Case Compilation 1

7/23/2019 Case Compilation 1

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Taxation Law 2 – Cases for VAT

1. CIR vs. CA and Commonwealth Management and Servies

[G.R. No. 125355. March 30, 2000]COMMISSIONER OF INTERNAL REVENUE, p!"!"o#r, $%. COURT OF A&&EALS a#' COMMON(EALT) MANAGEMENT AN*SERVICES COR&ORATION, r%po#'#!%. Co+r!

* E C I S I O N&AR*O, .-

(ha! "% /or !h Co+r! "% a p!"!"o# /or r$" o# cr!"orar" o/ !h 'c"%"o# o/ !h Co+r! o/ Appa%,[1] r$r%"# !ha! o/ !h Co+r! o/ Ta Appa%,[2] h"ch a//"r4' "!h 4o'"/"ca!"o# !h 'c"%"o# o/ !h Co44"%%"o#r o/ I#!r#a R$#+ r+"# !ha! Co44o#a!hMa#a4#! a#' Sr$"c% Corpora!"o#, "% "a /or $a+ a''' !a /or %r$"c% !o c"#!% '+r"# !aa ar 1677.

Co44o#a!h Ma#a4#! a#' Sr$"c% Corpora!"o# 8COMASERCO, /or r$"!9, "% a corpora!"o# '+ ora#":' a#' "%!"# +#'!h a% o/ !h &h""pp"#%. I! "% a# a//""a! o/ &h""pp"# A4r"ca# L"/ I#%+ra#c Co. 8&h"a4"/9, ora#":' !h !!r !o pr/or4coc!"o#, co#%+!a!"$ a#' o!hr !ch#"ca %r$"c%, "#c+'"# /+#c!"o#"# a% a# "#!r#a a+'"!or, o/ &h"a4"/ a#' "!% o!hr a//""a!%.

O# a#+ar 2;, 1662, !h <+ra+ o/ I#!r#a R$#+ 8<IR9 "%%+' a# a%%%%4#! !o pr"$a! r%po#'#! COMASERCO /or '/"c"#c$a+=a''' !a 8VAT9 a4o+#!"# !o &351,751.01, /or !aa ar 1677, co4p+!' a% /oo%-

>Taa %a?rc"p! &1,@6,155.0010B !a '+ !hro# 1@,615.5025B %+rchar ;1,67.7720B "#!r%! pr a##+4 125,63@.@3Co4pro4"% p#a! /or a! pa4#! 1@,000.00TOTAL AMOUNT *UE AN* COLLECTI<LE & 351,731.01>[3]

COMASERCO% a##+a corpora! "#co4 !a r!+r# #'"# *c4r 31, 1677 "#'"ca!' a #! o%% "# "!% opra!"o#% "# !h a4o+#! o/&@,0.00. D

O# Fr+ar 10, 1662, COMASERCO /"' "!h !h <IR, a !!r=pro!%! oDc!"# !o !h a!!r% /"#'"# o/ '/"c"#c VAT. O# A++%! 20,1662, !h Co44"%%"o#r o/ I#!r#a R$#+ %#! a coc!"o# !!r !o COMASERCO '4a#'"# pa4#! o/ !h '/"c"#c VAT.

O# Sp!4r 26,1662, COMASERCO /"' "!h !h Co+r! o/ Ta Appa%[;] a p!"!"o# /or r$" co#!%!"# !h Co44"%%"o#r%a%%%%4#!. COMASERCO a%%r!' !ha! !h %r$"c% "! r#'r' !o &h"a4"/ a#' "!% a//""a!%, ra!"# !o coc!"o#%, co#%+!a!"$ a#'o!hr !ch#"ca a%%"%!a#c, "#c+'"# /+#c!"o#"# a% a# "#!r#a a+'"!or, r o# a >#o=pro/"!, r"4+r%4#!=o/=co%!=o#> a%"%. I!a$rr' !ha! "! a% #o! #a' "' !h +%"#%% o/ pro$"'"# %r$"c% !o &h"a4"/ a#' "!% a//""a!%. COMASERCO a% %!a"%h' !o#%+r opra!"o#a or'r"#%% a#' a'4"#"%!ra!"$ //"c"#c o/ &h"a4"/ a#' "!% a//""a!%, a#' #o! "# !h %a o/ %r$"c%

COMASERCO %!r%%' !ha! "! a% #o! pro/"!=4o!"$a!', !h+% #o! #a' "# +%"#%%. I# /ac!, "! '"' #o! #ra! pro/"! +! %+//r' a#! o%% "# !aa ar 1677. COMASERCO a$rr' !ha! %"#c "! a% #o! #a' "# +%"#%%, "! a% #o! "a !o pa VAT.

O# +# 22, 1665, !h Co+r! o/ Ta Appa% r#'r' 'c"%"o# "# /a$or o/ !h Co44"%%"o#r o/ I#!r#a R$#+, !h '"%po%"!"$ por!"o#o/ h"ch ra'%-

>()EREFORE, !h 'c"%"o# o/ !h Co44"%%"o#r o/ I#!r#a R$#+ a%%%%"# p!"!"o#r '/"c"#c $a+=a''' !a /or !h !aaar 1677 "% AFFIRME* "!h %"h! 4o'"/"ca!"o#%. Accor'"#, p!"!"o#r "% or'r' !o pa r%po#'#! Co44"%%"o#r o/ I#!r#aR$#+ !h a4o+#! o/ &335,731.01 "#c+%"$ o/ !h 25B %+rchar a#' "#!r%! p+% 20B "#!r%! /ro4 a#+ar 2;, 1662 +#!" /+pa"' p+r%+a#! !o Sc!"o# 2;7 a#' 2;6 o/ !h Ta Co'.

>Th co4pro4"% p#a! o/ &1@,000.00 "4po%' !h r%po#'#! "# hr a%%%%4#! !!r %ha #o! "#c+'' "# !h pa4#! a%!hr a% #o co4pro4"% ar4#! #!r' "#!o !# p!"!"o#r a#' r%po#'#! "!h r%pc! !o !h $a+=a''' !a '/"c"#c.>[5

O# + 2@, 1665, r%po#'#! /"' "!h !h Co+r! o/ Appa%, p!"!"o# /or r$" o/ !h 'c"%"o# o/ !h Co+r! o/ Appa%.

A/!r '+ proc'"#%, o# Ma 13, 166@, !h Co+r! o/ Appa% r#'r' 'c"%"o# r$r%"# !ha! o/ !h Co+r! o/ Ta Appa%, !h'"%po%"!"$ por!"o# o/ h"ch ra'%- LD +r"%

>()EREFORE, "# $" o/ !h /oro"#, D+'4#! "% hr r#'r' REVERSING a#' SETTING ASI*E !h +%!"o#' *c"%"o#pro4+a!' o# 22 +# 1665. Th a%%%%4#! /or '/"c"#c $a+=a''' !a /or !h !aa ar 1677 "#c+%"$ o/ %+rchar, "#!r%a#' p#a! char% ar or'r' CANCELLE* /or ac o/ a a#' /ac!+a a%"%.>[@]

Th Co+r! o/ Appa% a#chor' "!% 'c"%"o# o# !h ra!"oc"#a!"o# "# a#o!hr !a ca% "#$o$"# !h %a4 par!"%,[] hr "! a% h' !ha!COMASERCO a% #o! "a !o pa /"' a#' co#!rac!or% !a /or %r$"c% r#'r' !o &h"a4"/ a#' "!% a//""a!%. Th Co+r! o/

Appa%, "# !ha! ca%, ra%o#' !ha! COMASERCO a% #o! #a' "# +%"#%% o/ pro$"'"# %r$"c% !o &h"a4"/ a#' "!% a//""a!%. I#!h %a4 4a##r, !h Co+r! o/ Appa% h' !ha! COMASERCO a% #o! "a !o pa VAT /or "! a% #o! #a' "# !h +%"#%% o/ %"# %r$"c%.



O# + 1@, 166@, !h Co44"%%"o#r o/ I#!r#a R$#+ /"' "!h !h"% Co+r! a p!"!"o# /or r$" o# cr!"orar" a%%a""# !h 'c"%"o# o/!h Co+r! o/ Appa%.

O# A++%! , 166@, r+"r' r%po#'#! COMASERCO !o /" co44#! o# !h p!"!"o#, a#' o# Sp!4r 2@, 166@, COMASERCOco4p"' "!h !h r%o+!"o#.[7]

( "$ '+ co+r% !o !h p!"!"o#.

A! "%%+ "# !h"% ca% "% h!hr COMASERCO a% #a' "# !h %a o/ %r$"c%, a#' !h+% "a !o pa VAT !hro#.

&!"!"o#r a$r% !ha! !o >#a "# +%"#%%> a#' !o >#a "# !h %a o/ %r$"c%> ar !o '"//r#! !h"#%. &!"!"o#r 4a"#!a"#% !ha

!h %r$"c% r#'r' COMASERCO !o &h"a4"/ a#' "!% a//""a!%, /or a / or co#%"'ra!"o#, ar %+Dc! !o VAT. VAT "% a !a o# !h$a+ a''' !h pr/or4a#c o/ !h %r$"c. I! "% "44a!r"a h!hr pro/"! "% 'r"$' /ro4 r#'r"# !h %r$"c. +r" %4"%

( ar "!h !h Co44"%%"o#r.

Sc!"o# 66 o/ !h Na!"o#a I#!r#a R$#+ Co' o/ 167@, a% a4#'' Ec+!"$ Or'r 8E.O.9 No. 23 "# 1677, pro$"'% !ha!-

>Sc!"o# 66. &r%o#% "a. = A# pr%o# ho, "# !h co+r% o/ !ra' or +%"#%%, %%, ar!r% or cha#% oo'%, r#'r% %r$"c%or #a% "# %"4"ar !ra#%ac!"o#% a#' a# pr%o# ho "4por!% oo'% %ha %+Dc! !o !h $a+=a''' !a 8VAT9 "4po%' "#Sc!"o#% 100 !o 102 o/ !h"% Co'.>[6]

COMASERCO co#!#'% !ha! !h !r4 >"# !h co+r% o/ !ra' or +%"#%%> r+"r% !ha! !h >+%"#%%> "% carr"' o# "!h a $" !o pro/"!or "$"hoo'. I! a$r% !ha! !h ac!"$"!"% o/ !h #!"! 4+%! pro/"!= or"#!'. COMASERCO %+4"!% !ha! "! "% #o! 4o!"$a!' pro/"!, a%'/"#' "!% pr"4ar p+rpo% "# !h ar!"c% o/ "#corpora!"o#, %!a!"# !ha! "! "% opra!"# >o# o# r"4+r%4#!=o/=co%! a%"%, "!ho+!a# pro/"!.> &r"$a! r%po#'#! ar+% !ha! pro/"! 4o!"$ "% 4a!r"a "# a%cr!a"#"# ho !o !a /or p+rpo%% o/ '!r4"#"# "a""! /or VAT.

( '"%ar.

O# Ma 27, 166;, Co#r%% #ac!' Rp+"c Ac! No. 1@, !h Epa#'' VAT La 8EVAT9, a4#'"# a4o# o!hr %c!"o#%, Sc!"o#66 o/ !h Ta Co'. O# a#+ar 1, 1667, Rp+"c Ac! 7;2;, !h Na!"o#a I#!r#a R$#+ Co' o/ 166, !oo //c!. Th a4#''a pro$"'% !ha!-

>SEC. 105. &r%o#% L"a. = A# pr%o# ho, "# !h co+r% o/ !ra' or +%"#%%, %%, ar!r%, cha#%, a%% oo'% or propr!"%r#'r% %r$"c%, a#' a# pr%o# ho "4por!% oo'% %ha %+Dc! !o !h $a+=a''' !a 8VAT9 "4po%' "# Sc!"o#% 10@ a#' 107 o!h"% Co'.

>Th $a+=a''' !a "% a# "#'"rc! !a a#' !h a4o+#! o/ !a 4a %h"/!' or pa%%' o# !o !h +r, !ra#%/r or %% o/ !hoo'%, propr!"% or %r$"c%. Th"% r+ %ha ""% app !o "%!"# %a or a% o/ oo'%, propr!"% or %r$"c% a! !h !"4 o/ !h

//c!"$"! o/ Rp+"c Ac! No.1@.

>Th phra% >"# !h co+r% o/ !ra' or +%"#%%> 4a#% !h r+ar co#'+c! or p+r%+"! o/ a co44rc"a or a# co#o4"c ac!"$"!, "#c+'"#!ra#%ac!"o#% "#c"'#!a !hr!o, a# pr%o# rar'%% o/ h!hr or #o! !h pr%o# #a' !hr"# "% a #o#%!oc, #o#pro/"!ora#":a!"o# 8"rr%pc!"$ o/ !h '"%po%"!"o# o/ "!% #! "#co4 a#' h!hr or #o! "! %% c+%"$ !o 44r% o/ !h"r +%!%9, oro$r#4#! #!"!. DD +r"%

>Th r+ o/ r+ar"!, !o !h co#!rar #o!"!h%!a#'"#, %r$"c% a% '/"#' "# !h"% Co' r#'r' "# !h &h""pp"#% #o#r%"'#!/or"# pr%o#% %ha co#%"'r' a% "# r#'r' "# !h co+r% o/ !ra' or +%"#%%.>

Co#!rar !o COMASERCO% co#!#!"o# !h ao$ pro$"%"o# car"/"% !ha! $# a #o#=%!oc, #o#=pro/"!, ora#":a!"o# or o$r#4#!#!"!, "% "a !o pa VAT o# !h %a o/ oo'% or %r$"c%. VAT "% a !a o# !ra#%ac!"o#%, "4po%' a! $r %!a o/ !h '"%!r"+!"o#proc%% o# !h %a, ar!r, cha# o/ oo'% or propr!, a#' o# !h pr/or4a#c o/ %r$"c%, $# "# !h a%#c o/ pro/"!a!!r"+!a !hr!o. Th !r4 >"# !h co+r% o/ !ra' or +%"#%%> r+"r% !h r+ar co#'+c! or p+r%+"! o/ a co44rc"a or a#co#o4"c ac!"$"!, rar'%% o/ h!hr or #o! !h #!"! "% pro/"!=or"#!'.

Th '/"#"!"o# o/ !h !r4 >"# !h co+r% o/ !ra' or +%"#%%> "#corpora!' "# !h pr%#! a app"% !o a !ra#%ac!"o#% $# !o !ho%4a' pr"or !o "!% #ac!4#!. Ec+!"$ Or'r No. 23 %!a!' !ha! a# pr%o# ho, "# !h co+r% o/ !ra' or +%"#%%, %%, ar!r% orcha#% oo'% a#' %r$"c%, a% ara' "a !o pa VAT. Th pr%#! a 4r %!r%%% !ha! $# a #o#%!oc, #o#pro/"!ora#":a!"o# or o$r#4#! #!"! "% "a !o pa VAT /or !h %a o/ oo'% a#' %r$"c%.

Sc!"o# 107 o/ !h Na!"o#a I#!r#a R$#+ Co' o/ 166[10] '/"#% !h phra% >%a o/ %r$"c%> a% !h >pr/or4a#c o/ a "#'% o%r$"c% /or o!hr% /or a /, r4+#ra!"o# or co#%"'ra!"o#.> I! "#c+'% >!h %+pp o/ !ch#"ca a'$"c, a%%"%!a#c or %r$"c% r#'r'"# co##c!"o# "!h !ch#"ca 4a#a4#! or a'4"#"%!ra!"o# o/ a# %c"#!"/"c, "#'+%!r"a or co44rc"a +#'r!a"# or proDc!.>[11]

O# Fr+ar 5, 1667, !h Co44"%%"o#r o/ I#!r#a R$#+ "%%+' <IR R+"# No. 010=67[12] 4pha%":"# !ha! a 'o4%!"ccorpora!"o# !ha! pro$"'' !ch#"ca, r%arch, 4a#a4#! a#' !ch#"ca a%%"%!a#c !o "!% a//""a!' co4pa#"% a#' rc"$' pa4#!%o# a r"4+r%4#!=o/=co%! a%"%, "!ho+! a# "#!#!"o# o/ ra":"# pro/"!, a% %+Dc! !o VAT o# %r$"c% r#'r'. I# /ac!, $# "/ %+ch



corpora!"o# a% ora#":' "!ho+! a# "#!#!"o# o/ ra":"# pro/"!, a# "#co4 or pro/"! #ra!' !h #!"! "# !h co#'+c! o/ "!%ac!"$"!"% a% %+Dc! !o "#co4 !a.

)#c, "! "% "44a!r"a h!hr !h pr"4ar p+rpo% o/ a corpora!"o# "#'"ca!% !ha! "! rc"$% pa4#!% /or %r$"c% r#'r' !o "!%a//""a!% o# a r"4+r%4#!=o#=co%! a%"% o#, "!ho+! ra":"# pro/"!, /or p+rpo%% o/ '!r4"#"# "a""! /or VAT o# %r$"c%r#'r'. A% o# a% !h #!"! pro$"'% %r$"c /or a /, r4+#ra!"o# or co#%"'ra!"o#, !h# !h %r$"c r#'r' "% %+Dc! !o VAT.

A! a# ra!, "! "% a r+ !ha! ca+% !a% ar !h "/oo' o/ !h #a!"o#, %!a!+!% !ha! ao 4p!"o#% ar co#%!r+' %!r"c! aa"#%!!h ra#! a#' "ra "# /a$or o/ !h o$r#4#!. O!hr"% %!a!', a# 4p!"o# /ro4 !h pa4#! o/ a !a 4+%! car %!a!'"# !h a#+a o/ !h a "! ca##o! 4r "4p"' !hr/ro4.[13] I# !h ca% o/ VAT, Sc!"o# 106, Rp+"c Ac! 7;2; car#+4ra!% !h !ra#%ac!"o#% 4p!' /ro4 VAT. Th %r$"c% r#'r' COMASERCO 'o #o! /a "!h"# !h 4p!"o#%.

<o!h !h Co44"%%"o#r o/ I#!r#a R$#+ a#' !h Co+r! o/ Ta Appa% corrc! r+' !ha! !h %r$"c% r#'r' COMASERCO!o &h"a4"/ a#' "!% a//""a!% ar %+Dc! !o VAT. A% po"#!' o+! !h Co44"%%"o#r, !h pr/or4a#c o/ a "#'% o/ %r$"c% /or o!hr%/or a /, r4+#ra!"o# or co#%"'ra!"o# "% co#%"'r' a% %a o/ %r$"c% %+Dc! !o VAT. A% !h o$r#4#! a#c char' "!h !h#/orc4#! o/ !h a, !h op"#"o# o/ !h Co44"%%"o#r o/ I#!r#a R$#+, "# !h a%#c o/ a# %ho"# !ha! "! "% pa"# ro#, "%#!"!' !o ra! "h!.[1;] A%o, "! ha% # !h o# %!a#'"# po"c a#' prac!"c o/ !h"% Co+r! !o r%pc! !h co#c+%"o#% o/ +a%"=

D+'"c"a a#c"%, %+ch a% !h Co+r! o/ Ta Appa% h"ch, !h #a!+r o/ "!% /+#c!"o#%, "% ''"ca!' c+%"$ !o !h %!+' a#'co#%"'ra!"o# o/ !a ca%% a#' ha% #c%%ar" '$op' a# pr!"% o# !h %+Dc!, +#%% !hr ha% # a# a+% or "4pro$"'#!rc"% o/ "!% a+!hor"!.[15]

Thr "% #o 4r"! !o r%po#'#!% co#!#!"o# !ha! !h Co+r! o/ Appa% 'c"%"o# "# CA=G. R. No. 3;0;2, 'car"# !h COMASERCO a%#o! #a' "# +%"#%% a#' #o! "a /or !h pa4#! o/ /"' a#' prc#!a !a%, "#'% p!"!"o#r. Th "%%+ "# CA=G. R. No.3;0;2 "% '"//r#! /ro4 !h pr%#! ca%, h"ch "#$o$% COMASERCO% "a""! /or VAT. A% hr!o/or %!a!', $r pr%o# ho %%ar!r%, or cha#% oo'% a#' %r$"c%, "# !h co+r% o/ !ra' or +%"#%%, a% '/"#' a, "% %+Dc! !o VAT. %4

()EREFORE, !h Co+r! GRANTS !h p!"!"o# a#' REVERSES !h 'c"%"o# o/ !h Co+r! o/ Appa% "# CA=G. R. S& No. 3630. ThCo+r! hr REINSTATES !h 'c"%"o# o/ !h Co+r! o/ Ta Appa% "# C. T. A. Ca% No. ;753.No co%!%.SO OR*ERE*.

*a$"', r., C..,8Cha"r4a#9, &+#o, Hap+#a#, a#' #ar%=Sa#!"ao, ., co#c+r.

2. CIR vs. Magsa!sa! Lines

G.R. No. 1;@67; + 27, 200@

COMMISSIONER OF INTERNAL REVENUE, p!"!"o#r,$%.MAGSASA LINES, INC., <ALI(AG NAVIGATION, INC., FIM LIMITE* OF T)E MAR*EN GROU& 8)H9 a#' NATIONAL

*EVELO&MENT COM&AN, r%po#'#!%.

* E C I S I O N

TINGA, .-

Th "%%+ "# !h"% pr%#! p!"!"o# "% h!hr !h %a !h Na!"o#a *$op4#! Co4pa# 8N*C9 o/ /"$ 859 o/ "!% $%%% !o !hpr"$a! r%po#'#!% "% %+Dc! !o $a+=a''' !a 8VAT9 +#'r !h Na!"o#a I#!r#a R$#+ Co' o/ 167@ 8Ta Co'9 !h# pr$a""#a! !h !"4 o/ !h %a. Th Co+r! o/ Ta Appa% 8CTA9 a#' !h Co+r! o/ Appa% co44o# r+' !ha! !h %a "% #o! %+Dc! !o VAT. (a//"r4, !ho+h o# a 4or +#+"$oca ra!"o#a !ha# !ha! +!"":' !h r+"#% +#'r r$". Th /ac! !ha! !h %a a% #o! "# !h co+r%o/ !h !ra' or +%"#%% o/ N*C "% %+//"c"#! "# "!%/ !o 'car !h %a a% o+!%"' !h co$ra o/ VAT.

Th /ac!% ar c+' pr"4ar" /ro4 !h r+"# o/ !h CTA.

&+r%+a#! !o a o$r#4#! prora4 o/ pr"$a!":a!"o#, N*C 'c"'' !o % !o pr"$a! #!rpr"% a o/ "!% %har% "# "!% ho=o#'

%+%"'"ar !h Na!"o#a Mar"# Corpora!"o# 8NMC9. Th N*C 'c"'' !o % "# o# o! "!% NMC %har% a#' /"$ 859 o/ "!% %h"p%, h"char 3,00 *(T T#=*cr, >Hoc#r> !p $%%%.1 Th $%%% r co#%!r+c!' /or !h N*C !# 1671 a#' 167;, !h#"#"!"a a%' !o L+:o# S!$'or"# Co4pa#, a%o "!% ho=o#' %+%"'"ar. S+%+#!, !h $%%% r !ra#%/rr' a#'a%', o# a aroa! a%"%, !o !h NMC.2

Th NMC %har% a#' !h $%%% r o//r' /or p+"c "''"#. A4o# !h %!"p+a!' !r4% a#' co#'"!"o#% /or !h p+"c a+c!"o# a%!ha! !h "##"# "''r a% !o pa >a $a+ a''' !a o/ 10B o# !h $a+ o/ !h $%%%.>3 O# 3 +# 1677, pr"$a! r%po#'#!Ma%a%a L"#%, I#c. 8Ma%a%a L"#%9 o//r' !o + !h %har% a#' !h $%%% /or &1@7,000,000.00. Th "' a% 4a' Ma%a%a L"#%, p+rpor!' /or a # co4pa# %!" !o /or4' co4po%' o/ "!%/, <a"a Na$"a!"o#, I#c., a#' FIM L"4"!' o/ !hMar'# Gro+p a%' "# )o#o# 8coc!"$, pr"$a! r%po#'#!%9.; Th "' a% appro$' !h Co44"!! o# &r"$a!":a!"o#, a#' aNo!"c o/ Aar' 'a!' 1 + 1677 a% "%%+' !o Ma%a%a L"#%.

O# 27 Sp!4r 1677, !h "4p4#!"# Co#!rac! o/ Sa a% c+!' !# N*C, o# o# ha#', a#' Ma%a%a L"#%, <a"aNa$"a!"o#, a#' FIM L"4"!', o# !h o!hr. &araraph 11.02 o/ !h co#!rac! %!"p+a!' !ha! >[$]a+=a''' !a, "/ a#, %ha /or !h



acco+#! o/ !h &URC)ASER.>5 &r arra#4#!, a# "rr$oca co#/"r4' L!!r o/ Cr'"! pr$"o+% /"' a% "''r% o#' a%accp!' N*C a% %c+r"! /or !h pa4#! o/ VAT, "/ a#. < !h"% !"4, a /or4a r+%! /or a r+"# o# h!hr or #o! !h %a o/ !h$%%% a% %+Dc! !o VAT ha' ara' # /"' "!h !h <+ra+ o/ I#!r#a R$#+ 8<IR9 !h a /"r4 o/ Sc"p Saa:ar)r#a#': J Ga!4a"!a#, pr%+4a "# ha/ o/ pr"$a! r%po#'#!%. Th+%, !h par!"% ar' !ha! %ho+' #o /a$ora r+"# rc"$' /ro4 !h <IR, N*C a% a+!hor":' !o 'ra o# !h L!!r o/ Cr'"! +po# r"!!# '4a#' !h a4o+#! #'' /or !h pa4#! o/!h VAT o# !h %!"p+a!' '+ 'a!, 20 *c4r 1677.@

I# a#+ar o/ 1676, pr"$a! r%po#'#!% !hro+h co+#% rc"$' VAT R+"# No. 5@7=77 'a!' 1; *c4r 1677 /ro4 !h <IRho'"# !ha! !h %a o/ !h $%%% a% %+Dc! !o !h 10B VAT. Th r+"# c"!' !h /ac! !ha! N*C a% a VAT=r"%!r' #!rpr"%, a#'!h+% "!% >!ra#%ac!"o#% "#c"'#! !o "!% #or4a VAT r"%!r' ac!"$"! o/ a%"# o+! pr%o#a propr! "#c+'"# %a o/ "!% o# a%%!% !haar 4o$a, !a#" oDc!% h"ch ar appropr"a or !ra#%/ra ar %+Dc! !o !h 10B [VAT].>

&r"$a! r%po#'#!% 4o$' /or !h rco#%"'ra!"o# o/ VAT R+"# No. 5@7=77, a% a% VAT R+"# No. 365=77 8'a!' 17 A++%!16779, h"ch 4a' a %"4"ar r+"# o# !h %a o/ !h %a4 $%%% "# r%po#% !o a# "#+"r /ro4 !h Cha"r4a# o/ !h S#a! <+R"o# Co44"!!. Th"r 4o!"o# a% '#"' h# !h <IR "%%+' VAT R+"# No%. 00=76 'a!' 2; Fr+ar 1676, r"!ra!"# !har"r VAT r+"#%. A! !h"% po"#!, N*C 'r o# !h L!!r o/ Cr'"! !o pa /or !h VAT, a#' !h a4o+#! o/ &15,120,000.00 "# !a% a%pa"' o# 1@ March 1676.

O# 10 Apr" 1676, pr"$a! r%po#'#!% /"' a# Appa a#' &!"!"o# /or R/+#' "!h !h CTA, /oo' a S+pp4#!a &!"!"o# /orR$" o# 1; + 1676. Th pra' /or !h r$r%a o/ VAT R+"#% No. 365=77, 5@7=77 a#' 00=76, a% a% !h r/+#' o/ !h VATpa4#! 4a' a4o+#!"# !o &15,120,000.00.7 Th Co44"%%"o#r o/ I#!r#a R$#+ 8CIR9 oppo%' !h p!"!"o#, /"r%! ar+"# !ha!pr"$a! r%po#'#!% r #o! !h ra par!"% "# "#!r%! a% !h r #o! !h !ra#%/ror% or %r% a% co#!4pa!' "# Sc!"o#% 66 a#'100 o/ !h !h# Ta Co'. Th CIR a%o %+ar '/#'' !h VAT r+"#% ho'"# !h %a o/ !h $%%% "a /or VAT, %pc"ac"!"# Sc!"o# 3 o/ R$#+ R+a!"o# No. 5=7 8R.R. No. 5=79, h"ch pro$"'' !ha! >[VAT] "% "4po%' o# a# %a or !ra#%ac!"o#%K'4' %a o/ !aa oo'% 8"#c+'"# cap"!a oo'%, "rr%pc!"$ o/ !h 'a! o/ ac+"%"!"o#9.> Th CIR ar+' !ha! !h %a o/ !h$%%% r a4o# !ho% !ra#%ac!"o#% >'4' %a,> a% #+4ra!' "# Sc!"o# ; o/ R.R. No. 5=7. I! %4% !ha! !h CIR par!"c+ar4pha%":' Sc!"o# ;8E98"9 o/ !h R+a!"o#, h"ch ca%%"/"' >cha# o/ o#r%h"p o/ +%"#%%> a% a c"rc+4%!a#c !ha! a$ r"% !o a!ra#%ac!"o# >'4' %a.>

I# a *c"%"o# 'a!' 2 Apr" 1662, !h CTA rDc!' !h CIR% ar+4#!% a#' ra#!' !h p!"!"o#.6 Th CTA r+' !ha! !h %a o/ a$%% a% a# >"%oa!' !ra#%ac!"o#,> #o! 'o# "# !h or'"#ar co+r% o/ N*C% +%"#%%, a#' a% !h+% #o! %+Dc! !o VAT, h"ch +#'rSc!"o# 66 o/ !h Ta Co', a% app"' o# !o %a% "# !h co+r% o/ !ra' or +%"#%%. Th CTA /+r!hr h' !ha! !h %a o/ !h$%%% co+' #o! >'4' %a,> a#' !h+% %+Dc! !o VAT, a% !h !ra#%ac!"o# '"' #o! /a +#'r !h #+4ra!"o# o/ !ra#%ac!"o#%'4' %a a% "%!' "!hr "# Sc!"o# 10089 o/ !h Ta Co', or Sc!"o# ; o/ R.R. No. 5=7. F"#a, !h CTA r+' !ha! a# ca% o/'o+! %ho+' r%o$' "# /a$or o/ pr"$a! r%po#'#!% %"#c Sc!"o# 66 o/ !h Ta Co' h"ch "4p4#!' VAT "% #o! a# 4p!"o#pro$"%"o#, +! a ca%%"/"ca!"o# pro$"%"o# h"ch arra#!' !h r%o+!"o# o/ 'o+!% "# /a$or o/ !h !apar.

Th CIR appa' !h CTA *c"%"o# !o !h Co+r! o/ Appa%,10 h"ch o# 11 March 166, r#'r' a *c"%"o# r$r%"# !h CTA.11(h" !h appa! co+r! ar' !ha! !h %a a% a# "%oa!' !ra#%ac!"o#, #o! 4a' "# !h co+r% o/ N*C% r+ar !ra' or +%"#%%, "#o#!h%% /o+#' !ha! !h !ra#%ac!"o# / "!h"# !h ca%%"/"ca!"o# o/ !ho% >'4' %a> +#'r R.R. No. 5=7, %"#c !h %a o/ !h

$%%% !o!hr "!h !h NMC %har% ro+h! ao+! a cha# o/ o#r%h"p "# NMC. Th Co+r! o/ Appa% a%o app"' !h pr"#c"po$r#"# !a 4p!"o#% !ha! %+ch %ho+' %!r"c! co#%!r+' aa"#%! !h !apar, a#' "ra "# /a$or o/ !h o$r#4#!.12

)o$r, !h Co+r! o/ Appa% r$r%' "!%/ +po# rco#%"'r"# !h ca%, !hro+h a R%o+!"o# 'a!' 5 Fr+ar 2001.13 Th"% !"4,!h appa! co+r! r+' !ha! !h >cha# o/ o#r%h"p o/ +%"#%%> a% co#!4pa!' "# R.R. No. 5=7 4+%! a co#%+#c o/ !h>r!"r4#! /ro4 or c%%a!"o# o/ +%"#%%> !h o#r o/ !h oo'%, a% pro$"'' /or "# Sc!"o# 100 o/ !h Ta Co'. Th Co+r! o/

Appa% a%o ar' "!h !h CTA !ha! !h ca%%"/"ca!"o# o/ !ra#%ac!"o#% >'4' %a> a% a ca%%"/"ca!"o# %!a!+!, a#' #o! a#4p!"o# %!a!+!, !h+% arra#!"# !h r%o+!"o# o/ a# 'o+! "# /a$or o/ !h !apar.1;

To !h 4"#' o/ !h Co+r!, !h ar+4#!% ra"%' "# !h pr%#! p!"!"o# ha$ ara' # a'+a! '"%c+%%' a#' r/+!' "# !hr+"#% a%%a"' /or +%. E$"'#!, !h p!"!"o# %ho+' '#"'. ! !h Co+r! /"#'% !ha! Sc!"o# 66 o/ !h Ta Co' "% %+//"c"#!ra%o# /or +pho'"# !h r/+#' o/ VAT pa4#!%, a#' !h %+%+#! '"%+"%"!"o#% !h or co+r!% o# !h app"ca""! o/ Sc!"o#100 o/ !h Ta Co' a#' Sc!"o# ; o/ R.R. No. 5=7 ar +!"4a! "rr$a#!.

A r"/ r"!ra!"o# o/ !h a%"c pr"#c"p% o$r#"# VAT "% "# or'r. VAT "% +!"4a! a !a o# co#%+4p!"o#, $# !ho+h "! "% a%%%%'

o# 4a# $% o/ !ra#%ac!"o#% o# !h a%"% o/ a /"' prc#!a.15 I! "% !h #' +%r o/ co#%+4r oo'% or %r$"c% h"ch +!"4a!%ho+'r% !h !a, a% !h "a""! !hr/ro4 "% pa%%' o# !o !h #' +%r% !h pro$"'r% o/ !h% oo'% or %r$"c%1@ ho "# !+r# 4acr'"! !h"r o# VAT "a""! 8or "#p+! VAT9 /ro4 !h VAT pa4#!% !h rc"$ /ro4 !h /"#a co#%+4r 8or o+!p+! VAT9.1 Th /"#ap+rcha% !h #' co#%+4r rpr%#!% !h /"#a "# "# a pro'+c!"o# cha"# !ha! "!%/ "#$o$% %$ra !ra#%ac!"o#% a#' %$ra ac!% oco#%+4p!"o#. Th VAT %%!4 a%%+r% /"%ca a'+ac !hro+h !h coc!"o# o/ !a% o# $r $ o/ co#%+4p!"o#,17 ! a%%+a%!h 4a#+/ac!+rr% or pro$"'r% o/ oo'% a#' %r$"c% #a"# !h4 !o pa%% o# !h"r r%pc!"$ VAT "a""!"% !o !h #! "# o/ !hcha"# +#!" /"#a !h #' co#%+4r %ho+'r% !h #!"r !a "a""!.

! VAT "% #o! a %"#+ar=4"#'' !a o# $r !ra#%ac!"o#a $. I!% a%%%%4#! ar% '"rc! r$a#c !o !h !apar% ro or "# "#!h pro'+c!"o# cha"#. )#c, a% a//"r4' Sc!"o# 66 o/ !h Ta Co' a#' "!% %+%+#! "#car#a!"o#%,16 !h !a "% $"' o# o# !h%a, ar!r or cha# o/ oo'% or %r$"c% pr%o#% ho #a "# %+ch ac!"$"!"%, "# !h co+r% o/ !ra' or +%"#%%. Th%!ra#%ac!"o#% o+!%"' !h co+r% o/ !ra' or +%"#%% 4a "#$ar"a co#!r"+! !o !h pro'+c!"o# cha"#, +! !h 'o %o o# a% a 4a!!o/ acc"'#! or "#c"'#!. A% !h %a% o/ oo'% or %r$"c% 'o #o! occ+r "!h"# !h co+r% o/ !ra' or +%"#%%, !h pro$"'r% o/ %+ch



oo'% or %r$"c% o+' har', "/ a! a, ha$ !h oppor!+#"! !o appropr"a! cr'"! a# VAT "a""! a% aa"#%! !h"r o# acc+4+a!'VAT coc!"o#% %"#c !h acc+4+a!"o# o/ o+!p+! VAT ar"%% "# !h /"r%! pac o# !hro+h !h or'"#ar co+r% o/ !ra' or +%"#%%.

Tha! !h %a o/ !h $%%% a% #o! "# !h or'"#ar co+r% o/ !ra' or +%"#%% o/ N*C a% apprc"a!' o!h !h CTA a#' !h Co+ro/ Appa%, !h a!!r 'o"# %o $# "# "!% /"r%! 'c"%"o# h"ch "! $#!+a rco#%"'r'.20 ( c"! "!h appro$a !h CTA% pa#a!"o#o# !h"% po"#!-

I# I4pr"a $. Coc!or o/ I#!r#a R$#+, G.R. No. L=62;, Sp!4r 30, 1655 86 &h". 6629, !h !r4 >carr"# o# +%"#%%> 'o%#o! 4a# !h pr/or4a#c o/ a %"# '"%co##c!' ac!, +! 4a#% co#'+c!"#, pro%c+!"# a#' co#!"#+"# +%"#%% pr/or4"#pror%%"$ a !h ac!% #or4a "#c"'#! !hro/ h" >'o"# +%"#%%> co#$% !h "'a o/ +%"#%% "# 'o#, #o! /ro4 !"4 !o!"4, +! a !h !"4. [. Ara#a%, U&*ATE* NATIONAL INTERNAL REVENUE CO*E 8(IT) ANNOTATIONS9, p. @07=6 816779]

>Co+r% o/ +%"#%%> "% ha! "% +%+a 'o# "# !h 4a#a4#! o/ !ra' or +%"#%%. [I'4" $. (% J R+%%, 66 So. @1, @;, 135M"%%. @5, c"!' "# (or'% J &hra%%, Vo. 10, 8167;9].

(ha! "% car !hr/or, a%' o# !h a/orc"!' D+r"%pr+'#c, "% !ha! >co+r% o/ +%"#%%> or >'o"# +%"#%%> co##o!% r+ar"! o/ac!"$"!. I# !h "#%!a#! ca%, !h %a a% a# "%oa!' !ra#%ac!"o#. Th %a h"ch a% "#$o+#!ar a#' 4a' p+r%+a#! !o !h 'car'po"c o/ Go$r#4#! /or pr"$a!":a!"o# co+' #o o#r rpa!' or carr"' o# "!h r+ar"!. I! %ho+' 4pha%":' !ha! !h #or4aVAT=r"%!r' ac!"$"! o/ N*C "% a%"# pr%o#a propr!.21

Th"% /"#'"# "% co#/"r4' !h R$"%' Char!r22 o/ !h N*C h"ch ar% #o "#'"ca!"o# !ha! !h N*C a% cra!' /or !h pr"4arp+rpo% o/ %"# ra propr!.23

Th co#c+%"o# !ha! !h %a a% #o! "# !h co+r% o/ !ra' or +%"#%%, h"ch !h CIR 'o% #o! '"%p+! /or !h"% Co+r!,2; %ho+'ha$ '/"#"!"$ %!!' !h 4a!!r. A# %a, ar!r or cha# o/ oo'% or %r$"c% #o! "# !h co+r% o/ !ra' or +%"#%% "% #o!%+Dc! !o VAT.

