REPUBLIC OF THE PHILIPPINES
SUPREME COURT
MANILA
TRADE UNION CONGRESS OF THE PHILIPPINES (TUCP), represented by its President, Democrito T. Mendoza
Petitioner,
– versus-
G. R. No. _____________
(For: Certiorari, Prohibition and Mandamus)
HON. MARGARITO B. TEVES, in his capacity as Secretary of the Department of Finance (DOF), and HON. LILIAN B. HEFTI, in her capacity as Commissioner of the Bureau of Internal Revenue (BIR),
Respondents.
x—————————————————————– x
PETITION
PETITIONER, TRADE UNION CONGRESS OF THE PHILIPPINES (TUCP), by undersigned counsel, to this Honorable Court, respectfully states:
PREFATORY STATEMENT
“The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.” Social justice and full protection to labor guaranteed by the fundamental law of this land is not some romantic notion, high in rhetoric but low in substance.
The importance of tax benefits among our workers cannot be overstated. The very essence of urgently passing Republic Act No. 9504 (R.A. No. 9504) is precisely to help our people cope with the rising prices of basic goods and commodities, which have been in a steady upsurge, most especially in the present year. The exemptions granted under the law seek to provide relief and additional income to our long-suffering workers. Unfortunately, such spirit of the law was subverted with the issuance of Revenue Regulations No. 10-2008 (RR No. 10-2008), which, among others: (i) limits the application of the law to a half-year basis, specifically commencing only on 6 July 2008, contrary to the legislative intent to make the law applicable to compensation or income received beginning 1 January 2008 or on a full-year basis; and (ii) changes the definition of a minimum wage earner by unduly taxing other benefits as well as their salaries, wages and allowances.
Thus, instead of helping our workers, the issuance of R.R. No. 10-2008 has necessarily curtailed the supposed complete enjoyment of the benefits they are legally and rightfully entitled to, all to the detriment and prejudice of our minimum wage earners and their families, who are now on the verge of poverty.
NATURE OF THE PETITION
1. This is a Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the Rules of Court, which seeks to review the R.R. No. 10-2008 issued by the Bureau of Internal Revenue (BIR), as having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. There is no other plain, speedy and adequate remedy in the ordinary course of law and considering the magnitude and the extreme urgency of the matter involved in this Petition, this direct resort to this Honorable Court is being made.
2. This petition likewise seeks to prohibit the BIR from implementing the assailed R.R. No. 10-2008 as the same was issued without or in excess of the jurisdiction of the BIR.
3. Petitioner TUCP seeks the issuance of a writ of mandamus to compel the respondents to undertake the appropriate amendments to R.R. 10-2008: (i) by making R.A. No. 9504 application to the full calendar year of 2008 and not just on a half-year basis, and (ii) by not subjecting the salaries or wages of employees to any condition to be exempted from income tax, in order to conform to the true spirit and intent of the law.
4. The issues involved in the instant Petition are purely questions of law. It is a settled jurisprudence that there is no need of prior demand before mandamus may be instituted against a government agency where the issue is purely one of law. As held in the case of Bagatsing vs. Ramirez , when a case involves solely legal questions, the litigant need not exhaust all administrative remedies before judicial relief is sought.
THE PARTIES
5. Petitioner Trade Union Congress of the Philippines, hereinafter referred to as “TUCP” for brevity, is a national labor federation duly organized and existing under the Labor Code of the Republic of the Philippines with principal business address at TUCP-PGEA Compound, Masaya and Maharlika Sts., Diliman, Quezon City. For purposes of the instant petition, Petitioner TUCP may be served with processes of the Honorable Court through the undersigned counsel at their address indicated below.
5.1 TUCP is represented herein by its President, Democrito T. Mendoza, who is duly authorized to file this case on behalf of TUCP, as evidenced by a Secretary’s Certificate attached herewith and made integral part hereof as Annex “A”. TUCP, as a duly registered labor center, has a membership, which comprises two million workers, more or less, throughout the country, and who are regular tax payers.
5.2 Respondent Hon. Margarito B. Teves is the Secretary of Department of Finance (DOF) who has signed and approved R.R. 10-2008, which implements R.A. No. 9504. He may be served with summons and other court processes through DOF’s principal office address at the Office of the Secretary, DOF Building, BSP Complex, Roxas Boulevard, Manila.
5.3 Respondent Hon. Lilian B. Hefti is the Commissioner of the Bureau of Internal Revenue (BIR) who has recommended the approval of the above-referred R.R. 10-2008 and which has the power and function to administer and implement the provisions of R.A. No. 9504. She may be served with summons and other court processes at BIR’s principal office address at BIR National Office Building, Diliman, Quezon City.
