G.R. No.

168056 September 1, 2005

ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S. ALCANTARA and ED VINCENT S.
ALBANO, Petitioners, vs. THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE
SECRETARY OF THE DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE COMMISSIONER OF
INTERNAL REVENUE GUILLERMO PARAYNO, JR., Respondent.

G.R. No. 168207

AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E. ESTRADA, PANFILO M. LACSON,
ALFREDO S. LIM, JAMBY A.S. MADRIGAL, AND SERGIO R. OSMEÑA III, Petitioners, vs. EXECUTIVE SECRETARY
EDUARDO R. ERMITA, CESAR V. PURISIMA, SECRETARY OF FINANCE, GUILLERMO L. PARAYNO, JR.,
COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE, Respondent.

G.R. No. 168461

ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its President, et al, Petitioners, vs. CESAR V.
PURISIMA, in his capacity as Secretary of the Department of Finance and GUILLERMO L. PARAYNO, JR., in his
capacity as Commissioner of Internal Revenue, Respondent.

G.R. No. 168463

FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOEL J. VILLANUEVA, RODOLFO G.
PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN C. AGARAO, JR. JUAN EDGARDO
M. ANGARA, JUSTIN MARC SB. CHIPECO, FLORENCIO G. NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO,
JOSEPH A. SANTIAGO, TEOFISTO DL. GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI and
TEODORO A. CASIÑO, Petitioners, vs. CESAR V. PURISIMA, in his capacity as Secretary of Finance,
GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of Internal Revenue, and EDUARDO R.
ERMITA, in his capacity as Executive Secretary, Respondent.

G.R. No. 168730

BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. Petitioner, vs. HON. EDUARDO R. ERMITA, in his capacity as the
Executive Secretary; HON. MARGARITO TEVES, in his capacity as Secretary of Finance; HON. JOSE MARIO
BUNAG, in his capacity as the OIC Commissioner of the Bureau of Internal Revenue; and HON. ALEXANDER
AREVALO, in his capacity as the OIC Commissioner of the Bureau of Customs, Respondent.

TOPIC: Constitutional Limitations: (1) Origin of Revenue, Appropriation and Tariff Bills; (2) Flexible Tariff
Clause

ABOUT: Constitutionality Value Added Tax (RA 9337) – SC held it as constitutional.

FACTS:
 Mounting budget deficit, revenue generation, inadequate fiscal allocation for education, increased emoluments for
health workers, and wider coverage for full value-added tax benefits … these are the reasons why Republic Act No.
9337 (R.A. No. 9337)1 was enacted.
 This is a consolidation of 5 cases.
 R.A. No. 9337 is a consolidation of three legislative bills namely, House Bill Nos. 3555 and 3705, and Senate Bill
No. 1950.
 House Bill No. 35552 was introduced on first reading on January 7, 2005. The House Committee on Ways and
Means approved the bill, in substitution of House Bill No. 1468, which Representative (Rep.) Eric D. Singson
introduced on August 8, 2004. The President certified the bill on January 7, 2005 for immediate enactment. On
January 27, 2005, the House of Representatives approved the bill on second and third reading.
 House Bill No. 37053 on the other hand, substituted House Bill No. 3105 introduced by Rep. Salacnib F. Baterina,
and House Bill No. 3381 introduced by Rep. Jacinto V. Paras. Its "mother bill" is House Bill No. 3555. The House
Committee on Ways and Means approved the bill on February 2, 2005. The President also certified it as urgent on
February 8, 2005. The House of Representatives approved the bill on second and third reading on February 28,
2005.
 Meanwhile, the Senate Committee on Ways and Means approved Senate Bill No. 19504 on March 7, 2005, "in
substitution of Senate Bill Nos. 1337, 1838 and 1873, taking into consideration House Bill Nos. 3555 and 3705."
Senator Ralph G. Recto sponsored Senate Bill No. 1337, while Senate Bill Nos. 1838 and 1873 were both
sponsored by Sens. Franklin M. Drilon, Juan M. Flavier and Francis N. Pangilinan. The President certified the bill
on March 11, 2005, and was approved by the Senate on second and third reading on April 13, 2005.
 Senate agreed to the request of the House of Representatives for a committee conference on the disagreeing
provisions of the proposed bills.
 Conference Committee on the Disagreeing Provisions of House Bill No. 3555, House Bill No. 3705, and Senate Bill
No. 1950, "after having met and discussed in full free and conference," recommended the approval of its report,
which the Senate did on May 10, 2005, and with the House of Representatives agreeing thereto the next day, May
11, 2005.
 On May 23, 2005, the enrolled copy of the consolidated House and Senate version was transmitted to the
President, who signed the same into law on May 24, 2005. Thus, came R.A. No. 9337.
 July 1, 2005 is the effectivity date of R.A. No. 9337. 5 When said date came, the Court issued a temporary
restraining order, effective immediately and continuing until further orders, enjoining respondents from enforcing