Sc!"o# 100 o/ !h Ta Co', h"ch "% "4p4#!' Sc!"o# ;8E98"9 o/ R.R. No. 5=7 #o r"' +po# !h CIR, "% cap!"o#' >Va+a''' !a o# %a o/ oo'%,> a#' "! pr%% %!a!% !ha! >[!]hr %ha $"', a%%%%' a#' coc!' o# $r %a, ar!r orcha# o/ oo'%, a $a+ a''' !a .> Sc!"o# 100 %ho+' ra' "# "h! o/ Sc!"o# 66, h"ch a% 'o# !h #ra r+ o#h"ch pr%o#% ar "a /or VAT "# !h /"r%! pac a#' o# ha! !ra#%ac!"o# "/ a! a. I! 4a $# #o!' !ha! Sc!"o# 66 "% !h $r /"r%pro$"%"o# "# T"! IV o/ !h Ta Co', !h T"! !ha! co$r% VAT "# !h a. </or a# por!"o# o/ Sc!"o# 100, or !h r%! o/ !h a /or !ha!4a!!r, 4a app"' "# or'r !o %+Dc! a !ra#%ac!"o# !o VAT, "! 4+%! /"r%! %a!"%/"' !ha! !h !apar a#' !ra#%ac!"o# "#$o$' "%"a /or VAT "# !h /"r%! pac +#'r Sc!"o# 66.

I! o+' ha$ # a '"//r#! 4a!!r "/ Sc!"o# 100 p+rpor!' !o '/"# !h phra% >"# !h co+r% o/ !ra' or +%"#%%> a% pr%%' "#Sc!"o# 66. I/ !ha! r %o, r/r#c !o Sc!"o# 100 o+' ha$ # #c%%ar a% a 4a#% o/ a%cr!a"#"# h!hr !h %a o/ !h$%%% a% >"# !h co+r% o/ !ra' or +%"#%%,> a#' !h+% %+Dc! !o

VAT. <+! !ha! "% #o! !h ca%. (ha! Sc!"o# 100 a#' Sc!"o# ;8E98"9 o/ R.R. No. 5=7 aora! o# "% #o! !h 4a#"# o/ >"# !h co+r% o/!ra' or +%"#%%,> +! "#%!a' !h "'#!"/"ca!"o# o/ !h !ra#%ac!"o#% h"ch 4a '4' a% %a. I! o+' co4 #c%%ar !o

a%cr!a"# h!hr +#'r !ho% !o pro$"%"o#% !h !ra#%ac!"o# 4a '4' a %a, o# "/ "! "% %!!' !ha! !h !ra#%ac!"o# occ+rr' "#!h co+r% o/ !ra' or +%"#%% "# !h /"r%! pac. I/ !h !ra#%ac!"o# !ra#%p"r' o+!%"' !h co+r% o/ !ra' or +%"#%%, "! o+' "rr$a#! /or !h p+rpo% o/ '!r4"#"# VAT "a""! h!hr !h !ra#%ac!"o# 4a '4' %a, %"#c "! a#a "% #o! %+Dc! !oVAT.

Accor'"#, !h Co+r! r+% !ha! "$# !h +#'"%p+!' /"#'"# !ha! !h !ra#%ac!"o# "# +%!"o# a% #o! 4a' "# !h co+r% o/ !ra' o+%"#%% o/ !h %r, N*C !ha! "%, !h %a "% #o! %+Dc! !o VAT p+r%+a#! !o Sc!"o# 66 o/ !h Ta Co', #o 4a!!r ho !h %a"' %a4a h !o !ho% !ra#%ac!"o#% '4' %a a% '/"#' +#'r Sc!"o# 100.

I# a# $#!, $# "/ Sc!"o# 100 or Sc!"o# ; o/ R.R. No. 5=7 r !o /"#' app"ca!"o# "# !h"% ca%, !h Co+r! /"#'% !h '"%c+%%"o#%o//r' o# !h"% po"#! !h CTA a#' !h Co+r! o/ Appa% 8"# "!% %+%+#! R%o+!"o#9 %%#!"a corrc!. Sc!"o# ; 8E98"9 o/ R.R. No.5=7 'o% ca%%"/ a% a4o# !h !ra#%ac!"o#% '4' %a !ho% "#$o$"# >cha# o/ o#r%h"p o/ +%"#%%.> )o$r, Sc!"o# ;8E9o/ R.R. No. 5=7, r/c!"# Sc!"o# 100 o/ !h Ta Co', car"/"% !ha! %+ch >cha# o/ o#r%h"p> "% o# a# a!!#'"# c"rc+4%!a#c !o>r!"r4#! /ro4 or c%%a!"o# o/ +%"#%%[, ] "!h r%pc! !o a oo'% o# ha#' [a%] o/ !h 'a! o/ %+ch r!"r4#! or c%%a!"o#.>25I#'', Sc!"o# ;8E9 o/ R.R. No. 5=7 pr%% charac!r":% !h >cha# o/ o#r%h"p o/ +%"#%%> a% o# a >c"rc+4%!a#c> !ha!

a!!#'% !ho% !ra#%ac!"o#% >'4' %a,> h"ch ar o!hr"% %!a!' "# !h %a4 %c!"o#.2@

()EREFORE, !h p!"!"o# "% *ENIE*. No co%!%.SO OR*ERE*.

+"%+4"#, Cha"r4a#, Carp"o, Carp"o=Mora%, Va%co, r., .., co#c+r.

". CIR vs. #eng$et Cor%oration

&I'(ST) <#+! Corpora!"o# "% a 'o4%!"c corpora!"o# #a' "# !h pora!"o#, '$op4#! a#' opra!"o# o/ 4"#ra r%o+rc%,a#' !h %a or 4ar!"# !hro/ !o $ar"o+% #!"!"%. I! "% a VAT r"%!r' #!rpr"%.

Th !ra#%ac!"o#% "# +%!"o# occ+rr' '+r"# !h pr"o' !# 1677 a#' 1661. U#'r Sc. 66 o/ NIRC a% a4#'' E.O. 23 %.167 !h# "# //c!, a# pr%o# ho, "# !h co+r% o/ !ra' or +%"#%%, %%, ar!r% or cha#% oo'%, r#'r% %r$"c%, or



#a% "# %"4"ar !ra#%ac!"o#% a#' a# pr%o# ho "4por!% oo'% "% "a /or o+!p+! VAT a! ra!% o/ "!hr 10B or 0B 8:ro=ra!'9'p#'"# o# !h ca%%"/"ca!"o# o/ !h !ra#%ac!"o# +#'r Sc. 100 o/ !h NIRC.

I# a#+ar o/ 1677, <#+! app"' /or a#' a% ra#!' !h <IR :ro=ra!' %!a!+% o# "!% %a o/ o' !o C#!ra <a#. O# 27 A++%1677 VAT R+"# No. 377=77 a% "%%+' h"ch 'car' !ha! !h %a o/ o' !o C#!ra <a# "% co#%"'r' a% por! %a %+Dc! !o:ro=ra! p+r%+a#! !o Sc!"o# 100 o/ !h Ta Co', a% a4#'' EO 23.

R"# o# "!% :ro=ra!' %!a!+% a#' !h ao$ "%%+a#c%, <#+! %o' o' !o !h C#!ra <a# '+r"# !h pr"o' o/ 1 A++%! 1676 !o31 + 1661 a#' #!r' "#!o !ra#%ac!"o#% !ha! r%+!' "# "#p+! VAT "#c+rr' "# ra!"o# !o !h %+Dc! %a% o/ o'. I! !h# /"'app"ca!"o#% /or !a r/+#'%?cr'"!% corr%po#'"# !o "#p+! VAT.

)o$r, %+ch r+%! a% #o! ra#!' '+ !o <IR VAT R+"# No. 007=62 'a!' 23 a#+ar 1662 !ha! a% "%%+' %+%+#! !o !hco#%+44a!"o# o/ !h %+Dc! %a% o/ o' !o !h C#!ra <a# h"ch pro$"'% !ha! %a% o/ o' !o !h C#!ra <a# %ha #o! co#%"'r' a% por! %a% a#' !h+%, %ha %+Dc! !o 10B VAT. <IR VAT R+"# No. 007=62 "!h'r, 4o'"/"', a#' %+pr%'' a"#co#%"%!#! <IR "%%+a#c%.

<o!h p!"!"o#r a#' <#+! ar !ha! !h r!roac!"$ app"ca!"o# o/ VAT R+"# No. 007=62 "% $a"' o# "/ %+ch app"ca!"o# o+' #o! prD+'"c"a !o !h <#+! p+r%+a#! Sc. 2;@ o/ !h NIRC.

I%%+%- 819 (ON <#+!% %a o/ o' !o !h C#!ra <a# '+r"# !h pr"o' h# %+ch a% ca%%"/"' <IR "%%+a#c% a% :ro=ra!'co+' !a' $a"' a! a 10B ra! a/!r !h co#%+44a!"o# o/ !h !ra#%ac!"o#% "#$o$' 829 (ON !hr a% prD+'"c !o <#+! Corp'+ !o !h # <IR VAT R+"#.

)'- 819 NO. A! !h !"4 h# !h %+Dc! !ra#%ac!"o#% r co#%+44a!', !h pr$a""# <IR r+a!"o#% r"' +po# <#+or'a"#' !ha! o' %a% !o !h C#!ra <a# r :ro=ra!'. <#+! %ho+' #o! /a+!' /or r"# o# !h <IR% "#!rpr!a!"o# o/ !h%a"' a% a#' r+a!"o#%.

(h" "! "% !r+, a% CIR a%, !ha! o$r#4#! "% #o! %!opp' /ro4 coc!"# !a% h"ch r4a"# +#pa"' o# acco+#! o/ !h rror% or4"%!a% o/ "!% a#!% a#'?or o//"c"a% a#' !hr co+' #o $%!' r"h! ar"%"# /ro4 a# rro#o+% "#!rpr!a!"o# o/ a, !h% pr"#c"p%4+%! "$ a !o cp!"o#% a%' o# a#' "# p"# "!h !h "#!r%! o/ D+%!"c a#' /a"r pa. 8!h# !h Co+r! c"!' !h A<S=C<N ca%9

829 ES. Th a'$r% //c! "% !ha! <#+! Corp ca4 !h +#pc!' a#' +#""# '!or !o !h <IR o/ !h a4o+#! +"$a#! !o!h !o!a VAT co%! o/ "!% pro'+c!, a "a""! "! pr$"o+% co+' ha$ rco$r' /ro4 !h <IR "# a :ro=ra!' %c#ar"o or a! a%! pa%%' o#!o !h C#!ra <a# ha' "! #o# "! o+' ha$ # !a' a! a 10B ra!. Th+%, "! "% car !ha! <#+! %+//r' co#o4"c prD+'"ch# "! co#%+44a!' %a% o/ o' !o !h C#!ra <a# r !a# o+! o/ !h :ro=ra!' ca!or. Th cha# "# !h VAT ra!"# o/<#+!% !ra#%ac!"o#% "!h !h C#!ra <a# r%+!' "# !h !"# o%% o/ "!% 4p!"o# /ro4 pa4#! o/ o+!p+! VAT a#' "!% oppor!+#"!!o rco$r "#p+! VAT, a#' a! !h %a4 !"4 %+Dc!' "! !o !h 10B VAT %a#% !h op!"o# !o pa%% o# !h"% co%! !o !h C#!ra <a#, "!h !h!o!a prD+'"c "# 4o# !r4% "# +"$a#! !o !h 10B VAT $"' o# "!% %a% o/ o' !o !h C#!ra <a#.

E$# a%%+4"# !ha! !h r"h! !o rco$r <#+!% c%% pa4#! o/ "#co4 !a ha% #o! ! pr%cr"', !h"% r"/ o+' o# a''r%%

<#+!% o$rpa4#! o/ "#co4 !a +! #o! !h o!hr +r'#% '"%c+%%' ao$. Vr", !h"% r4' "% #o! a /a%" op!"o# /or<#+! ca+% !h $r ra%o# h "! a% "%%+' a '/"c"#c !a a%%%%4#! "% !ha! "!% "#p+! VAT a% #o! #o+h !o o//%! "!%r!roac!"$ o+!p+! VAT. I#'', !h +r'# o/ ha$"# !o o !hro+h a# +##c%%ar a#' c+4r%o4 r/+#' proc%% "% prD+'"c#o+h.

*RI'I+AL) T"#a, .-

Th"% "% a p!"!"o# /or !h r$" o/ a co#%o"'a!' *c"%"o# o/ !h For4r Fo+r!#!h *"$"%"o# o/ !h Co+r! o/ Appa%[1] or'r"# !hCo44"%%"o#r o/ I#!r#a R$#+ !o aar' !a cr'"!% !o <#+! Corpora!"o# "# !h a4o+#! corr%po#'"# !o !h "#p+! $a+ a'''!a% !ha! !h a!!r ha' "#c+rr' "# ra!"o# !o "!% %a o/ o' !o !h C#!ra <a# '+r"# !h pr"o' o/ 01 A++%! 1676 !o 31 + 1661.

&!"!"o#r "% !h Co44"%%"o#r o/ I#!r#a R$#+ 8p!"!"o#r9 ac!"# "# h"% o//"c"a capac"! a% ha' o/ !h <+ra+ o/ I#!r#a R$#+8<IR9, a# a!!ach' a#c o/ !h *par!4#! o/ F"#a#c,[2] "!h !h a+!hor"!, "#!r a"a, !o '!r4"# ca"4% /or r/+#'% or !a cr'"!% a%pro$"'' a.[3]

R%po#'#! <#+! Corpora!"o# 8r%po#'#!9 "% a 'o4%!"c corpora!"o# ora#":' a#' "%!"# $"r!+ o/ &h""pp"# a%, #a'"# !h pora!"o#, '$op4#! a#' opra!"o# o/ 4"#ra r%o+rc%, a#' !h %a or 4ar!"# !hro/ !o $ar"o+% #!"!"%.[;R%po#'#! "% a $a+ a''' !a 8VAT9 r"%!r' #!rpr"%.[5]

Th !ra#%ac!"o#% "# +%!"o# occ+rr' '+r"# !h pr"o' !# 1677 a#' 1661. U#'r Sc. 66 o/ !h Na!"o#a I#!r#a R$#+ Co'8NIRC9,[@] a% a4#'' Ec+!"$ Or'r 8E.O.9 No. 23 %. 167, !h# "# //c!, a# pr%o# ho, "# !h co+r% o/ !ra' or +%"#%%,%%, ar!r% or cha#% oo'%, r#'r% %r$"c%, or #a% "# %"4"ar !ra#%ac!"o#% a#' a# pr%o# ho "4por!% oo'% "% "a /oro+!p+! VAT a! ra!% o/ "!hr 10B or 0B 8:ro=ra!'9 'p#'"# o# !h ca%%"/"ca!"o# o/ !h !ra#%ac!"o# +#'r Sc. 100 o/ !h NIRC&r%o#% r"%!r' +#'r !h VAT %%!4[] ar ao' !o rco#": "#p+! VAT, or !h VAT '+ /ro4 or pa"' "! "# !h co+r% o/ "!%!ra' or +%"#%% o# "4por!a!"o# o/ oo'% or oca p+rcha%% o/ oo'% or %r$"c, "#c+'"# a% or +% o/ propr!"%, /ro4 a VAT=r"%!r' pr%o#.[7]



I# a#+ar o/ 1677, r%po#'#! app"' /or a#' a% ra#!' !h <IR :ro=ra!' %!a!+% o# "!% %a o/ o' !o C#!ra <a#.[6] O# 27 A++%! 1677, *p+! Co44"%%"o#r o/ I#!r#a R$#+ E+/rac"o *. Sa#!o% "%%+' VAT R+"# No. 377=77, h"ch 'car' !ha! [!]h%a o/ o' !o C#!ra <a# "% co#%"'r' a% por! %a %+Dc! !o :ro=ra! p+r%+a#! !o Sc!"o# 100[[10]] o/ !h Ta Co', a%a4#'' Ec+!"$ Or'r No. 23. Th <IR ca4 o+! "!h a! a%! %" 8@9 o!hr "%%+a#c%[11] r"!ra!"# !h :ro=ra!"# o/ %a o/o' !o !h C#!ra <a#, !h a!%! o/ h"ch "% VAT R+"# No. 03@=60 'a!' 1; Fr+ar 1660.[12]

R"# o# "!% :ro=ra!' %!a!+% a#' !h ao$ "%%+a#c%, r%po#'#! %o' o' !o !h C#!ra <a# '+r"# !h pr"o' o/ 1 A++%! 1676!o 31 + 1661 a#' #!r' "#!o !ra#%ac!"o#% !ha! r%+!' "# "#p+! VAT "#c+rr' "# ra!"o# !o !h %+Dc! %a% o/ o'. I! !h# /"'app"ca!"o#% /or !a r/+#'%?cr'"!% corr%po#'"# !o "#p+! VAT /or !h a4o+#!%[13] o/ &;@,1,[email protected],[1;]&16,217,37.;;,[15] a#' &7;,606,2;.6@.[1@] R%po#'#!% app"ca!"o#% r "!hr +#ac!' +po# or pr%% '"%ao' p!"!"o#r.[1] I# a''"!"o#, p!"!"o#r "%%+' a '/"c"#c a%%%%4#! aa"#%! r%po#'#! h#, a/!r app"# r%po#'#!% cr'"!a"#p+! VAT co%!% aa"#%! !h r!roac!"$ 10B VAT $, !hr r%+!' a aa#c o/ c%% o+!p+! VAT.[17]

Th pr%% '"%aoa#c o/ r%po#'#!% app"ca!"o# /or r/+#'%?cr'"!% a#' !h "%%+a#c o/ '/"c"#c a%%%%4#!% aa"#%! "! ra%' o# a <IR r+"#=<IR VAT R+"# No. 007=62 'a!' 23 a#+ar 1662=!ha! a% "%%+' %+%+#! !o !h co#%+44a!"o# o/ !h%+Dc! %a% o/ o' !o !h C#!ra <a# h"ch pro$"'% !ha! %a% o/ o' !o !h C#!ra <a# %ha #o! co#%"'r' a% por! %a%a#' !h+%, %ha %+Dc! !o 10B VAT. I# a''"!"o#, <IR VAT R+"# No. 007=62 "!h'r, 4o'"/"', a#' %+pr%'' a "#co#%"%!#! <IR"%%+a#c%. Th r$a#! por!"o#% o/ !h r+"# pro$"'%, !h+%-

1. I# #ra, /or p+rpo%% o/ !h !r4 por! %a% o# '"rc! por! %a% a#' /or"# c+rr#c '#o4"#a!' %a%, %ha +a"/"'/or :ro=ra!"#.. . . .

;. Loca %a% o/ oo'%, h"ch /"c!"o# o/ a ar co#%"'r' por! %a% 8.., !h Epor! *+! La co#%"'r% %a% o/ o' !o !hC#!ra <a# o/ !h &h""pp"#%, a% por! %a9. Th"% !ra#%ac!"o# %ha #o! co#%"'r' a% por! %a /or VAT p+rpo%%.. . . .[A] Or'r% a#' M4ora#'a "%%+' !h"% O//"c "#co#%"%!#! hr"!h ar co#%"'r' "!h'ra#, 4o'"/"' or %+pr%''. 8E4pha%"%%+pp"'9

Th <IR a%o "%%+' VAT R+"# No. 056=62 'a!' 27 Apr" 1662 a#' R$#+ M4ora#'+4 Or'r No. 22=62 h"ch 'cr' !ha! !hr$oca!"o# o/ VAT R+"# No. 377=77 VAT R+"# No. 007=62 o+' #o! +#'+ prD+'"c 4"#"# co4pa#"% a#', !h+%, co+' app"' r!roac!"$.[16]

R%po#'#! /"' !hr %para! p!"!"o#% /or r$" "!h !h Co+r! o/ Ta Appa% 8CTA9, 'oc!' a% CTA Ca% No. ;6;5, CTA Ca%No. ;@2, a#' !h co#%o"'a!' ca%% o/ CTA Ca% No%. ;@7@ a#' ;726.

I# !h !hr ca%%, r%po#'#! ar+' !ha! a r!roac!"$ app"ca!"o# o/ <IR VAT R+"# No. 007=62 o+' $"oa! Sc. 2;@ o/ !h NIRCh"ch 4a#'a!% !h #o#=r!roac!"$"! o/ r+"#% or c"rc+ar% "%%+' !h Co44"%%"o#r o/ I#!r#a R$#+ !ha! o+' opra! !oprD+'"c !h !apar. R%po#'#! !h# '"%c+%%' "# '!a" !h 4a##r a#' !#! h"ch "! a% prD+'"c' !h"% r!roac!"$app"ca!"o#.[20] &!"!"o#r o# !h o!hr ha#', 4a"#!a"#' !ha! <IR VAT R+"# No. 007=62 "%, /"r%!, #o! $o"' a#' #!"!' !o ra! r%pc!ha$"# # "%%+' !h o' char' "!h !h '+! o/ a'4"#"%!r"# !h VAT a, a#' %co#', "! 4a $a"' "$# r!roac!"$//c! %"#c "! a% #o! prD+'"c"a !o r%po#'#!.

I# !hr %para! 'c"%"o#%,[21] !h CTA '"%4"%%' r%po#'#!% r%pc!"$ p!"!"o#%. I! h', "!h &r%"'"# +' Er#%!o *. Aco%!a'"%%#!"#, !ha! #o prD+'"c ha' /a# r%po#'#! $"r!+ o/ !h r!roac!"$ app"ca!"o# o/ <IR VAT R+"# No. 007=62, a#' !ha!co#%+#!, !h app"ca!"o# '"' #o! $"oa! Sc. 2;@ o/ !h NIRC.[22]

Th CTA 'c"%"o#% r appa' r%po#'#! !o !h Co+r! o/ Appa%. Th ca%% r 'oc!' !hr"# a% CA=G.R. S& No%.3205, 37657, a#' 36;35, a#' !hra/!r co#%o"'a!'. Th Co+r! o/ Appa%, a/!r $a+a!"# !h ar+4#!% o/ !h par!"%, r#'r'!h +%!"o#' *c"%"o# r$r%"# !h Co+r! o/ Ta Appa% "#%o/ar a% !h a!!r ha' r+' !ha! <IR VAT R+"# No. 007=62 '"' #o!prD+'"c !h r%po#'#! a#' !ha! !h %a4 co+' "$# r!roac!"$ //c!.

I# "!% *c"%"o#, !h appa! co+r! h' !ha! r%po#'#! %+//r' /"#a#c"a 'a4a +"$a#! !o !h %+4 o/ !h '"%appro$' ca"4%. I%!a!' !ha! ha' r%po#'#! #o# !ha! %+ch %a% r %+Dc! !o 10B VAT, h"ch ra! a% #o! !h pr$a""# ra! a! !h !"4 o/ !h!ra#%ac!"o#%, r%po#'#! o+' ha$ pa%%' o# !h co%! o/ !h "#p+! !a% !o !h C#!ra <a#. I! a%o r+' !ha! !h r4'"% h"ch !hCTA %+ppo%' o+' "4"#a! a# r%+!a#! prD+'"c !o r%po#'#! r #o! %+//"c"#! pa"a!"$% a% !h 4o#!ar $a+% pro$"'' "#!h %+ppo%' r4'"% 'o #o! appro"4a! !h 4o#!ar $a+% o/ !h !a cr'"!% !ha! r%po#'#! o%! a/!r !h "4p4#!a!"o# o/ !hVAT r+"# "# +%!"o#. I! c"!'

Ma#"a M"#"# Corpora!"o# $. Co44"%%"o#r o/ I#!r#a R$#+,[23] "# h"ch !h Co+r! o/ Appa% h'[2;] !ha! <IR VAT R+"# No.007=62 ca##o! "$# r!roac!"$ //c!. La%!, !h Co+r! o/ Appa% o%r$' !ha! R.A. 1@, !h Th N Epa#'' VAT La,r$a% !h "#!#! o/ !h a4ar% "!h rar' !o !h !ra!4#! o/ %a o/ o' !o !h C#!ra <a# %"#c !h a4#'' $r%"o# !hr"#o/ Sc. 100 o/ !h NIRC pr%% pro$"'% !ha! !h %a o/ o' !o !h <a#o S#!ra # &""p"#a% "% a# por! %a %+Dc! !o 0B VATra!. Th appa! co+r! !h+% ao' r%po#'#!% ca"4%, 'cr"# "# "!% '"%po%"!"$ por!"o#, $":-



()EREFORE, !h appa' 'c"%"o# "% hr REVERSE*. Th r%po#'#! Co44"%%"o#r o/ I#!r#a R$#+ "% or'r' !o aar'!h /oo"# !a cr'"!% !o p!"!"o#r.19 I# CA=G.R. S& No. 3206 &;6,@11,61;.0029 "# CA=G.R. S& No. 37657 = &16,217,37.;;39 "# CA=G.R. S& No. 36;35 = &7;,606,2;.6@[25]

*"%%a!"%/"' "!h !h ao$ r+"#, p!"!"o#r /"' !h "#%!a#! &!"!"o# /or R$" +%!"o#"# !h '!r4"#a!"o# o/ !h Co+r! o/ Appa%!ha! !h r!roac!"$ app"ca!"o# o/ !h %+Dc! "%%+a#c a% prD+'"c"a !o r%po#'#! a#' co+' #o! app"' r!roac!"$.

Apar! /ro4 !h c#!ra "%%+ o# !h $a"'"! o/ !h r!roac!"$ app"ca!"o# o/ VAT R+"# No. 007=62, !h +%!"o# o/ !h $a"'"! o/ !h

"%%+a#c "!%/ ha% # !o+ch' +po# "# !h pa'"#%, "#c+'"# a r/r#c 4a' r%po#'#! !o a Co+r! o/ Appa% *c"%"o#ho'"# !ha! !h VAT R+"# ha' #o a a%"%.[2@] For "!% par!, a% !h par! !ha! ra"%' !h"% "%%+, p!"!"o#r %p"r"!' '/#'% !h$a"'"! o/ !h "%%+a#c.[2] E//c!"$, ho$r, !h +%!"o# "% a #o#="%%+ a#' '$"# "#!o "! o+' a #'%% rc"% /or, a%r%po#'#! 4pha!"ca po"#!' o+! "# "!% Co44#!, +#" p!"!"o#r% /or4+a!"o# o/ !h "%%+%, !h o# ra "%%+ "# !h"% ca% "%h!hr VAT R+"# No. 007=62 h"ch r$o' pr$"o+% r+"#% o/ !h p!"!"o#r h"ch r%po#'#! ha$" r"' +po# . . . 4a a app"' r!roac!"$ !o r%po#'#!.[27] Th"% Co+r! #' #o! "#$a"'a! !h <IR "%%+a#c%, h"ch ha$ !h /orc a#' //c! o/ a+#%% !h "%%+ o/ $a"'"! "% %o cr+c"a a! !h har! o/ !h co#!ro$r% !ha! !h Co+r! ca##o! r%o$ !h ca% "!ho+! ha$"# !o %!r"'o# !h "%%+a#c%. Car, h!hr !h %+Dc! VAT r+"# 4a $a"' "$# r!ro%pc!"$ //c! "% !h "% 4o!a "# !h ca%. &+! "#a#o!hr +! %pc"/"c /a%h"o#, !h %o "%%+ !o a''r%%' "% h!hr r%po#'#!% %a o/ o' !o !h C#!ra <a# '+r"# !h pr"o'h# %+ch a% ca%%"/"' <IR "%%+a#c% a% :ro=ra!' co+' !a' $a"' a! a 10B ra! a/!r !h co#%+44a!"o# o/ !h!ra#%ac!"o#% "#$o$'.

I# a o# "# o/ ca%%,[26] !h"% Co+r! ha% a//"r4' !ha! !h r+"#%, c"rc+ar, r+% a#' r+a!"o#% pro4+a!' !h Co44"%%"o#r o/I#!r#a R$#+ o+' ha$ #o r!roac!"$ app"ca!"o# "/ !o %o app !h4 o+' prD+'"c"a !o !h !apar%. I# /ac!, o!hp!"!"o#r[30] a#' r%po#'#![31] ar !ha! !h r!roac!"$ app"ca!"o# o/ VAT R+"# No. 007=62 "% $a"' o# "/ %+ch app"ca!"o# o+'

#o! prD+'"c"a !o !h r%po#'#! p+r%+a#! !o !h p"c"! 4a#'a! +#'r Sc. 2;@ o/ !h NIRC, !h+%-

Sc. 2;@. No#=r!roac!"$"! o/ r+"#%.= A# r$oca!"o#, 4o'"/"ca!"o# or r$r%a o/ a# o/ !h r+% a#' r+a!"o#% pro4+a!' "#accor'a#c "!h !h prc'"# Sc!"o# or a# o/ !h r+"#% or c"rc+ar% pro4+a!' !h Co44"%%"o#r %ha #o! "$# r!roac!"$app"ca!"o# "/ !h r$oca!"o#, 4o'"/"ca!"o# or r$r%a " prD+'"c"a !o !h !apar% cp! "# !h /oo"# ca%%- 8a9 hr !h!apar '"ra! 4"%%!a!% or o4"!% 4a!r"a /ac!% /ro4 h"% r!+r# o# a# 'oc+4#! r+"r' o/ h"4 !h <+ra+ o/ I#!r#aR$#+ 89 hr !h /ac!% %+%+#! a!hr' !h <+ra+ o/ I#!r#a R$#+ ar 4a!r"a '"//r#! /or4 !h /ac!% o# h"ch!h r+"# "% a%' or 8c9 hr !h !apar ac!' "# a' /a"!h. 8E4pha%"% %+pp"'9

I# !ha! rar', p!"!"o#r %+4"!% !ha! r%po#'#! o+' #o! prD+'"c' a r!roac!"$ app"ca!"o# r%po#'#! 4a"#!a"#% !hco#!rar. Co#%+#!, !h '!r4"#a!"o# o/ !h "%%+ o/ r!roac!"$"! h"#% o# h!hr r%po#'#! o+' %+//r prD+'"c /ro4 !hr!roac!"$ app"ca!"o# o/ VAT R+"# No. 007=62.

( ar "!h !h Co+r! o/ Appa% a#' !h r%po#'#!.

To "# "!h, !h '!r4"#a!"o# o/ h!hr r%po#'#! ha' %+//r' prD+'"c "% a /ac!+a "%%+. I! "% a# %!a"%h' r+ !ha! "# !hrc"% o/ "!% por o/ r$", !h S+pr4 Co+r! "% #o! a !r"r o/ /ac!%. Moro$r, "# !h rc"% o/ !h S+pr4 Co+r!% por o/r$", !h /"#'"#% o/ /ac!% o/ !h Co+r! o/ Appa% ar co#c+%"$ a#' "#'"# o# !h S+pr4 Co+r!.[32] A# cp!"o# !o !h"% r+ "%h# !h /"#'"#% o/ /ac! a +o ar co#/"c!"#,[33] a% "% "# !h"% ca%.

VAT "% a prc#!a !a "4po%' a! $r %!a o/ !h '"%!r"+!"o# proc%% o# !h %a, ar!r, cha# or a% o/ oo'% or propr!"%a#' r#'"!"o# o/ %r$"c% "# !h co+r% o/ !ra' or +%"#%%, or !h "4por!a!"o# o/ oo'%.[3;] I! "% a# "#'"rc! !a, h"ch 4a %h"/!' !o!h +r, !ra#%/r, or %% o/ !h oo'%, propr!"%, or %r$"c%.[35] )o$r, !h par! '"rc! "a /or !h pa4#! o/ !h !a "%!h %r.[3@]

I# !ra#%ac!"o#% !a' a! a 10B ra!, h# a! !h #' o/ a# "$# !aa +ar!r !h o+!p+! VAT c'% !h "#p+! VAT, !h c%%%ha pa"' !o !h o$r#4#! h# !h "#p+! VAT c'% !h o+!p+! VAT, !h c%% o+' carr"' o$r !o VAT "a""!"% /or !h%+cc'"# +ar!r or +ar!r%.[3] O# !h o!hr ha#', !ra#%ac!"o#% h"ch ar !a' a! :ro=ra! 'o #o! r%+! "# a# o+!p+! !a. I#p+!

VAT a!!r"+!a !o :ro=ra!' %a% co+' r/+#'' or cr'"!' aa"#%! o!hr "#!r#a r$#+ !a% a! !h op!"o# o/ !h !apar.[37]

To "+%!ra!, "# a :ro=ra!' !ra#%ac!"o#, h# a VAT=r"%!r' pr%o# 8!apar9 p+rcha%% 4a!r"a% /ro4 h"% %+pp"r a! &70.00,&.30[36] o/ h"ch a% pa%%' o# !o h"4 h"% %+pp"r a% !h a!!r% 10B o+!p+! VAT, !h !apar "% ao' !o rco$r &.30 /ro4!h <IR, "# a''"!"o# !o o!hr "#p+! VAT h ha' "#c+rr' "# ra!"o# !o !h :ro=ra!' !ra#%ac!"o#, !hro+h !a cr'"!% or r/+#'%. (h# !h!apar %% h"% /"#"%h' pro'+c! "# a :ro=ra!' !ra#%ac!"o#, %a, /or &110.00, h "% #o! r+"r' !o pa a# o+!p+! VAT !hro#. I# !hca% o/ a !ra#%ac!"o# %+Dc! !o 10B VAT, !h !apar "% ao' !o rco$r o!h !h "#p+! VAT o/ &.30 h"ch h pa"' !o h"% %+pp"ra#' h"% o+!p+! VAT o/ &2.0 810B !h &30.00 $a+ h ha% a''' !o !h &70.00 4a!r"a9 pa%%"# o# o!h co%!% !o !h +r. Th+%!h +r pa% !h !o!a 10B VAT co%!, "# !h"% ca% &10.00 o# !h pro'+c!.

I# o!h %"!+a!"o#%, !h !apar ha% !h op!"o# #o! !o carr a# VAT co%! ca+% "# !h :ro=ra!' !ra#%ac!"o#, !h !apar "% ao'!o rco$r "#p+! !a /ro4 !h <IR "!ho+! #' !o pa o+!p+! !a, h" "# 10B ra!' VAT, !h !apar "% ao' !o pa%% o# o!h "#p+!a#' o+!p+! VAT !o !h +r. Th+%, !hr "% a# 4#!a %"4"ar"! !# !h !o !p% o/ VAT ra!"#% "# !ha! !h !apar ha% !h



op!"o# #o! !o !a o# a# VAT pa4#! /or h"% !ra#%ac!"o#% %"4p rc"%"# h"% r"h! !o pa%% o# !h VAT co%!% "# !h 4a##r'"%c+%%' ao$.

&roc'"# /ro4 !h /oro"#, !hr appar% !o #o +p/ro#! co#o4"c '"//r#c "# cha#"# !h %a o/ o' !o !h C#!ra <a#/ro4 a 0B !o 10B VAT ra! pro$"'' !ha! r%po#'#! o+' ao' !h cho"c !o pa%% o# "!% VAT co%!% !o !h C#!ra <a#. I# !h"#%!a#! ca%, !h r!roac!"$ app"ca!"o# o/ VAT R+"# No. 007=62 +#"a!ra /or/"!' or "!h'r !h"% op!"o# o/ r%po#'#!. Tha'$r% //c! "% !ha! r%po#'#! ca4 !h +#pc!' a#' +#""# '!or !o !h <IR o/ !h a4o+#! +"$a#! !o !h !o!a VAT co%o/ "!% pro'+c!, a "a""! "! pr$"o+% co+' ha$ rco$r' /ro4 !h <IR "# a :ro=ra!' %c#ar"o or a! a%! pa%%' o# !o !h C#!ra<a# ha' "! #o# "! o+' ha$ # !a' a! a 10B ra!. Th+%, "! "% car !ha! r%po#'#! %+//r' co#o4"c prD+'"c h# "!%co#%+44a!' %a% o/ o' !o !h C#!ra <a# r !a# o+! o/ !h :ro=ra!' ca!or. Th cha# "# !h VAT ra!"# o/ r%po#'#!%!ra#%ac!"o#% "!h !h C#!ra <a# r%+!' "# !h !"# o%% o/ "!% 4p!"o# /ro4 pa4#! o/ o+!p+! VAT a#' "!% oppor!+#"! !o rco$r"#p+! VAT, a#' a! !h %a4 !"4 %+Dc!' "! !o !h 10B VAT %a#% !h op!"o# !o pa%% o# !h"% co%! !o !h C#!ra <a#, "!h !h !o!aprD+'"c "# 4o# !r4% "# +"$a#! !o !h 10B VAT $"' o# "!% %a% o/ o' !o !h C#!ra <a#.

&!"!"o#r ha' 4a' "!% po%"!"o# hop%% +#!#a ar+"# !ha! !h '/"c"#c 10B !ha! 4a a%%%%a " o# +a !o1?11!h o/ !h a4o+#! "' !o !h [C#!ra <a#] ra!hr !ha# 10B !hro/. I# %hor!, [r%po#'#!] 4a o# char' a%' o# !h !aa4o+#! ac!+a a#' !ch#"ca pa%%' o# !o !h [C#!ra <a#] a% par! o/ !h "#$o"c' pr"c.[;0] To !h Co+r!, !h a/or+o!'%!a!4#! "% a car rco#"!"o# !ha! r%po#'#! o+' %+//r prD+'"c "# !h a4o+#! ac!+a a#' !ch#"ca pa%%' o# !o !h [C#!ra<a#] a% par! o/ !h "#$o"c' pr"c. I# '!r4"#"# !h prD+'"c %+//r' r%po#'#!, "! 4a!!r% "!! ho !h a4o+#! char' aa"#%r%po#'#! "% co4p+!',[;1] !h po"#! "% !ha! !h a4o+#! 8+a !o 1?11!h o/ !h a4o+#! "' !o !h C#!ra <a#9 a% char' aa"#%!r%po#'#!, r%+!"# "# 'a4a !o !h a!!r.

&!"!"o#r po%"!% !ha! !h r!roac!"$ app"ca!"o# o/ <IR VAT R+"# No. 007=62 "% %!r"pp' o/ a# prD+'"c"a //c! h# $"' "#ra!"o# !o %$ra a$a"a op!"o#% !o rco+p ha!$r "a""!"% r%po#'#! 4a ha$ "#c+rr', ".., r%po#'#!% "#p+! VAT 4a %!" +%' 819 !o o//%! "!% o+!p+! VAT o# !h %a% o/ o' !o !h C#!ra <a# or o# "!% o+!p+! VAT o# o!hr %a% %+Dc! !o 10B VAT, a#'

829 a% ''+c!"o#% o# "!% "#co4 !a +#'r Sc. 26 o/ !h Ta Co'.[;2]

O# p!"!"o#r% /"r%! %+%!' rco+p4#! 4o'a"!, r%po#'#! co+#!r% !ha! "!% o!hr %a% %+Dc! !o 10B VAT ar %o 4"#"4a !ha!!h"% 4o' "% o/ "!! $a+. I#'', ha! +% o+' a cr'"! hr !hr "% #o!h"# !o %! "! o// aa"#%! Moro$r, r%po#'#! po"#!%o+! !ha! a/!r ha$"# # "4po%' "!h 10B VAT %a#% !h oppor!+#"! !o pa%% o# !h %a4 !o !h C#!ra <a#, "! a% "%%+' a'/"c"#c !a a%%%%4#! ca+% "!% "#p+! VAT !a cr'"!% r #o! #o+h !o o//%! !h r!roac!"$ 10B o+!p+! VAT. Th prD+'"c!h# pr"#c' r%po#'#! "% "# !h /ac! !ha! !h !a r/+#'%?cr'"!% !ha! "! pc!' !o rc"$ ha' //c!"$ '"%appar' $"r!+ o/ "!% #/o+#' o+!p+! VAT "a""! aa"#%! h"ch p!"!"o#r ha' o//%! !h pc!' r/+#'?cr'"!. A''"!"o#a, !h prD+'"c !or%po#'#! o+' #o! %"4p '"%appar, a% p!"!"o#r ca"4%, h# a "a""! 8h"ch "a""! a% #o! !hr !o "# "!h9 "% "4po%'co#c+rr#! "!h a# oppor!+#"! !o r'+c, #o! !o!a ra'"ca!, !h #/o+#' "a""!. I# %+4, co#!rar !o p!"!"o#r% %+%!"o#r%po#'#!% #! "#co4 %!" 'cra%' corr%po#'"# !o !h a4o+#! "! pc!' a% "!% r/+#'%?cr'"!% a#' !h '/"c"#c a%%%%4#!%aa"#%! "!, h"ch h# %+44' +p o+' !h !o!a co%! o/ !h 10B r!roac!"$ VAT $"' o# r%po#'#!.

