VAT Ruling No. 046-92

March 31, 1992 VAT RULING NO. 046-92 NIRC Sec. 99, 102 Precedent Ruling 256-89 Fairdeal Construction and Maintenance Management, Inc. No. 8 Aurora Boulevard, Cor. Katipunan Avenue, Loyola Heights, Quezon City Attention: Mr. Reynaldo L. Maclang Executive Vice President and General Manager S i r s : This refers to your letter dated December 2, 1991 seeking advice and intervention from this Office in a matter that has given rise to a debate between Fairdeal Construction and Maintenance Management, Inc. and your client, Pantranco North Express, Inc. (PNEI), involving the imposition of the Value-Added Tax. Based on your letter, it is represented that Fairdeal is an entity which provides janitorial services to PNEI, a sequestered corporation that has been operating at a loss. That since the effectivity of the VAT law, Fairdeal has been asking PNEI to pay the 10% VAT which the latter has consistently refused to pay on the ground that PNEI is exempt from the payment of the VAT in view of its being in the transport service business and its having been a government-sequestered corporation. In reply, please be informed that the janitorial services rendered by your company are subject to the 10% VAT under Sec. 102 of the NIRC, as amended, and, as the seller of this kind of service, you are liable for the payment of VAT, although as a matter of business practice, you can pass on this tax to the buyer of service, as part of your selling price. In this regard, please be informed that the Bureau cannot direct PNEI to pay the VAT obligations passed on to it by Fairdeal. This is contractual in nature and part of business practice wherein this Bureau has no jurisdiction to enter into or intervene. aEHIDT Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue