Case Digest (G.R. No. 200670) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The case under discussion is Clark Investors and Locators Association, Inc. v. Secretary of Finance and Commissioner of Internal Revenue, G.R. No. 200670, decided by the Supreme Court on July 6, 2015. The petitioner, Clark Investors and Locators Association, Inc. (CILAI), represents businesses within the Clark Freeport Zone. The controversy arises from Revenue Regulations No. 2-2012 (RR 2-2012), issued by the Department of Finance (DOF) on February 17, 2012, under the recommendation of the Bureau of Internal Revenue (BIR). CILAI contends that these regulations impose Value Added Tax (VAT) and excise tax on the importation of petroleum and petroleum products from abroad into the Freeport and Economic Zones, contradicting the tax exemption granted to such businesses under Republic Act No. 7227, known as the Bases Conversion and Development Act of 1992, subsequently amended by Republic Act No. 9400.
On March 13, 1992, Congress enacted RA No. 7227, aimed at converting the Clark an
Case Digest (G.R. No. 200670) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Background of the Case
- Petitioner: Clark Investors and Locators Association, Inc., representing businesses and enterprises operating within the Clark Freeport Zone.
- Respondents: Secretary of Finance and Commissioner of Internal Revenue, through which the Office of the Solicitor General (OSG) defended the issuance of the questioned Revenue Regulation.
- Legislative Framework
- Republic Act (RA) No. 7227 – Bases Conversion and Development Act of 1992
- Enacted on March 13, 1992, it mandated the accelerated conversion of military reservations into special economic zones.
- Section 12 details the creation of the Subic Special Economic Zone and includes:
- Policies for developing a self-sustaining industrial, commercial, financial, and investment center.
- RA No. 9400 (March 20, 2007)
- Extended the tax and fiscal incentives of RA No. 7227 to the Clark Freeport Zone.
- Amended Section 15 of RA No. 7227 to declare a special economic zone covering the Clark military reservations, thereby granting similar tax exemption privileges to businesses operating therein.
- The Revenue Regulation at Issue
- On February 17, 2012, the Department of Finance (DOF), upon the recommendation of the Bureau of Internal Revenue (BIR), promulgated Revenue Regulations No. 2-2012 (RR 2-2012).
- RR 2-2012 imposed:
- Value-Added Tax (VAT) and excise tax on the importation of petroleum and petroleum products from abroad into the Freeport or Economic Zones.
- A mechanism under Section 3 for applying the tax on imports, while allowing a claim for credit or refund under stipulated conditions.
- Petitioner’s Assertion:
- Argues that RR 2-2012 unilaterally negated the tax exemptions granted by RA No. 7227 and RA No. 9400.
- Asserts that the imposition of these taxes is void and contrary to the intended special fiscal incentives for the zones.
- Procedural History
- On March 8, 2012, the petitioner filed the present petition for certiorari, seeking:
- Issuance of a temporary restraining order and/or writ of preliminary injunction.
- Annulment and setting aside of RR 2-2012.
- Respondents’ Position:
- Maintained that RR 2-2012 was issued in the exercise of quasi-legislative (rule-making) powers, not judicial or quasi-judicial functions.
- Asserted that the petition is an improper remedy as certiorari is available only against tribunals or officers exercising judicial or quasi-judicial authority.
- Emphasized that any issue affecting the tax exemptions under RA No. 7227 and RA No. 9400 is subject to the proper venue and remedial process.
- Decision on the Remedies
- The petition was deemed to be, in substance, a bid for declaratory relief on the alleged unconstitutionality and illegality of RR 2-2012.
- The Supreme Court identified:
- The alleged grave abuse of discretion was not committed by a judicial or quasi-judicial officer.
- The issuance of RR 2-2012 was based on rule-making authority under Section 244 of the National Internal Revenue Code (NIRC).
- The petition falls within the realm of quasi-legislative acts, which by their nature are not susceptible to review by certiorari.
- Conclusion on the Facts
- The petitioner’s use of the certiorari remedy was misplaced as the relief sought was essentially declaratory and thus should have been filed in the proper forum (i.e., the Regional Trial Courts).
- The decision rendered that no judicial or quasi-judicial function was improperly exercised by the respondents in issuing RR 2-2012.
Issues:
- Whether the petitioner can invoke petition for certiorari to assail an administrative rule (RR 2-2012) issued under quasi-legislative or rule-making powers rather than judicial or quasi-judicial functions.
- Whether the imposition of VAT and excise tax on the importation of petroleum and petroleum products by RR 2-2012 unilaterally and illegally revoked the tax exemptions provided by RA No. 7227 and RA No. 9400.
- Whether the petition for certiorari is the proper remedy given that the petition essentially seeks a declaration on the validity of a revenue regulation, an act that does not fall within the Supreme Court’s original jurisdiction for issuing such extraordinary writs.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)