R%po#'#! ca"4% !o ha$ "#c+rr' /+r!hr prD+'"c. I# co4p+!"# "!% "#co4 !a% /or !h r$a#! ar%, !h "#p+! VAT co%! !ha!

r%po#'#! ha' pa"' !o "!% %+pp"r% a% #o! !ra!' r%po#'#! a% par! o/ "!% co%! o/ oo'% %o', h"ch "% ''+c!" /ro4 ro%%"#co4 /or "#co4 !a p+rpo%%, +! a% a# a%%! h"ch co+' r/+#'' or app"' a% pa4#! /or o!hr "#!r#a r$#+ !a%. I#/ac!, R$#+ R+a!"o# No. 5=7 8VAT I4p4#!"# G+"'"#%9, r+"r% "#p+! VAT !o rcor'' #o! a% par! o/ !h co%! o/4a!r"a% or "#$#!or p+rcha%' +! a% a %para! #!r ca' "#p+! !a%, h"ch 4a !h# app"' aa"#%! o+!p+! VAT, o!hr"#!r#a r$#+ !a%, or r/+#'' a% !h ca% 4a .[;3] I# "# '#"' !h oppor!+#"! !o ''+c! !h "#p+! VAT /ro4 "!% ro%%"#co4, r%po#'#!% #! "#co4 a% o$r%!a!' !h a4o+#! o/ "!% "#p+! VAT. Th"% o$r%!a!4#! a% a%%%%' !a a! !h 32Bcorpora! "#co4 !a ra!, r%+!"# "# r%po#'#!% o$rpa4#! o/ "#co4 !a% "# !h corr%po#'"# a4o+#!. Th+%, r%po#'#! #o!o# o%! "!% r"h! !o r/+#'? cr'"! "!% "#p+! VAT a#' ca4 "a /or '/"c"#c VAT, "! a%o o$rpa"' "!% "#co4 !a "# !h a4o+#! o/32B o/ "!% "#p+! VAT.

Th"% a'% +% !o !h %co#' rco+r% !ha! p!"!"o#r ha% %+%!' !o o//%! a# r%+!"# prD+'"c !o r%po#'#! a% a co#%+#c o"$"# r!roac!"$ //c! !o <IR VAT R+"# No. 007=62. &!"!"o#r %+4"!% !ha! ra#!"# !ha! r%po#'#! ha% #o o!hr %a %+Dc! !o10B VAT aa"#%! h"ch "!% "#p+! !a% 4a +%' "# pa4#!, !h# r%po#'#! "% co#%!"!+!' a% !h /"#a #!"! aa"#%! h"ch !hco%!% o/ !h !a pa%%%=o# %ha a %!op h#c, !h "#p+! !a% 4a co#$r!' a% co%!% a$a"a a% ''+c!"o# /or "#co4 !ap+rpo%%.[;;]

E$# a%%+4"# !ha! !h r"h! !o rco$r r%po#'#!% c%% pa4#! o/ "#co4 !a ha% #o! ! pr%cr"', !h"% r"/ o+' o#a''r%% r%po#'#!% o$rpa4#! o/ "#co4 !a +! #o! !h o!hr +r'#% '"%c+%%' ao$. Vr", !h"% r4' "% #o! a /a%" op!"o#/or r%po#'#! ca+% !h $r ra%o# h "! a% "%%+' a '/"c"#c !a a%%%%4#! "% !ha! "!% "#p+! VAT a% #o! #o+h !o o//%! "!%r!roac!"$ o+!p+! VAT. I#'', !h +r'# o/ ha$"# !o o !hro+h a# +##c%%ar a#' c+4r%o4 r/+#' proc%% "% prD+'"c#o+h. Moro$r, !hr "% "# /ac! #o!h"# /! !o ca"4 a% a ''+c!"o# /ro4 "#co4 !a%.

Fro4 !h /oro"# "! "% car !ha! p!"!"o#r% %+%!' op!"o#% h"ch prD+'"c o+' "4"#a!' /ro4 a r!roac!"$ app"ca!"o# oVAT R+"# No. 007=62 ar "!hr %"4p "#a'+a! or ro%% +#ra"%!"c.

A! !h !"4 h# !h %+Dc! !ra#%ac!"o#% r co#%+44a!', !h pr$a""# <IR r+a!"o#% r"' +po# r%po#'#! or'a"#' !hao' %a% !o !h C#!ra <a# r :ro=ra!'. Th <IR "#!rpr!' Sc. 100 o/ !h NIRC "# ra!"o# !o Sc. 2 o/ E.O. No. 571 %. 1670h"ch pr%cr"' !ha! o' %o' !o !h C#!ra <a# %ha co#%"'r' por! a#' !hr/or %ha %+Dc! !o !h por! a#' pr4"+4



'+!"%. I# co4"# o+! "!h !h"% "#!rpr!a!"o#, !h <IR a%o co#%"'r' Sc. 1@6 o/ C#!ra <a# C"rc+ar No. 6@0 h"ch %!a!% !ha! a%a% o/ o' !o !h C#!ra <a# ar co#%"'r' co#%!r+c!"$ por!%.[;5] R%po#'#! %ho+' #o! /a+!' /or r"# o# !h <IR%"#!rpr!a!"o# o/ !h %a"' a% a#' r+a!"o#%.[;@] (h" "! "% !r+, a% p!"!"o#r a%, !ha! o$r#4#! "% #o! %!opp' /ro4 coc!"#!a% h"ch r4a"# +#pa"' o# acco+#! o/ !h rror% or 4"%!a% o/ "!% a#!% a#'?or o//"c"a% a#' !hr co+' #o $%!' r"h! ar"%"#/ro4 a# rro#o+% "#!rpr!a!"o# o/ a, !h% pr"#c"p% 4+%! "$ a !o cp!"o#% a%' o# a#' "# p"# "!h !h "#!r%! o/

D+%!"c a#' /a"rpa, a% ha% # 'o# "# !h "#%!a#! 4a!!r. For, "! "% pr"4or'"a !ha! $r pr%o# 4+%!, "# !h rc"% o/ h"% r"h!% a#'"# !h pr/or4a#c o/ h"% '+!"%, ac! "!h D+%!"c, "$ $ro# h"% '+, a#' o%r$ ho#%! a#' oo' /a"!h.[;]

Th ca% o/ A<S=C<N <roa'ca%!"# Corpora!"o# $. Co+r! o/ Ta Appa%[;7] "#$o$' a %"4"ar /ac!+a 4""+. Thr !h Co44"%%"o#o/ I#!r#a R$#+ "%%+' M4ora#'+4 C"rc+ar No. ;=1 r$o"# a# ar"r c"rc+ar /or "# rro#o+% /or ac o/ a a%"%. (h#!h pr"or c"rc+ar a% %!" "# //c!, p!"!"o#r !hr"# r"' o# "! a#' co#%+44a!' "!% !ra#%ac!"o#% o# !h a%"% !hro/. ( h', !h+%-

. . . .&!"!"o#r a% #o o#r "# a po%"!"o# !o "!hho' !a% '+ /ro4 /or"# corpora!"o#% ca+% "! ha' ara' r4"!!' a /"4 r#!a%a#' #o o#r ha' a# co#!ro o$r !h4 h# !h # C"rc+ar a% "%%+'. . . ... . .

Th"% Co+r! "% #o! +#aar o/ !h =#!r#ch' pr"#c"p !ha! !h []o$r#4#! "% #$r %!opp' /ro4 coc!"# !a% ca+% o/4"%!a% or rror% o# !h par! o/ "!% a#!%. <+!, " o!hr pr"#c"p% o/ a, !h"% a%o a'4"!% o/ cp!"o#% "# !h "#!r%! o/ D+%!"c a#'/a"rpa. . . .I# /ac!, "# !h U#"!' S!a!%, . . . "! ha% # h' !ha! !h Co44"%%"o#r [o/ I#!r#a R$#+] "% prc+'' /ro4 a'op!"# apo%"!"o# "#co#%"%!#! "!h o# pr$"o+% !a# hr "#D+%!"c o+' r%+! !hr/ro4 or hr !hr ha% # a 4"%rpr%#!a!"o# !o!h !apar.[;6]

R%po#'#!, "# !h"% ca%, ha% %"4"ar # p+! o# !h rc"$"# #' o/ a ro%% +#/a"r 'a. </or r%po#'#! a% #!"!' !o !ar/+#'% or cr'"!% a%' o# p!"!"o#r% o# "%%+a#c%. Th# %+''#, "! /o+#' "!%/ "#%!a' "# 4a' !o pa '/"c"#c !a% "!hp!"!"o#r% r!roac!"$ cha# "# !h VAT ca!or":a!"o# o/ r%po#'#!% !ra#%ac!"o#% "!h !h C#!ra <a#. Th"% "% !h %or! o/ +#D+%!!ra!4#! o/ a !apar h"ch !h a "# Sc. 2;@ o/ !h NIRC ahor% a#' /or"'%.

()EREFORE, !h p!"!"o# "% *ENIE* /or ac o/ 4r"!. Th *c"%"o# o/ !h Co+r! o/ Appa% "% AFFIRME*. No pro#o+#c4#! a% !oco%!%.

SO OR*ERE*.

,. A#A-A&A '$ro vs. (rmita

&I'(ST) O# Ma 2;, 2005, !h &r%"'#! %"#' "#!o a Rp+"c Ac! 633 or !h VAT R/or4 Ac!. </or !h a !oo //c! o# +1, 2005, !h Co+r! "%%+' a TRO #Do"#"# o$r#4#! /ro4 "4p4#!"# !h a "# r%po#% !o a % o/ p!"!"o#% /or cr!"orar" a#'proh""!"o# +%!"o#"# !h co#%!"!+!"o#a"! o/ !h # a.

Th cha#' %c!"o# o/ R.A. No. 633 "% !h co44o# pro$"%o "# Sc!"o#% ;, 5 a#' @- Tha! !h &r%"'#!, +po# !h rco44#'a!"o#

o/ !h Scr!ar o/ F"#a#c, %ha, //c!"$ a#+ar 1, 200@, ra"% !h ra! o/ $a+=a''' !a !o 12B, a/!r a# o/ !h /oo"#co#'"!"o#% ha% # %a!"%/"'-

8"9 Va+=a''' !a coc!"o# a% a prc#!a o/ Gro%% *o4%!"c &ro'+c! 8G*&9 o/ !h pr$"o+% ar c'% !o a#' /o+r=/"/!hprc#! 82 ;?5B9 or 8""9 Na!"o#a o$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% o# a#' o#=ha/ prc#! 81PB9Q

&!"!"o#r% a !ha! !h ra#! o/ %!a#'= a+!hor"! !o !h &r%"'#! !o "#cra% !h VAT ra! "% a# a'"ca!"o# Co#r%% o/ "!%c+%"$ por !o !a ca+% %+ch 'a!"o# "% #o! co$r' Sc!"o# 27 829, Ar!"c VI Co#%!". Th ar+ !ha! VAT "% a !a $"'o# !h %a or cha# o/ oo'% a#' %r$"c% h"ch ca#! "#c+'' "!h"# !h p+r$" o/ !ar"//% +#'r !h 4p!"o# 'a!"o#%"#c !h"% r/r% !o c+%!o4% '+!"%, !o% or !r"+! paa +po# 4rcha#'"% !o !h o$r#4#! a#' +%+a "4po%' o#"4por!'?por!' oo'%. Th a%o %a"' !ha! !h &r%"'#! ha% por% !o ca+%, "#/+#c or cra! !h co#'"!"o#% pro$"'' a !or"# ao+! !h co#'"!"o#% prc'#!. Moro$r, !h a !ha! #o +"'"# %!a#'ar'% ar 4a' a a% !o ho !h Scr!ar o/F"#a#c " 4a !h rco44#'a!"o#.

I%%+- (h!hr or #o! !h RA 633% %!a#'= a+!hor"! !o !h Ec+!"$ !o "#cra% !h VAT ra!, %pc"a o# acco+#! o/ !hrco44#'a!or por ra#!' !o !h Scr!ar o/ F"#a#c, co#%!"!+!% +#'+ 'a!"o# o/ "%a!"$ por NO

)'- Th por% h"ch Co#r%% "% proh""!' /ro4 'a!"# ar !ho% h"ch ar %!r"c!, or "#hr#! a#' c+%"$, "%a!"$.&+r "%a!"$ por h"ch ca# #$r 'a!' "% !h a+!hor"! !o 4a a co4p! a= co4p! a% !o !h !"4 h# "! %ha!a //c! a#' a% !o ho4 "! %ha app"ca, a#' !o '!r4"# !h p'"#c o/ "!% #ac!4#!. I! "% !h #a!+r o/ !h por a#' #o!!h "a""! o/ "!% +% or !h 4a##r o/ "!% rc"% h"ch '!r4"#% !h $a"'"! o/ "!% 'a!"o#.

Th cp!"o#% ar-8a9 'a!"o# o/ !ar"// por% !o &r%"'#! +#'r Co#%!"!+!"o#89 'a!"o# o/ 4r#c por% !o &r%"'#! +#'r Co#%!"!+!"o#8c9 'a!"o# !o !h pop a! ar8'9 'a!"o# !o oca o$r#4#!%89 'a!"o# !o a'4"#"%!ra!"$ o'"%



For !h 'a!"o# !o $a"', "! 4+%! co4p! a#' "! 4+%! /" a %!a#'ar'. A %+//"c"#! %!a#'ar' "% o# h"ch '/"#% "%a!"$po"c, 4ar% "!% "4"!%, 4ap% o+! "!% o+#'ar"% a#' %pc"/"% !h p+"c a#c !o app "!.

I# !h"% ca%, "! "% #o! a 'a!"o# o/ "%a!"$ por <UT a 'a!"o# o/ a%cr!a"#4#! o/ /ac!% +po# h"ch #/orc4#! a#'a'4"#"%!ra!"o# o/ !h "#cra%' ra! +#'r !h a "% co#!"##!. Th "%a!+r ha% 4a' !h opra!"o# o/ !h 12B ra! //c!"$a#+ar 1, 200@, co#!"##! +po# a %pc"/"' /ac! or co#'"!"o#. I! a$% !h #!"r opra!"o# or #o#=opra!"o# o/ !h 12B ra! +po#/ac!+a 4a!!r% o+!%"' o/ !h co#!ro o/ !h c+!"$. No '"%cr!"o# o+' rc"%' !h &r%"'#!. )"h"h!"# !h a%#c o/'"%cr!"o# "% !h /ac! !ha! !h or' S)ALL "% +%' "# !h co44o# pro$"%o. Th +% o/ !h or' S)ALL co##o!% a 4a#'a!or or'r. I!%+% "# a %!a!+! '#o!% a# "4pra!"$ o"a!"o# a#' "% "#co#%"%!#! "!h !h "'a o/ '"%cr!"o#.

Th+%, "! "% !h 4"#"%!r"a '+! o/ !h &r%"'#! !o "44'"a! "4po% !h 12B ra! +po# !h "%!#c o/ a# o/ !h co#'"!"o#% %pc"/"' Co#r%%. Th"% "% a '+!, h"ch ca##o! $a'' !h &r%"'#!. I! "% a car '"rc!"$ !o "4po% !h 12B VAT ra! h# !h%pc"/"' co#'"!"o#% ar pr%#!.

Co#r%% D+%! ra#!' !h Scr!ar o/ F"#a#c !h a+!hor"! !o a%cr!a"# !h "%!#c o/ a /ac!=== h!hr *c4r 31, 2005, !hVAT coc!"o# a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% 2 ;?5 B or !h #a!"o#a o$r#4#! '/"c"! a% a prc#!a o/G*& o/ !h pr$"o+% ar c'% o# a#' 1PB. I/ "!hr o/ !h% !o "#%!a#c% ha% occ+rr', !h Scr!ar o/ F"#a#c, "%a!"$4a#'a!, 4+%! %+4"! %+ch "#/or4a!"o# !o !h &r%"'#!.

I# 4a"# h"% rco44#'a!"o# !o !h &r%"'#! o# !h "%!#c o/ "!hr o/ !h !o co#'"!"o#%, !h Scr!ar o/ F"#a#c "% #o! ac!"#a% !h a!r o o/ !h &r%"'#! or $# hr %+or'"#a!. ) "% ac!"# a% !h a#! o/ !h "%a!"$ 'par!4#!, !o '!r4"# a#''car !h $#! +po# h"ch "!% pr%%' " "% !o !a //c!. Th Scr!ar o/ F"#a#c co4% !h 4a#% or !oo h"ch"%a!"$ po"c "% '!r4"#' a#' "4p4#!', co#%"'r"# !ha! h po%%%%% a !h /ac""!"% !o a!hr 'a!a a#' "#/or4a!"o# a#' ha%a 4+ch roa'r pr%pc!"$ !o propr $a+a! !h4. )"% /+#c!"o# "% !o a!hr a#' coa! %!a!"%!"ca 'a!a a#' o!hr pr!"##!"#/or4a!"o# a#' $r"/ "/ a# o/ !h !o co#'"!"o#% a"' o+! Co#r%% "% pr%#!.

Co#r%% 'o% #o! a'"ca! "!% /+#c!"o#% or +#'+ 'a! por h# "! '%cr"% ha! Do 4+%! 'o#, ho 4+%! 'o "!, a#' ha!"% !h %cop o/ h"% a+!hor"! "# o+r co4p co#o4 !ha! "% /r+#! !h o# a "# h"ch !h "%a!"$ proc%% ca# o /orar'.

Thr "% #o +#'+ 'a!"o# o/ "%a!"$ por +! o# o/ !h '"%cr!"o# a% !o !h c+!"o# o/ a a. Th"% "% co#%!"!+!"o#apr4"%%". Co#r%% '"' #o! 'a! !h por !o !a +! !h 4r "4p4#!a!"o# o/ !h a.

*RI'I+AL) ASTRIA/MARTI+(0 J .) Th p#%% o/ o$r#4#!, ha$"# /or !h"r oDc! !h "#!r%! o/ a, %ho+' or# $ro#, a#' !h 4or 4a# #Do% !ha'$a#!a% o/ %oc"!, !h 4or h o+h! !o ho' h"4%/ ho#or' "# co#!r"+!"# !o !ho% p#%%.=A## Ror! ac+% T+ro! 812=1719Fr#ch %!a!%4a# a#' co#o4"%!

Mo+#!"# +'! '/"c"!, r$#+ #ra!"o#, "#a'+a! /"%ca aoca!"o# /or '+ca!"o#, "#cra%' 4o+4#!% /or ha!h orr%, a#'"'r co$ra /or /+ $a+=a''' !a #/"!% !h% ar !h ra%o#% h Rp+"c Ac! No. 633 8R.A. No. 6339 [1] a% #ac!'Ra%o#%, !h "%'o4 o/ h"ch, !h Co+r! $# "!h "!% !#%"$ co#%!"!+!"o#a por o/ r$", ca##o! pro. Th p!"!"o#r% "# !h%ca%%, ho$r, +%!"o# #o! o# !h "%'o4 o/ !h a, +! a%o prc"$' co#%!"!+!"o#a "#/"r4"!"% "# "!% pa%%a. E$r a #Do% "# "!% /a$or !h pr%+4p!"o# o/ co#%!"!+!"o#a"!. Th"r ar+4#!% #o!"!h%!a#'"#, p!"!"o#r% /a"' !o D+%!"/ !h"r ca/or !h "#$a"'"! o/ !h a. )#c, R.A. No. 633 "% #o! +#co#%!"!+!"o#a. L('ISLATIV( IST*R3 R.A. No. 633 "% a co#%o"'a!"o# o/ !hr "%a!"$ "% #a4, )o+% <" No%. 3555 a#' 305, a#' S#a! <" No. 1650. House Bill No. 3555 [2] a% "#!ro'+c' o# /"r%! ra'"# o# a#+ar , 2005. Th )o+% Co44"!! o# (a% a#' Ma#% appro$' !h", "# %+%!"!+!"o# o/ )o+% <" No. 1;@7, h"ch Rpr%#!a!"$ 8Rp.9 Er"c *. S"#%o# "#!ro'+c' o# A++%! 7, 200;. Th &r%"'#!cr!"/"' !h " o# a#+ar , 2005 /or "44'"a! #ac!4#!. O# a#+ar 2, 2005, !h )o+% o/ Rpr%#!a!"$% appro$' !h " o#

%co#' a#' !h"r' ra'"#. House Bill No. 3705 [3] o# !h o!hr ha#', %+%!"!+!' )o+% <" No. 3105 "#!ro'+c' Rp. Saac#" F. <a!r"#a, a#' )o+% <" No3371 "#!ro'+c' Rp. ac"#!o V. &ara%. I!% 4o!hr " "% )o+% <" No. 3555. Th )o+% Co44"!! o# (a% a#' Ma#% appro$'!h " o# Fr+ar 2, 2005. Th &r%"'#! a%o cr!"/"' "! a% +r#! o#Fr+ar 7, 2005. Th )o+% o/ Rpr%#!a!"$% appro$' !h" o# %co#' a#' !h"r' ra'"# o# Fr+ar 27, 2005. Ma#h", !h S#a! Co44"!! o# (a% a#' Ma#% appro$' Senate Bill No. 1950 [;] o# March , 2005, "# %+%!"!+!"o# o/ S#a!<" No%. 133, 1737 a#' 173, !a"# "#!o co#%"'ra!"o# )o+% <" No%. 3555 a#' 305. S#a!or Raph G. Rc!o %po#%or' S#a!<" No. 133, h" S#a! <" No%. 1737 a#' 173 r o!h %po#%or' S#%. Fra#"# M. *r"o#, +a# M. Fa$"r a#' Fra#c"% N&a#""#a#. Th &r%"'#! cr!"/"' !h " o# March 11, 2005, a#' a% appro$' !h S#a! o# %co#' a#' !h"r' ra'"# o# Apr"13, 2005.

http://sc.judiciary.gov.ph/jurisprudence/2005/sep2005/168056.htm#_ftn1














O# !h %a4 'a!, Apr" 13, 2005, !h S#a! ar' !o !h r+%! o/ !h )o+% o/ Rpr%#!a!"$% /or a co44"!! co#/r#c o# !h'"%ar"# pro$"%"o#% o/ !h propo%' "%. </or o#, !h Co#/r#c Co44"!! o# !h *"%ar"# &ro$"%"o#% o/ )o+% <" No. 3555, )o+% <" No. 305, a#' S#a! <" No1650, a/!r ha$"# 4! a#' '"%c+%%' "# /+ /r a#' co#/r#c, rco44#'' !h appro$a o/ "!% rpor!, h"ch !h S#a! '"' o# Ma10, 2005, a#' "!h !h )o+% o/ Rpr%#!a!"$% ar"# !hr!o !h #! 'a, Ma 11, 2005. O# Ma 23, 2005, !h #ro' cop o/ !h co#%o"'a!' )o+% a#' S#a! $r%"o# a% !ra#%4"!!' !o !h &r%"'#!, ho %"#' !h%a4 "#!o a o# Ma 2;, 2005. Th+%, ca4 R.A. No. 633. + 1, 2005 "% !h //c!"$"! 'a! o/ R.A. No. 633.[5] (h# %a"' 'a! ca4, !h Co+r! "%%+' a !4porar r%!ra"#"# or'r, //c!"$

"44'"a! a#' co#!"#+"# +#!" /+r!hr or'r%, #Do"#"# r%po#'#!% /ro4 #/orc"# a#' "4p4#!"# !h a. Ora ar+4#!% r h' o# + 1;, 2005. S"#"/"ca#!, '+r"# !h har"#, !h Co+r! %pa"# !hro+h Mr. +%!"c Ar!4"o V&a#a#"a#, $o"c' !h ra!"o#a /or "!% "%%+a#c o/ !h !4porar r%!ra"#"# or'r o# + 1, 2005, !o "!-. &ANGANI<AN - . . . <+! /or I o "#!o !h '!a"% o/ o+r pr%#!a!"o#, ! 4 D+%! ! o+ a "!! acro+#'. o+ #o h# !ha !oo //c! o# + 1, 2005, !h Co+r! "%%+' a TRO a! ao+! 5 ococ "# !h a/!r#oo#. <+! /or !ha!, !hr a% a o! o/ co4pa"#!%a"r' o# !$"%"o# a#' o# ra'"o. So4 pop "# a a% %!a!"o# r co4pa"#"# !ha! !h a% pr"c% #! +p 10B. So4 popr co4pa"#"# !ha! !h"r c!r"c " " o +p 10B. O!hr !"4% pop r"'"# "# 'o4%!"c a"r carr"r r co4pa"#"# !ha! !hpr"c% !ha! !h ha$ !o pa o+' ha$ !o o +p 10B. (h" a !ha! a% "# a"r', pr o+r pr%#!a!"o# a#' pr o+r o#+#'r%!a#'"# o/ !h a, !ha!% #o! !r+. I!% #o! !r+ !ha! !h =$a! a #c%%ar" "#cra%' pr"c% 10B +#"/or4 "%#! "!

ATT. <ANIUE* - No, o+r )o#or. . &ANGANI<AN - I! "% #o!

ATT. <ANIUE* - I!% #o!, ca+%, o+r )o#or, !hr "% a# Ec+!"$ Or'r !ha! ra#!' !h &!ro+4 co4pa#"% %o4 %+%"' . . "#!rr+p!' . &ANGANI<AN - Tha!% corrc! . . .

ATT. <ANIUE* - . . . a#' !hr/or !ha! a% 4a#! !o !4pr !h "4pac! . . . "#!rr+p!' . &ANGANI<AN - . . . 4"!"a!"# 4a%+r% . . .

ATT. <ANIUE* - %, o+r )o#or. . &ANGANI<AN - A% a 4a!!r o/ /ac! a par! o/ !h 4"!"a!"# 4a%+r% o+' !h "4"#a!"o# o/ !h Ec"% Ta a#' !h "4por!'+!"%. Tha! "% h, "! "% #o! corrc! !o %a !ha! !h VAT a% !o p!ro+4 'ar% "#cra%' pr"c% 10B.

ATT. <ANIUE* - %, o+r )o#or. . &ANGANI<AN - A#' !hr/or, !hr "% #o D+%!"/"ca!"o# /or "#cra%"# !h r!a" pr"c 10B !o co$r !h E=Va! !a. I/ o+ co#%"'r !hc"% !a a#' !h "4por! '+!"%, !h N! Ta o+' proa "# !h #"horhoo' o/ B ( ar #o! o"# "#!o ac! /"+r% I a4

D+%! !r"# !o '"$r a po"#! !ha! '"//r#! "#'+%!r"%, '"//r#! pro'+c!%, '"//r#! %r$"c% ar h"! '"//r#!. So "!% #o! corrc! !o %a !ha!a pr"c% 4+%! o +p 10B.

ATT. <ANIUE* - o+r r"h!, o+r )o#or. . &ANGANI<AN - No. For "#%!a#c, *o4%!"c A"r"# co4pa#"%, Mr. Co+#%, ar a! pr%#! "4po%' a Sa% Ta o/ 3B. (h# !h"%E=Va! a !oo //c! !h Sa% Ta a% a%o r4o$' a% a 4"!"a!"# 4a%+r. So, !hr/or, !hr "% #o D+%!"/"ca!"o# !o "#cra% !h/ar% 10B a! %! B, corrc!

ATT. <ANIUE* - I +%% %o, o+r )o#or, %. . &ANGANI<AN - Thr ar o!hr pro'+c!% !ha! !h pop r co4pa"#"# o# !ha! /"r%! 'a, r "# "#cra%' ar"!rar" 10B

A#' !ha!% o# ra%o# a4o# 4a# o!hr% !h"% Co+r! ha' !o "%%+ TRO ca+% o/ !h co#/+%"o# "# !h "4p4#!a!"o#. Tha!% h a''' a% a# "%%+ "# !h"% ca%, $# "/ "!% !a##!"a !a# +p !h pa'"#% o/ !h par!"%, !h co#/+%"o# "# !h "4p4#!a!"o# o/!h E=$a!. O+r pop r %+Dc!' !o !h 4rc o/ !ha! co#/+%"o# o/ a# acro%% !h oar' "#cra% o/ 10B, h"ch o+ o+r%/ #oa'4"! a#' I !h"# $# !h Go$r#4#! " a'4"! "% "#corrc!. I# %o4 ca%%, "! %ho+' 3B o#, "# %o4 ca%% "! %ho+' @B'p#'"# o# !h% 4"!"a!"# 4a%+r% a#' !h oca!"o# a#' %"!+a!"o# o/ ach pro'+c!, o/ ach %r$"c, o/ ach co4pa#, "%#! "!

ATT. <ANIUE* - %, o+r )o#or. . &ANGANI<AN - Ar"h!. So !ha!% o# ra%o# h ha' !o "%%+ a TRO p#'"# !h car"/"ca!"o# o/ a !h% a#' "%h !ho$r#4#! " !a !"4 !o car"/ a !h% 4a#% o/ a 4or '!a"' "4p4#!"# r+%, "# ca% !h a "% +ph' !h"%Co+r!. . . .[@]

Th Co+r! a%o '"rc!' !h par!"% !o /" !h"r r%pc!"$ M4ora#'a.








'.R. +o. 145674 </or R.A. No. 633 !oo //c!, p!"!"o#r% ABAKADA GURO &ar! L"%!, et al., /"' a p!"!"o# /or proh""!"o# o# Ma 2, 2005. Th+%!"o# !h co#%!"!+!"o#a"! o/ Sc!"o#% ;, 5 a#' @ o/ R.A. No. 633, a4#'"# Sc!"o#% 10@, 10 a#' 107, r%pc!"$, o/ !hNa!"o#a I#!r#a R$#+ Co' 8NIRC9. Sc!"o# ; "4po%% a 10B VAT o# %a o/ oo'% a#' propr!"%, Sc!"o# 5 "4po%% a 10B VATo# "4por!a!"o# o/ oo'%, a#' Sc!"o# @ "4po%% a 10B VAT o# %a o/ %r$"c% a#' +% or a% o/ propr!"%. Th% +%!"o#'pro$"%"o#% co#!a"# a +#"/or4 proviso a+!hor":"# !h &r%"'#!, +po# rco44#'a!"o# o/ !h Scr!ar o/ F"#a#c, !o ra"% !h VAT ra!!o 12B, //c!"$ a#+ar 1, 200@, a/!r a# o/ !h /oo"# co#'"!"o#% ha$ # %a!"%/"', !o "!- . . . Tha! !h &r%"'#!, +po# !h rco44#'a!"o# o/ !h Scr!ar o/ F"#a#c, %ha, //c!"$ a#+ar 1, 200@, ra"% !h ra! o/ $a+=a''' !a !o !$ prc#! 812B9, a/!r a# o/ !h /oo"# co#'"!"o#% ha% # %a!"%/"'-

8"9 Va+=a''' !a coc!"o# a% a prc#!a o/ Gro%% *o4%!"c &ro'+c! 8G*&9 o/ !h pr$"o+% ar c'% !o a#' /o+r=/"/!hprc#! 82 ;?5B9 or 8""9 Na!"o#a o$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% o# a#' o#=ha/ prc#! 81 B9. &!"!"o#r% ar+ !ha! !h a "% +#co#%!"!+!"o#a, a% "! co#%!"!+!% aa#'o#4#! Co#r%% o/ "!% c+%"$ a+!hor"! !o /" !h ra! o/!a% +#'r Ar!"c VI, Sc!"o# 27829 o/ !h 167 &h""pp"# Co#%!"!+!"o#. '.R. +o. 145268 O# +# 6, 2005, S#. A+""#o . &"4#!, r., et al., /"' a p!"!"o# /or certiorari ""% a%%a""# !h co#%!"!+!"o#a"! o/ Sc!"o#% ;, 5a#' @ o/ R.A. No. 633.

A%"' /ro4 +%!"o#"# !h %o=ca' stand-by authority o/ !h &r%"'#! !o "#cra% !h VAT ra! !o 12B, o# !h ro+#' !ha! "! a4o+#!%!o a# +#'+ 'a!"o# o/ "%a!"$ por, p!"!"o#r% a%o co#!#' !ha! !h "#cra% "# !h VAT ra! !o 12B co#!"##! o# a# o/ !h!o co#'"!"o#% "# %a!"%/"' $"oa!% !h '+ proc%% ca+% 4o'"' "# Ar!"c III, Sc!"o# 1 o/ !h Co#%!"!+!"o#, a% "! "4po%% a#+#/a"r a#' a''"!"o#a !a +r'# o# !h pop, "# !ha!- 819 !h 12B "#cra% "% a4"+o+% ca+% "! 'o% #o! %!a! "/ !h ra! o+' r!+r#' !o !h or""#a 10B "/ !h co#'"!"o#% ar #o o#r %a!"%/"' 829 !h ra! "% +#/a"r a#' +#ra%o#a, a% !h pop ar +#%+r o/!h app"ca VAT ra! /ro4 ar !o ar a#' 839 !h "#cra% "# !h VAT ra!, h"ch "% %+ppo%' !o a# "#c#!"$ !o !h &r%"'#! !ora"% !h VAT coc!"o# !o a! a%! 2 ;?5 o/ !h G*& o/ !h pr$"o+% ar, %ho+' o# a%' o# /"%ca a'+ac. &!"!"o#r% /+r!hr ca"4 !ha! !h "#c+%"o# o/ a stand-by authority ra#!' !o !h &r%"'#! !h <"ca4ra Co#/r#c Co44"!! "% a$"oa!"o# o/ !h #o=a4#'4#! r+ +po# a%! ra'"# o/ a " a"' 'o# "# Ar!"c VI, Sc!"o# 2@829 o/ !h Co#%!"!+!"o#. '.R. +o. 145,41 Thra/!r, a p!"!"o# /or proh""!"o# a% /"' o# +# 26, 2005, !h A%%oc"a!"o# o/ Pilipinas Sh *ar%, I#c., et al., a%%a""# !h/oo"# pro$"%"o#% o/ R.A. No. 633-19 Section , a4#'"# Sc!"o# 110 8A9829 o/ !h NIRC, r+"r"# !ha! !h "#p+! !a o# 'prc"a oo'% %ha a4or!":' o$r a @0=

4o#!h pr"o', "/ !h ac+"%"!"o#, c+'"# !h VAT co4po##!%, c'% O# M""o# &%o% 8&1, 000,000.009 29 Section , a4#'"# Sc!"o# 110 8<9 o/ !h NIRC, "4po%"# a 0B "4"! o# !h a4o+#! o/ "#p+! !a !o cr'"!' aa"#%! !h o+!p+!!a a#' 39 Section !" , a4#'"# Sc!"o# 11; 8c9 o/ !h NIRC, a+!hor":"# !h Go$r#4#! or a# o/ "!% po"!"ca %+'"$"%"o#%, "#%!r+4#!a"!"% oa#c"%, "#c+'"# GOCC%, !o ''+c! a 5B /"#a "!hho'"# !a o# ro%% pa4#!% o/ oo'% a#' %r$"c%, h"ch ar %+Dc! !o 10BVAT +#'r Sc!"o#% 10@ 8%a o/ oo'% a#' propr!"%9 a#' 107 8%a o/ %r$"c% a#' +% or a% o/ propr!"%9 o/ !h NIRC. &!"!"o#r% co#!#' !ha! !h% pro$"%"o#% ar +#co#%!"!+!"o#a /or "# ar"!rar, oppr%%"$, c%%"$, a#' co#/"%ca!or. &!"!"o#r% ar+4#! "% pr4"%' o# !h co#%!"!+!"o#a r"h! o/ #o#='pr"$a!"o# o/ "/, "r! or propr! "!ho+! '+ proc%% o/ a+#'r Ar!"c III, Sc!"o# 1 o/ !h Co#%!"!+!"o#. Accor'"# !o p!"!"o#r%, !h co#!%!' %c!"o#% "4po% "4"!a!"o#% o# !h a4o+#! o/ "#p+!a !ha! 4a ca"4'. &!"!"o#r% a%o ar+ !ha! !h "#p+! !a par!a% !h #a!+r o/ a propr! !ha! 4a #o! co#/"%ca!',appropr"a!', or "4"!' "!ho+! '+ proc%% o/ a. &!"!"o#r% /+r!hr co#!#' !ha! " a# o!hr propr! or propr! r"h!, !h "#p+! !a

cr'"! 4a !ra#%/rr' or '"%po%' o/, a#' !ha! "4"!"# !h %a4, !h o$r#4#! !% !o !a a pro/"! or $a+=a''' $# "/ !hr"% #o pro/"! or $a+=a'''. &!"!"o#r% a%o "$ !ha! !h% pro$"%"o#% $"oa! !h co#%!"!+!"o#a +ara#! o/ +a pro!c!"o# o/ !h a +#'r Ar!"c III, Sc!"o#1 o/ !h Co#%!"!+!"o#, a% !h "4"!a!"o# o# !h cr'"!a "#p+! !a "/- 819 !h #!"! ha% a h"h ra!"o o/ "#p+! !a or 829 "#$%!% "# cap"!a+"p4#! or 839 ha% %$ra !ra#%ac!"o#% "!h !h o$r#4#!, "% #o! a%' o# ra a#' %+%!a#!"a '"//r#c% !o 4! a $a"'ca%%"/"ca!"o#. La%!, p!"!"o#r% co#!#' !ha! !h 0B "4"! "% a#!h"# +! pror%%"$, $"oa!"$ o/ Ar!"c VI, Sc!"o# 27819 o/ !h Co#%!"!+!"o#, a#'!ha! "! "% !h %4ar +%"#%%% "!h h"hr "#p+! !a !o o+!p+! !a ra!"o !ha! " %+//r !h co#%+#c% !hro/ /or "! "p% o+!ha!$r 4ar 4ar"#% !h p!"!"o#r% 4a. '.R. +o. 145,4"



S$ra 44r% o/ !h )o+% o/ Rpr%#!a!"$% ' Rp. Fra#c"% o%ph G. E%c+'ro /"' !h"% p!"!"o# /or certiorari o# +# 302005. Th +%!"o# !h co#%!"!+!"o#a"! o/ R.A. No. 633 o# !h /oo"# ro+#'%- 19 Sc!"o#% ;, 5, a#' @ o/ R.A. No. 633 co#%!"!+! a# +#'+ 'a!"o# o/ "%a!"$ por, "# $"oa!"o# o/ Ar!"c VI, Sc!"o# 27829 o/!h Co#%!"!+!"o# 29 Th <"ca4ra Co#/r#c Co44"!! ac!' "!ho+! D+r"%'"c!"o# "# '!"# !h no pass on pro$"%"o#% pr%#! "# S#a! <" No. 1650a#' )o+% <" No. 305 a#' 39 I#%r!"o# !h <"ca4ra Co#/r#c Co44"!! o/ Sc!"o#% 2, 27, 3;, 11@, 11, 116, 121, 125, [] 1;7, 151, 23@, 23 a#' 277h"ch r pr%#! "# S#a! <" No. 1650, $"oa!% Ar!"c VI, Sc!"o# 2;819 o/ !h Co#%!"!+!"o#, h"ch pro$"'% !ha! a appropr"a!"o#

r$#+ or !ar"// "% %ha or""#a! c+%"$ "# !h )o+% o/ Rpr%#!a!"$% '.R. +o. 1458"6 O# !h $#!h ho+r, Go$r#or E#r"+ T. Garc"a /"' a p!"!"o# /or certiorari a#' proh""!"o# o# + 20, 2005, a"#+#co#%!"!+!"o#a"! o/ !h a o# !h ro+#' !ha! !h "4"!a!"o# o# !h cr'"!a "#p+! !a "# //c! ao% VAT=r"%!r' %!a"%h4#!%!o r!a"# a por!"o# o/ !h !a% !h coc!, !h+% $"oa!"# !h pr"#c"p !ha! !a coc!"o# a#' r$#+ %ho+' %o aoca!' /orp+"c p+rpo%% a#' p#'"!+r%. &!"!"o#r Garc"a /+r!hr ca"4% !ha! ao"# !h% %!a"%h4#!% !o pa%% o# !h !a !o !hco#%+4r% "% "#+"!a, "# $"oa!"o# o/ Ar!"c VI, Sc!"o# 27819 o/ !h Co#%!"!+!"o#. R(S9*+&(+TS C*MM(+T Th O//"c o/ !h So"c"!or G#ra 8OSG9 /"' a Co44#! "# ha/ o/ r%po#'#!%. &r"4"#ar", r%po#'#!% co#!#' !ha! R.A. No633 #Do% !h pr%+4p!"o# o/ co#%!"!+!"o#a"! a#' p!"!"o#r% /a"' !o ca%! 'o+! o# "!% $a"'"!. R"# o# !h ca% o/ #olentino vs. Secretary o$ %inance, 235 SCRA@30 8166;9, r%po#'#!% ar+ !ha! !h proc'+ra "%%+% ra"%' p!"!"o#r%, i.e., a"! o/ !h "ca4ra proc'"#%, c+%"$or""#a!"o# o/ r$#+ 4a%+r% a#' !h por o/ !h S#a! co#co4"!a#! !hr!o, ha$ ara' # %!!'. ("!h rar' !o !h "%%+o/ +#'+ 'a!"o# o/ "%a!"$ por !o !h &r%"'#!, r%po#'#!% co#!#' !ha! !h a "% co4p! a#' a$% #o '"%cr!"o# !o !h&r%"'#! +! !o "#cra% !h ra! !o 12B o#c a# o/ !h !o co#'"!"o#% pro$"'' !hr"# ar"%. R%po#'#!% a%o r/+! p!"!"o#r% ar+4#! !ha! !h "#cra% !o 12B, a% a% !h 0B "4"!a!"o# o# !h cr'"!a "#p+! !a, !h @04o#!h a4or!":a!"o# o# !h p+rcha% or "4por!a!"o# o/ cap"!a oo'% c'"# &1,000,000.00, a#' !h 5B /"#a "!hho'"# !a o$r#4#! a#c"%, "% ar"!rar, oppr%%"$, a#' co#/"%ca!or, a#' !ha! "! $"oa!% !h co#%!"!+!"o#a pr"#c"p o# pror%%"$ !aa!"o#a4o# o!hr%. F"#a, r%po#'#!% 4a#"/%! !ha! R.A. No. 633 "% !h a#chor o/ !h o$r#4#!% /"%ca r/or4 a#'a. A r/or4 "# !h $a+=a'''%%!4 o/ !aa!"o# "% !h cor r$#+ 4a%+r !ha! " !"! !h aa#c !oar'% a %+%!a"#a 4acroco#o4"c #$"ro#4#! #c%%ar/or co#o4"c ro!h.