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 and implementing the law. Reasons: (1) confusion in the implementation; (2) prices of products have been
increased by 10%.
 G.R. No. 168056
 ABAKADA GURO Party List, et al., filed a petition for prohibition, assailing Section 4 imposes a 10% VAT on sale of
goods and properties, Section 5 imposes a 10% VAT on importation of goods, and Section 6 imposes a 10% VAT
on sale of services and use or lease of properties. These questioned provisions contain a uniform proviso
authorizing the President, a stand-by authority, upon recommendation of the Secretary of Finance, to raise the VAT
rate to 12%, effective January 1, 2006. Petitioners argue that the law is unconstitutional, as it constitutes
abandonment by Congress of its exclusive authority to fix the rate of taxes under Article VI, Section 28(2) of the
1987 Philippine Constitution.
 G.R. No. 168207
 Sen. Aquilino Q. Pimentel, Jr., et al., filed a petition for certiorari likewise assailing the constitutionality of Sections
4, 5 and 6 of R.A. No. 9337.
 Petitioners further claim that the inclusion of a stand-by authority granted to the President by the Bicameral
Conference Committee is a violation of the "no-amendment rule" upon last reading of a bill laid down in Article VI,
Section 26(2) of the Constitution.
 G.R. No. 1684
 Petition for prohibition was filed on June 29, 2005, by the Association of Pilipinas Shell Dealers, Inc., et al.,
contending that the provisions (Sections 8 & 12, imposing limitations on the amount of input tax that may be
claimed) are unconstitutional for being arbitrary, oppressive, excessive, and confiscatory.
 G.R. No. 168730
 Governor Enrique T. Garcia filed a petition for certiorari and prohibition on July 20, 2005, alleging unconstitutionality
of the law on the ground that the limitation on the creditable input tax in effect allows VAT-registered establishments
to retain a portion of the taxes they collect, thus violating the principle that tax collection and revenue should be
solely allocated for public purposes and expenditures.
 G.R. No. 168463
 Several members of the House of Representatives led by Rep. Francis Joseph G. Escudero filed this petition for
certiorari on June 30, 2005. They question the constitutionality of R.A. No. 9337, among others “3) Insertion by
the Bicameral Conference Committee of Sections 27, 28, 34, 116, 117, 119, 121, 125, 7 148, 151, 236, 237 and
288, which were present in Senate Bill No. 1950, violates Article VI, Section 24(1) of the Constitution, which
provides that all appropriation, revenue or tariff bills shall originate exclusively in the House of
Representatives”
 Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral Conference Committee exceeded its
authority by:
o 1) Inserting the stand-by authority in favor of the President in Sections 4, 5, and 6 of R.A. No. 9337;
o 2) Deleting entirely the no pass-on provisions found in both the House and Senate bills;
o 3) Inserting the provision imposing a 70% limit on the amount of input tax to be credited against the output
tax; and
o 4) Including the amendments introduced only by Senate Bill No. 1950 regarding other kinds of taxes in
addition to the value-added tax.


