Case Digest (G.R. No. 184450)
Facts:
In October 2017, the Supreme Court, En Banc, resolved consolidated Rule 65 petitions (G.R. Nos. 184450, 184508, 184538, 185234) filed by: (a) Jaime N. Soriano et al., (b) Senator Manuel A. Roxas, (c) Trade Union Congress of the Philippines (TUCP), and (d) Senator Francis Joseph G. Escudero, Tax Management Association of the Philippines, Inc., and Ernesto G. Ebro, all seeking to annul Revenue Regulation No. 10-2008 issued by the Bureau of Internal Revenue (BIR) on 24 September 2008. RR 10-2008 implemented Republic Act No. 9504 (approved 17 June 2008; took effect 6 July 2008), which granted: (1) increased personal (₱50,000) and additional (₱25,000 per dependent) exemptions under the 1997 Tax Code; and (2) unconditional income-tax exemption for minimum wage earners (MWEs) on statutory minimum wage, holiday, overtime, night shift differential, and hazard pay. Petitioners contended that the RR illegally: (a) limited the application of R.A. 9504’s exemption and increased exemptions toCase Digest (G.R. No. 184450)
Facts:
- Antecedent Legislative Background
- Republic Act No. 9504 (approved June 17, 2008; published June 21; effective July 6, 2008) amended the 1997 Tax Code (R.A. 8424) to:
- Increase basic personal exemption to P50,000 per individual.
- Increase additional exemption per dependent (up to four) to P25,000.
- Raise the optional standard deduction for individual taxpayers from 10% to 40% of gross receipts or sales, and introduce a 40% OSD for corporations.
- Grant income tax exemption to minimum wage earners (MWEs) for statutory minimum wage, holiday pay, overtime pay, night shift differential, and hazard pay.
- The law contained no provision for prorating exemptions or conditioning MWE exemption on other benefits.
- Issuance of Revenue Regulation No. 10-2008
- On September 24, 2008, the Bureau of Internal Revenue issued RR 10-2008 (dated July 8), implementing R.A. 9504 with the following key features:
- Section 1 amended withholding rules: defined “de minimis benefits,” reiterated MWE exemption but added that MWEs receiving “other benefits” in excess of P30,000 lose the exemption on all earnings.
- Section 3 prescribed a transitory withholding tax table for July 6–December 31, 2008, prorating personal and additional exemptions over six months (P25,000 personal; P12,500 per dependent).
- The regulation took effect July 6, 2008.
- Consolidated Petitions (G.R. Nos. 184450, 184508, 184538, 185234)
- Petitioners (private individuals, senators Roxas and Escudero, TUCP, TMAP, Ebro) filed Rule 65 petitions to nullify RR 10-2008, arguing:
- R.A. 9504’s exemptions should apply to the entire calendar year 2008; RR 10-2008 erred in prorating and limiting effectivity to July 6.
- RR 10-2008 improperly added a condition disqualifying MWEs who receive other benefits exceeding P30,000 from the exemption.
- The Solicitor General contended that R.A. 9504 was prospective, not retroactive, that Umali v. Estanislao was distinguishable, and that a “conforme” by Senator Escudero indicated legislative approval of the regulation.
Issues:
- Personal and Additional Exemptions
- Should the increased personal and additional exemptions under R.A. 9504 apply to the entire taxable year 2008 or be prorated from July 6, 2008?
- Minimum Wage Earner Exemption
- Is the income tax exemption for MWEs applicable to the full year 2008 or only from July 6, 2008?
- Condition on “Other Benefits”
- Are RR 10-2008’s provisions that revoke MWE exemption if “other benefits” exceed P30,000 consistent with R.A. 9504?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)