ISS(S Th Co+r! '/"#' !h "%%+%, a% /oo%- 9R*C(&RAL ISS( (h!hr R.A. No. 633 $"oa!% !h /oo"# pro$"%"o#% o/ !h Co#%!"!+!"o#- a. Ar!"c VI, Sc!"o# 2;, a#'. Ar!"c VI, Sc!"o# 2@829 S#STA+TIV( ISS(S 1. (h!hr Sc!"o#% ;, 5 a#' @ o/ R.A. No. 633, a4#'"# Sc!"o#% 10@, 10 a#' 107 o/ !h NIRC, $"oa! !h /oo"# pro$"%"o#% o/

!h Co#%!"!+!"o#- a. Ar!"c VI, Sc!"o# 27819, a#'. Ar!"c VI, Sc!"o# 27829 2. (h!hr Sc!"o# 7 o/ R.A. No. 633, a4#'"# Sc!"o#% 1108A9829 a#' 1108<9 o/ !h NIRC a#' Sc!"o# 12 o/ R.A. No. 633,a4#'"# Sc!"o# 11;8C9 o/ !h NIRC, $"oa! !h /oo"# pro$"%"o#% o/ !h Co#%!"!+!"o#- a. Ar!"c VI, Sc!"o# 27819, a#'. Ar!"c III, Sc!"o# 1 RLI+' *: T( C*RT






A% a pr+', !h Co+r! '4% "! ap! !o r%!a! !h #ra pr"#c"p% a#' co#cp!% o/ $a+=a''' !a 8VAT9, a% !h co#/+%"o# a#'"#$"!a, "!"a!"o#, r'% /ro4 a /aac"o+% #o!"o# o/ "!% #a!+r. Th VAT "% a !a o# %p#'"# or co#%+4p!"o#. I! "% $"' o# !h %a, ar!r, cha# or a% o/ oo'% or propr!"% a#' %r$"c%[7] <"# a# "#'"rc! !a o# p#'"!+r, !h %r o/ oo'% or %r$"c% 4a pa%% o# !h a4o+#! o/ !a pa"' !o !h +r,[6] "!h !h %ac!"# 4r a% a !a coc!or .[10] Th +r'# o/ VAT "% "#!#'' !o /a o# !h "44'"a! +r% a#' +!"4a!, !h #'=co#%+4r%. I# co#!ra%!, a '"rc! !a "% a !a /or h"ch a !apar "% '"rc! "a o# !h !ra#%ac!"o# or +%"#%% "! #a% "#, "!ho+! !ra#%/rr"#!h +r'# !o %o4o# %.[11]Ea4p% ar "#'"$"'+a a#' corpora! "#co4 !a%, !ra#%/r !a%, a#' r%"'#c !a%.[12]

I# !h &h""pp"#%, !h $a+=a''' %%!4 o/ %a% !aa!"o# ha% o# # "# "%!#c, a"! "# a '"//r#! 4o'. &r"or !o 167, !h

%%!4 a% a %"#=%!a !a co4p+!' +#'r !h co%! ''+c!"o# 4!ho' a#' a% paa o# !h or""#a %r%. Th %"#=%!a %%!4 a% %+%+#! 4o'"/"', a#' a 4"!+r o/ !h co%! ''+c!"o# 4!ho' a#' !a cr'"! 4!ho' a% +%' !o '!r4"# !h$a+=a''' !a paa.[13] U#'r !h !a cr'"! 4!ho', a# #!"! ca# cr'"! aa"#%! or %+!rac! /ro4 !h VAT char' o# "!% %a% oro+!p+!% !h VAT pa"' o# "!% p+rcha%%, "#p+!% a#' "4por!%. [1;]

I! a% o# "# 167, h# &r%"'#! Cora:o# C. A+"#o "%%+' Ec+!"$ Or'r No. 23, !ha! !h VAT %%!4 a% ra!"o#a":' "4po%"# a 4+!"=%!a !a ra! o/ 0B or 10B o# a %a% +%"# !h !a cr'"! 4!ho'.[15]

E.O. No. 23 a% /oo' R.A. No. 1@ or !h Epa#'' VAT La,[1@] R.A. No. 72;1 or !h I4pro$' VAT La,[1] R.A. No. 7;2; o!h Ta R/or4 Ac! o/ 166,[17] a#' /"#a, !h pr%#! a+r' R.A. No. 633, a%o r/rr' !o r%po#'#!% a% !h VAT R/or4

Ac!. Th Co+r! " #o '"%c+%% !h "%%+% "# o"ca %+#c. 9R*C(&RAL ISS(I.(h!hr R.A. No. 633 $"oa!% !h /oo"# pro$"%"o#% o/ !h Co#%!"!+!"o#- a. Ar!"c VI, Sc!"o# 2;, a#'. Ar!"c VI, Sc!"o# 2@829

A. #he Bica&eral 'on$erence 'o&&ittee &!"!"o#r% E%c+'ro, et al., a#' &"4#!, et al., a !ha! !h <"ca4ra Co#/r#c Co44"!! c'' "!% a+!hor"! - 19 I#%r!"# !h stand-by authority "# /a$or o/ !h &r%"'#! "# Sc!"o#% ;, 5, a#' @ o/ R.A. No. 633 29 *!"# #!"r !h no pass-on pro$"%"o#% /o+#' "# o!h !h )o+% a#' S#a! "%

39 I#%r!"# !h pro$"%"o# "4po%"# a 0B "4"! o# !h a4o+#! o/ "#p+! !a !o cr'"!' aa"#%! !h o+!p+! !a a#' ;9 I#c+'"# !h a4#'4#!% "#!ro'+c' o# S#a! <" No. 1650 rar'"# o!hr "#'% o/ !a% "# a''"!"o# !o !h $a+=a''' !a. &!"!"o#r% #o %ch !h Co+r! !o '/"# !h por% o/ !h <"ca4ra Co#/r#c Co44"!!. I! %ho+' or# "# 4"#' !ha! !h por o/ "#!r#a r+a!"o# a#' '"%c"p"# ar "#!r"#%"c "# a# "%a!"$ o' /or, a% +#rr"#+c"'a!' +%!"c S!or, ;i<f the %ower did not exist it wo$ld =e $tterl! im%ratia=le to transat the =$siness of the nationeither at all or at least with deen! deli=eration and order. [16] Th+%, Ar!"c VI, Sc!"o# 1@ 839 o/ !h Co#%!"!+!"o# pro$"'% !haach )o+% 4a '!r4"# !h r+% o/ "!% proc'"#%. &+r%+a#! !o !h"% "#hr#! co#%!"!+!"o#a por !o pro4+a! a#' "4p4#! "!%o# r+% o/ proc'+r, !h r%pc!"$ r+% o/ ach ho+% o/ Co#r%% pro$"'' /or !h cra!"o# o/ a <"ca4ra Co#/r#cCo44"!!. Th+%, R+ IV, Sc!"o#% 77 a#' 76 o/ !h R+% o/ )o+% o/ Rpr%#!a!"$% pro$"'% a% /oo%-

Sc. 77. 'on$erence 'o&&ittee. I# !h $#! !ha! !h )o+% 'o% #o! ar "!h !h S#a! o# !h a4#'4#! !o a# " or Do"#!r%o+!"o#, !h '"//r#c% 4a %!!' !h co#/r#c co44"!!% o/ o!h cha4r%. I# r%o$"# !h '"//r#c% "!h !h S#a!, !h )o+% pa# %ha, a% 4+ch a% po%%", a'hr !o a#' %+ppor! !h )o+% <". I/ !h'"//r#c% "!h !h S#a! ar %o %+%!a#!"a !ha! !h 4a!r"a "4pa"r !h )o+% <", !h pa# %ha rpor! %+ch /ac! !o !h )o+% /o!h a!!r% appropr"a! ac!"o#. Sc. 76. 'on$erence 'o&&ittee Reports. . . . Each rpor! %ha co#!a"# a '!a"', %+//"c"#! p"c"! %!a!4#! o/ !h cha#% "# ora4#'4#!% !o !h %+Dc! 4a%+r.. . .Th Cha"r4a# o/ !h )o+% pa# 4a "#!rpa!' o# !h Co#/r#c Co44"!! Rpor! pr"or !o !h $o!"# !hro#. Th )o+%%ha $o! o# !h Co#/r#c Co44"!! Rpor! "# !h %a4 4a##r a#' proc'+r a% "! $o!% o# a " o# !h"r' a#' /"#a ra'"#. R+ II, Sc!"o# 35 o/ !h R+% o/ !h S#a! %!a!%-



































Sc. 35. I# !h $#! !ha! !h S#a! 'o% #o! ar "!h !h )o+% o/ Rpr%#!a!"$% o# !h pro$"%"o# o/ a# " or Do"#! r%o+!"o#,!h '"//r#c% %ha %!!' a co#/r#c co44"!! o/ o!h )o+%% h"ch %ha 4! "!h"# !# 8109 'a% a/!r !h"r co4po%"!"o#Th &r%"'#! %ha '%"#a! !h 44r% o/ !h S#a! &a# "# !h co#/r#c co44"!! "!h !h appro$a o/ !h S#a!. Each Co#/r#c Co44"!! Rpor! %ha co#!a"# a '!a"' a#' %+//"c"#! p"c"! %!a!4#! o/ !h cha#% "#, or a4#'4#!% !o !h%+Dc! 4a%+r, a#' %ha %"#' a 4aDor"! o/ !h 44r% o/ ach )o+% pa#, $o!"# %para!.

A co4para!"$ pr%#!a!"o# o/ !h co#/"c!"# )o+% a#' S#a! pro$"%"o#% a#' a rco#c"' $r%"o# !hro/ "!h !h pa#a!or%!a!4#! o/ !h co#/r#c co44"!! %ha a!!ach' !o !h rpor!.. . .

Th cra!"o# o/ %+ch co#/r#c co44"!! a% appar#! "# r%po#% !o a pro4, #o! a''r%%' a# co#%!"!+!"o#a pro$"%"o#,hr !h !o ho+%% o/ Co#r%% /"#' !h4%$% "# '"%ar4#! o$r cha#% or a4#'4#!% "#!ro'+c' !h o!hr ho+% "# a"%a!"$ ". G"$# !ha! o# o/ !h 4o%! a%"c por% o/ !h "%a!"$ ra#ch "% !o /or4+a! a#' "4p4#! "!% o# r+% o/proc'"#% a#' !o '"%c"p"# "!% 44r%, 4a !h Co+r! !h# '$ "#!o !h '!a"% o/ ho Co#r%% co4p"% "!h "!% "#!r#a r+% oho "! co#'+c!% "!% +%"#%% o/ pa%%"# "%a!"o# No! !ha! "# !h pr%#! p!"!"o#%, !h "%%+ "% #o! h!hr pro$"%"o#% o/ !h r+% o/o!h ho+%% cra!"# !h "ca4ra co#/r#c co44"!! ar +#co#%!"!+!"o#a, =$t whether the =iameral onferene ommitteehas stritl! om%lied with the r$les of =oth ho$ses there=! remaining within the >$risdition onferred $%on it =! Congress. I# !h rc#! ca% o/ %arias vs. #he ()ecutive Secretary ,[20] !h Co+r! (n Banc , $nanimo$sl! r"!ra!' a#' 4pha%":' "!% a'hr#c!o !h #ro' " 'oc!r"#, !h+%, 'c"#"# !hr"# p!"!"o#r% pa /or !h Co+r! !o o h"#' !h #ro' cop o/ !h ". A%%a"' "#%a"' ca% a% Co#r%%% cra!"o# o/ !o %!% o/ "ca4ra co#/r#c co44"!!%, !h ac o/ rcor'% o/ %a"' co44"!!% proc'"#%!h a' $"oa!"o# o/ %a"' co44"!!% o/ !h r+% o/ o!h ho+%%, a#' !h '"%appara#c or '!"o# o/ o# o/ !h pro$"%"o#% "# !hco4pro4"% " %+4"!!' !h "ca4ra co#/r#c co44"!!. I! a% ar+' !ha! %+ch "rr+ar"!"% "# !h pa%%a o/ !h a#+"/"' R.A. No. 600@, or !h Fa"r Ec!"o# Ac!. S!r""# 'o# %+ch ar+4#!, !h Co+r! h' !h+%- U#'r !h #ro' " 'oc!r"#, !h %"#"# o/ a " !h Spar o/ !h )o+% a#' !h S#a! &r%"'#! a#' !h cr!"/"ca!"o# o/ !hScr!ar"% o/ o!h )o+%% o/ Co#r%% !ha! "! a% pa%%' ar co#c+%"$ o/ "!% '+ #ac!4#!. A r$" o/ ca%% r$a% !h Co+r!%co#%"%!#! a'hr#c !o !h r+. The Co$rt finds no reason to deviate from the sal$tar! r$le in this ase where the irreg$laritiesalleged =! the %etitioners mostl! involved the internal r$les of Congress e.g. reation of the 2nd or "rd #iameral ConfereneCommittee =! the o$se. This Co$rt is not the %ro%er for$m for the enforement of these internal r$les of Congress whethero$se or Senate. 9arliamentar! r$les are merel! %roed$ral and with their o=servane the o$rts have no onern. ?hateverdo$=ts there ma! =e as to the formal validit! of Re%. At +o. @664 m$st =e resolved in its favor. Th Co+r! r"!ra!% "!% r+"#"# Arroyo vs. De *enecia, vi+.- <+! !h ases =oth here and a=road in var!ing forms of ex%ression all den! to the o$rts the %ower to in$ire intoallegations that in enating a law a o$se of Congress failed to om%l! with its own r$les in the a=sene of showing thatthere was a violation of a onstit$tional %rovision or the rights of %rivate individ$als. I#Os&ea v. Pendatun, "! a% h'- A! a#

ra!, co+r!% ha$ 'car' !ha! !h r+% a'op!' '"ra!"$ o'"% ar %+Dc! !o r$oca!"o#, 4o'"/"ca!"o# or a"$r a! !h pa%+ro/ !h o' a'op!"# !h4. And it has =een said that 9arliamentar! r$les are merel! %roed$ral and with their o=servane theo$rts have no onern. The! ma! =e waived or disregarded =! the legislative =od!. Conse$entl! mere fail$re to onform to%arliamentar! $sage will not invalidate the ation Btaen =! a deli=erative =od!D when the re$isite n$m=er of mem=ers haveagreed to a %arti$lar meas$re.[21] 8E4pha%"% %+pp"'9 Th /oro"# 'cara!"o# "% ac! "# po"#! "!h !h pr%#! ca%%, hr p!"!"o#r% a "rr+ar"!"% co44"!!' !h co#/r#cco44"!! "# "#!ro'+c"# cha#% or '!"# pro$"%"o#% "# !h )o+% a#' S#a! "%. A"# !o !h %arias ca%,[22] !h pr%#! p!"!"o#%a%o ra"% a# "%%+ rar'"# !h ac!"o#% !a# !h co#/r#c co44"!! o# 4a!!r% rar'"# Co#r%% co4p"a#c "!h "!% o#"#!r#a r+%. A% %!a!' ar"r, o# o/ !h 4o%! a%"c a#' "#hr#! por o/ !h "%a!+r "% !h por !o /or4+a! r+% /or "!%proc'"#% a#' !h '"%c"p"# o/ "!% 44r%. Co#r%% "% !h %! D+' o/ ho "! %ho+' co#'+c! "!% o# +%"#%% p'"!"o+% a#'"# !h 4o%! or'r 4a##r. I! "% a%o !h %o co#cr# o/ Co#r%% !o "#%!" '"%c"p"# a4o# !h 44r% o/ "!% co#/r#c co44"!!"/ "! "$% !ha! %a"' 44r% $"oa!' a# o/ "!% r+% o/ proc'"#%. E$# !h pa#'' D+r"%'"c!"o# o/ !h"% Co+r! ca##o! app !o+%!"o#% rar'"# o# !h "#!r#a opra!"o# o/ Co#r%%, !h+%, !h Co+r! "% o#! !o '# a r$" o/ !h "#!r#a proc'"#% o/ aco=+a ra#ch o/ o$r#4#!.

Moro$r, a% /ar ac a% 166; or 4or !ha# !# ar% ao, "# !h ca% o/ #olentino vs. Secretary o$ %inance, [23] !h Co+r! ara' 4a'!h pro#o+#c4#! !ha! ;i<f a hange is desired in the %ratie ;of the #iameral Conferene Committee< it m$st =e so$ght inCongress sine this $estion is not overed =! an! onstit$tional %rovision =$t is onl! an internal r$le of eah ho$se. [2;] To'a!, Co#r%% ha% #o! %# "! /"! !o 4a %+ch cha#% a'$r!' !o !h Co+r!. I! %4%, !hr/or, !ha! Co#r%% /"#'% !h prac!"c%o/ !h "ca4ra co#/r#c co44"!! !o $r +%/+ /or p+rpo%% o/ pro4p! a#' //"c"#! "%a!"$ ac!"o#. N$r!h%%, D+%! !o p+! 4"#'% a! a% !ha! #o a!a#! "rr+ar"!"% !a"#!' !h proc'"#% o/ !h "ca4ra co#/r#c co44"!!%,!h Co+r! '4% "! #c%%ar !o ' o# !h "%%+. Th Co+r! o%r$% !ha! !hr a% a #c%%"! /or a co#/r#c co44"!! ca+%a co4par"%o# o/ !h pro$"%"o#% o/ )o+% <" No%. 3555 a#' 305 o# o# ha#', a#' S#a! <" No. 1650 o# !h o!hr, r$a% !ha!!hr r "#'' '"%ar4#!%. A% po"#!' o+! "# !h p!"!"o#%, %a"' '"%ar4#!% r a% /oo%-

o$se #ill +o. "777

o$se #ill +o."867

Senate #ill +o. 1@76


















With regard to Stand-By Authority in faor of !resident &ro$"'% /or 12B VAT o# $r %ao/ oo'% or propr!"% 8a4#'"#Sc. 10@ o/ NIRC9 12B VAT o#"4por!a!"o# o/ oo'% 8a4#'"#Sc. 10 o/ NIRC9 a#' 12B VATo# %a o/ %r$"c% a#' +% or a%o/ propr!"% 8a4#'"# Sc. 107 o/ NIRC9

&ro$"'% /or 12B VAT "# #ra o# %a%o/ oo'% or propr!"% a#' r'+c' ra!%/or %a o/ cr!a"# oca 4a#+/ac!+r'oo'% a#' p!ro+4 pro'+c!% a#' ra4a!r"a% !o +%' "# !h 4a#+/ac!+r!hro/ 8a4#'"# Sc. 10@ o/ NIRC912B VAT o# "4por!a!"o# o/ oo'% a#'r'+c' ra!% /or cr!a"# "4por!'

pro'+c!% "#c+'"# p!ro+4 pro'+c!%8a4#'"# Sc. 10 o/ NIRC9 a#' 12BVAT o# %a o/ %r$"c% a#' +% or a%o/ propr!"% a#' a r'+c' ra! /or cr!a"# %r$"c% "#c+'"# por #ra!"o# 8a4#'"# Sc. 107 o/ NIRC9

&ro$"'% /or a %"# ra! o/ 10B VAT o#%a o/ oo'% or propr!"% 8a4#'"#Sc. 10@ o/ NIRC9, 10B VAT o# %a o/ %r$"c% "#c+'"# %a o/ c!r"c"! #ra!"o# co4pa#"%, !ra#%4"%%"o# a#''"%!r"+!"o# co4pa#"%, a#' +% or a% o/ propr!"% 8a4#'"# Sc. 107 o/ NIRC9

With regard to the no "ass-on "roision No %"4"ar pro$"%"o# &ro$"'% !ha! !h VAT "4po%' o# por

#ra!"o# a#' o# !h %a o/ p!ro+4pro'+c!% %ha a%or' #ra!"o#co4pa#"% or %r%, r%pc!"$, a#'%ha #o! pa%%' o# !o co#%+4r%

&ro$"'% !ha! !h VAT "4po%' o# %a% o/ c!r"c"! #ra!"o# co4pa#"% a#'%r$"c% o/ !ra#%4"%%"o# co4pa#"% a#''"%!r"+!"o# co4pa#"%, a% a% !ho% o/ /ra#ch"% ra#!% o/ c!r"c +!""!"% %ha#o! app !o r%"'#!"a#'=+%r%. VAT %ha a%or' #ra!"o#, !ra#%4"%%"o#, a#' '"%!r"+!"o#co4pa#"%.

With regard to 70# li$it on in"ut ta% &redit &ro$"'% !ha! !h "#p+! !a cr'"! /or cap"!a oo'% o# h"ch a VAT ha%# pa"' %ha +a'"%!r"+!' o$r 5 ar% or !h'prc"a "/ o/ %+ch cap"!aoo'% !h "#p+! !a cr'"! /or oo'%a#' %r$"c% o!hr !ha# cap"!aoo'% %ha #o! c' 5B o/ !h!o!a a4o+#! o/ %+ch oo'% a#'

%r$"c% a#' /or pr%o#% #a'"# r!a" !ra'"# o/ oo'%, !haoa "#p+! !a cr'"! %ha #o!c' 11B o/ !h !o!a a4o+#! o/ oo'% p+rcha%'.

No %"4"ar pro$"%"o# &ro$"'% !ha! !h "#p+! !a cr'"! /or cap"!aoo'% o# h"ch a VAT ha% # pa"' %ha +a '"%!r"+!' o$r 5 ar% or !h'prc"a "/ o/ %+ch cap"!a oo'% !h"#p+! !a cr'"! /or oo'% a#' %r$"c%o!hr !ha# cap"!a oo'% %ha #o! c'60B o/ !h o+!p+! VAT.

With regard to a$end$ents to 'e $ade to N()* "roisions regarding in&o$e and e%&ise ta%es No %"4"ar pro$"%"o# No %"4"ar pro$"%"o# &ro$"'' /or a4#'4#!% !o %$ra NIRC

pro$"%"o#% rar'"# corpora! "#co4,prc#!a, /ra#ch"% a#' c"% !a%

Th '"%ar4#!% !# !h pro$"%"o#% "# !h )o+% "% a#' !h S#a! " r "!h rar' !o 819 ha! ra! o/ VAT "% !o "4po%' 829 h!hr o# !h VAT "4po%' o# c!r"c"! #ra!"o#, !ra#%4"%%"o# a#' '"%!r"+!"o# co4pa#"% %ho+' #o! pa%%' o#

!o co#%+4r%, a% propo%' "# !h S#a! ", or o!h !h VAT "4po%' o# c!r"c"! #ra!"o#, !ra#%4"%%"o# a#' '"%!r"+!"o#co4pa#"% a#' !h VAT "4po%' o# %a o/ p!ro+4 pro'+c!% %ho+' #o! pa%%' o# !o co#%+4r%, a% propo%' "# !h )o+% "839 "# ha! 4a##r "#p+! !a cr'"!% %ho+' "4"!' 8;9 a#' h!hr !h NIRC pro$"%"o#% o# corpora! "#co4 !a%, prc#!a/ra#ch"% a#' c"% !a% %ho+' a4#''. Thr "# '"//r#c% a#'?or '"%ar4#!% o# !h /oro"# pro$"%"o#% o/ !h )o+% a#' S#a! "%, !h <"ca4ra Co#/r#cCo44"!! a% 4a#'a!' !h r+% o/ o!h ho+%% o/ Co#r%% !o ac! o# !h %a4 %!!"# %a"' '"//r#c% a#'?o'"%ar4#!%. Th <"ca4ra Co#/r#c Co44"!! ac!' o# !h '"%ar"# pro$"%"o#% 4a"# !h /oo"# cha#%- 1. ("!h rar' !o !h '"%ar4#! o# !h ra! o/ VAT !o "4po%', "! o+' appar /ro4 !h Co#/r#c Co44"!! Rpor! !ha! !h<"ca4ra Co#/r#c Co44"!! !r"' !o r"' !h ap "# !h '"//r#c !# !h 10B VAT ra! propo%' !h S#a!, a#' !h$ar"o+% ra!% "!h 12B a% !h h"h%! VAT ra! propo%' !h )o+%, %!r""# a co4pro4"% hr !h pr%#! 10B VAT ra!o+' r!a"#' +#!" cr!a"# co#'"!"o#% ar"%, i.e., !h $a+=a''' !a coc!"o# a% a prc#!a o/ ro%% 'o4%!"c pro'+c! 8G*&9 o



!h pr$"o+% ar c'% 2 ;?5B, or Na!"o#a Go$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% 1B, h# !h&r%"'#!, +po# rco44#'a!"o# o/ !h Scr!ar o/ F"#a#c %ha ra"% !h ra! o/ VAT !o 12B //c!"$ a#+ar 1, 200@. 2. ("!h rar' !o !h '"%ar4#! o# h!hr o# !h VAT "4po%' o# c!r"c"! #ra!"o#, !ra#%4"%%"o# a#' '"%!r"+!"o# co4pa#"%%ho+' #o! pa%%' o# !o co#%+4r% or h!hr o!h !h VAT "4po%' o# c!r"c"! #ra!"o#, !ra#%4"%%"o# a#' '"%!r"+!"o#co4pa#"% a#' !h VAT "4po%' o# %a o/ p!ro+4 pro'+c!% 4a pa%%' o# !o co#%+4r%, !h <"ca4ra Co#/r#cCo44"!! cho% !o %!! %+ch '"%ar4#! a!o!hr '!"# /ro4 "!% Rpor! a# no pass-on pro$"%"o#. 3. ("!h rar' !o !h '"%ar4#! o# h!hr "#p+! !a cr'"!% %ho+' "4"!' or #o!, !h <"ca4ra Co#/r#c Co44"!! 'c"''!o a'op! !h po%"!"o# o/ !h )o+% p+!!"# a "4"!a!"o# o# !h a4o+#! o/ "#p+! !a !ha! 4a cr'"!' aa"#%! !h o+!p+! !a,a!ho+h "! cra/!' "!% o# a#+a a% !o !h a4o+#! o/ !h "4"!a!"o# o# "#p+! !a cr'"!% a#' !h 4a##r o/ co4p+!"# !h %a4

pro$"'"# !h+%- 8A9 Cr'"!a I#p+! Ta. . . .. . .Provided , Th "#p+! !a o# oo'% p+rcha%' or "4por!' "# a ca#'ar 4o#!h /or +% "# !ra' or +%"#%% /or h"ch ''+c!"o# /o'prc"a!"o# "% ao' +#'r !h"% Co', %ha %pra' $# o$r !h 4o#!h o/ ac+"%"!"o# a#' !h /"/!=#"# 8569 %+cc'"# 4o#!h%"/ !h ara! ac+"%"!"o# co%! /or %+ch oo'%, c+'"# !h VAT co4po##! !hro/, c'% o# 4""o# &%o% 8&1,000,000.009-&ROVI*E*, ho$r, !ha! "/ !h %!"4a!' +%/+ "/ o/ !h cap"!a oo' "% %% !ha# /"$ 859 ar%, a% +%' /or 'prc"a!"o# p+rpo%%,!h# !h "#p+! VAT %ha %pra' o$r %+ch %hor!r pr"o'- . . . 8<9 Ec%% O+!p+! or I#p+! Ta. I/ a! !h #' o/ a# !aa +ar!r !h o+!p+! !a c'% !h "#p+! !a, !h c%% %ha pa"' !hVAT=r"%!r' pr%o#. I/ !h "#p+! !a c'% !h o+!p+! !a, !h c%% %ha carr"' o$r !o !h %+cc'"# +ar!r or +ar!r%&ROVI*E* !ha! !h "#p+! !a "#c+%"$ o/ "#p+! VAT carr"' o$r /ro4 !h pr$"o+% +ar!r !ha! 4a cr'"!' "# $r +ar!r %ha#o! c' %$#! prc#! 80B9 o/ !h o+!p+! VAT- &ROVI*E*, )O(EVER, T)AT a# "#p+! !a a!!r"+!a !o :ro=ra!' %a% aVAT=r"%!r' pr%o# 4a a! h"% op!"o# r/+#'' or cr'"!' aa"#%! o!hr "#!r#a r$#+ !a%, . . .

;. ("!h rar' !o !h a4#'4#!% !o o!hr pro$"%"o#% o/ !h NIRC o# corpora! "#co4 !a, /ra#ch"%, prc#!a a#' c"% !a%, !hco#/r#c co44"!! 'c"'' !o "#c+' %+ch a4#'4#!% a#' a%"ca a'op!' !h pro$"%"o#% /o+#' "# S#a! <" No. 1650, "!h%o4 cha#% a% !o !h ra! o/ !h !a !o "4po%'. U#'r !h pro$"%"o#% o/ o!h !h R+% o/ !h )o+% o/ Rpr%#!a!"$% a#' S#a! R+%, !h <"ca4ra Co#/r#c Co44"!! "%4a#'a!' !o %!! !h '"//r#c% !# !h '"%ar"# pro$"%"o#% "# !h )o+% " a#' !h S#a! ". Th !r4 %!! "%%#o#4o+% !o rco#c" a#' har4o#":. [25] To rco#c" or har4o#": '"%ar"# pro$"%"o#%, !h <"ca4ra Co#/r#c Co44"!!4a !h# 8a9 a'op! !h %pc"/"c pro$"%"o#% o/ "!hr !h )o+% " or S#a! ", 89 'c"' !ha! #"!hr pro$"%"o#% "# !h )o+% " or!h pro$"%"o#% "# !h S#a! " o+' carr"' "#!o !h /"#a /or4 o/ !h ", a#'?or 8c9 !r !o arr"$ a! a co4pro4"% !# !h'"%ar"# pro$"%"o#%. I# !h pr%#! ca%, !h cha#% "#!ro'+c' !h <"ca4ra Co#/r#c Co44"!! o# '"%ar"# pro$"%"o#% r 4a#! o# !orco#c" a#' har4o#": !h '"%ar"# pro$"%"o#% /or "! '"' #o! "#Dc! a# "'a or "#!#! !ha! "% ho /or"# !o !h %+Dc! 4rac'

!h or""#a pro$"%"o#%. Th %o=ca' stand-by authority "# /a$or o/ !h &r%"'#!, hr !h ra! o/ 10B VAT a#!' !h S#a! "% r!a"#' +#!" %+ch!"4 !ha! cr!a"# co#'"!"o#% ar"% h# !h 12B VAT a#!' !h )o+% %ha "4po%', appar% !o a co4pro4"% !o !r !or"' !h '"//r#c "# !h ra! o/ VAT propo%' !h !o ho+%% o/ Co#r%%. N$r!h%%, %+ch co4pro4"% "% %!" !o!a "!h"#!h %+Dc! o/ ha! ra! o/ VAT %ho+' "4po%' o# !apar%. Th no pass-on provision a% '!' a!o!hr. I# !h !ra#%cr"p!% o/ !h proc'"#% o/ !h <"ca4ra Co#/r#c Co44"!! h'o# Ma 10, 2005, S#. Raph Rc!o, Cha"r4a# o/ !h S#a! &a#, pa"#' !h ra%o# /or '!"# !h no pass-on pro$"%"o# "# !h"%"%- . . . !h !h"#"# a% D+%! !o p !h VAT a or !h VAT " %"4p. A#' r !h"#"# !ha! #o %c!or %ho+' a #/"c"ar o/"%a!"$ rac, #"!hr %ho+' a# %c!or '"%cr"4"#a!' o#. Th VAT "% a# "#'"rc! !a. It is a %ass on/tax. A#' !% p "! pa"#a#' %"4p. L!% #o! co#/+% !h " a#' p+! a #o pa%%=o# pro$"%"o#. To=!h"r'% o/ !h or' ha$ a VAT %%!4 a#' "# !h"% !o=!h"r'% o/!h o, I ha$ ! !o % a VAT "!h a #o pa%%=!ho+h pro$"%"o#. So, !h !h"#"# o/ !h S#a! "% a%"ca %"4p, !% p !h VAT

%"4p.[2@]

8E4pha%"% %+pp"'9Rp. To'oro Loc%"# /+r!hr 4a' !h 4a#"/%!a!"o# !ha! !h no pass-on pro$"%"o# #$r ra #Do' !h %+ppor! o/ "!hr )o+%.[2]

("!h rar' !o !h a4o+#! o/ "#p+! !a !o cr'"!' aa"#%! o+!p+! !a, !h <"ca4ra Co#/r#c Co44"!! ca4 !o a co4pro4"%o# !h prc#!a ra! o/ !h "4"!a!"o# or cap o# %+ch "#p+! !a cr'"!, +! aa"#, !h cha# "#!ro'+c' !h <"ca4ra Co#/r#cCo44"!! a% !o!a "!h"# !h "#!#! o/ o!h ho+%% !o p+! a cap o# "#p+! !a !ha! 4a cr'"!' aa"#%! !h o+!p+! !a. Fro4 !h "#cp!"o# o/ !h %+Dc! r$#+ " "# !h )o+% o/ Rpr%#!a!"$%, o# o/ !h 4aDoroDc!"$% a% !o p+ a ar"# oopho "# !h !a po"c a#' a'4"#"%!ra!"o# cra!"# $"!a r%!r"c!"o#% o# !h ca"4"# o/ "#p+! VAT!a cr'"!% . . . a#' [] "#!ro'+c"# "4"!a!"o#% o# !h ca"4"# o/ !a cr'"!, ar capp"# a 4aDor aa !ha! ha% pac' o+rcoc!"o# //or!% a! a# appar#! '"%a'$a#!a.[27]

A% !o !h a4#'4#!% !o NIRC pro$"%"o#% o# !a% o!hr !ha# !h $a+=a''' !a propo%' "# S#a! <" No. 1650, %"#c %a"'pro$"%"o#% r a4o# !ho% r/rr' !o "!, !h co#/r#c co44"!! ha' !o ac! o# !h %a4 a#' "! a%"ca a'op!' !h $r%"o# o/ !hS#a!.













