Case Digest (G.R. No. 94955) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In The Commissioner of Internal Revenue vs. Acesite (Philippines) Hotel Corporation, G.R. No. 147295, decided February 16, 2007 under the 1987 Constitution, Acesite owns and operates the Holiday Inn Manila Pavilion Hotel. From January 1996 to April 1997, it leased 6,768.53 square meters to the Philippine Amusement and Gaming Corporation (PAGCOR) for casino operations and supplied food and beverages to PAGCOR patrons. Acesite incurred VAT of ₱30,152,892.02 on its rental and catering income but could not pass this tax on to PAGCOR, which invoked its tax‐exempt status. PAGCOR paid only the net amount; Acesite then remitted the disputed VAT to the Commissioner of Internal Revenue (CIR) to avoid penalties. Upon realizing that services rendered to a tax‐exempt entity should have been zero-rated, Acesite filed an administrative refund claim on May 21, 1998, which the CIR did not resolve. Consequently, Acesite petitioned the Court of Tax Appeals (CTA) on May 29, 1998. On January 3, 2000 Case Digest (G.R. No. 94955) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Transactions
- Acesite (Philippines) Hotel Corporation owns and operates the Holiday Inn Manila Pavilion Hotel.
- It leased 6,768.53 sqm of hotel premises to the Philippine Amusement and Gaming Corporation (PAGCOR) for casino operations and catered food and beverages to PAGCOR’s patrons.
- VAT Charge and Payments
- For January 1996 to April 1997, Acesite incurred VAT amounting to ₱30,152,892.02 on rental income and sales of food and beverages to PAGCOR.
- PAGCOR, claiming tax-exempt status, refused to pay the VAT; it remitted net amounts to Acesite, which in turn paid the VAT to the Commissioner of Internal Revenue (CIR) under protest.
- Administrative and Judicial Proceedings
- On May 21, 1998, Acesite filed an administrative claim for refund with the CIR; none was resolved.
- On May 29, 1998, Acesite petitioned the Court of Tax Appeals (CTA).
- The CTA (Jan 3, 2000) ruled that transactions to a tax-exempt entity are zero-rated and ordered refund of ₱30,054,148.64.
- The Court of Appeals (Nov 17, 2000) affirmed, holding PAGCOR’s exemption includes indirect taxes, effectively zero-rating Acesite’s VAT.
Issues:
- Scope of PAGCOR’s Exemption
- Does PAGCOR’s charter exemption extend to indirect taxes (VAT), thereby zero-rating Acesite’s transactions?
- Applicability of Zero-Percent VAT Rate
- Does then Section 102(b)(3) (now Sec. 108(b)(3), Tax Code) apply to Acesite’s services and rentals to PAGCOR?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)