Book Media Press, Inc.

November 5, 2009 VAT RULING NO. 013-09 Sec. 109 (R) Book Media Press, Inc. (Joint venture with Printwell, Inc.) 21-E Boni Serrano Avenue, Quezon City Attention: Cherry B. Sayago President/Partner in Charge Gentlemen : This refers to your letter dated March 23, 2009 requesting us a certification for VAT exemption on your contract with Department of Education (DepEd) for the printing and delivery of textbooks and teacher's guide/manuals. As represented, the DepEd awarded you (Book Media Press, Inc. joint venture with Printwell, Inc.) a contract amounting to Pesos: One Hundred Sixty Eight Million Seven Hundred Seventy Seven Thousand Fifty Seven and 39/100 (P168,777,057.39) for the printing and delivery of textbooks and teacher's guides/manuals for Science and Technology I to IV, Music and Arts I to III, and Physical Education & Health IV to Public High School NPSBE (Loan No. 7393-PH) Textbook Component with Contract No. IMCS-2008-12-032. It is your position that your transaction with DepEd is exempt from the imposition of the VAT pursuant to Section 109 (R) of the Tax Code, as amended by Republic Act No. 9337. In reply, please be informed that Section 109 (R) of the National Internal Revenue Code (NIRC), as amended, the sale, importation, printing or publication of books, is exempt from the value-added tax. In relation thereto, Section 3 (a) of R.A. No. 8047 provides that the term "Book" as defined by the United Nations Educational Scientific and Cultural Organization (UNESCO) is a printed non-periodical publication of at least forty-eight (48) pages, exclusive of cover pages, published in the country and made available to the public. On the other hand, Section 3 (b) of the same Act defines "Textbook" as a book which is an exposition of generally accepted principles in one (1) subject, intended primarily as a basis for instruction in a classroom or pupil-book-teacher situation. Moreover, the word "Manual" means a book that is conveniently handled; es. HANDBOOK (Merriam Webster's Collegiate Dictionary, 10th Edition). DCcAIS Based on the foregoing, the aforementioned textbooks and teacher's manuals may legally be treated as "Books" provided they meet the above quoted statutory requirement under Section 3 (a) and (b) of R.A. No. 8047, i.e. , at least forty-eight pages, exclusive of cover pages. If in the affirmative, your printing and supply of the said textbooks and teacher's manuals to the DepEd shall be exempt from VAT under Section 109 (R) of the NIRC, hence, also exempt from the 5% final withholding VAT prescribed under Section 114 (C), NIRC, as implemented by Section 4.114-2 of Revenue Regulations No. 16-2005. (VAT Rulings 033-02; 001-2005). This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it is discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Commissioner of Internal Revenue