Th+%, a !h cha#% or 4o'"/"ca!"o#% 4a' !h <"ca4ra Co#/r#c Co44"!! r r4a# !o %+Dc!% o/ !h pro$"%"o#%r/rr'!o "! /or rco#c""a!"o#. S+ch "# !h ca%, !h Co+r! 'o% #o! % a# ra$ a+% o/ '"%cr!"o# a4o+#!"# !o ac or c%% o/

D+r"%'"c!"o# co44"!!' !h <"ca4ra Co#/r#c Co44"!!. I# !h ar"r ca%% o/ Philippine udes Association vsPrado[26] a#' #olentino vs. Secretary o$ %inance, [30] !h Co+r! rco#":' !h o#=%!a#'"# "%a!"$ prac!"c o/ "$"# %a"' co#/r#cco44"!! a4p a!"!+' /or co4pro4"%"# '"//r#c% !# !h S#a! a#' !h )o+%. Th+%, "# !h #olentino ca%, "! a% h'!ha!- . . . "! "% "!h"# !h por o/ a co#/r#c co44"!! !o "#c+' "# "!% rpor! a# #!"r # pro$"%"o# !ha! "% #o! /o+#' "!hr "# !h )o+%" or "# !h S#a! ". I/ !h co44"!! ca# propo% a# a4#'4#! co#%"%!"# o/ o# or !o pro$"%"o#%, !hr "% #o ra%o# h "

ca##o! propo% %$ra pro$"%"o#%, coc!"$ co#%"'r' a% a# a4#'4#! "# !h #a!+r o/ a %+%!"!+!, %o o# a% %+ch a4#'4#"% r4a# !o !h %+Dc! o/ !h "% /or !h co44"!!. A/!r a, "!% rpor! a% #o! /"#a +! #'' !h appro$a o/ o!h ho+%% o/ Co#r%% !o co4 $a"' a% a# ac! o/ !h "%a!"$ 'par!4#!. The harge that in this ase the Conferene Committee ated asa third legislative ham=er is th$s witho$t an! =asis.[31] 8E4pha%"% %+pp"'9 B. R.A. o. /001 Does ot *iolate Article *2, Section "34"5 o$ the 'onstitution on the o-A&end&ent Rule

Ar!"c VI, Sc. 2@ 829 o/ !h Co#%!"!+!"o#, %!a!%- No " pa%%' "!hr )o+% %ha co4 a a +#%% "! ha% pa%%' !hr ra'"#% o# %para! 'a%, a#' pr"#!' cop"% !hro/ "#"!% /"#a /or4 ha$ # '"%!r"+!' !o "!% M4r% !hr 'a% /or "!% pa%%a, cp! h# !h &r%"'#! cr!"/"% !o !h #c%%"! o"!% "44'"a! #ac!4#! !o 4! a p+"c caa4"! or 4r#c. Upo# !h a%! ra'"# o/ a ", #o a4#'4#! !hr!o %ha ao', a#' !h $o! !hro# %ha !a# "44'"a! !hra/!r, a#' !h a% a#' #a% #!r' "# !h o+r#a. &!"!"o#r% ar+4#! !ha! !h prac!"c hr a "ca4ra co#/r#c co44"!! "% ao' !o a'' or '! pro$"%"o#% "# !h )o+% "a#' !h S#a! " a/!r !h% ha' pa%%' !hr ra'"#% "% "# //c! a c"rc+4$#!"o# o/ !h #o a4#'4#! r+ 8Sc. 2@ 829, Ar!. VI o/!h 167 Co#%!"!+!"o#9, /a"% !o co#$"#c !h Co+r! !o '$"a! /ro4 "!% r+"# "# !h #olentino ca% !ha!- Nor "% !hr a# ra%o# /or r+"r"# !ha! !h Co44"!!% Rpor! "# !h% ca%% 4+%! ha$ +#'ro# !hr ra'"#% "# ach o/ !h !oho+%%. I/ !ha! !h ca%, !hr o+' #o #' !o #o!"a!"o# %"#c ach ho+% 4a % 4o'"/"ca!"o# o/ !h co4pro4"% ". . . . Art. VI. 24 B2D m$st therefore =e onstr$ed as referring onl! to =ills introd$ed for the first time in either ho$se of Congressnot to the onferene ommittee re%ort. [32]8E4pha%"% %+pp"'9 Th Co+r! r"!ra!% hr !ha! the no/amendment r$le refers onl! to the %roed$re to =e followed =! eah ho$se of Congresswith regard to =ills initiated in eah of said res%etive ho$ses =efore said =ill is transmitted to the other ho$se for itson$rrene or amendment. Vr", !o co#%!r+ %a"' pro$"%"o# "# a a a% !o pro%cr" a# /+r!hr cha#% !o a " a/!r o# ho+%ha% $o!' o# "! o+' a' !o a%+r'"! a% !h"% o+' 4a# !ha! !h o!hr ho+% o/ Co#r%% o+' 'pr"$' o/ "!% co#%!"!+!"o#apor !o a4#' or "#!ro'+c cha#% !o %a"' ". Th+%, Ar!. VI, Sc. 2@ 829 o/ !h Co#%!"!+!"o# ca##o! !a# !o 4a# !ha! !h

"#!ro'+c!"o# !h <"ca4ra Co#/r#c Co44"!! o/ a4#'4#!% a#' 4o'"/"ca!"o#% !o '"%ar"# pro$"%"o#% "# "% !ha! ha$# ac!' +po# o!h ho+%% o/ Co#r%% "% proh""!'. '. R.A. o. /001 Does ot *iolate Article *2, Section "6 o$ the 'onstitution on ()clusive Oriination o$ Revenue Bills

Co4"# !o !h "%%+ o/ !h $a"'"! o/ !h a4#'4#!% 4a' rar'"# !h NIRC pro$"%"o#% o# corpora! "#co4 !a% a#' prc#!ac"% !a%. &!"!"o#r% r/r !o !h /oo"# pro$"%"o#%, !o "!-

Sc!"o# 2Ra!% o/ I#co4 Ta o# *o4%!"c Corpora!"o#

278A9819 Ta o# R%"'#! For"# Corpora!"o#278<9819 I#!r=corpora! *"$"'#'%3;8<9819 I#!r=corpora! *"$"'#'%11@ Ta o# &r%o#% E4p! /ro4 VAT

11 &rc#!a Ta o# 'o4%!"c carr"r% a#' pr% o/ Gara116 Ta o# /ra#ch"%%121 Ta o# a#% a#' No#=<a# F"#a#c"a I#!r4'"ar"%1;7 Ec"% Ta o# 4a#+/ac!+r' o"% a#' o!hr /+%151 Ec"% Ta o# 4"#ra pro'+c!%23@ R"%!ra!"o# r+"r4#!%23 I%%+a#c o/ rc"p!% or %a% or co44rc"a "#$o"c%277 *"%po%"!"o# o/ I#cr4#!a R$#+

&!"!"o#r% ca"4 !ha! !h a4#'4#!% !o !h% pro$"%"o#% o/ !h NIRC '"' #o! a! a or""#a! /ro4 !h )o+%. Th a$r !ha! )o+% <"No. 3555 propo%' a4#'4#!% o# rar'"# Sc!"o#% 10@, 10, 107, 110 a#' 11; o/ !h NIRC, h" )o+% <" No. 305 propo%'a4#'4#!% o# !o Sc!"o#% 10@, 10,107, 106, 110 a#' 111 o/ !h NIRC !h+%, !h o!hr %c!"o#% o/ !h NIRC h"ch !h S#a!a4#'' +! h"ch a4#'4#!% r #o! /o+#' "# !h )o+% "% ar #o! "#!#'' !o a4#'' !h )o+% o/ Rpr%#!a!"$%












)#c, !h ar+ !ha! %"#c !h propo%' a4#'4#!% '"' #o! or""#a! /ro4 !h )o+%, %+ch a4#'4#!% ar a $"oa!"o# o/ Ar!"cVI, Sc!"o# 2; o/ !h Co#%!"!+!"o#. Th ar+4#! 'o% #o! ho' a!r.

Ar!"c VI, Sc!"o# 2; o/ !h Co#%!"!+!"o# ra'%- Sc. 2;. A appropr"a!"o#, r$#+ or !ar"// "%, "% a+!hor":"# "#cra% o/ !h p+"c '!, "% o/ oca app"ca!"o#, a#' pr"$a! "%%ha or""#a! c+%"$ "# !h )o+% o/ Rpr%#!a!"$% +! !h S#a! 4a propo% or co#c+r "!h a4#'4#!%. I# !h pr%#! ca%%, p!"!"o#r% a'4"! !ha! "! a% "#'' )o+% <" No%. 3555 a#' 305 !ha! "#"!"a!' !h 4o$ /or a4#'"#

pro$"%"o#% o/ !h NIRC 'a"# 4a"# "!h !h $a+=a''' !a. Upo# !ra#%4"!!a o/ %a"' )o+% "% !o !h S#a!, !h S#a! ca4o+! "!h S#a! <" No. 1650 propo%"# a4#'4#!% #o! o# !o NIRC pro$"%"o#% o# !h $a+=a''' !a +! a%o a4#'4#!% !oNIRC pro$"%"o#% o# o!hr "#'% o/ !a%. I% !h "#!ro'+c!"o# !h S#a! o/ pro$"%"o#% #o! 'a"# '"rc! "!h !h $a+= a''' !a,h"ch "% !h o# "#' o/ !a "# a4#'' "# !h )o+% "%, %!" "!h"# !h p+r$" o/ !h co#%!"!+!"o#a pro$"%"o# a+!hor":"# !hS#a! !o propo% or co#c+r "!h a4#'4#!% !o a r$#+ " !ha! or""#a!' /ro4 !h )o+% Th /oro"# +%!"o# ha' # %+ar a#%r' "# !h #olentino ca%, hr"# !h Co+r! h', !h+%- . . . To "# "!h, "! "% #o! !h a +! !h r$#+ " h"ch "% r+"r' !h Co#%!"!+!"o# !o or""#a! c+%"$ "# !h )o+% o/ Rpr%#!a!"$%. I! "% "4por!a#! !o 4pha%": !h"%, ca+% a " or""#a!"# "# !h )o+% 4a +#'ro %+ch !#%"$ cha#% "# !hS#a! !ha! !h r%+! 4a a rr"!"# o/ !h ho. . . . A! !h"% po"#!, ha! "% "4por!a#! !o #o! "% !ha!, a% a r%+! o/ !h S#a!ac!"o#, a '"%!"#c! " 4a pro'+c'. To insist that a reven$e stat$te and not onl! the =ill whih initiated the legislative %roess$lminating in the enatment of the law m$st s$=stantiall! =e the same as the o$se =ill wo$ld =e to den! the Senates %owernot onl! to &on&ur +ith a$end$ents =$t also to "ro"ose a$end$ents. I! o+' !o $"oa! !h co+a"! o/ "%a!"$ por o!h !o ho+%% o/ Co#r%% a#' "# /ac! 4a !h )o+% %+pr"or !o !h S#a!. 'iven then the %ower of the Senate to %ro%ose amendments the Senate an %ro%ose its own version even with res%et to=ills whih are re$ired =! the Constit$tion to originate in the o$se.. . .I#'', ha! !h Co#%!"!+!"o# %"4p 4a#% "% !ha! !h "#"!"a!"$ /or /""# r$#+, !ar"// or !a "%, "% a+!hor":"# a# "#cra% o/ !hp+"c '!, pr"$a! "% a#' "% o/ oca app"ca!"o# 4+%! co4 /ro4 !h )o+% o/ Rpr%#!a!"$% o# !h !hor !ha!, c!' a% !har /ro4 !h '"%!r"c!%, the mem=ers of the o$se an =e ex%eted to =e more sensitive to the loal needs and %ro=lems. *n theother hand the senators who are eleted at large are ex%eted to a%%roah the same %ro=lems from the nationa%ers%etive. #oth views are there=! made to =ear on the enatment of s$h laws.[33] 8E4pha%"% %+pp"'9 S"#c !hr "% #o +%!"o# !ha! !h r$#+ " c+%"$ or""#a!' "# !h )o+% o/ Rpr%#!a!"$%, !h S#a! a% ac!"# "!h"# "!%co#%!"!+!"o#a por !o "#!ro'+c a4#'4#!% !o !h )o+% " h# "! "#c+'' pro$"%"o#% "# S#a! <" No. 1650 a4#'"# corpora!"#co4 !a%, prc#!a, c"% a#' /ra#ch"% !a%. Vr", Ar!"c VI, Sc!"o# 2; o/ !h Co#%!"!+!"o# 'o% #o! co#!a"# a# proh""!"o#or "4"!a!"o# o# !h !#! o/ !h a4#'4#!% !ha! 4a "#!ro'+c' !h S#a! !o !h )o+% r$#+ ".

F+r!hr4or, !h a4#'4#!% "#!ro'+c' !h S#a! !o !h NIRC pro$"%"o#% !ha! ha' #o! # !o+ch' "# !h )o+% "% ar %!" "#/+r!hra#c o/ !h "#!#! o/ !h )o+% "# "#"!"a!"# !h %+Dc! r$#+ "%. Th Epa#a!or No! o/ )o+% <" No. 1;@7, !h $r /"r%!)o+% " "#!ro'+c' o# !h /oor, h"ch a% a!r %+%!"!+!' )o+% <" No. 3555, %!a!'- O# o/ !h cha#% /ac' !h pr%#! a'4"#"%!ra!"o# "% !h +r#! a#' 'a+#!"# !a% o/ %o$"# !h co+#!r% %r"o+% /"#a#c"apro4%. To 'o !h"%, o$r#4#! p#'"!+r% 4+%! %!r"c! 4o#"!or' a#' co#!ro' a#' r$#+% 4+%! %"#"/"ca#! "#cra%'Th"% 4a a%"r %a"' !ha# 'o#, +! o+r /"%ca a+!hor"!"% ar %!" op!"4"%!"c !h o$r#4#! " opra!"# o# a aa#c' +'! !h ar 2006. I# /ac!, %$ra 4a%+r% !ha! " r%+! !o %"#"/"ca#! p#'"!+r %a$"#% ha$ # "'#!"/"' !ha'4"#"%!ra!"o#. It is s$%%orted with a redi=le %aage of reven$e meas$res that inl$de meas$res to im%rove taxadministration and ontrol the leaages in reven$es from inome taxes and the val$e/added tax BVATD. 8E4pha%"% %+pp"'9 Rp. Er"c *. S"#%o#, "# h"% %po#%or%h"p %pch /or )o+% <" No. 3555, 'car' !ha!- I# !h +'! 4%%a o/ o+r &r%"'#! "# !h ar 2005, %h r"!ra!' !ha! a ac#o'' !ha! o# !op o/ o+r a#'a 4+%!

!h r%!ora!"o# o/ !h ha!h o/ o+r /"%ca %%!4. I# or'r !o co#%"'ra or !h co#%o"'a!' p+"c %c!or '/"c"! a#' $#!+a ach"$ a aa#c' +'! !h ar 2006, weneed to seiEe windows of o%%ort$nities whih might seem %oignant in the =eginning =$t in the long r$n %rove effetive and=enefiial to the overall stat$s of o$r eonom!. *ne s$h o%%ort$nit! is a review of existing tax rates eval$ating therelevane given o$r %resent onditions.[3;] 8E4pha%"% %+pp"'9 No!a !hr/or, !h 4a"# p+rpo% o/ !h "% 4a#a!"# /ro4 !h )o+% o/ Rpr%#!a!"$% "% !o r"# "# %":a r$#+% /or !ho$r#4#!!o %+pp4#! o+r co+#!r% %r"o+% /"#a#c"a pro4%, a#' "4pro$ !a a'4"#"%!ra!"o# a#' co#!ro o/ !h aa% "# r$#+% /ro4"#co4 !a% a#' $a+=a''' !a%. A% !h% ho+% "% r !ra#%4"!!' !o !h S#a!, !h a!!r, approach"# !h 4a%+r% /ro4!h po"#! o/ #a!"o#a pr%pc!"$, ca# "#!ro'+c a4#'4#!% "!h"# !h p+rpo%% o/ !ho% "%. I! ca# pro$"' /or a% !ha! o+' %o/!#!h "4pac! o/ !h VAT 4a%+r o# !h co#%+4r, i.e., '"%!r"+!"# !h +r'# acro%% a %c!or% "#%!a' o/ p+!!"# "! #!"r o# !h









%ho+'r% o/ !h co#%+4r%. Th %po#%or%h"p %pch o/ S#. Raph Rc!o o# h !h pro$"%"o#% o# "#co4 !a o# corpora!"o# r"#c+'' "% or!h +o!"#-

A "# a, !h propo%a o/ !h S#a! Co44"!! o# (a% a#' Ma#% " ra"% &@;.3 ""o# "# a''"!"o#a r$#+% a##+a $# h" 4"!"a!"# pr"c% o/ por, %r$"c% a#' p!ro+4 pro'+c!%. )o$r, #o! a o/ !h"% " r+# o+! o/ VAT. I# /ac!, o# &;7. ""o# a4o+#! "% /ro4 !h VAT o# !$ oo'% a#' %r$"c%. Thr%! o/ !h !a &10.5 ""o#= " p"c' corpora!"o#%. (ha! !hr/or pr%cr" "% a +r'# %har"# !# corpora! &h""pp"#% a#' !h co#%+4r. (h %ho+' !h a!!r ar a !hpa"# (h %ho+' !h /"%ca %a$a!"o# o# o# !h +r'# o/ !h co#%+4r

Th corpora! or'% +"! "% "# /or4 o/ !h "#cra% "# !h corpora! "#co4 !a /ro4 32 !o 35 prc#!, +! +p !o 2007 o#. Th"% "ra"% &10.5 ""o# a ar. A/!r !ha!, !h ra! " %"' ac, #o! !o "!% o' ra! o/ 32 prc#!, +! !o #o!ch% or, !o 30 prc#!. Car, ar !"# !ho% "!h !h capac"! !o pa, corpora!"o#%, !o ar "!h !h"% 4r#c pro$"%"o# !ha! " "# //c! /or 1,200'a%, h" p+! o+r /"%ca ho+% "# or'r. Th"% /"%ca 4'"c"# " ha$ a# p"r 'a!. For !h"r a%%"%!a#c, a rar' o/ !a r'+c!"o# aa"!% !h4. ( "#!#' !o p !h #!h o/ !h"r %acr"/"c r"/. ( o+' " !o a%%+r!h4 !ha! #o! ca+% !hr "% a "h! a! !h #' o/ !h !+##, !h"% o$r#4#! " p o# 4a"# !h !+## o#. Th r%po#%"""! " #o! r%! %o o# !h ar %ho+'r% o/ !h %4a 4a#. <" +%"#%% " !hr !o %har !h +r'#.[35]

A% !h Co+r! ha% %a"', !h S#a! ca# propo% a4#'4#!% a#' "# /ac!, !h a4#'4#!% 4a' o# pro$"%"o#% "# !h !a o# "#co4 o/corpora!"o#% ar r4a# !o !h p+rpo% o/ !h ho+% "% h"ch "% !o ra"% r$#+% /or !h o$r#4#!. L""%, !h Co+r! /"#'% !h %c!"o#% r/rr"# !o o!hr prc#!a a#' c"% !a% r4a# !o !h r/or4% !o !h VAT %%!4, a%!h% %c!"o#% o+' c+%h"o# !h //c!% o/ VAT o# co#%+4r%. Co#%"'r"# !ha! cr!a"# oo'% a#' %r$"c% h"ch r %+Dc! !oprc#!a !a a#' c"% !a o+' #o o#r VAT=4p!, !h co#%+4r o+' +r'#' 4or a% !h o+' pa"# !hVAT "# a''"!"o# !o !h% !a%. Th+%, !hr "% a #' !o a4#' !h% %c!"o#% !o %o/!# !h "4pac! o/ VAT. Aa"#, "# h"% %po#%or%h"p%pch, S#. Rc!o %a"'- )o$r, /or por pa#!% !ha! r+# o# o", " r'+c !o :ro !h pr%#! c"% !a o# +#r /+, !o %%# !h //c! o/ a VAT o#!h"% pro'+c!. For c!r"c +!""!"% " Mraco, " "p o+! !h /ra#ch"% !a "# cha# /or a VAT.

A#' "# !h ca% o/ p!ro+4, h" " $ !h VAT o# o" pro'+c!%, %o a% #o! !o '%!ro !h VAT cha"#, " ho$r r"# 'o#!h c"% !a o# %oc"a %#%"!"$ pro'+c!% %+ch a% '"%, +#r, /+ a#' ro%#.. . .

(ha! 'o a !h% rc"%% po"#! !o Th% ar #o! co#!or!"o#% o/ "$"# !o !h /! ha#' ha! a% !a# /ro4 !h r"h!. Ra!hr, !h%%pra# /ro4 o+r co#cr# o/ %o/!#"# !h "4pac! o/ VAT, %o !ha! !h pop ca# c+%h"o# !h o o/ h"hr pr"c% !h " ha$ !o paa% a r%+! o/ VAT.[3@]

Th o!hr %c!"o#% a4#'' !h S#a! pr!a"#' !o 4a!!r% o/ !a a'4"#"%!ra!"o# h"ch ar #c%%ar /or !h "4p4#!a!"o# o/ !hcha#% "# !h VAT %%!4. To r"!ra!, !h %c!"o#% "#!ro'+c' !h S#a! ar r4a# !o !h %+Dc! 4a!!r a#' p+rpo%% o/ !h ho+% "%, h"ch "% !o%+pp4#! o+r co+#!r% /"%ca '/"c"!, a4o# o!hr%. Th+%, !h S#a! ac!' "!h"# "!% por !o propo% !ho% a4#'4#!%. S#STA+TIV( ISS(SI.(h!hr Sc!"o#% ;, 5 a#' @ o/ R.A. No. 633, a4#'"# Sc!"o#% 10@, 10 a#' 107 o/ !h NIRC, $"oa! !h /oo"# pro$"%"o#% o/ !hCo#%!"!+!"o#-

a. Ar!"c VI, Sc!"o# 27819, a#'. Ar!"c VI, Sc!"o# 27829

A. o Undue Deleation o$ 7eislative Po8er &!"!"o#r% ABAKADA GURO &ar! L"%!, et al., &"4#!, r., et al., a#' E%c+'ro, et al. co#!#' "# co44o# !ha! Sc!"o#% ;, 5 a#' @ o/R.A. No. 633, a4#'"# Sc!"o#% 10@, 10 a#' 107, r%pc!"$, o/ !h NIRC "$"# !h &r%"'#! !h stand-by authority !o ra"% !hVAT ra! /ro4 10B !o 12B h# a cr!a"# co#'"!"o# "% 4!, co#%!"!+!% +#'+ 'a!"o# o/ !h "%a!"$ por !o !a. Th a%%a"' pro$"%"o#% ra' a% /oo%- SEC. ;. Sc. 10@ o/ !h %a4 Co', a% a4#'', "% hr /+r!hr a4#'' !o ra' a% /oo%- SEC. 10@. Va+=A''' Ta o# Sa o/ Goo'% or &ropr!"%.








8A9 Ra! a#' <a% o/ Ta. Thr %ha $"', a%%%%' a#' coc!' o# $r %a, ar!r or cha# o/ oo'% or propr!"%, a$a+=a''' !a +"$a#! !o !# prc#! 810B9 o/ !h ro%% %"# pr"c or ro%% $a+ "# 4o# o/ !h oo'% or propr!"% %o'ar!r' or cha#', %+ch !a !o pa"' !h %r or !ra#%/ror- %rovided that the 9resident $%on the reommendation othe Seretar! of :inane shall effetive Fan$ar! 1 2664 raise the rate of val$e/added tax to twelve %erent B12GD after an! ofthe following onditions has =een satisfied. BiD val$e/added tax olletion as a %erentage of 'ross &omesti 9rod$t B'&9D of the %revio$s !ear exeeds twoand fo$r/fifth %erent B2 ,H7GD or BiiD national government defiit as a %erentage of '&9 of the %revio$s !ear exeeds one and one/half %erent B1 GD.

SEC. 5. Sc!"o# 10 o/ !h %a4 Co', a% a4#'', "% hr /+r!hr a4#'' !o ra' a% /oo%- SEC. 10. Va+=A''' Ta o# I4por!a!"o# o/ Goo'%.8A9 I# G#ra. Thr %ha $"', a%%%%' a#' coc!' o# $r "4por!a!"o# o/ oo'% a $a+=a''' !a +"$a#! !o !# prc#810B9 a%' o# !h !o!a $a+ +%' !h <+ra+ o/ C+%!o4% "# '!r4"#"# !ar"// a#' c+%!o4% '+!"%, p+% c+%!o4% '+!"%, c"%!a%, "/ a#, a#' o!hr char%, %+ch !a !o pa"' !h "4por!r pr"or !o !h ra% o/ %+ch oo'% /ro4 c+%!o4% c+%!o'- &ro$"''Tha! hr !h c+%!o4% '+!"% ar '!r4"#' o# !h a%"% o/ !h +a#!"! or $o+4 o/ !h oo'%, !h $a+=a''' !a %ha a%'o# !h a#'' co%! p+% c"% !a%, "/ a#- %rovided f$rther that the 9resident $%on the reommendation of the Seretar! of:inane shall effetive Fan$ar! 1 2664 raise the rate of val$e/added tax to twelve %erent B12GD after an! of the followingonditions has =een satisfied. BiD val$e/added tax olletion as a %erentage of 'ross &omesti 9rod$t B'&9D of the %revio$s !ear exeeds two and fo$r/fifth %erent B2 ,H7GD or BiiD national government defiit as a %erentage of '&9 of the %revio$s !ear exeeds one and one/half %erent B1 GD. SEC. @. Sc!"o# 107 o/ !h %a4 Co', a% a4#'', "% hr /+r!hr a4#'' !o ra' a% /oo%- SEC. 107. Va+=a''' Ta o# Sa o/ Sr$"c% a#' U% or La% o/ &ropr!"% 8A9 Ra! a#' <a% o/ Ta. Thr %ha $"', a%%%%' a#' coc!', a $a+=a''' !a +"$a#! !o !# prc#! 810B9 o/ ro%%rc"p!% 'r"$' /ro4 !h %a or cha# o/ %r$"c%- %rovided that the 9resident $%on the reommendation of the Seretar! of:inane shall effetive Fan$ar! 1 2664 raise the rate of val$e/added tax to twelve %erent B12GD after an! of the followingonditions has =een satisfied. BiD val$e/added tax olletion as a %erentage of 'ross &omesti 9rod$t B'&9D of the %revio$s !ear exeeds two and fo$r/fifth %erent B2 ,H7GD or BiiD national government defiit as a %erentage of '&9 of the %revio$s !ear exeeds one and one/half %erent B1GD. 8E4pha%"% %+pp"'9

&!"!"o#r% a !ha! !h ra#! o/ !h stand-by authority !o !h &r%"'#! !o "#cra% !h VAT ra! "% a $"r!+a a'"ca!"o# Co#r%% o/"!% c+%"$ por !o !a ca+% %+ch 'a!"o# "% #o! "!h"# !h p+r$" o/ Sc!"o# 27 829, Ar!"c VI o/ !h Co#%!"!+!"o#, h"chpro$"'%- Th Co#r%% 4a, a, a+!hor": !h &r%"'#! !o /" "!h"# %pc"/"' "4"!%, a#' 4a "4po%, !ar"// ra!%, "4por! a#' por! +o!a%!o##a a#' har/a '+%, a#' o!hr '+!"% or "4po%!% "!h"# !h /ra4or o/ !h #a!"o#a '$op4#! prora4 o/ !h o$r#4#!. Th ar+ !ha! !h VAT "% a !a $"' o# !h %a, ar!r or cha# o/ oo'% a#' propr!"% a% a% o# !h %a or cha# o/ %r$"c%, h"ch ca##o! "#c+'' "!h"# !h p+r$" o/ !ar"//% +#'r !h 4p!' 'a!"o# a% !h a!!r r/r% !o c+%!o4% '+!"%!o% or !r"+! paa +po# 4rcha#'"% !o !h o$r#4#! a#' +%+a "4po%' o# oo'% or 4rcha#'"% "4por!' or por!'. &!"!"o#r% ABAKADA GURO &ar! L"%!, et al., /+r!hr co#!#' !ha! 'a!"# !o !h &r%"'#! !h "%a!"$ por !o !a "% co#!rar !orp+"ca#"%4. Th "#%"%! !ha! acco+#!a""!, r%po#%"""! a#' !ra#%par#c %ho+' '"c!a! !h ac!"o#% o/ Co#r%% a#' !h %ho+'#o! pa%% !o !h &r%"'#! !h 'c"%"o# !o "4po% !a%. Th a%o ar+ !ha! !h a a%o //c!"$ #+"/"' !h &r%"'#!% por o/co#!ro, h"ch "#c+'% !h a+!hor"! !o %! a%"' a#' #+"/ !h ac!% o/ hr %+or'"#a!% " !h Scr!ar o/ F"#a#c, 4a#'a!"# !h

/""# o/ !h !a ra! !h &r%"'#! +po# !h rco44#'a!"o# o/ !h Scr!ar o/ F"#a#c. &!"!"o#r% &"4#!, et al. a$r !ha! !h &r%"'#! ha% a4p por% !o ca+%, "#/+#c or cra! !h co#'"!"o#% pro$"'' !h a !or"# ao+! "!hr or o!h !h co#'"!"o#% prc'#!. O# !h o!hr ha#', p!"!"o#r% E%c+'ro, et al. /"#' ":arr a#' r$o!"# !h %"!+a!"o# !ha! !h "4po%"!"o# o/ !h 12B ra! o+' %+Dc! !o !h h"4 o/ !h Scr!ar o/ F"#a#c, a# +#c!' +ra+cra!, co#!rar !o !h pr"#c"p o/ #o !aa!"o# "!ho+! rpr%#!a!"o#Th %+4"! !ha! !h Scr!ar o/ F"#a#c "% #o! 4a#'a!' !o "$ a /a$ora rco44#'a!"o# a#' h 4a #o! $# "$ h"%rco44#'a!"o#. Moro$r, !h a !ha! #o +"'"# %!a#'ar'% ar pro$"'' "# !h a o# ha! a%"% a#' a% !o ho h " 4a h"%rco44#'a!"o#. Th ca"4, #o#!h%%, !ha! a# rco44#'a!"o# o/ !h Scr!ar o/ F"#a#c ca# a%" r+%h' a%"' !h&r%"'#! %"#c !h /or4r "% a 4r a!r o o/ !h a!!r, %+ch !ha!, +!"4a!, "! "% !h &r%"'#! ho 'c"'% h!hr !o "4po% !h"#cra%' !a ra! or #o!.

A r"/ '"%co+r% o# !h pr"#c"p o/ #o#='a!"o# o/ por% "% "#%!r+c!"$.



Th pr"#c"p o/ %para!"o# o/ por% or'a"#% !ha! ach o/ !h !hr ra! ra#ch% o/ o$r#4#! ha% c+%"$ co#":a#c o/ a#' "%%+pr4 "# 4a!!r% /a"# "!h"# "!% o# co#%!"!+!"o#a aoca!' %phr.[3] A o"cacoroar !o !h 'oc!r"# o/ %para!"o# o/ por% "% !h pr"#c"p o/ #o#='a!"o# o/ por%, a% pr%%' "# !h La!"# 4a"4- potestasdeleata non deleari potest h"ch 4a#% ha! ha% # 'a!', ca##o! 'a!'. [37] Th"% 'oc!r"# "% a%' o# !h !h"capr"#c"p !ha! %+ch a% 'a!' por co#%!"!+!% #o! o# a r"h! +! a '+! !o pr/or4' !h 'a! !hro+h !h"#%!r+4#!a"! o/ h"% o# D+'4#! a#' #o! !hro+h !h "#!r$#"# 4"#' o/ a#o!hr.[36]

("!h r%pc! !o !h L"%a!+r, Sc!"o# 1 o/ Ar!"c VI o/ !h Co#%!"!+!"o# pro$"'% !ha! the 7eislative po8er shall be vested in the'onress o$ the Philippines 8hich shall consist o$ a Senate and a 9ouse o$ Representatives. Th por% h"ch Co#r%% "% proh""!'/ro4 'a!"# ar !ho% h"ch ar %!r"c!, or "#hr#! a#' c+%"$, "%a!"$. &+r "%a!"$ por, h"ch ca# #$r

'a!', ha% # '%cr"' a% !h a$thorit! to mae a om%lete law om%lete as to the time when it shall tae effet and asto whom it shall =e a%%lia=le and to determine the ex%edien! of its enatmen!.[;0] Th+%, !h r+ "% !ha! "# or'r !ha! a co+r! 4a D+%!"/"' "# ho'"# a %!a!+! +#co#%!"!+!"o#a a% a 'a!"o# o/ "%a!"$ por, "! 4+%! appar !ha! !h por "#$o$' "% p+r"%a!"$ "# #a!+r !ha! "%, o# appr!a"#"# c+%"$ !o !h "%a!"$ 'par!4#!. I! "% !h #a!+r o/ !h por, a#' #o! !h "a""!o/ "!% +% or !h 4a##r o/ "!% rc"%, h"ch '!r4"#% !h $a"'"! o/ "!% 'a!"o#. No#!h%%, !h #ra r+ arr"# 'a!"o# o/ "%a!"$ por% "% %+Dc! !o !h /oo"# rco#":' "4"!a!"o#% or cp!"o#%- 819 *a!"o# o/ !ar"// por% !o !h &r%"'#! +#'r Sc!"o# 27 829 o/ Ar!"c VI o/ !h Co#%!"!+!"o#829 *a!"o# o/ 4r#c por% !o !h &r%"'#! +#'r Sc!"o# 23 829 o/ Ar!"c VI o/ !h Co#%!"!+!"o#839 *a!"o# !o !h pop a! ar8;9 *a!"o# !o oca o$r#4#!% a#'859 *a!"o# !o a'4"#"%!ra!"$ o'"%. I# $r ca% o/ pr4"%%" 'a!"o#, !hr 4+%! a %ho"# !ha! !h 'a!"o# "!%/ "% $a"'. I! "% $a"' o# "/ !h a 8a9 "%co4p! "# "!%/, %!!"# /or!h !hr"# !h po"c !o c+!', carr"' o+!, or "4p4#!' !h 'a! [;1] a#' 89 /"% a %!a#'ar'!h "4"!% o/ h"ch ar %+//"c"#! '!r4"#a! a#' '!r4"#a !o h"ch !h 'a! 4+%! co#/or4 "# !h pr/or4a#c o/ h"%/+#c!"o#%.[;2] A %+//"c"#! %!a#'ar' "% o# h"ch '/"#% "%a!"$ po"c, 4ar% "!% "4"!%, 4ap% o+! "!% o+#'ar"% a#' %pc"/"% !hp+"c a#c !o app "!. I! "#'"ca!% !h c"rc+4%!a#c% +#'r h"ch !h "%a!"$ co44a#' "% !o //c!'. [;3] <o!h !%!% ar"#!#'' !o pr$#! a !o!a !ra#%/r#c o/ "%a!"$ a+!hor"! !o !h 'a!, ho "% #o! ao' !o %!p "#!o !h %ho% o/ !h"%a!+r a#' rc"% a por %%#!"a "%a!"$.[;;]

I# People vs. *era,[;5] !h Co+r!, !hro+h 4"##! +%!"c o% &. La+r, po+#'' o# !h co#cp! a#' !#! o/ 'a!"o# o/ por "#!h"% "%- I# !%!"# h!hr a %!a!+! co#%!"!+!% a# +#'+ 'a!"o# o/ "%a!"$ por or #o!, "! "% +%+a !o "#+"r h!hr !h %!a!+! a%co4p! "# a "!% !r4% a#' pro$"%"o#% h# "! /! !h ha#'% o/ !h "%a!+r %o !ha! #o!h"# a% /! !o !h D+'4#! o/ a# o!hr appo"#! or 'a! o/ !h "%a!+r.. . .

The tr$e distintion sa!s F$dge Ranne! is =etween the delegation of %ower to mae the law whih neessaril! involves adisretion as to what it shall =e and onferring an a$thorit! or disretion as to its exe$tion to =e exerised $nder and in%$rs$ane of the law. The first annot =e done to the latter no valid o=>etion an =e made.. . .I! "% co#!#'', ho$r, !ha! a "%a!"$ ac! 4a 4a' !o !h //c! a% a a/!r "! a$% !h ha#'% o/ !h "%a!+r. I! "% !r+ !ha!a% 4a 4a' //c!"$ o# cr!a"# co#!"##c"%, a% proca4a!"o# o/ !h c+!"$ or !h a'op!"o# !h pop o/ a par!"c+aco44+#"!. I# (a4a# $%. So+!har', !h S+pr4 Co+r! o/ !h U#"!' S!a!% r+' !ha! !h "%a!+r 4a 'a! a por #o!"%a!"$ h"ch "! 4a "!%/ r"h!/+ rc"%. The %ower to asertain fats is s$h a %ower whih ma! =e delegated. There isnothing essentiall! legislative in asertaining the existene of fats or onditions as the =asis of the taing into effet of alaw. That is a mental %roess ommon to all =ranhes of the government. No!"!h%!a#'"# !h appar#! !#'#c, ho$r, !ora !h r+ proh""!"# 'a!"o# o/ "%a!"$ a+!hor"! o# acco+#! o/ !h co4p"! ar"%"# /ro4 %oc"a a#' co#o4"c /orc% a! or"# !h"% 4o'r# "#'+%!r"a a, !h or!ho'o pro#o+#c4#! o/ +' Coo "# h"% or o# Co#%!"!+!"o#a L"4"!a!"o#% /"#'% r%!a!4#!"# &ro/. ("o+h% !ra!"% o# !h Co#%!"!+!"o# o/ !h U#"!' S!a!% "# !h /oo"# a#+a %pa"# o/ 'cara!"o# o/ "%a!"$por !o a'4"#"%!ra!"$ a#c"%- The %rini%le whih %ermits the legislat$re to %rovide that the administrative agent ma!determine when the ir$mstanes are s$h as re$ire the a%%liation of a law is defended $%on the gro$nd that at the time

this a$thorit! is granted the r$le of %$=li %oli! whih is the essene of the legislative at is determined =! the legislat$reIn other words the legislat$re as it is its d$t! to do determines that $nder given ir$mstanes ertain exe$tive oradministrative ation is to =e taen and that $nder other ir$mstanes different or no ation at all is to =e taen. ?hat isth$s left to the administrative offiial is not the legislative determination of what %$=li %oli! demands =$t sim%l! theasertainment of what the fats of the ase re$ire to =e done aording to the terms of the law =! whih he is governed. Theeffiien! of an At as a delaration of legislative will m$st of o$rse ome from Congress =$t the asertainment of theontingen! $%on whih the At shall tae effet ma! =e left to s$h agenies as it ma! designate. The legislat$re then ma!%rovide that a law shall tae effet $%on the ha%%ening of f$t$re s%eified ontingenies leaving to some other %erson or=od! the %ower to determine when the s%eified ontingen! has arisen. 8E4pha%"% %+pp"'9.[;@]

I# (du vs. (ricta,[;] !h Co+r! r"!ra!'- (ha! ca##o! 'a!' "% !h a+!hor"! +#'r !h Co#%!"!+!"o# !o 4a a% a#' !o a!r a#' rpa !h4 !h !%! "% !hco4p!#%% o/ !h %!a!+! "# a "!% !r4% a#' pro$"%"o#% h# "! a$% !h ha#'% o/ !h "%a!+r. To '!r4"# h!hr or #o! !hr

































"% a# +#'+ 'a!"o# o/ "%a!"$ por, !h "#+"r 4+%! '"rc!' !o !h %cop a#' '/"#"!#%% o/ !h 4a%+r #ac!'. Thelegislative does not a=diate its f$ntions when it desri=es what >o= m$st =e done who is to do it and what is the so%e ofhis a$thorit!. For a co4p co#o4, !ha! 4a !h o# a "# h"ch !h "%a!"$ proc%% ca# o /orar'. A distintion hasrightf$ll! =een made =etween delegation of %ower to mae the laws whih neessaril! involves a disretion as to what it shal=e whih onstit$tionall! ma! not =e done and delegation of a$thorit! or disretion as to its exe$tion to =e exerised $nderand in %$rs$ane of the law to whih no valid o=>etion an =e made. Th Co#%!"!+!"o# "% !h+% #o! !o rar'' a% '#"# !h"%a!+r !h #c%%ar r%o+rc% o/ /"""! a#' prac!"ca""!. 8E4pha%"% %+pp"'9.[;7]

Car, !h "%a!+r 4a 'a! !o c+!"$ o//"cr% or o'"% !h por !o '!r4"# cr!a"# /ac!% or co#'"!"o#%, or !h happ#"#o/ co#!"##c"%, o# h"ch !h opra!"o# o/ a %!a!+! "%, "!% !r4%, 4a' !o 'p#', +! !h "%a!+r 4+%! pr%cr" %+//"c"#!%!a#'ar'%, po"c"% or "4"!a!"o#% o# !h"r a+!hor"!.[;6] (h" !h por !o !a ca##o! 'a!' !o c+!"$ a#c"%, '!a"% a% !o

!h #/orc4#! a#' a'4"#"%!ra!"o# o/ a# rc"% o/ %+ch por 4a /! !o !h4, "#c+'"# !h por !o '!r4"# !h "%!#c o//ac!% o# h"ch "!% opra!"o# 'p#'%. [50]

Th ra!"o#a /or !h"% "% !ha! !h pr"4"#ar a%cr!a"#4#! o/ /ac!% a% a%"% /or !h #ac!4#! o/ "%a!"o# "% #o! o/ "!%/ a "%a!"$/+#c!"o#, +! "% %"4p a#c"ar !o "%a!"o#. Th+%, !h '+! o/ corra!"# "#/or4a!"o# a#' 4a"# rco44#'a!"o#% "% !h "#' o/%+%"'"ar ac!"$"! h"ch !h "%a!+r 4a pr/or4 !hro+h "!% 44r%, or h"ch "! 4a 'a! !o o!hr% !o pr/or4. I#!"#!"%a!"o# o# !h co4p"ca!' pro4% o/ 4o'r# %oc"! "% "4po%%" "# !h a%#c o/ acc+ra! "#/or4a!"o# o# !h par! o/ !h"%a!or%, a#' a# ra%o#a 4!ho' o/ %c+r"# %+ch "#/or4a!"o# "% propr. [51] Th Co#%!"!+!"o# a% a co#!"#+o+% opra!"$ char!o/ o$r#4#! 'o% #o! r+"r !ha! Co#r%% /"#' /or "!%/ $r /ac! +po# h"ch "! '%"r% !o a% "%a!"$ ac!"o# or !ha! "! 4a /or "!%/ '!a"' '!r4"#a!"o#% h"ch "! ha% 'car' !o prr+"%"! !o app"ca!"o# o/ "%a!"$ po"c !o par!"c+ar /ac!% a#' c"rc+4%!a#c% "4po%%" /or Co#r%% "!%/ propr !o"#$%!"a!.[52]

