Case Summary (G.R. No. 200670)
Background of the Case
The petitioner, Clark Investors and Locators Association, Inc., filed a petition for certiorari with a request for a temporary restraining order and/or writ of preliminary injunction, challenging Revenue Regulations No. 2-2012 (RR 2-2012). This regulation, issued by the Department of Finance, imposed Value Added Tax (VAT) and excise tax on the importation of petroleum products into Freeport or Economic Zones, which the petitioner contended violated the provisions of Republic Act (RA) No. 7227 and its amendment, RA No. 9400.
Relevant Legislation
RA No. 7227, enacted on March 13, 1992, aimed to facilitate the conversion of the Clark and Subic military reservations into special economic zones. It outlined tax incentives and established that no local and national taxes would be imposed within the Subic Special Economic Zone, allowing for the establishment of a self-sustaining and investment-attractive economic area. The same tax exemptions were extended to the Clark Freeport Zone under RA No. 9400, instituted on March 20, 2007.
Development of Revenue Regulations No. 2-2012
On February 17, 2012, the Department of Finance issued RR 2-2012, which mandated the payment of VAT and excise taxes on petroleum products imported from abroad to various Philippine locations, including Freeport Zones. This regulation included provisions allowing for tax refunds to businesses that utilized imported petroleum products for registered operations within designated economic zones.
Claim of the Petitioner
The petitioner argued that RR 2-2012 effectively revoked the tax exemptions provided under RA No. 7227 and RA No. 9400, thereby infringing upon the rights of businesses operating within the economic zones. They alleged that this was a case of grave abuse of discretion on the part of the respondents in issuing RR 2-2012 without sufficient justification.
Position of the Respondents
In response, the Office of the Solicitor General (OSG), representing the respondents, maintained that the petition should be dismissed as the issuance of RR 2-2012 was a quasi-legislative act and therefore not a subject for certiorari under Rule 65 of the Rules of Civil Procedure. The OSG contended that the regulatory framework established by RR 2-2012 did not contradict the provisions of RA No. 7227 and RA No. 9400 because it allowed for tax refunds to businesses fulfilling certain conditions.
Court's Ruling on Jurisdiction
The Supreme Court ruled that the petition for certiorari was improperly filed, as the respondents were not exercising judicial or quasi-judicial powers when they issued RR 2-2012. Instead, the issuance of such revenue regulations was deemed to be an exerci
...continue readingCase Syllabus (G.R. No. 200670)
Introduction
- This syllabus details the case involving Clark Investors and Locators Association, Inc. (petitioner) against the Secretary of Finance and the Commissioner of Internal Revenue (respondents).
- The case centers on a petition for certiorari challenging Revenue Regulations No. 2-2012 (RR 2-2012) that imposed Value Added Tax (VAT) and excise tax on the importation of petroleum and petroleum products into Freeport or Economic Zones.
Background
- The petitioner asserts that RR 2-2012 is void as it contradicts Republic Act No. 7227 (RA No. 7227) and Republic Act No. 9400 (RA No. 9400), which grant tax exemptions to businesses within these zones.
- RA No. 7227 was enacted on March 13, 1992, to convert the Clark and Subic military reservations into special economic zones, providing for tax and duty exemptions.
Relevant Provisions of RA No. 7227
- Section 12 of RA No. 7227 establishes the Subic Special Economic Zone, outlining policies for its development and tax exemptions.
- Specifically, businesses in the zone are subject to a 3% remittance of gross income to the National Government instead of paying national and local taxes.
- Exemptions include no taxes imposed within the Subic Special Economic Zone and preferential tax rates.