Unfortunately, the law suffers from poor draftsmanship, which the BIR is trying to exploit as a possible loophole to justify the exclusion of professional partnership of lawyers from the exemption. Hence, the delay in issuing the regulations.
The exempting provision states: "cc Services rendered by lawyers duly registered with the Integrated Bar of the Philippines ("IBP"); xxx" Based on this language of the law, there are those in the BIR who espouse the view that the exemption does not apply to professional partnership of lawyers, as such, is not registered with the IBP.
Such narrow interpretation appears to be without valid basis. What should matter is that the lawyers who comprise the partnership are registered with the IBP or are members of good standing.
The practice of law is conducted either through the medium of a professional partnership organized in accordance with the laws on partnership found in the Civil Code, or a via a loose or informal partnership. Or one can practice on is own – the so-called "solo practitioners."
In a previous article, we discussed the basic rules and principles regarding the practice of law laid down by the Philippine Supreme Court – that it is not a trade or business and that its being a means of livelihood does not make it a trade or business. This appears to be the underlying principles behind the exemption of lawyers.
The intent of the law to lawyers from the VAT is clear. And the imprecise language of the law is no excuse for setting aside such intent. To exclude a professional partnership of lawyers who are themselves members of good standing or registered with the IBP, based on such a literal reading and strained interpretation, disregards the basic principles of statutory construction, namely: "the literal import of a law must yield to its apparent intent, purpose or spirit; a literal interpretation that will render the law meaningless and led to absurdity should be avoided."
Between two statutory interpretations, that which better serves the purpose or intent of the law should prevail. The BIR should be guided by this basic statutory canon of construction in drafting the implementing rules and regulations.
(The author may be reached at tel. nos. 830-8000/894-0109; e-mail address: accra@accralaw.com)