I# !h pr%#! ca%, !h cha#' %c!"o# o/ R.A. No. 633 "% !h co44o# proviso "# Sc!"o#% ;, 5 a#' @ h"ch ra'% a% /oo%- Tha! !h &r%"'#!, +po# !h rco44#'a!"o# o/ !h Scr!ar o/ F"#a#c, %ha, //c!"$ a#+ar 1, 200@, ra"% !h ra! o/ $a+=a''' !a !o !$ prc#! 812B9, a/!r a# o/ !h /oo"# co#'"!"o#% ha% # %a!"%/"'- 8"9 Va+=a''' !a coc!"o# a% a prc#!a o/ Gro%% *o4%!"c &ro'+c! 8G*&9 o/ !h pr$"o+% ar c'% !o a#' /o+r=/"/!hprc#! 82 ;?5B9 or 8""9 Na!"o#a o$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% o# a#' o#=ha/ prc#! 81 B9. Th ca% /or !h Co+r! "% #o! a 'a!"o# o/ "%a!"$ por. I! "% %"4p a 'a!"o# o/ a%cr!a"#4#! o/ /ac!% +po# h"ch#/orc4#! a#' a'4"#"%!ra!"o# o/ !h "#cra% ra! +#'r !h a "% co#!"##!. Th "%a!+r ha% 4a' !h opra!"o# o/ !h 12B ra!//c!"$ a#+ar 1, 200@, co#!"##! +po# a %pc"/"' /ac! or co#'"!"o#. I! a$% !h #!"r opra!"o# or #o#=opra!"o# o/ !h 12B ra!+po# /ac!+a 4a!!r% o+!%"' o/ !h co#!ro o/ !h c+!"$. No '"%cr!"o# o+' rc"%' !h &r%"'#!. )"h"h!"# !h a%#c o/ '"%cr!"o# "% !h /ac! !ha! !h or' shall "% +%' "# !h

co44o# proviso. Th +% o/ !h or' shall co##o!% a 4a#'a!or or'r. I!% +% "# a %!a!+! '#o!% a# "4pra!"$ o"a!"o# a#' "%"#co#%"%!#! "!h !h "'a o/ '"%cr!"o#.[53] (hr !h a "% car a#' +#a4"+o+%, "! 4+%! !a# !o 4a# ac! ha! "! %a%, a#'co+r!% ha$ #o cho"c +! !o % !o "! !ha! !h 4a#'a! "% o'.[5;]

Th+%, "! "% !h 4"#"%!r"a '+! o/ !h &r%"'#! !o "44'"a! "4po% !h 12B ra! +po# !h "%!#c o/ a# o/ !h co#'"!"o#% %pc"/"' Co#r%%. Th"% "% a '+! h"ch ca##o! $a'' !h &r%"'#!. I#a%4+ch a% !h a %pc"/"ca +%% !h or' shall , !hrc"% o/ '"%cr!"o# !h &r%"'#! 'o% #o! co4 "#!o pa. I! "% a car '"rc!"$ !o "4po% !h 12B VAT ra! h# !h %pc"/"'co#'"!"o#% ar pr%#!. Th !"4 o/ !a"# "#!o //c! o/ !h 12B VAT ra! "% a%' o# !h happ#"# o/ a cr!a"# %pc"/"' co#!"##cor +po# !h a%cr!a"#4#! o/ cr!a"# /ac!% or co#'"!"o#% a pr%o# or o' o!hr !ha# !h "%a!+r "!%/. Th Co+r! /"#'% #o 4r"! !o !h co#!#!"o# o/ p!"!"o#r% ABAKADA GURO &ar! L"%!, ! a. !ha! !h a //c!"$ #+"/"' !h&r%"'#!% por o/ co#!ro o$r !h Scr!ar o/ F"#a#c 4a#'a!"# !h /""# o/ !h !a ra! !h &r%"'#! +po# !hrco44#'a!"o# o/ !h Scr!ar o/ F"#a#c. Th Co+r! ca##o! a%o %+%cr" !o !h po%"!"o# o/ p!"!"o#r%&"4#!, et al. !ha! !h or' shall %ho+' "#!rpr!' !o 4a# &ay "# $" o/ !h phra% +po# !h rco44#'a!"o# o/ !h Scr!aro/ F"#a#c. N"!hr 'o% !h Co+r! /"#' pr%+a%"$ !h %+4"%%"o# o/ p!"!"o#r% E%c+'ro, et al. !ha! a# rco44#'a!"o# !h

Scr!ar o/ F"#a#c ca# a%" r+%h' a%"' !h &r%"'#! %"#c !h /or4r "% a 4r a!r o o/ !h a!!r. (h# o# %pa% o/ !h Scr!ar o/ F"#a#c a% !h a!r o o/ !h &r%"'#!, "! %"4p 4a#% !ha! a% ha' o/ !h *par!4#! oF"#a#c h "% !h a%%"%!a#! a#' a#! o/ !h Ch"/ Ec+!"$. Th 4+!"/ar"o+% c+!"$ a#' a'4"#"%!ra!"$ /+#c!"o#% o/ !h Ch"/Ec+!"$ ar pr/or4' a#' !hro+h !h c+!"$ 'par!4#!%, a#' !h ac!% o/ !h %cr!ar"% o/ %+ch 'par!4#!%, %+ch a% !h*par!4#! o/ F"#a#c, pr/or4' a#' pro4+a!' "# !h r+ar co+r% o/ +%"#%%, ar, +#%% '"%appro$' or rproa!' !hCh"/ Ec+!"$, pr%+4p!"$ !h ac!% o/ !h Ch"/ Ec+!"$. Th Scr!ar o/ F"#a#c, a% %+ch, occ+p"% a po"!"ca po%"!"o# a#'ho'% o//"c "# a# a'$"%or capac"!, a#', "# !h a#+a o/ Tho4a% //r%o#, >%ho+' o/ !h &r%"'#!% o%o4 co#/"'#c> a#', "#!h a#+a o/ A!!or#=G#ra C+%h"#, "% %+Dc! !o !h '"rc!"o# o/ !h &r%"'#!.>[55]

I# !h pr%#! ca%, "# 4a"# h"% rco44#'a!"o# !o !h &r%"'#! o# !h "%!#c o/ "!hr o/ !h !o co#'"!"o#%, !h Scr!ar o/F"#a#c "% #o! ac!"# a% !h a!r o o/ !h &r%"'#! or $# hr %+or'"#a!. I# %+ch "#%!a#c, h "% #o! %+Dc! !o !h por o/ co#!ro a#' '"rc!"o# o/ !h &r%"'#!. ) "% ac!"# a% !h a#! o/ !h "%a!"$ 'par!4#!, !o '!r4"# a#' 'car !h $#! +po#h"ch "!% pr%%' " "% !o !a //c!.[5@] Th Scr!ar o/ F"#a#c co4% !h 4a#% or !oo h"ch "%a!"$ po"c "%



























'!r4"#' a#' "4p4#!', co#%"'r"# !ha! h po%%%%% a !h /ac""!"% !o a!hr 'a!a a#' "#/or4a!"o# a#' ha% a 4+ch roa'rpr%pc!"$ !o propr $a+a! !h4. )"% /+#c!"o# "% !o a!hr a#' coa! %!a!"%!"ca 'a!a a#' o!hr pr!"##! "#/or4a!"o# a#' $r"/ "/a# o/ !h !o co#'"!"o#% a"' o+! Co#r%% "% pr%#!. )"% pr%o#a"! "# %+ch "#%!a#c "% "# ra"! +! a proDc!"o# o/ !ha! o/Co#r%%. Th+%, "# !h a#! o/ Co#r%% a#' #o! o/ !h &r%"'#!, !h &r%"'#! ca##o! a!r or 4o'"/ or #+"/, or %! a%"' !h/"#'"#% o/ !h Scr!ar o/ F"#a#c a#' !o %+%!"!+! !h D+'4#! o/ !h /or4r /or !ha! o/ !h a!!r. Co#r%% %"4p ra#!' !h Scr!ar o/ F"#a#c !h a+!hor"! !o a%cr!a"# !h "%!#c o/ a /ac!, #a4, h!hr *c4r 312005, !h $a+=a''' !a coc!"o# a% a prc#!a o/ Gro%% *o4%!"c &ro'+c! 8G*&9 o/ !h pr$"o+% ar c'% !o a#' /o+r=/"/!hprc#! 82;?5B9 or !h #a!"o#a o$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% o# a#' o#=ha/ prc#! 81B9I/ "!hr o/ !h% !o "#%!a#c% ha% occ+rr', !h Scr!ar o/ F"#a#c, "%a!"$ 4a#'a!, 4+%! %+4"! %+ch "#/or4a!"o# !o !h&r%"'#!. Th# !h 12B VAT ra! 4+%! "4po%' !h &r%"'#! //c!"$ a#+ar 1, 200@. There is no $nd$e delegation of

legislative %ower =$t onl! of the disretion as to the exe$tion of a law. This is onstit$tionall! %ermissi=le .[5] Co#r%% 'o%#o! a'"ca! "!% /+#c!"o#% or +#'+ 'a! por h# "! '%cr"% ha! Do 4+%! 'o#, ho 4+%! 'o "!, a#' ha! "% !h %cop o/h"% a+!hor"! "# o+r co4p co#o4 !ha! "% /r+#! !h o# a "# h"ch !h "%a!"$ proc%% ca# o /orar'. [57]

A% !o !h ar+4#! o/ p!"!"o#r% ABAKADA GURO &ar! L"%!, et al. !ha! 'a!"# !o !h &r%"'#! !h "%a!"$ por !o !a "%co#!rar !o !h pr"#c"p o/ rp+"ca#"%4, !h %a4 '%r$% %ca#! co#%"'ra!"o#. Co#r%% '"' #o! 'a! !h por !o !a +! !h4r "4p4#!a!"o# o/ !h a. Th "#!#! a#' " !o "#cra% !h VAT ra! !o 12B ca4 /ro4 Co#r%% a#' !h !a% o/ !h &r%"'#"% !o %"4p c+! !h "%a!"$ po"c. Tha! Co#r%% cho% !o 'o %o "# %+ch a 4a##r "% #o! "!h"# !h pro$"#c o/ !h Co+r! !o"#+"r "#!o, "!% !a% "# !o "#!rpr! !h a.[56]

Th "#%"#+a!"o# p!"!"o#r% &"4#!, et al. !ha! !h &r%"'#! ha% a4p por% !o ca+%, "#/+#c or cra! !h co#'"!"o#% !o r"#ao+! "!hr or o!h !h co#'"!"o#% prc'#! 'o% #o! '%r$ a# 4r"! a% !h"% ar+4#! "% h"h %pc+a!"$. Th Co+r! 'o% #o!r+ o# aa!"o#% h"ch ar 4a#"/%! co#Dc!+ra, a% !h% 4a #o! "%! a! a.Th Co+r! 'a% "!h /ac!%, #o! /a#c"% o# ra"!"%,#o! appara#c%. (h# !h Co+r! ac!% o# appara#c% "#%!a' o/ ra"!"%, D+%!"c a#' a " %hor!="$'. B. #he !": 2ncrease *A# Rate Does ot 2&pose an Un$air and Unnecessary Additional #a) Burden &!"!"o#r% &"4#!, et al. ar+ !ha! !h 12B "#cra% "# !h VAT ra! "4po%% a# +#/a"r a#' a''"!"o#a !a +r'# o# !h pop.&!"!"o#r% a%o ar+ !ha! !h 12B "#cra%, 'p#'#! o# a# o/ !h 2 co#'"!"o#% %! /or!h "# !h co#!%!' pro$"%"o#%, "% a4"+o+%ca+% "! 'o% #o! %!a! "/ !h VAT ra! o+' r!+r#' !o !h or""#a 10B "/ !h ra!% ar #o o#r %a!"%/"'. &!"!"o#r% a%o ar+!ha! %+ch ra! "% +#/a"r a#' +#ra%o#a, a% !h pop ar +#%+r o/ !h app"ca VAT ra! /ro4 ar !o ar. U#'r !h co44o# provisos o/ Sc!"o#% ;, 5 a#' @ o/ R.A. No. 633, "/ a# o/ !h !o co#'"!"o#% %! /or!h !hr"# ar %a!"%/"', !h&r%"'#! %ha "#cra% !h VAT ra! !o 12B. Th pro$"%"o#% o/ !h a ar car. I! 'o% #o! pro$"' /or a r!+r# !o !h 10B ra! #or 'o% "! 4por !h &r%"'#! !o %o r$r! "/, a/!r !h ra! "% "#cra%' !o 12B, !h VAT coc!"o# o% o !h 2 ;?5 o/ !h G*& o!h pr$"o+% ar or !ha! !h #a!"o#a o$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar 'o% #o! c' 1B. Thr/or, #o %!a!+!or co#%!r+c!"o# or "#!rpr!a!"o# "% #''. N"!hr ca# co#'"!"o#% or "4"!a!"o#% "#!ro'+c' hr #o# "%pro$"'' /or. Rr"!"# !h a "% a /or"''# ro+#' !ha! o# Co#r%% 4a !ra' +po#.[@0]

Th+%, "# !h a%#c o/ a# pro$"%"o# pro$"'"# /or a r!+r# !o !h 10B ra!, h"ch "# !h"% ca% !h Co+r! /"#'% #o#, p!"!"o#r%ar+4#! "%, a! %!, p+r %pc+a!"$. Thr "% #o a%"% /or p!"!"o#r% /ar o/ a /+c!+a!"# VAT ra! ca+% !h a "!%/ 'o% #o!pro$"' !ha! !h ra! %ho+' o ac !o 10B "/ !h co#'"!"o#% pro$"'' "# Sc!"o#% ;, 5 a#' @ ar #o o#r pr%#!. Th r+ "% !ha!hr !h pro$"%"o# o/ !h a "% car a#' +#a4"+o+%, %o !ha! !hr "% #o occa%"o# /or !h co+r!% %"# !h "%a!"$ "#!#!, !ha 4+%! !a# a% "! "%, '$o"' o/ D+'"c"a a''"!"o# or %+!rac!"o#.[@1]

&!"!"o#r% a%o co#!#' !ha! !h "#cra% "# !h VAT ra!, h"ch a% a' a# "#c#!"$ !o !h &r%"'#! !o ra"% !h VAT coc!"o#!o a! a%! 2 ;?5 o/ !h G*& o/ !h pr$"o+% ar, %ho+' a%' o# /"%ca a'+ac. &!"!"o#r% o$"o+% o$roo' !ha! "#cra% "# VAT coc!"o# "% #o! !h only co#'"!"o#. Thr "% a#o!hr co#'"!"o#, i.e., !h #a!"o#ao$r#4#! '/"c"! a% a prc#!a o/ G*& o/ !h pr$"o+% ar c'% o# a#' o#=ha/ prc#! 81 B9. R%po#'#!% pa"#' !h ph"o%oph h"#' !h% a!r#a!"$ co#'"!"o#%-

1. VAT?G*& Ra!"o 2.7B Th co#'"!"o# %! /or "#cra%"# VAT ra! !o 12B ha$ co#o4"c or /"%ca 4a#"#. I/ VAT?G*& "% %% !ha# 2.7B, "! 4a#% !ha!o$r#4#! ha% a or #o capa""! o/ "4p4#!"# !h VAT or !ha! VAT "% #o! //c!"$ "# !h /+#c!"o# o/ !h !a coc!"o#.Thr/or, !hr "% #o $a+ !o "#cra% "! !o 12B ca+% %+ch ac!"o# " a%o "#//c!+a. 2. Na! Go$! */"c"!?G*& 1.5B Th co#'"!"o# %! /or "#cra%"# VAT h# '/"c"!?G*& "% 1.5B or %% 4a#% !h /"%ca co#'"!"o# o/ o$r#4#! ha% rach' ara!"$ %o+#' po%"!"o# or "% !oar'% !h '"rc!"o# o/ a aa#c' +'! po%"!"o#. Thr/or, !hr "% #o #' !o "#cra% !h VAT ra!%"#c !h /"%ca ho+% "% "# a ra!"$ ha!h po%"!"o#. O!hr"% %!a!', "/ !h ra!"o "% 4or !ha# 1.5B, !hr "% "#'' a #' !o"#cra% !h VAT ra!.[@2]


















Tha! !h /"r%! co#'"!"o# a4o+#!% !o a# "#c#!"$ !o !h &r%"'#! !o "#cra% !h VAT coc!"o# 'o% #o! r#'r "! +#co#%!"!+!"o#a %oo# a% !hr "% a p+"c p+rpo% /or h"ch !h a a% pa%%', h"ch "# !h"% ca%, "% 4a"# !o ra"% r$#+. I# /ac!, $iscaade;uacy '"c!a!' !h #' /or a ra"% "# r$#+. Th pr"#c"p o/ /"%ca a'+ac a% a charac!r"%!"c o/ a %o+#' !a %%!4 a% or""#a %!a!' A'a4 S4"!h "# h"% 'anons o#a)ation 81@9, a%-IV. E$r !a o+h! !o %o co#!r"$' a% o!h !o !a o+! a#' !o p o+! o/ !h poc!% o/ !h pop a% "!! a% po%%" o$r a#'ao$ ha! "! r"#% "#!o !h p+"c !ra%+r o/ !h %!a!.[@3]

I! %"4p 4a#% !ha! %o+rc% o/ r$#+% 4+%! a'+a! !o 4! o$r#4#! p#'"!+r% a#' !h"r $ar"a!"o#%.[@;]

Th '"r #' /or r$#+ ca##o! "#or'. O+r co+#!r "% "# a +a4"r o/ /"#a#c"a o. *+r"# !h <"ca4ra Co#/r#cCo44"!! har"#, !h# F"#a#c Scr!ar &+r"%"4a +#! 'p"c!' !h co+#!r% oo4 %!a! o/ co#o4"c a//a"r%, !h+%- F"r%!, ! 4 pa"# !h po%"!"o# !ha! !h &h""pp"#% /"#'% "!%/ "# r"h! #o. ( ar "# a po%"!"o# hr 60 prc#! o/ o+r r$#+ "%+%' /or '! %r$"c. So, /or $r p%o o/ r$#+ !ha! c+rr#! ra"%, 60 o% !o '! %r$"c. Tha!% "#!r%! p+% a4or!":a!"o# o/o+r '!. So car, !h"% "% #o! a %+%!a"#a %"!+a!"o#. Tha!% !h /"r%! /ac!. Th %co#' /ac! "% !ha! o+r '! !o G*& $ "% a o+! o/ "# co4par' !o o!hr pr co+#!r"% !ha! orro 4o# /ro4 !ha!"#!r#a!"o#a /"#a#c"a 4ar!%. O+r '! !o G*& "% appro"4a! +a !o o+r G*&. Aa"#, !ha! %ho% o+ !ha! !h"% "% #o! a %+%!a"#a%"!+a!"o#. Th !h"r' !h"# !ha! I' " !o po"#! o+! "% !h #$"ro#4#! !ha! ar pr%#! opra!"# "# "% #o! a% #"# a% ha! "! +%' !o !hpa%! /"$ ar%. (ha! 'o I 4a# !ha! I# !h pa%! /"$ ar%, $ # +c ca+% r opra!"# "# a pr"o' o/ a%"ca oa ro!h a#' o "#!r%! ra!%. Thpa%! / 4o#!h%, ha$ %# a# "#ch"# +p, "# /ac!, a rap"' "#cra% "# !h "#!r%! ra!% "# !h a'"# co#o4"% o/ !h or'. A#'!hr/or, o+r a""! !o orro a! ra%o#a pr"c% "% o"# !o cha#'. I# /ac!, +!"4a!, !h +%!"o# "% o+r a""! !o acc%% !h/"#a#c"a 4ar!%. (h# !h &r%"'#! 4a' hr %pch "# + a%! ar, !h #$"ro#4#! a% #o! a% a' a% "! "% #o, a! a%! a%' o# !h /orca%! o/4o%! /"#a#c"a "#%!"!+!"o#%. So, r a%%+4"# !ha! ra"%"# 70 ""o# o+' p+! +% "# a po%"!"o# hr ca# !h# co#$"#c !h4 !o"4pro$ o+r a""! !o orro a! or ra!%. <+! co#'"!"o#% ha$ cha#' o# +% ca+% !h "#!r%! ra!% ha$ o# +p. I# /ac!, D+%!"!h"# !h"% roo4, !r"' !o acc%% !h 4ar! /or a ""o# 'oar% ca+% /or !h"% ar ao#, !h &h""pp"#% " ha$ !o orro ;""o# 'oar%. O/ !ha! a4o+#!, ha$ orro' 1.5 ""o#. ( "%%+' a%! a#+ar a 25=ar o#' a! 6. prc#! co%!. ( r !r"#!o acc%% a%! a#' !h 4ar! a% #o! a% /a$ora a#' +p !o #o ha$ #o! acc%%' a#' 4"h! p+ ac ca+% !hco#'"!"o#% ar #o! $r oo'.

So "$# !h"% %"!+a!"o#, a! !h *par!4#! o/ F"#a#c "$ !ha! ra #' !o /ro#!=#' o+r '/"c"! r'+c!"o#. <ca+% "! "%'/"c"! !ha! "% ca+%"# !h "#cra% o/ !h '! a#' ar "# ha! ca a '! %p"ra. Th 4or '! o+ ha$, !h 4or '/"c"! o+ha$ ca+% "#!r%! a#' '! %r$"c a!% a#' a!% 4or o/ o+r r$#+. ( #' !o ! o+! o/ !h"% '! %p"ra. A#' !h o# a, !h"#, ca# ! o+! o/ !h"% '! %p"ra "% ra ha$ a /ro#!=#' a'D+%!4#! "# o+r r$#+ a%.[@5]

Th "4a por!ra' "% ch""#. Co#r%% pa%%' !h a hop"# /or r%c+ /ro4 a# "#$"!a ca!a%!roph. (h!hr !h a "% "#''%+//"c"#! !o a#%r !h %!a!% co#o4"c '"44a "% #o! /or !h Co+r! !o D+'. I# !h %arias ca%, !h Co+r! r/+%' !o co#%"'r !h$ar"o+% ar+4#!% ra"%' !hr"# !ha! '! o# !h "%'o4 o/ Sc!"o# 1; o/ R.A. No. 600@ 8Th Fa"r Ec!"o# Ac!9, pro#o+#c"# !ha!- . . . po"c 4a!!r% ar #o! !h co#cr# o/ !h Co+r!. Go$r#4#! po"c "% "!h"# !h c+%"$ 'o4"#"o# o/ !h po"!"ca ra#ch% o/ !ho$r#4#!. I! "% #o! /or !h"% Co+r! !o oo "#!o !h "%'o4 or propr"! o/ "%a!"$ '!r4"#a!"o#. I#'', h!hr a# #ac!4#! "%"% or +#"%, h!hr "! "% a%' o# %o+#' co#o4"c !hor, h!hr "! "% !h %! 4a#% !o ach"$ !h '%"r' r%+!%, h!hr, "#%hor!, !h "%a!"$ '"%cr!"o# "!h"# "!% pr%cr"' "4"!% %ho+' rc"%' "# a par!"c+ar 4a##r ar 4a!!r% /or !h D+'4#! o/ !h"%a!+r, a#' !h %r"o+% co#/"c! o/ op"#"o#% 'o% #o! %+//"c !o r"# !h4 "!h"# !h ra# o/ D+'"c"a co#":a#c.[@@]

I# !h %a4 $"#, !h Co+r! "# !h"% ca% " #o! 'a' o# !h p+rpo% o/ Co#r%% or !h c+!"$ po"c, "$# !ha! "! "% #o! /or !h D+'"c"ar !o >pa%% +po# +%!"o#% o/ "%'o4, D+%!"c or p'"#c o/ "%a!"o#.[@]

II.(h!hr Sc!"o# 7 o/ R.A. No. 633, a4#'"# Sc!"o#% 1108A9829 a#' 1108<9 o/ !h NIRC a#' Sc!"o# 12 o/ R.A. No. 633, a4#'"#Sc!"o# 11;8C9 o/ !h NIRC, $"oa! !h /oo"# pro$"%"o#% o/ !h Co#%!"!+!"o#- a. Ar!"c VI, Sc!"o# 27819, a#'. Ar!"c III, Sc!"o# 1

A. Due Process and (;ual Protection 'lauses&!"!"o#r% A%%oc"a!"o# o/ Pilipinas Sh *ar%, I#c., et al. ar+ !ha! Sc!"o# 7 o/ R.A. No. 633, a4#'"# Sc!"o#% 110 8A9829, 1108<9, a#' Sc!"o# 12 o/ R.A. No. 633, a4#'"# Sc!"o# 11; 8C9 o/ !h NIRC ar ar"!rar, oppr%%"$, c%%"$ a#' co#/"%ca!or
















Th"r ar+4#! "% pr4"%' o# !h co#%!"!+!"o#a r"h! aa"#%! 'pr"$a!"o# o/ "/, "r! o/ propr! "!ho+! '+ proc%% o/ a, a%4o'"' "# Ar!"c III, Sc!"o# 1 o/ !h Co#%!"!+!"o#. &!"!"o#r% a%o co#!#' !ha! !h% pro$"%"o#% $"oa! !h co#%!"!+!"o#a +ara#! o/ +a pro!c!"o# o/ !h a.Th 'oc!r"# "% !ha! hr !h '+ proc%% a#' +a pro!c!"o# ca+%% ar "#$o', co#%"'r"# !ha! !h ar #o! /"' r+% +! ra!hroa' %!a#'ar'%, !hr "% a #' /or proo/ o/ %+ch pr%+a%"$ charac!r a% o+' a' !o %+ch a co#c+%"o#. A%#! %+ch a %ho"#, !hpr%+4p!"o# o/ $a"'"! 4+%! pr$a". [@7]

Sc!"o# 7 o/ R.A. No. 633, a4#'"# Sc!"o# 1108<9 o/ !h NIRC "4po%% a "4"!a!"o# o# !h a4o+#! o/ "#p+! !a !ha! 4a cr'"!'aa"#%! !h o+!p+! !a. I! %!a!%, "# par!- [P ]rovided , !ha! !h "#p+! !a "#c+%"$ o/ !h "#p+! VAT carr"' o$r /ro4 !h pr$"o+% +ar!r!ha! 4a cr'"!' "# $r +ar!r %ha #o! c' %$#! prc#! 80B9 o/ !h o+!p+! VAT-

2nput #a) "% '/"#' +#'r Sc!"o# 1108A9 o/ !h NIRC, a% a4#'', a% !h $a+=a''' !a '+ $ro& or paid a VAT=r"%!r'pr%o# o# !h "4por!a!"o# o/ oo'% or oca p+rcha% o/ oo' a#' %r$"c%, "#c+'"# a% or +% o/ propr!, "# !h co+r% o/ !ra' or+%"#%%, /ro4 a VAT=r"%!r' pr%o#, a#' Output #a) "% !h $a+=a''' !adue o# !h %a or a% o/ !aa oo'% or propr!"%or %r$"c% a# pr%o# r"%!r' or r+"r' !o r"%!r +#'r !h a. &!"!"o#r% ca"4 !ha! !h co#!%!' %c!"o#% "4po% "4"!a!"o#% o# !h a4o+#! o/ "#p+! !a !ha! 4a ca"4'. I# //c!, a por!"o# o/ !h "#p+! !a !ha! ha% ara' # pa"' ca##o! #o cr'"!' aa"#%! !h o+!p+! !a. &!"!"o#r% ar+4#! "% #o! a%o+!. I! a%%+4% !ha! !h "#p+! !a c'% 0B o/ !h o+!p+! !a, a#' !hr/or, !h "#p+! !a "# c%%o/ 0B r4a"#% +#cr'"!'. )o$r, !o !h !#! !ha! !h "#p+! !a "% %% !ha# 0B o/ !h o+!p+! !a, !h# 100B o/ %+ch "#p+! !a "%%!" cr'"!a. Mor "4por!a#!, !h c%% "#p+! !a, "/ a#, "% r!a"#' "# a +%"#%%% oo% o/ acco+#!% a#' r4a"#% cr'"!a "# !h %+cc'"#+ar!r?%. Th"% "% p"c"! ao' Sc!"o# 1108<9, h"ch pro$"'% !ha! "/ !h "#p+! !a c'% !h o+!p+! !a, !h c%% %ha carr"' o$r !o !h %+cc'"# +ar!r or +ar!r%. I# a''"!"o#, Sc!"o# 1128<9 ao% a VAT=r"%!r' pr%o# !o app /or !h "%%+a#co/ a !a cr'"! cr!"/"ca! or r/+#' /or a# +#+%' "#p+! !a%, !o !h !#! !ha! %+ch "#p+! !a% ha$ #o! # app"' aa"#%! !ho+!p+! !a%. S+ch +#+%' "#p+! !a 4a +%' "# pa4#! o/ h"% o!hr "#!r#a r$#+ !a%. Th #o#=app"ca!"o# o/ !h +#+!"":' "#p+! !a "# a "$# +ar!r "% #o! ad in$initu&, a% p!"!"o#r% ara!' co#!#'. Th"r a#a%"%o/ !h //c! o/ !h 0B "4"!a!"o# "% "#co4p! a#' o#=%"''. I! #'% a! !h #! //c! !ha! !hr " +#app"'?+#+!"":' "#p+!% VAT/or a "$# +ar!r. I! 'o% #o! proc' /+r!hr !o !h /ac! !ha! %+ch +#app"'?+#+!"":' "#p+! !a 4a cr'"!' "# !h %+%+#!pr"o'% a% ao' !h carr=o$r pro$"%"o# o/ Sc!"o# 1108<9 or !ha! "! 4a a!r o# r/+#'' !hro+h a !a cr'"! cr!"/"ca! +#'Sc!"o# 1128<9. Thr/or, p!"!"o#r% ar+4#! 4+%! rDc!'. O# !h o!hr ha#', "! appar% !ha! p!"!"o#r Garc"a /a"' !o co4prh#' !h opra!"o# o/ !h 0B "4"!a!"o# o# !h "#p+! !a. Accor'"#!o p!"!"o#r, !h "4"!a!"o# o# !h cr'"!a "#p+! !a "# //c! ao% VAT=r"%!r' %!a"%h4#!% !o r!a"# a por!"o# o/ !h !a% !h

coc!, h"ch $"oa!% !h pr"#c"p !ha! !a coc!"o# a#' r$#+ %ho+' /or p+"c p+rpo%% a#' p#'"!+r% A% ar"r %!a!', !h "#p+! !a "% !h !a pa"' a pr%o#, pa%%' o# !o h"4 !h %r, h# h +% oo'%. O+!p+! !a 4a#h" "%!h !a '+ !o !h pr%o# h# h %% oo'%. I# co4p+!"# !h VAT paa, !hr po%%" %c#ar"o% 4a ar"%- F"r%!, "/ a! !h #' o/ a !aa +ar!r !h o+!p+! !a% char' !h %r ar +a !o !h "#p+! !a% !ha! h pa"' a#' pa%%' o# !h %+pp"r%, !h# #o pa4#! "% r+"r'

Sco#', h# !h o+!p+! !a% c' !h "#p+! !a%, !h pr%o# %ha "a /or !h c%%, h"ch ha% !o pa"' !o !h <+ra+ o/I#!r#a R$#+ 8<IR9[@6] a#'

Th"r', "/ !h "#p+! !a% c' !h o+!p+! !a%, !h c%% %ha carr"' o$r !o !h %+cc'"# +ar!r or +ar!r%. Sho+' !h"#p+! !a% r%+! /ro4 :ro=ra!' or //c!"$ :ro=ra!' !ra#%ac!"o#%, a# c%% o$r !h o+!p+! !a% %ha "#%!a' r/+#'' !o!h !apar or cr'"!' aa"#%! o!hr "#!r#a r$#+ !a%, a! !h !apar% op!"o#.[0]

Sc!"o# 7 o/ R.A. No. 633 ho$r, "4po%' a 0B "4"!a!"o# o# !h "#p+! !a. Th+%, a pr%o# ca# cr'"! h"% "#p+! !a o# +p !o !h!#! o/ 0B o/ !h o+!p+! !a. I# a4a#% !r4, !h $a+=a''' !a% !ha! a pr%o#?!apar pa"' a#' pa%%' o# !o h"4 a %rca# o# cr'"!' +p !o 0B o/ !h $a+=a''' !a% !ha! "% '+ !o h"4 o# a !aa !ra#%ac!"o#. Thr "% #o r!#!"o# o/ a# !acoc!"o# ca+% !h pr%o#?!apar ha% ara' pr$"o+% pa"' !h "#p+! !a !o a %r, a#' !h %r " %+%+#! r4"! %+ch"#p+! !a !o !h <IR. Th par! '"rc! "a /or !h pa4#! o/ !h !a "% !h %r. [1] (ha! o# #'% !o 'o# "% /or !hpr%o#?!apar !o app or cr'"! !h% "#p+! !a%, a% $"'#c' rc"p!%, aa"#%! h"% o+!p+! !a%. &!"!"o#r% A%%oc"a!"o# o/ Pilipinas Sh *ar%, I#c., et al. a%o ar+ !ha! !h "#p+! !a par!a% !h #a!+r o/ a propr! !ha! 4a #o! co#/"%ca!', appropr"a!', or "4"!' "!ho+! '+ proc%% o/ a. Th "#p+! !a "% #o! a propr! or a propr! r"h! "!h"# !h co#%!"!+!"o#a p+r$" o/ !h '+ proc%% ca+%. A VAT=r"%!r' pr%o#%#!"!4#! !o !h cr'"!a "#p+! !a "% a 4r %!a!+!or pr"$".













Th '"%!"#c!"o# !# %!a!+!or pr"$"% a#' $%!' r"h!% 4+%! or# "# 4"#' /or pr%o#% ha$ #o $%!' r"h!% "# %!a!+!orpr"$"%. Th %!a! 4a cha# or !a aa r"h!%, h"ch r cra!' !h a o/ !h %!a!, a!ho+h "! 4a #o! !a aapropr!, h"ch a% $%!' $"r!+ o/ %+ch r"h!%.[2]

U#'r !h pr$"o+% %%!4 o/ %"#=%!a !aa!"o#, !a% pa"' a! $r $ o/ '"%!r"+!"o# ar #o! rco$ra /ro4 !h !a% paaa!ho+h "! co4% par! o/ !h co%!, h"ch "% ''+c!" /ro4 !h ro%% r$#+. (h# &r%. A+"#o "%%+' E.O. No. 23 "4po%"# a10B 4+!"=%!a !a o# a %a%, "! a% !h# !ha! !h cr'"!"# o/ !h "#p+! !a pa"' o# p+rcha% or "4por!a!"o# o/ oo'% a#' %r$"c% VAT=r"%!r' pr%o#% aa"#%! !h o+!p+! !a a% "#!ro'+c'.[3] Th"% a% a'op!' !h Epa#'' VAT La 8R.A. No. 1@9, [;] a#'Th Ta R/or4 Ac! o/ 166 8R.A. No. 7;2;9. [5] Th r"h! !o cr'"! "#p+! !a a% aa"#%! !h o+!p+! !a "% car a pr"$" cra!' a, a pr"$" !ha! a%o !h a ca# r4o$, or "# !h"% ca%, "4"!.

&!"!"o#r% a%o co#!%! a% ar"!rar, oppr%%"$, c%%"$ a#' co#/"%ca!or, Sc!"o# 7 o/ R.A. No. 633, a4#'"# Sc!"o# 1108A9 o/!h NIRC, h"ch pro$"'%- SEC. 110. #a) 'redits. 8A9 'reditable 2nput #a) . Provided , Tha! !h "#p+! !a o# oo'% p+rcha%' or "4por!' "# a ca#'ar 4o#!h /or +% "# !ra' or +%"#%% /or h"ch ''+c!"o# /or 'prc"a!"o# "% ao' +#'r !h"% Co', %ha %pra' $# o$r !h 4o#!h o/ ac+"%"!"o# a#' !h /"/!=#"# 8569 %+cc'"# 4o#!h%"/ !h ara! ac+"%"!"o# co%! /or %+ch oo'%, c+'"# !h VAT co4po##! !hro/, c'% O# 4""o# p%o%8&1,000,000.009- Provided , ho$r, Tha! "/ !h %!"4a!' +%/+ "/ o/ !h cap"!a oo'% "% %% !ha# /"$ 859 ar%, a% +%' /o'prc"a!"o# p+rpo%%, !h# !h "#p+! VAT %ha %pra' o$r %+ch a %hor!r pr"o'- Provided , $inally , Tha! "# !h ca% o/ p+rcha% o%r$"c%, a% or +% o/ propr!"%, !h "#p+! !a %ha cr'"!a !o !h p+rcha%r, %% or "c#% +po# pa4#! o/ !hco4p#%a!"o#, r#!a, roa! or /.

Th /oro"# %c!"o# "4po%% a @0=4o#!h pr"o' "!h"# h"ch !o a4or!": !h cr'"!a "#p+! !a o# p+rcha% or "4por!a!"o# o/ cap"!aoo'% "!h ac+"%"!"o# co%! o/ &1 M""o# p%o%, c+%"$ o/ !h VAT co4po##!. S+ch %pra' o+! o# po%% a 'a "# !h cr'"!"# o/!h "#p+! !a. &!"!"o#r% ar+4#! "% "!ho+! a%"% ca+% !h !apar "% #o! pr4a##! 'pr"$' o/ h"% pr"$" !o cr'"! !h "#p+!!a. I! "% or!h 4#!"o#"# !ha! Co#r%% a'4"!!' !ha! !h %pra'=o+! o/ !h cr'"!a "#p+! !a "# !h"% ca% a4o+#!% !o a ;=ar "#!r%!=/r oa# !o !h o$r#4#!. [@] I# !h %a4 ra!h, Co#r%% a%o D+%!"/"' "!% 4o$ %a"# !ha! !h pro$"%"o# a% '%"#' !o ra"%a# a##+a r$#+ o/ 22.@ ""o#. [] Th "%a!+r a%o '"%p' !h /ar !ha! !h pro$"%"o# " /#' o// /or"# "#$%!4#!%, %a"#!ha! /or"# "#$%!or% ha$ o!hr !a "#c#!"$% pro$"'' a, a#' c"!"# !h ca% o/ Ch"#a, hr '%p"! a 1.5B #o#=cr'"!aVAT, /or"# "#$%!4#!% r #o! '!rr'. [7] Aa"#, /or ha!$r "% !h p+rpo% o/ !h @0=4o#!h a4or!":a!"o#, !h"% "#$o$% c+!"$co#o4"c po"c a#' "%a!"$ "%'o4 "# h"ch !h Co+r! ca##o! "#!r$#. ("!h rar' !o !h 5B cr'"!a "!hho'"# !a "4po%' o# pa4#!% 4a' !h o$r#4#! /or !aa !ra#%ac!"o#%, Sc!"o# 12 o/

R.A. No. 633, h"ch a4#'' Sc!"o# 11; o/ !h NIRC, ra'%- SEC. 11;. R!+r# a#' &a4#! o/ Va+=a''' Ta. 8C9 ("!hho'"# o/ Va+=a''' Ta. Th Go$r#4#! or a# o/ "!% po"!"ca %+'"$"%"o#%, "#%!r+4#!a"!"% or a#c"%, "#c+'"#o$r#4#!=o#' or co#!ro' corpora!"o#% 8GOCC%9 %ha, /or 4a"# pa4#! o# acco+#! o/ ach p+rcha% o/ oo'% a#'%r$"c% h"ch ar %+Dc! !o !h $a+=a''' !a "4po%' "# Sc!"o#% 10@ a#' 107 o/ !h"% Co', ''+c! a#' "!hho' a /"#a $a+=a''' !a a! !h ra! o/ /"$ prc#! 85B9 o/ !h ro%% pa4#! !hro/- &ro$"'', Tha! !h pa4#! /or a% or +% o/ propr!"% or propr! r"h!% !o #o#r%"'#! o#r% %ha %+Dc! !o !# prc#! 810B9 "!hho'"# !a a! !h !"4 o/ pa4#!. For p+rpo%% o/ !h"%Sc!"o#, !h paor or pr%o# "# co#!ro o/ !h pa4#! %ha co#%"'r' a% !h "!hho'"# a#!. Th $a+=a''' !a "!hh' +#'r !h"% Sc!"o# %ha r4"!!' "!h"# !# 8109 'a% /oo"# !h #' o/ !h 4o#!h !h "!hho'"#a% 4a'. Sc!"o# 11;8C9 4r pro$"'% a 4!ho' o/ coc!"o#, or a% %!a!' r%po#'#!%, a 4or %"4p"/"' VAT "!hho'"# %%!4. Th

o$r#4#! "# !h"% ca% "% co#%!"!+!' a% a "!hho'"# a#! "!h r%pc! !o !h"r pa4#!% /or oo'% a#' %r$"c%. &r"or !o "!% a4#'4#!, Sc!"o# 11;8C9 pro$"'' /or '"//r#! ra!% o/ $a+=a''' !a% !o "!hh' == 3B o# ro%% pa4#!% /orp+rcha%% o/ oo'% @B o# ro%% pa4#!% /or %r$"c% %+pp"' co#!rac!or% o!hr !ha# p+"c or% co#!rac!or% 7.5B o# ro%%pa4#!% /or %r$"c% %+pp"' p+"c or co#!rac!or% or 10B o# pa4#! /or !h a% or +% o/ propr!"% or propr! r"h!% !o#o#r%"'#! o#r%. U#'r !h pr%#! Sc!"o# 11;8C9, !h% '"//r#! ra!%, cp! /or !h 10B o# a% or propr! r"h!% pa4#! !o#o#r%"'#!%, r '!', a#' a +#"/or4 ra! o/ 5B "% app"'. Th Co+r! o%r$%, ho$r, !ha! !h a !h +%' !h or' $inal . I# !a +%a, $inal , a% oppo%' !o cr'"!a, 4a#% /+. Th+%, "! "%pro$"'' "# Sc!"o# 11;8C9- /"#a $a+=a''' !a a! !h ra! o/ /"$ prc#! 85B9. I# R$#+ R+a!"o#% No. 02=67, "4p4#!"# R.A. No. 7;2; 8Th Ta R/or4 Ac! o/ 1669, !h co#cp! o/ /"#a "!hho'"# !a o#"#co4 a% pa"#', !o "!-




















SECTION 2.5. ("!hho'"# o/ Ta a! So+rc 8A9 F"#a ("!hho'"# Ta. U#'r !h /"#a "!hho'"# !a %%!4 !h a4o+#! o/ "#co4 !a "!hh' !h "!hho'"# a#! "%co#%!"!+!' a% f$ll and final %a!ment o/ !h "#co4 !a '+ /ro4 !h pa o# !h %a"' "#co4. Th "a""! /or pa4#! o/ !h !ar%!% pr"4ar" o# !h paor a% a "!hho'"# a#!. Th+%, "# ca% o/ h"% /a"+r !o "!hho' !h !a or "# ca% o/ +#'r"!hho'"#, !h'/"c"#c !a %ha coc!' /ro4 !h paor?"!hho'"# a#!. 8<9 Cr'"!a ("!hho'"# Ta. U#'r !h cr'"!a "!hho'"# !a %%!4, !a% "!hh' o# cr!a"# "#co4 pa4#!% ar "#!#''!o +a or a! a%! appro"4a! !h !a '+ o/ !h pa o# %a"' "#co4. Ta% "!hh' o# "#co4 pa4#!% co$r' !hpa#'' "!hho'"# !a 8r/rr' !o "# Sc. 2.5.2 o/ !h% r+a!"o#%9 a#' co4p#%a!"o# "#co4 8r/rr' !o "# Sc. 2.7 a%o o/!h% r+a!"o#%9 ar cr'"!a "# #a!+r.