5.4 Petitioner TUCP, with its membership of minimum wage earners and regular tax payers, has a personal and substantial interest in the subject matter of the instant Petition and sustains direct injury as a result of DOF and BIR’s issuance of R.R. No. 10-2008, which has effectively limited the application of R.A. No. 9504. Petitioner TUCP exercises a personal stake in the subject matter of the instant Petition, since its members are composed primarily of trade unions, workers’ organizations and other groups of workers in all sectors and industries (from agriculture to manufacturing to service), both private and government employees, who are directly and adversely affected with the issuance of R.R. No. 10-2008.
STATEMENT OF FACTS
6. On 17 June 2008, the Congress of the Philippines enacted R.A. No. 9504 entitled “An Act Amending Sections 22, 24, 34, 35, 51, and 79 of Republic Act No. 8424, As Amended, otherwise known as the National Internal Revenue Code of 1997.” This law, in essence, exempts minimum wage earners from income tax and increases the personal and additional exemptions of other income earners.
A copy R.A. No. 9504 is attached hereto as Annex “B”.
7. On 25 September 2008, or more than three (3) months after the law’s enactment, the Bureau of Internal Revenue issued R.R. No. 10-2008, which implements the pertinent provision of the above-referred R.A. No. 9504 and was published in the Philippine Star on same date.
A certified true copy of the Revenue Regulations No. 10-2008 is attached hereto as Annex “C”.
8. Alarmed of the provisions of the R.R. 10-2008, the different labor unions, workers and other members of Petitioner TUCP held a series of consultations. The impact of R.R. No. 10-2008 was assessed and it with its gross repercussions among workers and their families, the petitioner, on behalf of its members is now compelled to bring before this Honorable Court, the petition a quo, there being no other plain, speedy and adequate remedy in the ordinary course of law and the issues being purely questions of law.
ISSUES
A.THE PROVISIONS OF REPUBLIC ACT NO. 9504 APPLY TO THE FULL CALENDAR YEAR OF 2008.
B.THE INCOME OF A MINIMUM WAGE EARNER IS NOT SUBJECT TO TAX IN ANY MANNER.
C.R.R. NO. 10-2008 IS CONTRARY TO REPUBLIC ACT NO. 9504.
ARGUMENTS/DISCUSSION
A.THE PROVISIONS OF REPUBLIC ACT NO. 9504 APPLY TO THE FULL CALENDAR YEAR OF 2008.
9. The real intent of R.A. No. 9504 is to make the law applicable for the whole calendar year of 2008, beginning with compensation or income earned on 1 January 2008. This legislative intent has always been clear and in fact has been consistently asserted by the legislators themselves, specifically its primary author Senator Mar Roxas.
9.1 Thus, in a press statement dated 9 September 2008, Sen. Roxas “maintained that RA 9504 should apply for the full taxable year, and not – as the DOF maintains – only for taxes starting July onwards, when the law was made effective, since these are remitted to the government at the end of the year.”
9.2 Further, it bears stressing that in the Explanatory Note of Senate Bill No. 103, authored by Sen. Roxas. It underscores the very spirit of enacting the subject tax exemption law:
“With the poor, every little bit counts, and by lifting their burden of paying income tax, we give them opportunities to put their money to daily essentials as well as savings. Minimum wage earners can no longer afford to be taxed and to be placed in the cumbersome income tax process in the same manner as higher-earning employees. It is our obligation to ease their burdens in any way we can.”
10. Needless to say, the Php 4,898.00 which each minimum wage earner stands to lose, as a result of the deferred implementation of the exemption imposed under the R.R. No.10-2008, is a vital added resource that will provide their families the means to survive amidst the soaring prices of basic commodities. As it is, Filipino families are already struggling to cope with the high cost of daily living. To deprive them of the financial relief that R.A. 9504 extends is contrary to law and a clear case of injustice.
B. THE INCOME OF A MINIMUM WAGE EARNER IS NOT SUBJECT TO TAX.
11. The proposition that R.A. No. 9504 should apply on a full-year basis for taxable year 2008 finds strong legal basis on existing jurisprudence, namely Umali vs. Estanislao [G.R. Nos. 104037 and. 104069, 29 May 1992]. The issue in this case was whether or not a tax measure, then (Republic Act No. 7167 – increasing personal and additional tax exemptions of individual taxpayers), which took effect on 30 January 1992, can be made to apply to income earned in 1991. In summary, the SC en banc ruled that R.A. No. 7167 should take effect on compensation income earned or received on 1 January 1991 even if the same law became effective only 30 January 1992.
