Case Digest (G.R. No. 57268) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Chamber of Real Estate and Builders’ Associations, Inc. (CREBA) v. Romulo, G.R. No. 160756, decided on March 9, 2010, petitioner CREBA, an association of real estate developers and builders, filed an original petition under Rule 65 seeking certiorari and mandamus against Executive Secretary Alberto Romulo, Acting Secretary of Finance Juanita D. Amatong, and Commissioner of Internal Revenue Guillermo Parayno, Jr. CREBA assailed Section 27(E) of Republic Act No. 8424 (the Minimum Corporate Income Tax or MCIT) and the implementing Revenue Regulations—RR 9-98 for MCIT and RR 2-98 (as amended by RR 6-2001) and RR 7-2003 for Creditable Withholding Tax (CWT) on sales of real properties classified as ordinary assets. Petitioner contended that MCIT and CWT contravened the Due Process and Equal Protection clauses of the 1987 Constitution, imposed tax on unrealized gains, and exceeded the Finance Secretary’s regulatory authority. No prior assessment or concrete injury to petitioner’s Case Digest (G.R. No. 57268) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Proceedings
- Petitioner: Chamber of Real Estate and Builders’ Associations, Inc. (CREBA), an association of real estate developers and builders in the Philippines, filed an original petition for certiorari and mandamus under Rule 65 of the Rules of Court.
- Respondents: The Hon. Executive Secretary Alberto Romulo; the Hon. Acting Secretary of Finance Juanita D. Amatong; and the Hon. Commissioner of Internal Revenue Guillermo Parayno, Jr.
- Challenged Statutes and Regulations
- Republic Act (RA) No. 8424 (National Internal Revenue Code of 1997, as amended):
- Section 27(E) – Minimum Corporate Income Tax (MCIT) of 2% on gross income for domestic corporations beginning the fourth taxable year; carry‐forward of excess; relief provisions; definition of gross income.
- Section 57 – Authority to impose withholding taxes (final and creditable).
- Section 58(E) – Requirement of Certificate Authorizing Registration (CAR) from the CIR for transfers of real property subject to withholding.
- Revenue Regulations (RRs):
- RR 9-98 – Implementing Section 27(E) on MCIT.
- RR 2-98 (as amended by RR 6-2001) – Sections 2.57.2(J) and 2.58.2 on creditable withholding tax (CWT) on sales of real property classified as ordinary assets, and CAR requirement.
- RR 7-2003 – Guidelines to classify real properties as capital or ordinary assets for tax purposes.
- Petitioner’s Contentions
- MCIT under Section 27(E) and RR 9-98:
- Violates due process by taxing gross income (not realized net gain), confiscatory and arbitrary.
- Imposed even when net income is zero or negative.
- CWT under RRs 2-98, 6-2001, and 7-2003 on sales of ordinary real properties:
- Exceeds statutory authority of the Secretary of Finance.
- Ignores distinction between ordinary and capital assets in RA 8424.
- Violates due process by collecting tax before determination of net income.
- Violates equal protection by targeting real estate enterprises only.
Issues:
- Justiciability
- Whether there is an actual case or controversy, ripeness, and standing for judicial review.
- Constitutionality of MCIT
- Whether Section 27(E) of RA 8424 and its implementing RR 9-98 violate due process or equal protection.
- Constitutionality of CWT on Sales of Ordinary Assets
- Whether Sections 2.57.2(J) and 2.58.2 of RR 2-98 (as amended by RR 6-2001) and Sections 4(a)(ii) and 4(c)(ii) of RR 7-2003 exceed statutory authority, or violate due process and equal protection.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)