A% app"' !o $a+=a''' !a, !h"% 4a#% !ha! !aa !ra#%ac!"o#% "!h !h o$r#4#! ar %+Dc! !o a 5B ra!, h"ch co#%!"!+!% a%/+ pa4#! o/ !h !a paa o# !h !ra#%ac!"o#. Th"% rpr%#!% !h #! VAT paa o/ !h %r. Th o!hr 5B //c!"$ acco+#!%/or !h %!a#'ar' "#p+! VAT 8'4' "#p+! VAT9, "# "+ o/ !h ac!+a "#p+! VAT '"rc! or a!!r"+!a !o !h !aa !ra#%ac!"o#. [6]

Th Co+r! #' #o! por !h ra!"o#a h"#' !h pro$"%"o#. I! "% car !ha! Co#r%% "#!#'' !o !ra! '"//r#! !aa !ra#%ac!"o#%"!h !h o$r#4#!.[70] Th"% "% %+ppor!' !h /ac! !ha! +#'r !h o' pro$"%"o#, !h 5B !a "!hh' !h o$r#4#! r4a"#%cr'"!a aa"#%! !h !a "a""! o/ !h %r or co#!rac!or, !o "!- SEC. 11;. R!+r# a#' &a4#! o/ Va+=a''' Ta. 8C9 ?ithholding of Credita=le Val$e/added Tax. Th Go$r#4#! or a# o/ "!% po"!"ca %+'"$"%"o#%, "#%!r+4#!a"!"% or a#c"%,"#c+'"# o$r#4#!=o#' or co#!ro' corpora!"o#% 8GOCC%9 %ha, /or 4a"# pa4#! o# acco+#! o/ ach p+rcha% o/ oo'%/ro4 %r% a#' %r$"c% r#'r' co#!rac!or% h"ch ar %+Dc! !o !h $a+=a''' !a "4po%' "# Sc!"o#% 10@ a#' 107 o/ !h"%Co', ''+c! a#' "!hho' !h $a+=a''' !a '+ a! !h ra! o/ !hr prc#! 83B9 o/ !h ro%% pa4#! /or !h p+rcha% o/ oo'%a#' %" prc#! 8@B9 o# ro%% rc"p!% /or %r$"c% r#'r' co#!rac!or% o# $r %a or "#%!a4#! pa4#! h"ch %ha redita=le against the val$e/added tax lia=ilit! of the seller or ontrator - &ro$"'', ho$r, Tha! "# !h ca% o/ o$r#4#!p+"c or% co#!rac!or%, !h "!hho'"# ra! %ha "h! a#' o#=ha/ prc#! 87.5B9- &ro$"'', /+r!hr, Tha! !h pa4#! /or a%or +% o/ propr!"% or propr! r"h!% !o #o#r%"'#! o#r% %ha %+Dc! !o !# prc#! 810B9 "!hho'"# !a a! !h !"4 opa4#!. For !h"% p+rpo%, !h paor or pr%o# "# co#!ro o/ !h pa4#! %ha co#%"'r' a% !h "!hho'"# a#!. Th $a+'=a''' !a "!hh' +#'r !h"% Sc!"o# %ha r4"!!' "!h"# !# 8109 'a% /oo"# !h #' o/ !h 4o#!h !h "!hho'"#a% 4a'. 8E4pha%"% %+pp"'9

A% a4#'', !h +% o/ !h or' $inal a#' !h '!"o# o/ !h or' creditable h""!% Co#r%%% "#!#!"o# !o !ra! !ra#%ac!"o#% "!h !ho$r#4#! '"//r#!. S"#c "! ha% #o! # %ho# !ha! !h ca%% %+Dc! !o !h 5B /"#a "!hho'"# !a ha% # +#ra%o#a#arro', !hr "% #o ra%o# !o "#$a"'a! !h pro$"%"o#. &!"!"o#r%, a% p!ro+4 'ar%, ar #o! !h o# o#% %+Dc!' !o !h 5B/"#a "!hho'"# !a. I! app"% !o a !ho% ho 'a "!h !h o$r#4#!.

Moro$r, !h ac!+a "#p+! !a "% #o! !o!a o%! or +#cr'"!a, a% p!"!"o#r% "$. R$#+ R+a!"o#% No. 1;=2005 or !hCo#%o"'a!' Va+=A''' Ta R+a!"o#% 2005 "%%+' !h <IR, pro$"'% !ha! %ho+' !h ac!+a "#p+! !a c' 5B o/ ro%%pa4#!%, !h c%% 4a /or4 par! o/ !h co%!. E+a, %ho+' !h ac!+a "#p+! !a %% !ha# 5B, !h '"//r#c "% !ra!' a%"#co4.[71]

&!"!"o#r% a%o ar+ !ha! "4po%"# a "4"!a!"o# o# !h cr'"!a "#p+! !a, !h o$r#4#! !% !o !a a pro/"! or $a+=a''' $# "!hr "% #o pro/"! or $a+=a'''. &!"!"o#r% %!a#c "% p+r hpo!h!"ca, ar+4#!a!"$, a#' aa"#, o#=%"''. Th Co+r! " #o! #a "# a a Do+%! hrpr4"%% ar ha! "/%, ar+4#!%, !hor!"ca a#' /ac!%, +#cr!a"#. A# '"%+"%"!"o# !h Co+r! o# !h"% po"#! " o# , a%Sha%par '%cr"% "/ "# <acbeth,[72] /+ o/ %o+#' a#' /+r, %"#"/"# #o!h"#. (ha!% 4or, p!"!"o#r% co#!#!"o# a%%+4% !h propo%"!"o# !ha! !hr "% #o pro/"! or $a+=a'''. I! #' #o! !a a# a%!+!+%"#%%4a# !o #o !ha! "! "% a 4a!!r o/ cp!"o# !ha! a +%"#%% " % oo'% or %r$"c% "!ho+! pro/"! or $a+=a'''. I! ca##o o$r%!r%%' !ha! a +%"#%% "% cra!' prc"% /or pro/"!.

Th +a pro!c!"o# ca+% +#'r !h Co#%!"!+!"o# 4a#% !ha! #o pr%o# or ca%% o/ pr%o#% %ha 'pr"$' o/ !h %a4 pro!c!"o#o/ a% h"ch "% #Do' o!hr pr%o#% or o!hr ca%%% "# !h %a4 pac a#' "# " c"rc+4%!a#c%.[73]

Th por o/ !h S!a! !o 4a ra%o#a a#' #a!+ra ca%%"/"ca!"o#% /or !h p+rpo%% o/ !aa!"o# ha% o# # %!a"%h'. (h!h"! ra!% !o !h %+Dc! o/ !aa!"o#, !h "#' o/ propr!, !h ra!% !o $"', or !h a4o+#!% !o ra"%', !h 4!ho'% o/ a%%%%4#!$a+a!"o# a#' coc!"o#, !h S!a!% por "% #!"!' !o pr%+4p!"o# o/ $a"'"!. A% a r+, !h D+'"c"ar " #o! "#!r/r "!h %+ch pora%#! a car %ho"# o/ +#ra%o#a#%%, '"%cr"4"#a!"o#, or ar"!rar"#%%.[7;]

&!"!"o#r% po"#! o+! !ha! !h "4"!a!"o# o# !h cr'"!a "#p+! !a "/ !h #!"! ha% a h"h ra!"o o/ "#p+! !a, or "#$%!% "# cap"!a+"p4#!, or ha% %$ra !ra#%ac!"o#% "!h !h o$r#4#!, "% #o! a%' o# ra a#' %+%!a#!"a '"//r#c% !o 4! a $a"'ca%%"/"ca!"o#.

















Th ar+4#! "% p'a#!"c, "/ #o! o+!r"h! a%%%. Th a 'o% #o! 4a a# ca%%"/"ca!"o# "# !h %+Dc! o/ !aa!"o#, !h "#' o/propr!, !h ra!% !o $"' or !h a4o+#!% !o ra"%', !h 4!ho'% o/ a%%%%4#!, $a+a!"o# a#' coc!"o#. &!"!"o#r% a''"%!"#c!"o#% ar a%' o# $ar"a% !ha! ar '"//r#! co#%+#c%. (h" !h "4p4#!a!"o# o/ !h a 4a "' $ar"# #' r%+!%'p#'"# o# o#% pro/"! 4ar"# a#' $a+=a''', !h Co+r! ca##o! o o#' ha! !h "%a!+r ha% a"' 'o# a#' "#!r/r "!h !ha//a"r% o/ +%"#%%.Th +a pro!c!"o# ca+% 'o% #o! r+"r !h +#"$r%a app"ca!"o# o/ !h a% o# a pr%o#% or !h"#% "!ho+! '"%!"#c!"o#. Th"% 4"h"# /ac! %o4!"4% r%+! "# +#+a pro!c!"o#. (ha! !h ca+% r+"r% "% +a"! a4o# +a% a% '!r4"#' accor'"# !o a $a"'ca%%"/"ca!"o#. < ca%%"/"ca!"o# "% 4a#! !h ro+p"# o/ pr%o#% or !h"#% %"4"ar !o ach o!hr "# cr!a"# par!"c+ar% a#' '"//r#! /ro4a o!hr% "# !h% %a4 par!"c+ar%. [75]

&!"!"o#r% ro+h! !o !h Co+r!% a!!#!"o# !h "#!ro'+c!"o# o/ S#a! <" No. 2037 S#%. S.R. O%4a III a#' Ma. A#a Co#%+o A.S

Ma'r"a o# +# @, 2005, a#' )o+% <" No. ;;63 Rp. Er"c *. S"#%o#. Th propo%' "%a!"o# %% !o a4#' !h 0B"4"!a!"o# "#cra%"# !h %a4 !o 60B. Th"%, accor'"# !o p!"!"o#r%, %+ppor!% !h"r %!a#c !ha! !h 0B "4"!a!"o# "% ar"!rar a#'co#/"%ca!or. O# !h"% %cor, %+//"c "! !o %a !ha! !h% ar %!" propo%' "%a!"o#%. U#!" Co#r%% a4#'% !h a, a#' a%#! a#+#+"$oca a%"% /or "!% +#co#%!"!+!"o#a"!, !h 0B "4"!a!"o# %!a%. B. Uni$or&ity and (;uitability o$ #a)ation

Ar!"c VI, Sc!"o# 27819 o/ !h Co#%!"!+!"o# ra'%- Th r+ o/ !aa!"o# %ha +#"/or4 a#' +"!a. Th Co#r%% %ha $o$ a pror%%"$ %%!4 o/ !aa!"o#. U#"/or4"! "# !aa!"o# 4a#% !ha! a !aa ar!"c% or "#'% o/ propr! o/ !h %a4 ca%% %ha !a' a! !h %a4 ra!. *"//r#!ar!"c% 4a !a' a! '"//r#! a4o+#!% pro$"'' !ha! !h ra! "% +#"/or4 o# !h %a4 ca%% $rhr "!h a pop a! a !"4%. [7@]

I# !h"% ca%, !h !a a "% +#"/or4 a% "! pro$"'% a %!a#'ar' ra! o/ 0B or 10B 8or 12B9 o# a oo'% a#' %r$"c%. Sc!"o#% ;, 5 a#' @o/ R.A. No. 633, a4#'"# Sc!"o#% 10@, 10 a#' 107, r%pc!"$, o/ !h NIRC, pro$"' /or a ra! o/ 10B 8or 12B9 o# %a o/ oo'%a#' propr!"%, "4por!a!"o# o/ oo'%, a#' %a o/ %r$"c% a#' +% or a% o/ propr!"%. Th% %a4 %c!"o#% a%o pro$"' /or a 0Bra! o# cr!a"# %a% a#' !ra#%ac!"o#. N"!hr 'o% !h a 4a a# '"%!"#c!"o# a% !o !h !p o/ "#'+%!r or !ra' !ha! " ar !h 0B "4"!a!"o# o# !h cr'"!a "#p+! !a5=ar a4or!":a!"o# o/ "#p+! !a pa"' o# p+rcha% o/ cap"!a oo'% or !h 5B /"#a "!hho'"# !a !h o$r#4#!. I! 4+%! %!r%%' !ha! !h r+ o/ +#"/or4 !aa!"o# 'o% #o! 'pr"$ Co#r%% o/ !h por !o ca%%"/ %+Dc!% o/ !aa!"o#, a#' o# '4a#'%+#"/or4"! "!h"# !h par!"c+ar ca%%.[7]

R.A. No. 633 "% a%o +"!a. Th a "% +"pp' "!h a !hr%ho' 4ar"#. Th VAT ra! o/ 0B or 10B 8or 12B9 'o% #o! app !o%a% o/ oo'% or %r$"c% "!h ro%% a##+a %a% or rc"p!% #o! c'"# &1,500,000.00.[77] A%o, a%"c 4ar"# a#' ar"c+!+ra /oo'pro'+c!% "# !h"r or""#a %!a! ar %!" #o! %+Dc! !o !h !a, [76] !h+% #%+r"# !ha! pr"c% a! !h ra%%roo!% $ " r4a"# acc%%"

A% a% %!a!' "# Kapatiran n &a alilin=od sa Pa&ahalaan n Pilipinas, 2nc. vs. #an-[60]

Th '"%p+!' %a% !a "% a%o +"!a. I! "% "4po%' o# o# %a% o/ oo'% or %r$"c% pr%o#% #a' "# +%"#%% "!h a#ara! ro%% a##+a %a% c'"# &200,000.00. S4a cor#r sari-sari %!or% ar co#%+#! 4p! /ro4 "!% app"ca!"o#L""% 4p! /ro4 !h !a ar %a% o/ /ar4 a#' 4ar"# pro'+c!%, %o !ha! !h co%!% o/ a%"c /oo' a#' o!hr #c%%"!"%, %par' a%!h ar /ro4 !h "#c"'#c o/ !h VAT, ar pc!' !o ra!"$ or a#' "!h"# !h rach o/ !h #ra p+"c. I! "% a'4"!!' !ha! R.A. No. 633 p+!% a pr4"+4 o# +%"#%%% "!h o pro/"! 4ar"#%, a#' +#'+ /a$or% !ho% "!h h"h pro/"!4ar"#%. Co#r%% a% #o! o"$"o+% !o !h"%. Th+%, !o +a": !h "h! +r'# !h a #!a"%, !h a, +#'r Sc!"o# 11@, "4po%'a 3B prc#!a !a o# VAT=4p! pr%o#% +#'r Sc!"o# 1068$9, i.e., !ra#%ac!"o#% "!h ro%% a##+a %a% a#'?or rc"p!% #oc'"# &1.5 M""o#. Th"% ac!% a% a +a":r ca+% "# //c!, "r +%"#%%% !ha! +a"/ /or VAT co$ra a#' VAT=4p!!apar% %!a#' o# +a=/oo!"#. Moro$r, Co#r%% pro$"'' 4"!"a!"# 4a%+r% !o c+%h"o# !h "4pac! o/ !h "4po%"!"o# o/ !h !a o# !ho% pr$"o+% 4p!Ec"% !a% o# p!ro+4 pro'+c!%[61]a#' #a!+ra a%[62] r r'+c'. &rc#!a !a o# 'o4%!"c carr"r% a% r4o$'. [63] &opro'+cr% ar #o 4p! /ro4 pa"# /ra#ch"% !a.[6;]

A%"' /ro4 !h%, Co#r%% a%o "#cra%' !h "#co4 !a ra!% o/ corpora!"o#%, "# or'r !o '"%!r"+! !h +r'# o/ !aa!"o#. *o4%!"c/or"#, a#' #o#=r%"'#! corpora!"o#% ar #o %+Dc! !o a 35B "#co4 !a ra!, /ro4 a pr$"o+% 32B. [65] I#!rcorpora! '"$"'#'% o#o#=r%"'#! /or"# corpora!"o#% ar %!" %+Dc! !o 15B /"#a "!hho'"# !a +! !h !a cr'"! ao' o# !h corpora!"o#% 'o4"c"a% "#cra%' !o 20B.[6@] Th &h""pp"# A4+%4#! a#' Ga4"# Corpora!"o# 8&AGCOR9 "% #o! 4p! /ro4 "#co4 !a% a#4or.[6] E$# !h %a a# ar!"%! o/ h"% or% or %r$"c% pr/or4' /or !h pro'+c!"o# o/ %+ch or% a% #o! %par'.

A !h% r '%"#' !o a%, a% a% %pra' o+!, !h +r'# o/ !aa!"o#, h"ch o+' o!hr"% r%! ar o# !h co#%+4r%. Ica##o! !hr/or a"#%a"' !ha! R.A. No. 633 "% +"!a. '. Proressivity o$ #a)ation La%!, p!"!"o#r% co#!#' !ha! !h "4"!a!"o# o# !h cr'"!a "#p+! !a "% a#!h"# +! rr%%"$. I! "% !h %4ar +%"#%% "!h h"hr"#p+! !a=o+!p+! !a ra!"o !ha! " %+//r !h co#%+#c%.




































&ror%%"$ !aa!"o# "% +"! o# !h pr"#c"p o/ !h !apar% a""! !o pa. Th"% pr"#c"p a% a%o "/!' /ro4 A'a4 S4"!h% 'anons o#a)ation, a#' "! %!a!%- I. Th %+Dc!% o/ $r %!a! o+h! !o co#!r"+! !oar'% !h %+ppor! o/ !h o$r#4#!, a% #ar a% po%%", "# propor!"o# !o !h"rr%pc!"$ a""!"% !ha! "%, "# propor!"o# !o !h r$#+ h"ch !h r%pc!"$ #Do +#'r !h pro!c!"o# o/ !h %!a!.Taa!"o# "% pror%%"$ h# "!% ra! o% +p 'p#'"# o# !h r%o+rc% o/ !h pr%o# a//c!'.[67]

Th VAT "% a# a#!"!h%"% o/ pror%%"$ !aa!"o#. < "!% $r #a!+r, "! "% rr%%"$. Th pr"#c"p o/ pror%%"$ !aa!"o# ha% #o ra!"o#"!h !h VAT %%!4 "#a%4+ch a% !h VAT pa"' !h co#%+4r or +%"#%% /or $r oo'% o+h! or %r$"c% #Do' "% !h %a4rar'%% o/ "#co4. I#o!hr or'%, !h VAT pa"' a!% !h %a4 por!"o# o/ a# "#co4, h!hr " or %4a. Th '"%par"! "% "# !h "#co4 ar#' a pr%o#

or pro/"! 4ar"# 4ar' a +%"#%%, %+ch !ha! !h h"hr !h "#co4 or pro/"! 4ar"#, !h %4ar !h por!"o# o/ !h "#co4 or pro/"!!ha! "% a!# VAT. A converso, !h or !h "#co4 or pro/"! 4ar"#, !h "r !h par! !ha! !h VAT a!% aa. A! !h #' o/ !h'a, "! "% ra !h or "#co4 ro+p or +%"#%%% "!h o=pro/"! 4ar"#% !ha! "% aa% har'%! h"!. N$r!h%%, !h Co#%!"!+!"o# 'o% #o! ra proh""! !h "4po%"!"o# o/ "#'"rc! !a%, " !h VAT. (ha! "! %"4p pro$"'% "% !ha!Co#r%% %ha >$o$ a pror%%"$ %%!4 o/ !aa!"o#.> Th Co+r! %!a!' "# !h #olentino case, !h+%- Th Co#%!"!+!"o# 'o% #o! ra proh""! !h "4po%"!"o# o/ "#'"rc! !a% h"ch, " !h VAT, ar rr%%"$. (ha! "! %"4p pro$"'% "%!ha! Co#r%% %ha $o$ a pror%%"$ %%!4 o/ !aa!"o#. Th co#%!"!+!"o#a pro$"%"o# ha% # "#!rpr!' !o 4a# %"4p !ha!'"rc! !a% ar . . . !o pr/rr' [a#'] a% 4+ch a% po%%", "#'"rc! !a% %ho+' 4"#"4":'. 8E. FERNAN*O, T)ECONSTITUTION OF T)E &)ILI&&INES 221 8Sco#' '. 1699 I#'', !h 4a#'a! !o Co#r%% "% #o! !o pr%cr", +! !o $o$, apror%%"$ !a %%!4. O!hr"%, %a% !a%, h"ch prhap% ar !h o'%! /or4 o/ "#'"rc! !a%, o+' ha$ # proh""!' "!h!h proca4a!"o# o/ Ar!. VIII, 1 819 o/ !h 163 Co#%!"!+!"o# /ro4 h"ch !h pr%#! Ar!. VI, 27 819 a% !a#. Sa% !a% ar a%orr%%"$. R%or! !o "#'"rc! !a% %ho+' 4"#"4":' +! #o! a$o"'' #!"r ca+% "! "% '"//"c+!, "/ #o! "4po%%", !o a$o"' !h4 "4po%"#%+ch !a% accor'"# !o !h !apar% a""! !o pa. I# !h ca% o/ !h VAT, !h a 4"#"4":% !h rr%%"$ //c!% o/ !h"% "4po%"!"o# pro$"'"# /or :ro ra!"# o/ cr!a"# !ra#%ac!"o#% 8R.A. No. 1@, 3, a4#'"# 102 89 o/ !h NIRC9, h" ra#!"# 4p!"o#% !o o!hr!ra#%ac!"o#%. 8R.A. No. 1@, ; a4#'"# 103 o/ !h NIRC9[66]

C*+CLSI*+ I! ha% # %a"' !ha! !a% ar !h "/oo' o/ !h o$r#4#!. I# !h"% ca%, "! "% D+%! a# #4a, a /"r%!=a"' 4a%+r !o r%+%c"!a! a#co#o4 "# '"%!r%%. Th Co+r! "% #"!hr "#' #or "% "! !+r#"# a 'a/ ar o# !h p"h! o/ !h 4a%%%. <+! "! 'o% #o! ha$ !h pa#aca/or !h 4aa' !ha! !h a %% !o r4'. A% "# o!hr ca%%, !h Co+r! ca##o! %!r" 'o# a a a% +#co#%!"!+!"o#a %"4p ca+%o/ "!% o%. L! +% #o! o$r "#/+#c' !h pa !ha! /or $r ro# !hr "% a r4', a#' !ha! !h D+'"c"ar %ho+' %!a#' ra' !o a//or'r"/. Thr ar +#'o+!' 4a# ro#% !h D+'"ca!+r 4a #o! corrc!, /or "#%!a#c, !ho% "#$o$"# po"!"ca +%!"o#%. . . .

L! +% ""% '"%a+% o+r 4"#'% /ro4 !h #o!"o# !ha! !h D+'"c"ar "% !h rpo%"!or o/ r4'"% /or a po"!"ca or %oc"a "% ( %ho+'#o! /or! !ha! !h Co#%!"!+!"o# ha% D+'"c"o+% aoca!' !h por% o/ o$r#4#! !o !hr '"%!"#c! a#' %para! co4par!4#!% a#'!ha! D+'"c"a "#!rpr!a!"o# ha% !#'' !o !h pr%r$a!"o# o/ !h "#'p#'#c o/ !h !hr, a#' a :ao+% rar' o/ !h prroa!"$% o/ach, #o"# /+ !ha! o# "% #o! !h +ar'"a# o/ !h o!hr% a#' !ha!, /or o//"c"a ro#='o"#, ach 4a ro+h! !o acco+#!"!hr "4pach4#!, !r"a or !h ao! o.[100]

Th or'% o/ !h Co+r! "# *era vs. Avelino[101] ho'% !r+ !h#, a% "! %!" ho'% !r+ #o. A !h"#% co#%"'r', !hr "% #o raison d>tre /o!h +#co#%!"!+!"o#a"! o/ R.A. No. 633. ()EREFORE, Rp+"c Ac! No. 633 #o! "# +#co#%!"!+!"o#a, !h p!"!"o#% "# G.R. No%. 1@705@, 1@720, 1@7;@1, 1@7;@3, a#'1@730, ar hr &ISMISS(&. Thr "# #o co#%!"!+!"o#a "4p'"4#! !o !h /+ #/orc4#! a#' "4p4#!a!"o# o/ R.A. No. 633, !h !4porar r%!ra"#"# or'r"%%+' !h Co+r! o# + 1, 2005 "% LI:T(& +po# /"#a"! o/ hr"# 'c"%"o#.

SO OR*ERE*.

7. &iaE vs. Seretar! of :inane

&I'(ST) &!"!"o#r% R#a!o V. *"a: a#' A+rora Ma. F. T"4o 8p!"!"o#r%9 /"' !h"% p!"!"o# /or 'cara!or r"/ a%%a""# !h $a"'"! o!h "4p#'"# "4po%"!"o# o/ $a+=a''' !a 8VAT9 !h <+ra+ o/ I#!r#a R$#+ 8<IR9 o# !h coc!"o#% o/ !oa opra!or%.

&!"!"o#r% ho' !h $" !ha! Co#r%% '"' #o!, h# "! #ac!' !h NIRC, "#!#' !o "#c+' !o /% "!h"# !h 4a#"# o/ %a o/%r$"c% !ha! ar %+Dc! !o VAT !ha! a !o / "% a +%r% !a, #o! a %a o/ %r$"c% !ha! !o "4po% VAT o# !o /% o+' a4o+#! !o a!a o# p+"c %r$"c a#' !ha!, %"#c VAT a% #$r /ac!or' "#!o !h /or4+a /or co4p+!"# !o /%, "!% "4po%"!"o# o+' $"oa! !h#o#="4pa"r4#! ca+% o/ !h co#%!"!+!"o#.

Th o$r#4#! co#!#'% !ha! !h #o#="#c+%"o# o/ VAT "# !h para4!r"c /or4+a /or co4p+!"# !o ra!% ca##o! 4p! !oaopra!or% /ro4 VAT. I# a# $#!, "! ca##o! ca"4' !ha! !h r"h!% o/ !oa opra!or% !o a ra%o#a ra! o/ r!+r# " "4pa"r'












!h VAT %"#c !h"% "% "4po%' o# !op o/ !h !o ra!. F+r!hr, !h "4po%"!"o# o/ VAT o# !o /% o+' ha$ $r 4"#"4a //c! o#4o!or"%!% +%"# !h !oa%.

ISSUES- 819 (ON !h o$r#4#! "% +#a/+ pa#'"# VAT co$ra "#c+'"# !oa opra!or% a#' !oa opra!"o#% "# !h!r4% /ra#ch"% ra#!% a#' %a o/ %r$"c% +#'r Sc!"o# 107 o/ !h Co' a#'829 (ON !h "4po%"!"o# o/ VAT o# !oa opra!or% a9 a4o+#!% !o a !a o# !a a#' #o! a !a o# %r$"c% 9 " "4pa"r !h !oaopra!or% r"h! !o a ra%o#a r!+r# o/ "#$%!4#! +#'r !h"r TOA% a#' c9 "% #o! a'4"#"%!ra!"$ /a%" a#' ca##o! "4p4#!'.

)EL*- No.

Th r$a#! a "# !h"% ca% "% Sc!"o# 107 o/ !h NIRC, a% a4#''. VAT "% $"', a%%%%', a#' coc!', accor'"# !o Sc!"o#107, o# !h ro%% rc"p!% 'r"$' /ro4 !h %a or cha# o/ %r$"c% a% a% /ro4 !h +% or a% o/ propr!"%. Th !h"r'pararaph o/ Sc!"o# 107 '/"#% %a or cha# o/ %r$"c% a% /oo%-Th phra% %a or cha# o/ %r$"c% 4a#% !h pr/or4a#c o/ a "#'% o/ %r$"c% "# !h &h""pp"#% /or o!hr% /or a /,r4+#ra!"o# or co#%"'ra!"o#, "#c+'"# !ho% pr/or4' or r#'r' co#%!r+c!"o# a#' %r$"c co#!rac!or% %!oc, ra %!a!,co44rc"a, c+%!o4% a#' "44"ra!"o# ror% %%or% o/ propr!, h!hr pr%o#a or ra arho+%"# %r$"c% %%or% o'"%!r"+!or% o/ c"#4a!oraph"c /"4% pr%o#% #a' "# 4""#, proc%%"#, 4a#+/ac!+r"# or rpac"# oo'% /or o!hr% propr"!or%opra!or% or pr% o/ ho!%, 4o!%, r%!ho+%%, p#%"o# ho+%%, "##%, r%or!% propr"!or% or opra!or% o/ r%!a+ra#!%, r/r%h4#!paror%, ca/% a#' o!hr a!"# pac%, "#c+'"# c+% a#' ca!rr% 'ar% "# %c+r"!"% #'"# "#$%!or% !ra#%por!a!"o# co#!rac!or%o# !h"r !ra#%por! o/ oo'% or caro%, "#c+'"# pr%o#% ho !ra#%por! oo'% or caro% /or h"r a#' o!hr 'o4%!"c co44o# carr"r% a#' ra!"$ !o !h"r !ra#%por! o/ oo'% or caro% co44o# carr"r% a"r a#' %a ra!"$ !o !h"r !ra#%por! o/ pa%%#r%, oo'%or caro% /ro4 o# pac "# !h &h""pp"#% !o a#o!hr pac "# !h &h""pp"#% %a% o/ c!r"c"! #ra!"o# co4pa#"%,!ra#%4"%%"o#, a#' '"%!r"+!"o# co4pa#"% %r$"c% o/ /ra#ch"% ra#!% o/ c!r"c +!""!"%, !pho# a#' !raph, ra'"o a#'!$"%"o# roa'ca%!"# a#' a o!hr /ra#ch"% ra#!% cp! !ho% +#'r Sc!"o# 116 o/ !h"% Co' a#' #o#="/ "#%+ra#c co4pa#"%8cp! !h"r crop "#%+ra#c%9, "#c+'"# %+r!, /"'"!, "#'4#"! a#' o#'"# co4pa#"% a#' %"4"ar %r$"c% rar'%% o/ h!hror #o! !h pr/or4a#c !hro/ ca% /or !h rc"% or +% o/ !h ph%"ca or 4#!a /ac+!"%.

A#' #o! o# 'o !oa opra!or% co4 +#'r !h roa' !r4 a "#'% o/ %r$"c%, !h a%o co4 +#'r !h %pc"/"c ca%% '%cr"' "#Sc!"o# 107 a% a o!hr /ra#ch"% ra#!% ho ar %+Dc! !o VAT, cp! !ho% +#'r Sc!"o# 116 o/ !h"% Co'.

Toa opra!or% ar /ra#ch"% ra#!% a#' !h 'o #o! o# !o cp!"o#% 8!h o="#co4 ra'"o a#'?or !$"%"o# roa'ca%!"#co4pa#"% "!h ro%% a##+a "#co4% o/ %% !ha# &10 4""o# a#' a% a#' a!r +!""!"%9 !ha! Sc!"o# 116 %par% /ro4 !h pa4#! o/VAT. Th or' /ra#ch"% roa' co$r% o$r#4#! ra#!% o/ a %pc"a r"h! !o 'o a# ac! or %r"% o/ ac!% o/ p+"c co#cr#.

RATIO RELATIVE TO A*MINISTRATIVE FEASI<ILIT- A'4"#"%!ra!"$ /a%"""! "% o# o/ !h ca#o#% o/ a %o+#' !a %%!4. I! %"4p 4a#% !ha! !h !a %%!4 %ho+' capa o/ "#//c!"$ a'4"#"%!r' a#' #/orc' "!h !h a%! "#co#$#"#c !o !h !apar. No#=o%r$a#c o/ !h ca#o#, ho$r, " #o!r#'r a !a "4po%"!"o# "#$a"' cp! !o !h !#! !ha! %pc"/"c co#%!"!+!"o#a or %!a!+!or "4"!a!"o#% ar "4pa"r'. Th+%, $# "/ !h"4po%"!"o# o/ VAT o# !oa opra!"o#% 4a %4 +r'#%o4 !o "4p4#!, "! "% #o! #c%%ar" "#$a"' +#%% %o4 a%pc! o/ "! "%

%ho# !o $"oa! a# a or !h Co#%!"!+!"o#.

*RI'I+AL) A<A*, .-

Ma !o /% coc!' !oa opra!or% %+Dc!' !o $a+= a''' !a

Th Fac!% a#' !h Ca%

&!"!"o#r% R#a!o V. *"a: a#' A+rora Ma. F. T"4o 8p!"!"o#r%9 /"' !h"% p!"!"o# /or 'cara!or r"/[1] a%%a""# !h $a"'"! o/ !h"4p#'"# "4po%"!"o# o/ $a+=a''' !a 8VAT9 !h <+ra+ o/ I#!r#a R$#+ 8<IR9 o# !h coc!"o#% o/ !oa opra!or%.

&!"!"o#r% ca"4 !ha!, %"#c !h VAT o+' r%+! "# "#cra%' !o /%, !h ha$ a# "#!r%! a% r+ar +%r% o/ !oa% "# %!opp"# !h<IR ac!"o#. A''"!"o#a, *"a: ca"4% !ha! h %po#%or' !h appro$a o/ Rp+"c Ac! 1@ 8!h 166; Epa#'' VAT La or EVAT Laa#' Rp+"c Ac! 7;2; 8!h 166 Na!"o#a I#!r#a R$#+ Co' or !h NIRC9 a! !h )o+% o/ Rpr%#!a!"$%. T"4o, o# !h o!hr

ha#', ca"4% !ha! %h %r$' a% A%%"%!a#! Scr!ar o/ !h *par!4#! o/ Tra' a#' I#'+%!r a#' co#%+!a#! o/ !h To R+a!or<oar' 8TR<9 "# !h pa%! a'4"#"%!ra!"o#.

&!"!"o#r% a !ha! !h <IR a!!4p!' '+r"# !h a'4"#"%!ra!"o# o/ &r%"'#! Gor"a Macapaa=Arroo !o "4po% VAT o# !o /%Th "4po%"!"o# a% '/rr', ho$r, "# $" o/ !h co#%"%!#! oppo%"!"o# o/ *"a: a#' o!hr %c!or% !o %+ch 4o$. <+!, +po# &r%"'#<#"#o C. A+"#o III% a%%+4p!"o# o/ o//"c "# 2010, !h <IR r$"$' !h "'a a#' o+' "4po% !h cha#' !a o# !o /%"##"# A++%! 1@, 2010 +#%% D+'"c"a #Do"#'.

&!"!"o#r% ho' !h $" !ha! Co#r%% '"' #o!, h# "! #ac!' !h NIRC, "#!#' !o "#c+' !o /% "!h"# !h 4a#"# o/ %a o/%r$"c% !ha! ar %+Dc! !o VAT !ha! a !o / "% a +%r% !a, #o! a %a o/ %r$"c% !ha! !o "4po% VAT o# !o /% o+' a4o+#! !o a!a o# p+"c %r$"c a#' !ha!, %"#c VAT a% #$r /ac!or' "#!o !h /or4+a /or co4p+!"# !o /%, "!% "4po%"!"o# o+' $"oa! !h#o#="4pa"r4#! ca+% o/ !h co#%!"!+!"o#.



O# A++%! 13, 2010 !h Co+r! "%%+' a !4porar r%!ra"#"# or'r 8TRO9, #Do"#"# !h "4p4#!a!"o# o/ !h VAT. Th Co+r! r+"r'!h o$r#4#!, rpr%#!' r%po#'#!% C%ar V. &+r"%"4a, Scr!ar o/ !h *par!4#! o/ F"#a#c, a#' H"4 S. ac"#!o=)#ar%Co44"%%"o#r o/ I#!r#a R$#+, !o co44#! o# !h p!"!"o# "!h"# 10 'a% /ro4 #o!"c.[2] La!r, !h Co+r! "%%+' a#o!hr r%o+!"o#!ra!"# !h p!"!"o# a% o# /or proh""!"o#.[3]

O# A++%! 23, 2010 !h O//"c o/ !h So"c"!or G#ra /"' !h o$r#4#!% co44#!.[;] Th o$r#4#! a$r% !ha! !h NIRC"4po%% VAT o# a "#'% o/ %r$"c% o/ /ra#ch"% ra#!%, "#c+'"# !oa opra!"o#%, cp! hr !h a pro$"'% o!hr"% !ha!h Co+r! %ho+' % !h 4a#"# a#' "#!#! o/ !h a /ro4 !h or'% +%' "# !h %!a!+! a#' !ha! !h "4po%"!"o# o/ VAT o# !oaopra!"o#% ha% # !h %+Dc! a% ar a% 2003 o/ %$ra <IR r+"#% a#' c"rc+ar%.[5]

Th o$r#4#! a%o ar+% !ha! p!"!"o#r% ha$ #o r"h! !o "#$o !h #o#="4pa"r4#! o/ co#!rac!% ca+% %"#c !h car ha$ #opr%o#a "#!r%! "# "%!"# !o opra!"# ar4#!% 8TOA%9 !# !h o$r#4#! a#' !oa opra!or%. A! a# ra!, !h #o#="4pa"r4#! ca+% ca##o! "4"! !h S!a!% %o$r"# !a"# por h"ch "% #ra ra' "#!o co#!rac!%.F"#a, !h o$r#4#! co#!#'% !ha! !h #o#="#c+%"o# o/ VAT "# !h para4!r"c /or4+a /or co4p+!"# !o ra!% ca##o! 4p! !oaopra!or% /ro4 VAT. I# a# $#!, "! ca##o! ca"4' !ha! !h r"h!% o/ !oa opra!or% !o a ra%o#a ra! o/ r!+r# " "4pa"r' !h VAT %"#c !h"% "% "4po%' o# !op o/ !h !o ra!. F+r!hr, !h "4po%"!"o# o/ VAT o# !o /% o+' ha$ $r 4"#"4a //c! o#4o!or"%!% +%"# !h !oa%.