12. In addition and as aptly held in the above-referred case of Umali vs. Estanslao:
xxx the court can not lose sight of the fact that these personal and additional exemptions are fixed amounts to which an individual taxpayer is entitled, as a means to cushion the devastating effects of high prices and a depreciated purchasing power of the currency. In the end, it is the lower-income and the middle-income groups of taxpayers [not the high-income taxpayers] who stand to benefit most from the increase of personal and additional exemptions provided for by Rep. Act 7167. To that extent, the Act is a social legislation intended to alleviate in part the present economic plight of the lower income taxpayers. It is intended to remedy the inadequacy of the heretofore existing personal and additional exemptions for individual taxpayers. xxx
13. Given the Supreme Court ruling in Umali vs. Estanislao, there is no reason why R.A. No. 9504 should not be implemented on a full year basis.
R.A. 9504 DEFINES MINIMUM WAGE EARNER IN AN UNEQUIVOCAL AND UNQUALIFIED MANNER.
14. Section 1 of R.A. 9504 provides:
“(HH) The term ‘minimum wage earner’ shall refer to a worker in the private sector paid the statutory minimum wage, or to an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned.”
This definition gives no room for doubt that the law does not give any qualification as to who are minimum wage earners, regardless of the amount of benefits a worker receives. It is a basic rule of interpretation that words and phrases used in the statute, in the absence of a clear legislative intent to the contrary, should be given their plain, ordinary and common usage or meaning.
A MINIMUM WAGE EARNER IS EXEMPTED FROM INCOME TAX, REGARDLESS OF THE AMOUNT OF OTHER BENEFITS HE/SHE RECEIVES.
15. The DOF and BIR, contrary to the provisions of R.A. No. 9504, provide that minimum wage earners receiving ‘other benefits’ exceeding the P30,000.00 limit shall be taxable on the excess benefits, as well as on his salaries, wages and allowances. The real intent, however, of R.A. No. 9504 is to grant the income tax exemption without any limitation. In short, the income of minimum wage earners should not be taxed in any manner, regardless of whether or not they are receiving additional benefits, monetary or otherwise. RR No. 10-2008 is clearly a surreptitious provision that is again contrary to the intent of R.A. No. 9504.
16. The sole basis in determining as to who is a minimum wage earner is the employee’s basic pay/wage and this does not in any way include ‘other benefits’, which an employee may receive. The DOF and BIR are therefore absolutely incorrect and have gravely abused their discretion, amounting to lack or in excess of jurisdiction, in unlawfully expanding the definition of minimum wage earners to include the amount of ‘other benefits’ in the determination of who are the minimum wage earners.
C. R.R. NO. 10-2008 IS CONTRARY TO REPUBLIC ACT NO. 9504.
17. Considering the foregoing discussions, there is no doubt that that R.R. No. 10-2008 is contrary to Republic Act No. 9504. As the spring cannot rise above its source, so as R.R. No. 10-2008, the implementing rules, cannot amend the substantive law, R.A. 9504, as held in Insular Bank of Asia and America Employees Union (IBAAUE) vs. Hon. Amado G. Inciong, Deputy Minister, Ministry of Labor and Insular Bank of Asia and Amerika, G.R. No. L-52415, October 23, 1984, citing the case of Philippine Apparel Workers Union vs. National Labor Relations Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged the scope of exemption from the coverage of a Presidential Decree granting increase in emergency allowance, this Court ruled that:
… the Secretary of Labor has exceeded his authority when he included paragraph (k) in Section 1 of the Rules implementing P. D. 1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory authority granted to the Secretary of Labor, and the same is therefore void, as ruled by this Court in a long line of cases . . . ..
The recognition of the power of administrative officials to promulgate rules in the administration of the statute, necessarily limited to what is provided for in the legislative enactment, may be found in the early case of United States vs. Barrios decided in 1908. Then came in a 1914 decision, United States vs. Tupasi Molina (29 Phil. 119) delineation of the scope of such competence. Thus: “Of course the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they are valid.” In 1936, in People vs. Santos, this Court expressed its disapproval of an administrative order that would amount to an excess of the regulatory power vested in an administrative official We reaffirmed such a doctrine in a 1951 decision, where we again made clear that where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, ‘the mandate of the Act must prevail and must be followed. Justice Barrera, speaking for the Court in Victorias Milling inc. vs. Social Security Commission, citing Parker as well as Davis did tersely sum up the matter thus: “A rule is binding on the Courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom. … On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine chat the law means.”
