The Supreme Court decides: The Court ruled in favor of Manila Peninsula, holding that the additional conditions imposed by the circulars were invalid.
In this case, the Supreme Court addressed the validity of Revenue Memorandum Circulars No. 46-2008 and No. 31-2011, which imposed additional requirements for VAT zero-rating on services provided to entities engaged in international air transport operations. Manila Peninsula argued that VAT zero-rating for such services required only two conditions: the service must be provided by a VAT-registered service provider in the Philippines and rendered to persons engaged in international air transport. In contrast, the CIR contended that the additional conditions stipulated in the circulars—namely, that the services must pertain to the transport of goods or passengers directly from a Philippine port to a foreign port without stopping at any other Philippine port—were also required.
