Case Summary (G.R. No. 252189)
Applicable Law
The relevant laws include the existing legislative franchises for the racing clubs, which impose specific tax obligations, and the provisions of the TRAIN Law, which amended the DST applicable to horse racing tickets. The case's proceedings are guided by the 1987 Philippine Constitution and pertinent sections of the National Internal Revenue Code (NIRC).
Factual Background
On May 25, 2018, Klub Don Juan initiated legal proceedings through a complaint for injunction against GAB, BIR, MJCI, PRCI, and MMTCI, stemming from an alleged conflict between the special tax rates set forth in the franchises of the racing clubs and the newly introduced rates under the TRAIN Law, which took effect on January 1, 2018. Klub Don Juan contended that the increase in DST adversely affected dividends to bettors and consequently reduced overall sales, justifying their request for provisional relief.
Arguments by Respondents
GAB and BIR opposed the request, emphasizing a lack of jurisdiction by the Regional Trial Court (RTC) to grant an injunction against the collection of elevated taxes as outlined by the TRAIN Law. They asserted that Section 218 of the NIRC explicitly prohibits injunctions concerning the collection of national internal revenue taxes, which encompasses documentary stamp taxes.
RTC Ruling
The RTC granted the motion to dismiss filed by GAB and BIR, citing their lack of jurisdiction to issue injunctive relief under Section 218 of the NIRC. Klub Don Juan's subsequent motion for reconsideration was also denied, prompting an appeal to the Court of Appeals (CA).
Court of Appeals Ruling
In its February 28, 2019 decision, the CA overturned the RTC's dismissal, redirecting the proceedings so that the RTC could continue hearing the case. The CA found that the primary nature of Klub Don Juan's complaint was suitable for declaratory relief rather than an injunction, as the crux of the issue was the valid DST rate applicable following the enactment of the TRAIN Law.
Subsequent Developments
The GAB and BIR contested this ruling through a petition for review, arguing that the CA had mischaracterized the nature of Klub Don Juan’s complaint and that the RTC maintained no jurisdiction over cases questioning the validity of tax laws under Banco de Oro v. Republic of the Philippines.
Supreme Court Ruling
The Supreme Court ruled in favor of GAB and BIR, asserting that the RTC's jurisdiction was indeed limited in this case. The Court reinforced the notion that the primary issue involved the applicability of tax rates under the TRAIN Law, which fell within the exclusive jurisdictio
...continue readingCase Syllabus (G.R. No. 252189)
Case Overview
- The case is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court.
- It challenges the Decision dated February 28, 2019, and the Resolution dated November 11, 2019, of the Court of Appeals (CA) in CA-G.R. SP No. 158302.
- Petitioners include the Games and Amusement Board (GAB) and the Bureau of Internal Revenue (BIR).
- Respondents are Klub Don Juan De Manila, Inc. (Klub Don Juan), Cesar Avila, Jr., Manila Jockey Club, Inc. (MJCI), Philippine Racing Club, Inc. (PRCI), and Metro Manila Turf Club, Inc. (MMTCI).
Facts of the Case
- On May 25, 2018, Klub Don Juan filed a complaint for Injunction with a request for a Temporary Restraining Order (TRO) against the GAB, BIR, MJCI, PRCI, and MMTCI.
- Klub Don Juan represents racehorse owners participating in horse racing conducted by various racing clubs.
- MJCI, PRCI, and MMTCI hold legislative franchises allowing them to operate horse racing tracks and are mandated to withhold and remit documentary stamp taxes (DST) to the BIR.
- The applicable DST rates under the franchises were established by specific provisions in Republic Acts (R.A. 8407, R.A. 7953, and R.A. 7978), which set the tax at P0.10 per ticket, with additional rates based on ticket price and specific bet types.
- The enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) Law on January 1, 2018, raised the DST to P0.20 per ticket, leading to significant increases in withheld taxes compared to the franchise rates.
- Klub Don Juan claimed that the provisions of the TRAIN Law conflicted with the special laws governing the franchises of the racing clubs and argued th