VAT Ruling No. 001-91

January 28, 1991 VAT RULING NO. 001-91 Bengzon Zarraga Narciso Cudala Pecson & Bengson Law Offices 6th Floor, SOL Building Amorsolo St., Legaspi Village Makati, Metro Manila Attention : Atty . Jose F . S . Bengzon, Jr . Gentlemen : This refers to your letter dated October 15, 1990 requesting for a reconsideration of VAT Ruling No. 200-90, issued October 2, 1990 to your client, the INTEGRATED HEALTH CARE SERVICES, INC. prcd In our said ruling it was held that, since your client is engaged in the business of selling and marketing "pre-need medical services" to the general public for a fee, it is engaged in business as a "dealer in securities", pursuant to B.P. 178 otherwise known as the Revised Securities Act because persons engaged in the business of selling pre-need services (e.g., pre-need memorial plans, educational plans, pension plans, interment plans, and others) are classified by the said law as dealers in securities. Thus, it was held that your client is not subject to the value-added tax law but rather to the percentage tax on dealers in securities, pursuant to Section 116, NIRC. However, you contend that, while your client sells pre-need medical services it may not necessarily be considered a dealer in securities for, to be considered as such, your client, under the Securities Act, has first to register with the SEC and has to secure a "Certificate of Permit to Offer Securities for Sale" that your client has no such SEC permit because it did not file any application therefor. Please be informed that, based on the doctrine that substance prevails over form, this office believes that your client's business, i.e., marketing and selling to the general public pre-need medical services, for a fee, constitutes a dealership in securities unless the Securities and Exchange Commission, pursuant to the Securities Act, certifies that your client is not classifiable as a dealer in securities. Hence, VAT Ruling No. 200-90 is maintained, i.e., your client is subject to the 6% tax as a dealer in securities, pursuant to Section 116, NIRC, in lieu of the VAT. Please be informed also that, should your client be not considered, by the SEC, as a dealer in securities based on the provisions of the Securities Act, your client, being engaged in the sale of service, shall, however, be subject to 10%, VAT, pursuant to Section 99 and 102, NIRC, in lieu of the said 6% tax on dealer in securities. cdpr Very truly yours, JOSE U. ONG Commissioner of Internal Revenue