ISSUE:
 Whether there are irregularities committed by the conference committee in introducing changes or deleting
provisions in the House and Senate bills - NONE
 Whether the bicameral conference committee has strictly complied with the rules of both houses, thereby remaining
within the jurisdiction conferred upon it by Congress.
 Whether R.A. No. 9337 violates the following provisions of the Constitution:
o a. Article VI, Section 24 (which provides that all appropriation, revenue or tariff bills shall originate
exclusively in the House of Representatives) - NO
o b. Article VI, Section 26(2)
 Whether R.A. No. 9337 violates Article VI, Section 24 of the Constitution on Exclusive Origination of Revenue Bills -

HELD:
 Republic Act No. 9337 not being unconstitutional, the petitions in G.R. Nos. 168056, 168207, 168461, 168463, and
168730, are hereby DISMISSED.
 The VAT is a tax on spending or consumption. It is levied on the sale, barter, exchange or lease of goods or
properties and services.8 Being an indirect tax on expenditure, the seller of goods or services may pass on the
amount of tax paid to the buyer, 9 with the seller acting merely as a tax collector. 10 The burden of VAT is intended to
fall on the immediate buyers and ultimately, the end-consumers.
 In the Philippines, the value-added system of sales taxation has long been in existence, albeit in a different mode.
Prior to 1978, the system was a single-stage tax computed under the "cost deduction method" and was payable
only by the original sellers. The single-stage system was subsequently modified, and a mixture of the "cost
deduction method" and "tax credit method" was used to determine the value-added tax payable. 13 Under the "tax
credit method," an entity can credit against or subtract from the VAT charged on its sales or outputs the VAT paid
on its purchases, inputs and imports.

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 The Bicameral Conference Committee
 Article VI, Section 16 (3) of the Constitution provides that "each House may determine the rules of its proceedings."
Pursuant to this inherent constitutional power to promulgate and implement its own rules of procedure, the
respective rules of each house of Congress provided for the creation of a Bicameral Conference Committee.
 Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives provides as follows: Sec. 88.
Conference Committee. – In the event that the House does not agree with the Senate on the amendment to any bill
or joint resolution, the differences may be settled by the conference committees of both chambers.
 Rule XII, Section 35 of the Rules of the Senate states: Sec. 35. In the event that the Senate does not agree with the
House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a
conference committee of both Houses which shall meet within ten (10) days after their composition. The President
shall designate the members of the Senate Panel in the conference committee with the approval of the Senate.
 Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in, or
amendments to the subject measure, and shall be signed by a majority of the members of each House panel,
voting separately.
 A comparative presentation of the conflicting House and Senate provisions and a reconciled version thereof with
the explanatory statement of the conference committee shall be attached to the report.
 Under the "enrolled bill doctrine," the signing of a bill by the Speaker of the House and the Senate President and
the certification of the Secretaries of both Houses of Congress that it was passed are conclusive of its due
enactment. A review of cases reveals the Court’s consistent adherence to the rule.
 The Court observes that there was a necessity for a conference committee because a comparison of the provisions
of House Bill Nos. 3555 and 3705 on one hand, and Senate Bill No. 1950 on the other, reveals that there were
indeed disagreements.
 The disagreements between the provisions in the House bills and the Senate bill were with regard to (1) what rate
of VAT is to be imposed; (2) whether only the VAT imposed on electricity generation, transmission and distribution
companies should not be passed on to consumers, as proposed in the Senate bill, or both the VAT imposed on
electricity generation, transmission and distribution companies and the VAT imposed on sale of petroleum products
should not be passed on to consumers, as proposed in the House bill; (3) in what manner input tax credits should
be limited; (4) and whether the NIRC provisions on corporate income taxes, percentage, franchise and excise taxes
should be amended.
 There being differences and/or disagreements on the foregoing provisions of the House and Senate bills, the
Bicameral Conference Committee was mandated by the rules of both houses of Congress to act on the same by
settling said differences and/or disagreements.
 In the present case, the changes introduced by the Bicameral Conference Committee on disagreeing provisions
were meant only to reconcile and harmonize the disagreeing provisions for it did not inject any idea or intent that is
wholly foreign to the subject embraced by the original provisions.
 All the changes or modifications made by the Bicameral Conference Committee were germane to subjects of the
provisions. Such being the case, the Court does not see any grave abuse of discretion amounting to lack or excess
of jurisdiction committed by the Bicameral Conference Committee.

