"Indeed, a contract constitutes the law between the parties who are, therefore, bound by its stipulation which, when couched in clear and plain language, should be applied according to their literal tenor."
"VAT is a uniform tax levied on every importation of goods, whether or not in the course of trade or business, or imposed on each sale, barter, exchange or lease of goods or properties or on each rendition of services in the course of trade or business. It is a tax on transactions, imposed at every stage of the distribution process on the sale, barter, exchange of goods or property, and on the performance of services, even in the absence of profit attributable thereto. As an indirect tax that may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services, VAT should be understood not in the context of the person or entity that is primarily, directly and legally liable for its payment, but in terms of its nature as a tax on consumption."
LVM Construction Corporation, represented by its Managing Director, Andres Chua Lao Vs. F.T. Sanchez/SOCOR/KIMWA (Joint Venture), et al.
This is a collection of sum of money case between the contractor of the DPWH and its subcontractor.
The contractor failed to pay its sub-contractor despite the termination of the contract and insist that it has a right to deduct from the retention money the VAT that it paid to the government.
The Supreme Court disagrees and raised the concept that contracting parties can not change unilaterally the terms of the conrtract and re-explained the concept of Value Added Tax.
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