I# !h"r rp[@] !o !h o$r#4#!% co44#!, p!"!"o#r% po"#! o+! !ha! !oa opra!or% ca##o! rar'' a% /ra#ch"% ra#!%+#'r !h NIRC %"#c !h 'o #o! ho' "%a!"$ /ra#ch"%%. F+r!hr, !h <IR "#!#'% !o coc! !h VAT ro+#'"# o// !h !o ra! a#'p+!!"# a# c%% coc!"o# "# a# %cro acco+#!. <+! !h"% o+' "a %"#c o# !h Co#r%% ca# 4o'"/ VAT ra!% a#'a+!hor": "!% '"%+r%4#!. F"#a, <IR R$#+ M4ora#'+4 C"rc+ar @3=2010 8<IR RMC @3=20109, h"ch '"rc!% !o co4pa#"% !orcor' a# acc+4+a!' "#p+! VAT o/ :ro aa#c "# !h"r oo% a% o/ A++%! 1@, 2010, co#!ra$#% Sc!"o# 111 o/ !h NIRC h"chra#!% #!"!"% !ha! /"r%! co4 "a !o VAT a !ra#%"!"o#a "#p+! !a cr'"! o/ 2B o# "##"# "#$#!or. For !h"% ra%o#, !h VAT o# !o/% ca##o! "4p4#!'.

Th I%%+% &r%#!'

Th ca% pr%#!% !o proc'+ra "%%+%-

1. (h!hr or #o! !h Co+r! 4a !ra! !h p!"!"o# /or 'cara!or r"/ a% o# /or proh""!"o# a#'

2. (h!hr or #o! p!"!"o#r% *"a: a#' T"4o ha$ a %!a#'"# !o /" !h ac!"o#.

Th ca% a%o pr%#!% !o %+%!a#!"$ "%%+%-

1. (h!hr or #o! !h o$r#4#! "% +#a/+ pa#'"# VAT co$ra "#c+'"# !oa opra!or% a#' !oa opra!"o#% "# !h!r4% /ra#ch"% ra#!% a#' %a o/ %r$"c% +#'r Sc!"o# 107 o/ !h Co' a#'

2. (h!hr or #o! !h "4po%"!"o# o/ VAT o# !oa opra!or% a9 a4o+#!% !o a !a o# !a a#' #o! a !a o# %r$"c% 9 " "4pa"r !h!oa opra!or% r"h! !o a ra%o#a r!+r# o/ "#$%!4#! +#'r !h"r TOA% a#' c9 "% #o! a'4"#"%!ra!"$ /a%" a#' ca##o! "4p4#!'.

Th Co+r!% R+"#%

A. O# !h &roc'+ra I%%+%-

O# A++%! 2;, 2010 !h Co+r! "%%+' a r%o+!"o#, !ra!"# !h p!"!"o# a% o# /or proh""!"o# ra!hr !ha# o# /or 'cara!or r"/, !hcharac!r":a!"o# !ha! p!"!"o#r% *"a: a#' T"4o a$ !h"r ac!"o#. Th o$r#4#! ha% %o+h! rco#%"'ra!"o# o/ !h Co+r!% r%o+!"o#[] ho$r, ar+"# !ha! p!"!"o#r% aa!"o#% car 4a' o+! a ca% /or 'cara!or r"/, a# ac!"o# o$r h"ch !h Co+r! ha% #oor""#a D+r"%'"c!"o#. Th o$r#4#! a''%, 4oro$r, !ha! !h p!"!"o# 'o% #o! 4! !h r+"r4#!% o/ R+ @5 /or ac!"o#% /orproh""!"o# %"#c !h <IR '"' #o! rc"% D+'"c"a, +a%"=D+'"c"a, or 4"#"%!r"a /+#c!"o#% h# "! %o+h! !o "4po% VAT o# !o /%.<%"'%, p!"!"o#r% *"a: a#' T"4o ha% a pa"#, %p', a#' a'+a! r4' "# !h or'"#ar co+r% o/ a aa"#%! !h <IR ac!"o# "#

!h /or4 o/ a# appa !o !h Scr!ar o/ F"#a#c.

<+! !hr ar prc'#!% /or !ra!"# a p!"!"o# /or 'cara!or r"/ a% o# /or proh""!"o# "/ !h ca% ha% /ar=rach"# "4p"ca!"o#% a#'ra"%% +%!"o#% !ha! #' !o r%o$' /or !h p+"c oo'.[7] Th Co+r! ha% a%o h' !ha! a p!"!"o# /or proh""!"o# "% a propr r4' !o proh""! or #+"/ ac!% o/ c+!"$ o//"c"a% !ha! a4o+#! !o +%+rpa!"o# o/ "%a!"$ a+!hor"!.[6]

)r, !h "4po%"!"o# o/ VAT o# !o /% ha% /ar=rach"# "4p"ca!"o#%. I!% "4po%"!"o# o+' "4pac!, #o! o# o# !h 4or !ha# ha/ a4""o# 4o!or"%!% ho +% !h !oa% $r'a, +! 4or %o o# !h o$r#4#!% //or! !o ra"% r$#+ /or /+#'"# $ar"o+% proDc!%a#' /or r'+c"# +'!ar '/"c"!%.

To '"%4"%% !h p!"!"o# a#' r%o$ !h "%%+% a!r, a/!r !h cha#' VAT ha% # "4po%', co+' ca+% 4or 4"%ch"/ o!h !o !h!a=pa"# p+"c a#' !h o$r#4#!. A a!' 'cara!"o# o/ #+"! o/ !h <IR ac!"o# o+' 4a a# a!!4p! !o r/+#' !o !h4o!or"%!% ha! !h pa"' a# a'4"#"%!ra!"$ #"h!4ar "!h #o %o+!"o#. Co#%+#!, "! "% #o! o# !h r"h!, +! !h '+! o/ !h Co+r! !o!a co#":a#c o/ a#' r%o$ !h "%%+% !ha! !h p!"!"o# ra"%%.



A!ho+h !h p!"!"o# 'o% #o! %!r"c! co4p "!h !h r+"r4#!% o/ R+ @5, !h Co+r! ha% a4p por !o a"$ %+ch !ch#"car+"r4#!% h# !h a +%!"o#% !o r%o$' ar o/ ra! "4por!a#c !o !h p+"c. Th %a4 4a %a"' o/ !h r+"r4#!o/ oc+% %!a#'" h"ch "% a 4r proc'+ra r+"%"!.[10]

<. O# !h S+%!a#!"$ I%%+%-O#. Th r$a#! a "# !h"% ca% "% Sc!"o# 107 o/ !h NIRC, a% a4#''. VAT "% $"', a%%%%', a#' coc!', accor'"# !oSc!"o# 107, o# !h ro%% rc"p!% 'r"$' /ro4 !h %a or cha# o/ %r$"c% a% a% /ro4 !h +% or a% o/ propr!"%. Th!h"r' pararaph o/ Sc!"o# 107 '/"#% %a or cha# o/ %r$"c% a% /oo%-

Th phra% %a or cha# o/ %r$"c% 4a#% !h pr/or4a#c o/ a "#'% o/ %r$"c% "# !h &h""pp"#% /or o!hr% /or a /,r4+#ra!"o# or co#%"'ra!"o#, "#c+'"# !ho% pr/or4' or r#'r' co#%!r+c!"o# a#' %r$"c co#!rac!or% %!oc, ra %!a!,co44rc"a, c+%!o4% a#' "44"ra!"o# ror% %%or% o/ propr!, h!hr pr%o#a or ra arho+%"# %r$"c% %%or% o'"%!r"+!or% o/ c"#4a!oraph"c /"4% pr%o#% #a' "# 4""#, proc%%"#, 4a#+/ac!+r"# or rpac"# oo'% /or o!hr% propr"!or%opra!or% or pr% o/ ho!%, 4o!%, r%!ho+%%, p#%"o# ho+%%, "##%, r%or!% propr"!or% or opra!or% o/ r%!a+ra#!%, r/r%h4#!paror%, ca/% a#' o!hr a!"# pac%, "#c+'"# c+% a#' ca!rr% 'ar% "# %c+r"!"% #'"# "#$%!or% !ra#%por!a!"o# co#!rac!or%o# !h"r !ra#%por! o/ oo'% or caro%, "#c+'"# pr%o#% ho !ra#%por! oo'% or caro% /or h"r a#' o!hr 'o4%!"c co44o# carr"r% a#' ra!"$ !o !h"r !ra#%por! o/ oo'% or caro% co44o# carr"r% a"r a#' %a ra!"$ !o !h"r !ra#%por! o/ pa%%#r%, oo'%or caro% /ro4 o# pac "# !h &h""pp"#% !o a#o!hr pac "# !h &h""pp"#% %a% o/ c!r"c"! #ra!"o# co4pa#"%,!ra#%4"%%"o#, a#' '"%!r"+!"o# co4pa#"% %r$"c% o/ /ra#ch"% ra#!% o/ c!r"c +!""!"%, !pho# a#' !raph, ra'"o a#'!$"%"o# roa'ca%!"# a#' a o!hr /ra#ch"% ra#!% cp! !ho% +#'r Sc!"o# 116 o/ !h"% Co' a#' #o#="/ "#%+ra#c co4pa#"%8cp! !h"r crop "#%+ra#c%9, "#c+'"# %+r!, /"'"!, "#'4#"! a#' o#'"# co4pa#"% a#' %"4"ar %r$"c% rar'%% o/ h!hror #o! !h pr/or4a#c !hro/ ca% /or !h rc"% or +% o/ !h ph%"ca or 4#!a /ac+!"%. 8U#'r%cor"# %+pp"'9

I! "% pa"# /ro4 !h ao$ !ha! !h a "4po%% VAT o# a "#'% o/ %r$"c% r#'r' "# !h &h""pp"#% /or a /, "#c+'"# !ho%%pc"/"' "# !h "%!. Th #+4ra!"o# o/ a//c!' %r$"c% "% #o! c+%"$.[11] < +a"/"# %r$"c% "!h !h or'% a "#'%, Co#r%%ha% "$# !h !r4 %r$"c% a# a=#co4pa%%"# 4a#"#. Th "%!"# o/ %pc"/"c %r$"c% ar "#!#'' !o "+%!ra! ho pr$a%"$ a#'roa' "% !h VAT% rach ra!hr !ha# %!a"%h co#cr! "4"!% !o "!% app"ca!"o#. Th+%, $r ac!"$"! !ha! ca# "4a"#' a% a /or4 o/%r$"c r#'r' /or a / %ho+' '4' "#c+'' +#%% %o4 pro$"%"o# o/ a %pc"a c+'% "!.

No, 'o !oa opra!or% r#'r %r$"c% /or a / &r%"'#!"a *cr 8&.*.9 1112 or !h To Opra!"o# *cr %!a"%h% !h aa%"% /or !h %r$"c% !ha! !oa opra!or% r#'r. E%%#!"a, !oa opra!or% co#%!r+c!, 4a"#!a"#, a#' opra! pr%%a%, a%oca' !oa%, a! !h opra!or% p#%. Toa% %r$ a% a!r#a!"$% !o r+ar p+"c h"ha% !ha! 4a#'r !hro+h pop+a!'ara% a#' ra#ch o+! !o oca roa'%. Tra//"c "# !h r+ar p+"c h"ha% "% /or !h"% ra%o# %o=4o$"#. I# co#%"'ra!"o# /orco#%!r+c!"# !oa% a! !h"r p#%, !h opra!or% ar ao' !o coc! o$r#4#!=appro$' /% /ro4 4o!or"%!% +%"# !h !oa%+#!" %+ch opra!or% co+' /+ rco$r !h"r p#%% a#' ar# ra%o#a r!+r#% /ro4 !h"r "#$%!4#!%.

(h# a !oa opra!or !a% a !o / /ro4 a 4o!or"%!, !h / "% "# //c! /or !h a!!r% +% o/ !h !oa /ac""!"% o$r h"ch !hopra!or #Do% pr"$a! propr"!ar r"h!%[12] !ha! "!% co#!rac! a#' !h a rco#":. I# !h"% %#%, !h !oa opra!or "% #o '"//r#!

/ro4 !h /oo"# %r$"c pro$"'r% +#'r Sc!"o# 107 ho ao o!hr% !o +% !h"r propr!"% or /ac""!"% /or a /-

1. L%%or% o/ propr!, h!hr pr%o#a or ra2. (arho+%"# %r$"c opra!or%3. L%%or% or '"%!r"+!or% o/ c"#4a!oraph"c /"4%;. &ropr"!or%, opra!or% or pr% o/ ho!%, 4o!%, r%!ho+%%, p#%"o# ho+%%, "##%, r%or!%5. L#'"# "#$%!or% 8/or +% o/ 4o#9@. Tra#%por!a!"o# co#!rac!or% o# !h"r !ra#%por! o/ oo'% or caro%, "#c+'"# pr%o#% ho !ra#%por! oo'% or caro% /or h"r a#'o!hr 'o4%!"c co44o# carr"r% a#' ra!"$ !o !h"r !ra#%por! o/ oo'% or caro% a#'. Co44o# carr"r% a"r a#' %a ra!"$ !o !h"r !ra#%por! o/ pa%%#r%, oo'% or caro% /ro4 o# pac "# !h &h""pp"#% !oa#o!hr pac "# !h &h""pp"#%.

I! 'o% #o! hp p!"!"o#r% ca+% !ha! Sc!"o# 107 %+Dc!% !o VAT a "#'% o/ %r$"c% r#'r' /or a / rar'%% o/ h!hr or #o!!h pr/or4a#c !hro/ ca% /or !h rc"% or +% o/ !h ph%"ca or 4#!a /ac+!"%. Th"% 4a#% !ha! %r$"c% !o %+Dc! !o VAT

#' #o! /a +#'r !h !ra'"!"o#a co#cp! o/ %r$"c%, !h pr%o#a or pro/%%"o#a "#'% !ha! r+"r !h +% o/ h+4a# #o' a#'%"%.

A#' #o! o# 'o !oa opra!or% co4 +#'r !h roa' !r4 a "#'% o/ %r$"c%, !h a%o co4 +#'r !h %pc"/"c ca%% '%cr"' "#Sc!"o# 107 a% a o!hr /ra#ch"% ra#!% ho ar %+Dc! !o VAT, cp! !ho% +#'r Sc!"o# 116 o/ !h"% Co'.

Toa opra!or% ar /ra#ch"% ra#!% a#' !h 'o #o! o# !o cp!"o#% 8!h o="#co4 ra'"o a#'?or !$"%"o# roa'ca%!"#co4pa#"% "!h ro%% a##+a "#co4% o/ %% !ha# &10 4""o# a#' a% a#' a!r +!""!"%9 !ha! Sc!"o# 116[13] %par% /ro4 !hpa4#! o/ VAT. Th or' /ra#ch"% roa' co$r% o$r#4#! ra#!% o/ a %pc"a r"h! !o 'o a# ac! or %r"% o/ ac!% o/ p+"c co#cr#[1;]

&!"!"o#r% o/ co+r% co#!#' !ha! !oa opra!or% ca##o! co#%"'r' /ra#ch"% ra#!% +#'r Sc!"o# 107 %"#c !h 'o #o! ho'"%a!"$ /ra#ch"%%. <+! #o!h"# "# Sc!"o# 107 "#'"ca!% !ha! !h /ra#ch"% ra#!% "! %pa% o/ ar !ho% ho ho' "%a!"$



/ra#ch"%%. &!"!"o#r% "$ #o ra%o#, a#' !h Co+r! ca##o! %+r4"% a#, /or 4a"# a '"%!"#c!"o# !# /ra#ch"%% ra#!' Co#r%% a#' /ra#ch"%% ra#!' %o4 o!hr o$r#4#! a#c. Th a!!r, propr co#%!"!+!', 4a ra#! /ra#ch"%%. I#'',/ra#ch"%% co#/rr' or ra#!' oca a+!hor"!"%, a% a#!% o/ !h %!a!, co#%!"!+! a% 4+ch a "%a!"$ /ra#ch"% a% !ho+h !hra#! ha' # 4a' Co#r%% "!%/.[15] Th !r4 /ra#ch"% ha% # roa' co#%!r+' a% r/rr"#, #o! o# !o a+!hor":a!"o#% !haCo#r%% '"rc! "%%+% "# !h /or4 o/ a %pc"a a, +! a%o !o !ho% ra#!' a'4"#"%!ra!"$ a#c"% !o h"ch !h por !o ra#/ra#ch"%% ha% # 'a!' Co#r%%.[1@]

Toa opra!or% ar, o"# !o !h #a!+r a#' oDc! o/ !h"r +%"#%%, /ra#ch"% ra#!%. Th co#%!r+c!"o#, opra!"o#, a#'4a"#!#a#c o/ !o /ac""!"% o# p+"c "4pro$4#!% ar ac!"$"!"% o/ p+"c co#%+#c !ha! #c%%ar" r+"r a %pc"a ra#! o/a+!hor"! /ro4 !h %!a!. I#'', Co#r%% ra#!' %pc"a /ra#ch"% /or !h opra!"o# o/ !oa% !o !h &h""pp"# Na!"o#a Co#%!r+c!"o#Co4pa#, !h /or4r !oa co#c%%"o#a"r /or !h Nor!h a#' So+!h L+:o# Epr%%a%. Apar! /ro4 Co#r%%, !oa /ra#ch"%% 4aa%o ra#!' !h TR<, p+r%+a#! !o !h rc"% o/ "!% 'a!' por% +#'r &.*. 1112.[1] Th /ra#ch"% "# !h"% ca% "%$"'#c' a To Opra!"o# Cr!"/"ca!.[17]

&!"!"o#r% co#!#' !ha! !h p+"c #a!+r o/ !h %r$"c% r#'r' !oa opra!or% c+'% %+ch %r$"c% /ro4 !h !r4 %a o/%r$"c% +#'r Sc!"o# 107 o/ !h Co'. <+!, aa"#, #o!h"# "# Sc!"o# 107 %+ppor!% !h"% co#!#!"o#. Th r$r% "% !r+. I# %pc"/"ca"#c+'"# a o/ a4p c!r"c +!""!"%, !pho#, !raph, a#' roa'ca%!"# co4pa#"% "# "!% "%! o/ VAT=co$r' +%"#%%%Sc!"o# 107 op#% o!hr co4pa#"% r#'r"# p+"c %r$"c /or a / !o !h "4po%"!"o# o/ VAT. <+%"#%%% o/ a p+"c #a!+r %+ch a%p+"c +!""!"% a#' !h coc!"o# o/ !o% or char% /or "!% +% or %r$"c "% a /ra#ch"%.[16]

Nor ca# p!"!"o#r% c"! a% "#'"# o# !h Co+r! %!a!4#!% 4a' cr!a"# a4ar% "# !h co+r% o/ co#r%%"o#a '"ra!"o#% o/!h o+'= a. A% !h Co+r! %a"' "# So+!h A/r"ca# A"ra% $. Co44"%%"o#r o/ I#!r#a R$#+,[20] %!a!4#!% 4a' "#'"$"'+a44r% o/ Co#r%% "# !h co#%"'ra!"o# o/ a " 'o #o! #c%%ar" r/c! !h %#% o/ !ha! o' a#' ar, co#%+#!, #o!co#!ro"# "# !h "#!rpr!a!"o# o/ a. Th co#r%%"o#a " "% +!"4a! '!r4"#' !h a#+a o/ !h a !ha! !h a4ar%$o!' o#. Co#%+#!, !h 4a#"# a#' "#!#!"o# o/ !h a 4+%! /"r%! %o+h! "# !h or'% o/ !h %!a!+! "!%/, ra' a#' co#%"'r'

"# !h"r #a!+ra, or'"#ar, co44o# accp!' a#' 4o%! o$"o+% %"#"/"ca!"o#%, accor'"# !o oo' a#' appro$' +%a a#' "!ho+!r%or!"# !o /orc' or %+! co#%!r+c!"o#.

To. &!"!"o#r% ar+ !ha! a !o / "% a +%r% !a a#' !o "4po% VAT o# !o /% "% !a#!a4o+#! !o !a"# a !a.[21] Ac!+a, p!"!"o#r%a% !h"% ar+4#! o# !h /oo"# '"%c+%%"o# "# Ma#"a I#!r#a!"o#a A"rpor! A+!hor"! 8MIAA9 $. Co+r! o/ Appa%-[22]

No o# ca# '"%p+! !ha! propr!"% o/ p+"c 'o4"#"o# 4#!"o#' "# Ar!"c ;20 o/ !h C"$" Co', " roa'%, ca#a%, r"$r%, !orr#!%,por!% a#' r"'% co#%!r+c!' !h S!a!, ar o#' !h S!a!. Th !r4 por!% "#c+'% %apor!% a#' a"rpor!%. Th MIAA A"rpor!La#'% a#' <+"'"#% co#%!"!+! a por! co#%!r+c!' !h S!a!. U#'r Ar!"c ;20 o/ !h C"$" Co', !h MIAA A"rpor! La#'% a#'<+"'"#% ar propr!"% o/ p+"c 'o4"#"o# a#' !h+% o#' !h S!a! or !h Rp+"c o/ !h &h""pp"#%.

Th opra!"o# !h o$r#4#! o/ a !oa 'o% #o! cha# !h charac!r o/ !h roa' a% o# /or p+"c +%. So4o# 4+%! pa/or !h 4a"#!#a#c o/ !h roa', "!hr !h p+"c "#'"rc! !hro+h !h !a% !h pa !h o$r#4#!, or o# !ho% a4o# !h p+"cho ac!+a +% !h roa' !hro+h !h !o /% !h pa +po# +%"# !h roa'. Th !oa %%!4 "% $# a 4or //"c"#! a#' +"!a

4a##r o/ !a"# !h p+"c /or !h 4a"#!#a#c o/ p+"c roa'%.

Th char"# o/ /% !o !h p+"c 'o% #o! '!r4"# !h charac!r o/ !h propr! h!hr "! "% /or p+"c 'o4"#"o# or #o!. Ar!"c ;20 o/!h C"$" Co' '/"#% propr! o/ p+"c 'o4"#"o# a% o# "#!#'' /or p+"c +%. E$# "/ !h o$r#4#! coc!% !o /%, !h roa' "%%!" "#!#'' /or p+"c +% "/ a#o# ca# +% !h roa' +#'r !h %a4 !r4% a#' co#'"!"o#% a% !h r%! o/ !h p+"c. Th char"# o//%, !h "4"!a!"o# o# !h "#' o/ $h"c% !ha! ca# +% !h roa', !h %p' r%!r"c!"o#% a#' o!hr co#'"!"o#% /or !h +% o/ !h roa' 'o#o! a//c! !h p+"c charac!r o/ !h roa'.

Th !r4"#a /% MIAA char% !o pa%%#r%, a% a% !h a#'"# /% MIAA char% !o a"r"#%, co#%!"!+! !h + o/ !h "#co4!ha! 4a"#!a"#% !h opra!"o#% o/ MIAA. Th coc!"o# o/ %+ch /% 'o% #o! cha# !h charac!r o/ MIAA a% a# a"rpor! /or p+"c +%.S+ch /% ar o/!# !r4' +%r% !a. Th"% 4a#% !a"# !ho% a4o# !h p+"c ho ac!+a +% a p+"c /ac""! "#%!a' o/ !a"# a!h p+"c "#c+'"# !ho% ho #$r +% !h par!"c+ar p+"c /ac""!. A +%r% !a "% 4or +"!a a pr"#c"p o/ !aa!"o# 4a#'a!' "#!h 167 Co#%!"!+!"o#.[23] 8U#'r%cor"# %+pp"'9

&!"!"o#r% a%%+4 !ha! ha! !h Co+r! %a"' ao$, +a!"# !r4"#a /% !o a +%r% !a 4+%! a%o pr!a"# !o !oa /%. <+! !h 4a"#"%%+ "# !h MIAA ca% a% h!hr or #o! &araa+ C"! co+' % a"rpor! a#'% a#' +"'"#% +#'r MIAA a'4"#"%!ra!"o# a! p+"ca+c!"o# !o %a!"%/ +#pa"' ra %!a! !a%. S"#c oca o$r#4#!% ha$ #o por !o !a !h #a!"o#a o$r#4#!, !h Co+r! h' !ha!!h C"! co+' #o! proc' "!h !h a+c!"o# %a. MIAA /or4% par! o/ !h #a!"o#a o$r#4#! a!ho+h #o! "#!ra!' "# !h 'par!4#/ra4or.[2;] Th+%, "!% a"rpor! a#'% a#' +"'"#% ar propr!"% o/ p+"c 'o4"#"o# o#' !h co44rc o/ 4a# +#'r Ar!"c ;2081[25] o/ !h C"$" Co' a#' co+' #o! %o' a! p+"c a+c!"o#.

A% ca# %#, !h '"%c+%%"o# "# !h MIAA ca% o# !o roa'% a#' !o /% a% 4a', #o! !o %!a"%h a r+ !ha! !oa /% ar +%r%!a, +! !o 4a !h po"#! !ha! a"rpor! a#'% a#' +"'"#% ar propr!"% o/ p+"c 'o4"#"o# a#' !ha! !h coc!"o# o/ !r4"#a /% /or!h"r +% 'o% #o! 4a !h4 pr"$a! propr!"%. Toa /% ar #o! !a%. I#'', !h ar #o! a%%%%' a#' coc!' !h <IRa#' 'o #o! o !o !h #ra co//r% o/ !h o$r#4#!.I! o+' o/ co+r% a#o!hr 4a!!r "/ Co#r%% #ac!% a a "4po%"# a +%r% !a, coc!" /ro4 4o!or"%!%, /or !h co#%!r+c!"o# a#'4a"#!#a#c o/ cr!a"# roa'a%. Th !a "# %+ch a ca% o% '"rc! !o !h o$r#4#! /or !h rp#"%h4#! o/ r%o+rc% "! %p#'%/or !h roa'a%. Th"% "% #o! !h ca% hr. (ha! !h o$r#4#! %% !o !a hr ar /% coc!' /ro4 !oa% !ha! ar



co#%!r+c!', 4a"#!a"#', a#' opra!' pr"$a! !oa opra!or% a! !h"r o# p#% +#'r !h +"', opra!, a#' !ra#%/r %ch4!ha! !h o$r#4#! ha% a'op!' /or pr%%a%.[2@] Ecp! /or a /rac!"o# "$# !o !h o$r#4#!, !h !o /% %%#!"a #' +p a%ar#"#% o/ !h !oa opra!or%.

I# %+4, /% pa"' !h p+"c !o !oa opra!or% /or +% o/ !h !oa%, ar #o! !a% "# a# %#%. A !a "% "4po%' +#'r !h !a"#por o/ !h o$r#4#! pr"#c"pa /or !h p+rpo% o/ ra"%"# r$#+% !o /+#' p+"c p#'"!+r%.[2] To /%, o# !h o!hr ha#'ar coc!' pr"$a! !oa opra!or% a% r"4+r%4#! /or !h co%!% a#' p#%% "#c+rr' "# !h co#%!r+c!"o#, 4a"#!#a#c a#'opra!"o# o/ !h !oa%, a% a% !o a%%+r !h4 a ra%o#a 4ar"# o/ "#co4. A!ho+h !o /% ar char' /or !h +% o/ p+"c/ac""!"%, !hr/or, !h ar #o! o$r#4#! ac!"o#% !ha! ca# propr !ra!' a% a !a. Ta% 4a "4po%' o# !ho$r#4#! +#'r "!% %o$r"# a+!hor"!, !o /% 4a '4a#'' "!hr !h o$r#4#! or pr"$a! "#'"$"'+a% or #!"!"%, a% a#a!!r"+! o/ o#r%h"p.[27]

&ar#!h!"ca, VAT o# !oa opra!"o#% ca##o! '4' a !a o# !a '+ !o !h #a!+r o/ VAT a% a# "#'"rc! !a. I# "#'"rc!!aa!"o#, a '"%!"#c!"o# "% 4a' !# !h "a""! /or !h !a a#' +r'# o/ !h !a. Th %r ho "% "a /or !h VAT 4a %h"/! or pa%% o# !h a4o+#! o/ VAT "! pa"' o# oo'%, propr!"% or %r$"c% !o !h +r. I# %+ch a ca%, ha! "% !ra#%/rr' "% #o! !h %r%"a""! +! 4r !h +r'# o/ !h VAT.[26]

Th+%, !h %r r4a"#% '"rc! a#' a "a /or pa4#! o/ !h VAT, +! !h +r ar% "!% +r'# %"#c !h a4o+#! o/ VAT pa"' !h /or4r "% a''' !o !h %"# pr"c. O#c %h"/!', !h VAT ca%% !o a !a[30] a#' %"4p co4% par! o/ !h co%! !ha! !h+r 4+%! pa "# or'r !o p+rcha% !h oo', propr! or %r$"c.

Co#%+#!, VAT o# !oa opra!"o#% "% #o! ra a !a o# !h !oa +%r, +! o# !h !oa opra!or. U#'r Sc!"o# 105 o/ !hCo', [31] VAT "% "4po%' o# a# pr%o# ho, "# !h co+r% o/ !ra' or +%"#%%, %% or r#'r% %r$"c% /or a /. I# o!hr or'%, !h%r o/ %r$"c%, ho "# !h"% ca% "% !h !oa opra!or, "% !h pr%o# "a /or VAT. Th a!!r 4r %h"/!% !h +r'# o/ VAT !o !h!oa +%r a% par! o/ !h !o /%.For !h"% ra%o#, VAT o# !oa opra!"o#% ca##o! a !a o# !a $# "/ !o /% r '4' a% a +%r% !a. VAT "% a%%%%' aa"#%!!h !oa opra!or% ro%% rc"p!% a#' #o! #c%%ar" o# !h !o /%. A!ho+h !h !oa opra!or 4a %h"/! !h VAT +r'# !o !h!oa +%r, "! " #o! 4a !h a!!r '"rc! "a /or !h VAT. Th %h"/!' VAT +r'# %"4p co4% par! o/ !h !o /% !ha! o#ha% !o pa "# or'r !o +% !h !oa%.[32]

Thr. &!"!"o#r T"4o ha% #o pr%o#a"! !o "#$o !h #o#="4pa"r4#! o/ co#!rac! ca+% o# ha/ o/ pr"$a! "#$%!or% "# !h !oaproDc!%. Sh " #"!hr prD+'"c' #or a//c!' !h a' '"4"#+!"o# "# r!+r# o/ "#$%!4#!% !ha! 4a r%+! /ro4 !hVAT "4po%"!"o#. Sh ha% #o "#!r%! a! a "# !h pro/"!% !o ar#' +#'r !h TOA%. Th "#!r%! "# a#' r"h! !o rco$r "#$%!4#!%%o o#% !o !h pr"$a! !oa "#$%!or%.

<%"'%, hr aa!"o# !ha! !h pr"$a! "#$%!or% ra! o/ rco$r " a'$r% a//c!' "4po%"# VAT o# !oa opra!"o#% "%p+r %pc+a!"$. E+a pr%+4p!+o+% "% hr a%%r!"o# !ha! a %!"p+a!"o# "# !h TOA% #o# a% !h Ma!r"a A'$r% Gra#!or Ac!"o#" ac!"$a!' "/ VAT "% !h+% "4po%'. Th Co+r! ca##o! r+ o# 4a!!r% !ha! ar 4a#"/%! co#Dc!+ra. N"!hr ca# "! proh""! !hS!a! /ro4 rc"%"# "!% %o$r"# !a"# por a%' o# +#cr!a"#, proph!"c ro+#'%.

Fo+r. F"#a, p!"!"o#r% a%%r! !ha! !h %+%!a#!"a!"o# r+"r4#!% /or ca"4"# "#p+! VAT 4a !h VAT o# !oa opra!"o#%"4prac!"ca a#' "#capa o/ "4p4#!a!"o#. Th c"! !h /ac! !ha!, "# or'r !o ca"4 "#p+! VAT, !h #a4, a''r%% a#' !a "'#!"/"ca!"o##+4r o/ !h !oa +%r 4+%! "#'"ca!' "# !h VAT rc"p! or "#$o"c. Th 4a##r h"ch !h <IR "#!#'% !o "4p4#! !h VAT ro+#'"# o// !h !o ra! a#' p+!!"# a# c%% coc!"o# "# a# %cro acco+#! "% a%o "a, h" !h a!r#a!"$ o/ "$"# cha#!o !ho+%a#'% o/ 4o!or"%!% "# or'r !o 4! !h ac! !o ra! o+' a o"%!"ca #"h!4ar. Th+%, accor'"# !o !h4, !h VAT o#!oa opra!"o#% "% #o! a'4"#"%!ra!"$ /a%".[33]

A'4"#"%!ra!"$ /a%"""! "% o# o/ !h ca#o#% o/ a %o+#' !a %%!4. I! %"4p 4a#% !ha! !h !a %%!4 %ho+' capa o/ "#//c!"$ a'4"#"%!r' a#' #/orc' "!h !h a%! "#co#$#"#c !o !h !apar. No#=o%r$a#c o/ !h ca#o#, ho$r, " #o!r#'r a !a "4po%"!"o# "#$a"' cp! !o !h !#! !ha! %pc"/"c co#%!"!+!"o#a or %!a!+!or "4"!a!"o#% ar "4pa"r'.[3;] Th+%, $# "/ !h"4po%"!"o# o/ VAT o# !oa opra!"o#% 4a %4 +r'#%o4 !o "4p4#!, "! "% #o! #c%%ar" "#$a"' +#%% %o4 a%pc! o/ "! "%%ho# !o $"oa! a# a or !h Co#%!"!+!"o#.

)r, "! r4a"#% !o %# ho !h !a"# a+!hor"! " ac!+a "4p4#! !h VAT o# !oa opra!"o#%. A# 'cara!"o# !h Co+r!ha! !h 4a##r o/ "!% "4p4#!a!"o# "% "a or +#co#%!"!+!"o#a o+' pr4a!+r. A!ho+h !h !ra#%cr"p! o/ !h A++%! 12, 2010S#a! har"# pro$"'% %o4 c+ a% !o ho !h <IR "#!#'% !o o ao+! "!,[35] !h /ac!% pr!a"#"# !o !h 4a!!r ar #o! %+//"c"#!%!a"%h' /or !h Co+r! !o pa%% D+'4#! o#. <%"'%, a# co#cr# ao+! ho !h VAT o# !oa opra!"o#% " #/orc' 4+%!/"r%! a''r%%' !o !h <IR o# ho4 !h !a% o/ "4p4#!"# !a a% pr"4ar" a#' c+%"$ r%!%. Th Co+r! ca##o! pr4p! !h<IR% '"%cr!"o# o# !h 4a!!r, a%#! a# car $"oa!"o# o/ a or !h Co#%!"!+!"o#.

For !h %a4 ra%o#, !h Co+r! ca##o! pr4a!+r 'car a% "a, <IR RMC @3=2010 h"ch '"rc!% !o co4pa#"% !o rcor' a#acc+4+a!' "#p+! VAT o/ :ro aa#c "# !h"r oo% a% o/ A++%! 1@, 2010, !h 'a! h# !h VAT "4po%"!"o# a% %+ppo%' !o !a//c!. Th "%%+a#c a' $"oa!% Sc!"o# 1118A9[3@] o/ !h Co' h"ch ra#!% /"r%! !"4 VAT par% a !ra#%"!"o#a "#p+! VAT o/ 2Bo# "##"# "#$#!or.



I# !h"% co##c!"o#, !h <IR pa"#' !ha! <IR RMC @3=2010 "% ac!+a !h pro'+c! o/ #o!"a!"o#% "!h !oa opra!or% ho ha$# a%%%%' VAT a% ar a% 2005, +! /a"' !o char VAT="#c+%"$ !o /% h"ch #o ca# #o o#r coc!'. Th !oaopra!or% ar' !o a"$ !h 2B !ra#%"!"o#a "#p+! VAT, "# cha# /or ca#ca!"o# o/ !h"r pa%! '+ VAT "a""!"%. No!a, !h r"h!o ca"4 !h 2B !ra#%"!"o#a "#p+! VAT o#% !o !h !oa opra!or% ho ha$ #o! +%!"o#' !h c"rc+ar% $a"'"!. Th ar !h+% !ho#% ho ha$ a r"h! !o cha# !h c"rc+ar "# a '"rc! a#' propr ac!"o# ro+h! /or !h p+rpo%.

Co#c+%"o#

I# /"#, !h Co44"%%"o#r o/ I#!r#a R$#+ '"' #o! +%+rp "%a!"$ prroa!"$ or pa#' !h VAT a% co$ra h# %h %o+h!o "4po% VAT o# !oa opra!"o#%. Sc!"o# 1078A9 o/ !h Co' car %!a!% !ha! %r$"c% o/ a o!hr /ra#ch"% ra#!% ar %+Dc

!o VAT, cp! a% 4a pro$"'' +#'r Sc!"o# 116 o/ !h Co'. Toa opra!or% ar #o! a4o# !h /ra#ch"% ra#!% %+Dc! !o/ra#ch"% !a +#'r !h a!!r pro$"%"o#. N"!hr ar !h"r %r$"c% a4o# !h VAT=4p! !ra#%ac!"o#% +#'r Sc!"o# 106 o/ !h Co'.

I/ !h "%a!"$ "#!#! a% !o 4p! !oa opra!"o#% /ro4 VAT, a% p!"!"o#r% %o %!ro# a, !h# "! o+' ha$ # /or !ha !o car %a %o. Ta 4p!"o#% 4+%! D+%!"/"' car %!a!+!or ra#! a#' a%' o# a#+a "# !h a !oo pa"# !o 4"%!a#.[3] <+! a% !h a "% r"!!#, #o %+ch 4p!"o# o!a"#% /or !oa opra!or%. Th Co+r! "% !h+% '+!=o+#' !o %"4p app!h a a% "! "% /o+#'.

La%!, !h ra#! o/ !a 4p!"o# "% a 4a!!r o/ "%a!"$ po"c !ha! "% "!h"# !h c+%"$ prroa!"$ o/ Co#r%%. Th Co+r!% ro "%!o 4r +pho' !h"% "%a!"$ po"c, a% r/c!' /"r%! a#' /or4o%! "# !h a#+a o/ !h !a %!a!+!. Th+%, a# +#arra#!' +r'#!ha! 4a prc"$' !o r%+! /ro4 #/orc"# %+ch po"c 4+%! propr r/rr' !o Co#r%%. Th Co+r! ha% #o '"%cr!"o# o# !h4a!!r +! %"4p app"% !h a.

Th VAT o# /ra#ch"% ra#!% ha% # "# !h %!a!+! oo% %"#c 166; h# R.A. 1@ or !h Epa#'' Va+=A''' Ta a a%

pa%%'. I! "% o# #o, ho$r, !ha! !h c+!"$ ha% ar#%! p+r%+' !h VAT "4po%"!"o# aa"#%! !oa opra!or%. Th c+!"$rc"%% c+%"$ '"%cr!"o# "# 4a!!r% pr!a"#"# !o !h "4p4#!a!"o# a#' c+!"o# o/ !a a%. Co#%+#!, !h c+!"$ "%4or propr %+"!' !o 'a "!h !h "44'"a! a#' prac!"ca co#%+#c% o/ !h VAT "4po%"!"o#.

()EREFORE, !h Co+r! *ENIES r%po#'#!% Scr!ar o/ F"#a#c a#' Co44"%%"o#r o/ I#!r#a R$#+% 4o!"o# /orco#%"'ra!"o# o/ "!% A++%! 2;, 2010 r%o+!"o#, *ISMISSES !h p!"!"o#r% R#a!o V. *"a: a#' A+rora Ma. F. T"4o% p!"!"o# /or aco/ 4r"!, a#' SETS ASI*E !h Co+r!% !4porar r%!ra"#"# or'r 'a!' A++%! 13, 2010.SO OR*ERE*.

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