 R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the Constitution on the "No-Amendment Rule"
 Article VI, Sec. 26 (2) of the Constitution, states: No bill passed by either House shall become a law unless it has
passed three readings on separate days, and printed copies thereof in its final form have been distributed to its
Members three days before its passage, except when the President certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be
allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.
 The Court reiterates here that the "no-amendment rule" refers only to the procedure to be followed by each
house of Congress with regard to bills initiated in each of said respective houses, before said bill is
transmitted to the other house for its concurrence or amendment. Verily, to construe said provision in a way
as to proscribe any further changes to a bill after one house has voted on it would lead to absurdity as this would
mean that the other house of Congress would be deprived of its constitutional power to amend or introduce
changes to said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution cannot be taken to mean that the introduction by
the Bicameral Conference Committee of amendments and modifications to disagreeing provisions in bills that have
been acted upon by both houses of Congress is prohibited.
 Petitioners claim that the amendments to these provisions of the NIRC did not at all originate from the House. They
aver that House Bill No. 3555 proposed amendments only regarding Sections 106, 107, 108, 110 and 114 of the
NIRC, while House Bill No. 3705 proposed amendments only to Sections 106, 107,108, 109, 110 and 111 of the
NIRC; thus, the other sections of the NIRC which the Senate amended but which amendments were not found in
the House bills are not intended to be amended by the House of Representatives. Hence, they argue that since the
proposed amendments did not originate from the House, such amendments are a violation of Article VI, Section 24
of the Constitution.
 Article VI, Section 24 of the Constitution reads:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives but the Senate may
propose or concur with amendments.
 In the present cases, petitioners admit that it was indeed House Bill Nos. 3555 and 3705 that initiated the move for
amending provisions of the NIRC dealing mainly with the value-added tax. Upon transmittal of said House bills to
the Senate, the Senate came out with Senate Bill No. 1950 proposing amendments not only to NIRC provisions on
the value-added tax but also amendments to NIRC provisions on other kinds of taxes. Is the introduction by the
Senate of provisions not dealing directly with the value- added tax, which is the only kind of tax being amended in

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 the House bills, still within the purview of the constitutional provision authorizing the Senate to propose or concur
with amendments to a revenue bill that originated from the House?
 The foregoing question had been squarely answered in the Tolentino case, wherein the Court held, thus: . . . To
begin with, it is not the law – but the revenue bill – which is required by the Constitution to "originate exclusively" in
the House of Representatives. It is important to emphasize this, because a bill originating in the House may
undergo such extensive changes in the Senate that the result may be a rewriting of the whole. . . . At this point,
what is important to note is that, as a result of the Senate action, a distinct bill may be produced. To insist that a
revenue statute – and not only the bill which initiated the legislative process culminating in the enactment
of the law – must substantially be the same as the House bill would be to deny the Senate’s power not only
to "concur with amendments" but also to "propose amendments." It would be to violate the coequality of
legislative power of the two houses of Congress and in fact make the House superior to the Senate.
 As pointed out in the petitions, said disagreements we Since there is no question that the revenue bill exclusively
originated in the House of Representatives, the Senate was acting within it constitutional power to introduce
amendments to the House bill when it included provisions in Senate Bill No. 1950 amending corporate income
taxes, percentage, excise and franchise taxes. Verily, Article VI, Section 24 of the Constitution does not contain any
prohibition or limitation on the extent of the amendments that may be introduced by the Senate to the House
revenue bill.
 One of the challenges faced by the present administration is the urgent and daunting task of solving the country’s
serious financial problems. To do this, government expenditures must be strictly monitored and controlled and
revenues must be significantly increased. This may be easier said than done, but our fiscal authorities are still
optimistic the government will be operating on a balanced budget by the year 2009. In fact, several measures that
will result to significant expenditure savings have been identified by the administration. It is supported with a
credible package of revenue measures that include measures to improve tax administration and control the
leakages in revenues from income taxes and the value-added tax (VAT). (Emphasis supplied)
 Notably therefore, the main purpose of the bills emanating from the House of Representatives is to bring in sizeable
revenues for the government to supplement our country’s serious financial problems, and improve tax
administration and control of the leakages in revenues from income taxes and value-added taxes. As these house
bills were transmitted to the Senate, the latter, approaching the measures from the point of national perspective,
can introduce amendments within the purposes of those bills. It can provide for ways that would soften the impact
of the VAT measure on the consumer, i.e., by distributing the burden across all sectors instead of putting it entirely
on the shoulders of the consumers.

