6.

AMERICAN EXPRESS VS COMMISSIONER

SC. G.R. No. 152609 June 29, 2005

FACTS:

Respondent is a Philippine Brance of American Express

International Inc.

It acts as a servicing unit of American Express

International Inc-Hongkong Btance and is engaged
primarily to facilitate the collections of AMEX HK
receivables from card members situated in the Philippines
and payment to ervice establishments in the Philippines.

It is a registered VAT taxpayer.

Respondnet requested from the BIR a refund of its 1997

excess input taxes.

There being no action, respondent filed a petition with the

CTA

Respondent anchored its arguments on Sc 102 and 106 of

the NIRC, thus, it is subject tto CAT at 0% and that it can
avail of the refund or redits of input tax.

The CTA granted the petition, duly affirmed by the CA

stating that CIR made a mistake in requiring that the
respondents services be consumed abroad in order to be 0
rated.

ISSUE: Can the respondent company avail of the tax

credits?

RULINGl yes

The law is very clear in saying that services performed by

VAT registered person in the Philippines (other than the
processing, manufacturing or repacking of goods for
persons during business outside the Philippines), when
paid in acceptable foreign currency and accounted for in
accordance wit the rules and regulations o the BSP, are
zero-rate

Hence, respondent is a VAT registered person that

facilitates the collection and payment o receivables
belonging to a non-resident foreign client, for which it is
paid in acceptable foreign currency inwardly remitted and
accounted for in conformity with BSP rules and
regulations.

Certainly, the service it renders In the Philippines is not in

the same category as “processing, manufactung, or
repacking of goods and should, therefore, be zero rated.

Hence respondent is entited to a refund.