“It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed the statute requires adherence to, not departure from its provisions. No deviation is allowable. In the terse language of the present Chief Justice, an administrative agency “cannot amend an act of Congress.” Respondents can be sustained, therefore, only if it could be shown that the rules and regulations promulgated by them were in accordance with what the Veterans Bill of Rights provides” (Phil. Apparel Workers Union vs. National Labor Relations Commission, supra, 463, 464, citing Teozon vs. Members of the Board of Administrators, PVA 33 SCRA 585; see also Santos vs. Hon. Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of Internal Revenue, 100 Phil. 295; Sy Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and Trinidad, 43 Phil. 259).
RELIEF
WHEREFORE, Petitioner TUCP respectfully prays of this Honorable Supreme Court that:
1. A “writ of certiorari” be issued, annulling and setting aside the specific assailed provisions of Revenue Regulation No. 10-2008, specific portions of Sec. 1, as provided therein, and the Sec. 7, Transitory Provision, par. 2 thereof, for being contrary to law;
2. A “writ of prohibition” be issued restraining the Commissioner of the Bureau of Internal Revenue from implementing the aforequoted assailed provisions of Revenue Regulation No. 10-2008; and
3. A “writ of mandamus” be issued against the Commissioner of the Bureau of Internal Revenue to require her to perform her duty to issue a new revenue regulation which conforms to the letter and intent of Republic Act No. 9504, specifically by applying tax exemption benefits under the said law to the full calendar year of 2008 and exempting all minimum wage earners from income tax, regardless of the other benefits that a minimum wage earner receives.
4. Petitioner also respectfully prays for such other and further relief that may be deemed just and equitable under the premises.
Quezon City for Manila, 3 October 2008.
TRADE UNION CONGRESS OF THE PHILIPPINES (TUCP)
Petitioner
By:
DEMOCRITO T. MENDOZA
President
Assisted by:
ATTY. LEONARD U. SAWAL
PGEA Compound, Elliptical Road,
cor. Maharlika Ave., Diliman, Q. C.
PTR No. A-9786144, 1/04/08, Q.C.
IBP No. 733123, 1/04/08, MANILA 3 (2 years)
Roll of Attorneys No. 33317
MCLE No. II-0005630
Copy furnished:
HON. MARGARITO B. TEVES
Secretary, Department of Finance (DOF)
DOF Building, BSP Complex, Roxas Boulevard, Manila.
HON. LILIAN B. HEFTI
Commissioner, Bureau of Internal Revenue (BIR)
BIR National Office Building, Diliman, Quezon City.
OFFICE OF THE SOLICITOR GENERAL
134 Amorsolo Street, Legaspi Village
Makati City
EXPLANATION AS TO MODE OF SERVICE
(Pursuant to Sec. 11, Rule 13, of Civil Procedure)
Due to the unavailability of messengers and the distance of the parties, the foregoing pleading was sent by registered mail to the parties concerned.
LEONARD U. SAWAL
VERIFICATION AND CERTIFICATION
OF NON-FORUM SHOPPING
I, DEMOCRITO T. MENDOZA, of legal age, Filipino citizen, under oath, depose and say:
1. That I am the President and authorized representative of Trade Union Congress of the Philippines (TUCP), herein petitioner in the above entitled-case;
2. That I have been authorized by the Board of the petitioner TUCP (See Annex “A”, Secretary’s Certificate), to file the instant Petition for certiorari, prohibition and mandamus against the respondents herein, and pursuant to said authority, I caused the preparation of the instant Petition;
3. That I have read the contents thereof and the allegations therein which are of my own personal knowledge and are based on authentic documents;
4. That I have not theretofore commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals or any other tribunal or agency, that to the best of our knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency; and
5. That should I thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, any other tribunal or agency, I undertake to report that fact within five (5) days there from to the court or agency wherein the original pleading and sworn certification contemplated herein have been filed.
DEMOCRITO T. MENDOZA
TUCP President
CTC No. 11687635
Issued on January 4, 2008
At Cebu City
Passport ID: UV 048046
SUBSCRIBED AND SWORN TO before me on this 3rd day of October 2008 at Quezon City. Affiant exhibited to me his Community Tax Certificate No. and his Philippine Passport ID as written below his name.
