleum producers used by NPC cannot benefit the suppliers, importers and contractors of NPC of other products and services. In short, the indirect tax exemption of NPC covers only the value-added tax on its purchases of petroleum products and not on its purchases of other goods or services. Accordingly, your sales of goods/services to NPC shall be subject to 10% value-added tax imposed under Sections 100 and 102 of the Tax Code, as amended by R.A. No. 7716 as further amended by R.A. No. 8241 and not zero-rated. Very truly yours, (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Asst. (Legal Service)