 No Undue Delegation of Legislative Power, Flexible Tariff Clause

 Petitioners allege that the grant of the stand-by authority to the President to increase the VAT rate is a virtual
abdication by Congress of its exclusive power to tax because such delegation is not within the purview of Section
28 (2), Article VI of the Constitution, which provides: The Congress may, by law, authorize the President to fix within
specified limits, and may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program of the government. They argue that the
VAT is a tax levied on the sale, barter or exchange of goods and properties as well as on the sale or exchange of
services, which cannot be included within the purview of tariffs under the exempted delegation as the latter refers to
customs duties, tolls or tribute payable upon merchandise to the government and usually imposed on goods or
merchandise imported or exported.
 Thus, the rule is that in order that a court may be justified in holding a statute unconstitutional as a delegation of
legislative power, it must appear that the power involved is purely legislative in nature – that is, one appertaining
exclusively to the legislative department. It is the nature of the power, and not the liability of its use or the manner of
its exercise, which determines the validity of its delegation.
 Nonetheless, the general rule barring delegation of legislative powers is subject to the following recognized
limitations or exceptions:
o (1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the Constitution;
o (2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution;
o (3) Delegation to the people at large;
o (4) Delegation to local governments; and
o (5) Delegation to administrative bodies.
 In every case of permissible delegation, there must be a showing that the delegation itself is valid. It is valid only if
the law (a) is complete in itself, setting forth therein the policy to be executed, carried out, or implemented by the
delegate;41 and (b) fixes a standard — the limits of which are sufficiently determinate and determinable — to which
the delegate must conform in the performance of his functions. 42 A sufficient standard is one which defines
legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it. It indicates
the circumstances under which the legislative command is to be effected. 43 Both tests are intended to prevent a
total transference of legislative authority to the delegate, who is not allowed to step into the shoes of the legislature
and exercise a power essentially legislative.
 The case before the Court is not a delegation of legislative power. It is simply a delegation of ascertainment of facts
upon which enforcement and administration of the increase rate under the law is contingent. The legislature has
made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact or condition. It
leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the control of the
executive.
 No discretion would be exercised by the President. Highlighting the absence of discretion is the fact that the word
shall is used in the common proviso. The use of the word shall connotes a mandatory order. Its use in a statute
denotes an imperative obligation and is inconsistent with the idea of discretion. 53 Where the law is clear and

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 unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the
mandate is obeyed.
 Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the
conditions specified by Congress. This is a duty which cannot be evaded by the President. Inasmuch as the law
specifically uses the word shall, the exercise of discretion by the President does not come into play. It is a clear
directive to impose the 12% VAT rate when the specified conditions are present. The time of taking into effect of the
12% VAT rate is based on the happening of a certain specified contingency, or upon the ascertainment of certain
facts or conditions by a person or body other than the legislature itself.
 Congress simply granted the Secretary of Finance the authority to ascertain the existence of a fact, namely,
whether by December 31, 2005, the value-added tax collection as a percentage of Gross Domestic Product (GDP)
of the previous year exceeds two and four-fifth percent (2 4/5%) or the national government deficit as a percentage of
GDP of the previous year exceeds one and one-half percent (1½%). If either of these two instances has occurred,
the Secretary of Finance, by legislative mandate, must submit such information to the President. Then the 12%
VAT rate must be imposed by the President effective January 1, 2006. There is no undue delegation of
legislative power but only of the discretion as to the execution of a law. This is constitutionally
permissible.57 Congress does not abdicate its functions or unduly delegate power when it describes what job must
be done, who must do it, and what is the scope of his authority; in our complex economy that is frequently the only
way in which the legislative process can go forward.
 The 12% Increase VAT Rate Does Not Impose an Unfair and Unnecessary Additional Tax Burden
 In this case, the tax law is uniform as it provides a standard rate of 0% or 10% (or 12%) on all goods and services.
Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the NIRC, provide for a
rate of 10% (or 12%) on sale of goods and properties, importation of goods, and sale of services and use or lease
of properties. These same sections also provide for a 0% rate on certain sales and transaction.
 R.A. No. 9337 is also equitable. The law is equipped with a threshold margin. The VAT rate of 0% or 10% (or 12%)
does not apply to sales of goods or services with gross annual sales or receipts not exceeding ₱1,500,000.00. 88
Also, basic marine and agricultural food products in their original state are still not subject to the tax, 89 thus ensuring
that prices at the grassroots level will remain accessible.
 The VAT is an antithesis of progressive taxation. By its very nature, it is regressive. The principle of progressive
taxation has no relation with the VAT system inasmuch as the VAT paid by the consumer or business for every
goods bought or services enjoyed is the same regardless of income. In
 other words, the VAT paid eats the same portion of an income, whether big or small. The disparity lies in the
income earned by a person or profit margin marked by a business, such that the higher the income or profit margin,
the smaller the portion of the income or profit that is eaten by VAT. A converso, the lower the income or profit
margin, the bigger the part that the VAT eats away. At the end of the day, it is really the lower income group or
businesses with low-profit margins that is always hardest hit.