Doc. No. 283; LEONARDO U. SAWAL
Page No. 57; Notary Public
Book No. VI; Until 31 December 2009
Series of 2008. PGEA Compound, Elliptical Road
Cor. Maharlika Ave., Diliman, Q. C.
PTR NO. A-9786144, 04 Jan. 2008
Roll No. 33317
A.M. No. NP 106 (08)
Quezon City
“ANNEX A”
REPUBLIC OF THE PHILIPPINES)
QUEZON CITY………………………..)S.S.
SECRETARY’S CERTIFICATE
The undersigned, ERNESTO F. HERRERA, of legal age, married, with postal address at TUCP-PGEA Compound, Masaya Corner Maharlika Sts., Diliman, Quezon City, after being duly sworn, certifies, deposes and says:
That I am the duly elected and incumbent General Secretary of the Trade Union Congress of the Philippines (TUCP), a national labor center organized and existing under the Labor Code of the Philippines with principal office at TUCP-PGEA Compound, Masaya Corner Maharlika Sts., Diliman, Quezon City;
That in a meeting of the Executive Board of the TUCP was duly held at its principal office on October 02, 2008, at which meeting a quorum was present, the attached Resolution 2008-1002 consistent with the TUCP Constitution and Standing Orders, was duly approved and recorded in the minutes, to wit:
To file a petition for certiorari, prohibition and mandamus against respondents Hon. Margarito B. Teves, Secretary of Department of Finance (DOF) and Hon. Lilian B. Hefti, Commissioner of the Bureau of Internal Revenue (BIR), in relation to R.R. No. 10-2008; and
To authorize TUCP’s President, ATTY. DEMOCRITO T. MENDOZA to file the instant petition, and to sign the verification and certification of non-forum shopping thereof;
IN WITNESS WHEROF, I have hereunto affixed my signature this 3rd day of October 2008 at Quezon City, Philippines.
ERNESTO F. HERRERA
TUCP, Secretary General
SUBSCRIBED AND SWORN to before me on this 3rd day of October 2008 in Quezon City, Philippines, affiant exhibiting to me his Residence Certificate No. 21352877 issued on February 20, 2008 at Quezon City, together with his valid Identification Card.
Doc. No. 282; LEONARDO U. SAWAL
Page No. 57; Notary Public
Book No. VI; Until 31 December 2009
Series of 2008. PGEA Compound, Elliptical Road Cor. Maharlika Ave., Diliman, Q. C.
PTR NO. A-9786144, 04 Jan. 2008
Roll No. 33317
A.M. No. NP 106 (08)
Quezon City
RESOLUTION 2008-1002
THE EXECUTIVE BOARD OF THE
TRADE UNION CONGRESS OF THE PHILIPPINES (TUCP)
Meeting on October 02, 2008
held at the TUCP Building, Quezon City
ENCOURAGED by the results of its long advocacy for exemption from taxes of income of minimum wage earners as well as those workers earning P20,000 per month or less;
WELCOMING the passage of Republic Act No. 9504 seeking to provide tax relief to our workers who have been assaulted by escalating prices of products and services;
DISMAYED by the issuance of Revenue Regulations No. 10-2008 (RR-10-2008) which would (1) limit the application of the law to commence only on July 06, 2008, contrary to the intent to make the law applicable to compensation income received beginning January 01, 2008; and (2) changed the definition of a minimum wage earner by unduly taxing other benefits as well as their salaries, wages, and allowances;
DISTURBED that the RR-10-2008 would restrict the full enjoyment of the benefits granted by the law, to the prejudice of minimum wage earners and their families, who are further disadvantaged by inflation;
RESOLVES, AS IT IS HEREBY RESOLVES, to cause the filing of a Petition for Mandamus to compel the Department of Finance and the Bureau of Internal Revenue to amend RR-10-2008 to (1) apply R.A. No 9504 to the full calendar year of 2008 and not just on a half-year basis, and (2) to not subject the salaries and wages of minimum wage earners to any condition to be exempted from income tax, in order to conform with the true spirit and intent of the law.
FURTHER RESOLVES to authorize its President DEMOCRITO T. MENDOZA to cause the filing of said Petition for certiorari, prohibition and mandamus against respondents Hon. Margarito B. Teves, Secretary of Department of Finance (DOF) and Hon. Lilian B. Hefti, Commissioner of the Bureau of Internal Revenue (BIR), in relation to R.R. No. 10-2008 and to sign the verification and certification of non-forum shopping thereof;
Done this 2nd Day of October 2008 in Quezon City.
Signed:
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