Case Summary (G.R. No. 250565)
Background of the Case
On September 11, 2006, Equitable PCI Bank, Inc. filed a petition for rehabilitation for STEELCORP, a corporation based in Balayan, Batangas, engaged in steel manufacturing. The Regional Trial Court (RTC) issued a stay order on claims against STEELCORP as the rehabilitation process commenced. In 2010, Republic Act (R.A.) No. 10142, which contains provisions on corporate rehabilitation, came into effect, particularly its Section 19, which waives taxes and fees during the rehabilitation process.
Waiver of Taxes and Fees
On December 16, 2010, STEELCORP and the Municipality of Balayan reached an agreement to waive all local taxes and fees due from the corporation until the court approved a rehabilitation plan. Subsequently, STEELCORP sought affirmation from the BOC regarding the waiver of import duties for raw materials, asserting that such taxes could not be imposed under R.A. No. 10142.
Dispute Over Customs Duties
The BOC, upon the recommendation of its legal service, initially approved the waiver of taxes on October 26, 2010. However, DOF Undersecretary Carlo A. Carag later issued a disapproval indicating that the stay order from the RTC did not equate to the formal commencement order necessary for the waiver of duties. This led STEELCORP to appeal to the OP, which advanced the case to the RTC.
Legal Proceedings Initiated by STEELCORP
On September 14, 2011, STEELCORP filed a complaint for injunction against the respondents, seeking a restraining order from assessing taxes and fees until the ongoing rehabilitation plan was finalized. The RTC initially issued temporary restraining orders, but the case saw further complications when various motions to dismiss were filed by the respondents.
RTC Decisions and Challenges
On January 12, 2012, the RTC directed compliance with its status quo order, restraining the collection of customs duties on STEELCORP's importations. However, the OSG filed a motion to dismiss, asserting that the RTC lacked jurisdiction over the matter, claiming that the corrective action should have been directed to the Court of Tax Appeals (CTA) under existing tax laws. The RTC denied the motion to dismiss on March 5, 2012, which was subsequently met with an omnibus motion from the OSG.
Court of Appeals Ruling
After the RTC's subsequent orders and motions, the OSG’s appeals led to the CA eventually dismissing STEELCORP’s appeal on November 19, 2014. The court noted there was no procedural defect in the motions from OSG and BIR and stated that jurisdiction was confined to the exclusive authority of the CTA with respect to tax-related matters.
Issues on Reconsideration
STEELCORP raised two primary issues in its review, disputing the validity of procedural motions and asserting its rights under Section 19 of R.A. No. 10142 concerning tax waivers during rehabilitation. However, the CA reaffirmed that jurisdiction over tax assessments lies exclusively with the CT
...continue readingCase Syllabus (G.R. No. 250565)
Case Background
- This case stems from a petition for review on certiorari filed by Steel Corporation of the Philippines (STEELCORP) seeking to overturn the decision of the Court of Appeals (CA) dated November 19, 2014, and its resolution dated September 15, 2015.
- The CA's decision dismissed STEELCORP's appeal and affirmed the Regional Trial Court (RTC) Order dated June 6, 2012.
- The RTC had previously issued an order related to the rehabilitation proceedings of STEELCORP initiated by Equitable PCI Bank, Inc. on September 11, 2006.
Legal Framework and Relevant Laws
- The case revolves around the application of Republic Act (R.A.) No. 10142, known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, particularly Section 19, which mandates the waiver of taxes and fees during rehabilitation proceedings.
- The law stipulates that once a Commencement Order is issued by the court, all taxes and fees due to the national government and local government units (LGUs) are waived until the rehabilitation plan is either approved or dismissed.
Factual Antecedents
- On September 12, 2006, the RTC issued an order that included a stay on all claims against STEELCORP due to ongoing rehabilitation proceedings.
- Following the enactment of R.A. No. 10142, STEELCORP engaged in discussions with the Municipality of Balayan, resulting in an agreement to waive taxes and fees from 2011 until a final rehabilitation plan was approved.
- STEELCORP sought to extend the waiver to customs duties and taxes for imported raw materials, leading to a memorandum issued by the Bureau of Customs (BOC) Commissioner approving the waiver.
Disputes and Administrative Actions
- The Department of Finance