 Furthermore, the amendments introduced by the Senate to the NIRC provisions that had not been touched in the
House bills are still in furtherance of the intent of the House in initiating the subject revenue bills. The Explanatory
Note of House Bill No. 1468, the very first House bill introduced on the floor, which was later substituted by House
Bill No. 3555, stated:re as follows:

House Bill No. 3555   House Bill No.3705   Senate Bill No. 1950
With regard to "Stand-By Authority" in favor of President
Provides for 12% VAT on every   Provides for 12% VAT in general on   Provides for a single rate of 10%
sale of goods or properties sales of goods or properties and VAT on sale of goods or properties
(amending Sec. 106 of NIRC); reduced rates for sale of certain locally (amending Sec. 106 of NIRC), 10%
12% VAT on importation of goods manufactured goods and petroleum VAT on sale of services including
(amending Sec. 107 of NIRC); products and raw materials to be used sale of electricity by generation
and 12% VAT on sale of services in the manufacture thereof (amending companies, transmission and
and use or lease of properties Sec. 106 of NIRC); 12% VAT on distribution companies, and use or
(amending Sec. 108 of NIRC) importation of goods and reduced lease of properties (amending Sec.
rates for certain imported products 108 of NIRC)
including petroleum products
(amending Sec. 107 of NIRC); and
12% VAT on sale of services and use
or lease of properties and a reduced
rate for certain services including
power generation (amending Sec. 108
of NIRC)
With regard to the "no pass-on" provision
No similar provision   Provides that the VAT imposed on   Provides that the VAT imposed on
power generation and on the sale of sales of electricity by generation
petroleum products shall be absorbed companies and services of
by generation companies or sellers, transmission companies and
respectively, and shall not be passed distribution companies, as well as
on to consumers those of franchise grantees of
electric utilities shall not apply to
residential

end-users. VAT shall be absorbed

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 by generation, transmission, and
distribution companies.
With regard to 70% limit on input tax credit
Provides that the input tax credit   No similar provision   Provides that the input tax credit for
for capital goods on which a VAT capital goods on which a VAT has
has been paid shall be equally been paid shall be equally
distributed over 5 years or the distributed over 5 years or the
depreciable life of such capital depreciable life of such capital
goods; the input tax credit for goods; the input tax credit for
goods and services other than goods and services other than
capital goods shall not exceed 5% capital goods shall not exceed 90%
of the total amount of such goods of the output VAT.
and services; and for persons
engaged in retail trading of goods,
the allowable input tax credit shall
not exceed 11% of the total
amount of goods purchased.
With regard to amendments to be made to NIRC provisions regarding income and excise taxes
No similar provision   No similar provision   Provided for amendments to
several NIRC provisions
regarding corporate income,
percentage, franchise and
excise taxes

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