BAGUIO CITY – Pawnshops, the enterprise most likely to unburden households during financial crises, should be covered by documentary stamp taxes, the Supreme Court ruled here.
The court’s second division overturned a Court of Tax Appeals ruling that H. Tambunting Pawnshop Inc. should not be assessed for documentary stamp taxes because it issued pawn tickets, which “were not securities indicating indebtedness.”
But Associate Justice Presbitero Velasco Jr., in a dissenting opinion, said Congress intended to exempt pawnshops from this tax.
“It is my submission that Presidential Decree 114 is a piece of legislation granting social justice to the poor, the marginalized and the weak. Our view on the exclusion of pawn transactions from the coverage of [the documentary stamp tax] hews closely with the principle that those who have less in life should have more in law,” Velasco said.
The Bureau of Internal Revenue defines the documentary stamp tax as one imposed on all types of documents or loan instruments which establish that certain assets or obligations have been transferred, sold or reassigned to another party.
In a decision written by Associate Justice Leonardo Quisumbing, the high court said it had made the same judgment when it ruled on a similar dispute between Michel J. Lhuillier Pawnshop Inc. and the commissioner of internal revenue.
In that 2006 ruling, the court cited Section 195 of the National Internal Revenue Code which imposed a documentary stamp tax “on every pledge regardless of whether [the document] is a conventional pledge governed by the Civil Code or one that is governed by the provisions of [PD 114 or the law regulating pawnshops].”
Tambunting had argued that PD 114 already defined the pawnbroker’s receipt as one “for a pawn [which] is neither a security nor a printed evidence of indebtedness.”
Therefore, the firm argued, the pawn ticket was shielded from the coverage of documentary stamp tax.
What BIR should pursue, it said, were pledge agreements assigned by the pawnshops “if any is issued,” quoting Tambunting’s petition.
The BIR asserted that “the transactions in a pawnshop business partake of the nature of pledge transactions” so the court should conclude that “pawn transactions as evidenced by pawn tickets are subject to documentary stamp tax.”
Vincent Cabreza, Inquirer Northern Luzon
By REY G. PANALIGAN
The Supreme Court (SC) has ruled that the National Power Corp. (NPC) is not exempt from the P288 million taxes imposed on the machineries and equipment used in the construction of the 215 megawatt power plant in Bauang, La Union under a Build-Operate-Transfer (BOT) agreement with a private firm in 1993.
In a decision written by Justice Arturo D. Brion, the SC affirmed the ruling of the Court of Tax Appeals (CTA) that denied the petitions of both the NPC and its contractor, Bauang Private Power Corp. (BPPC), to nullify the tax assessment imposed by the provincial government of La Union.
Senior Justice Leonardo A. Quisumbing and Justices Renato C. Corona, Conchita Carpio Morales, and Dante O. Tinga concurred in the decision.
NPC had claimed it is the actual owner and user of the machineries and equipment used in the construction of the power plant under the BOT scheme and thus it is exempt from taxes under Republic Act No. 7160, the Local Government Code (LGC).
The LCG exempts from payment of real property tax “all machineries that are actually, directly, and exclusively used by local water districts and government-owned or -controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power.”
According to the NPC, its BOT agreement with BPPC is a financing agreement that makes it the beneficial owner and the actual, direct and exclusive user of the power plant, while the contractor is the lender/creditor that retains the plant’s legal ownership until it is fully paid.
In upholding the CTA ruling, the SC said that a review of the BOT agreement between the NPC and the BPPC showed that the latter has complete ownership — both legal and beneficial — of the power plant project which would be turned over to the former once the obligations are fully paid.
The Supreme Court (SC) has affirmed a Court of Appeals (CA) decision that ordered the Davao Oriental Electric Cooperative, Inc. to pay the Davao Oriental provincial government some R1.8 million in real estate taxes, excluding penalties and surcharges, from the time the government lifted the tax exemptions of electric cooperatives in 1984.
In a decision written by Chief Justice Reynato S. Puno, the SC affirmed the Nov. 15, 2005 CA decision that reversed the ruling of the regional trial court (RTC) that dismissed the collection suit filed by the province of Davao Oriental.
At the height of the economic crisis in 1984, the late President Ferdinand Marcos issued Presidential Decree No. 1955 that withdrew all exemptions from the payment of duties, taxes and other charges granted to private business enterprises engaged in any economic activity, including electric cooperatives.
Two years later on Jan. 8, 1986, Marcos issued PD 2008 that required the then Ministry of Finance to immediately restore the tax exemption of all electric cooperatives.
But after Marcos was replaced by then President Corazon C. Aquino, the latter issued Executive Order No. 93 that withdrew all tax and duty exemptions granted to private entities effective March 10, 1987.
The implementation of EO 93 for electric cooperatives was suspended until June 30, 1987.
On July 1, 1987, the government restored the tax and duty exemption privileges under PD 269, the law that created the electric cooperatives.
While the tax exemption was suspended, the Davao Oriental provincial government assessed the value of the province’s electric cooperative.
The assessment became final and executory after the cooperative failed to protest the assessment before the Board of Assessment Appeals.
In May, 2000, the Davao Oriental provincial government filed a collection suit before the RTC which dismissed the case.
On appeal, the CA reversed the RTC and ordered the cooperative to pay the provincial government some R1.8 million in realty taxes, excluding penalties and surcharges, from 1985 to 1989.
The cooperative elevated the case to the SC. The cooperative told the SC that it was exempted from the payment of real estate tax from 1984 to 1989 because the restoration of tax exemptions under Fiscal Incentive Review Board (FIRB) Resolution No. 2487 “retroacts” to the date of withdrawal of said exemptions.
In resolving the issue, the SC said that the CA was correct when the appellate court ruled that FIRB Resolution No. 24-87 “bares no indicia of retroactivity of its application.”
“A claim for exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception,” the SC stressed.
At the same time, the SC said that when the electric cooperative failed to exhaust administrative remedies by appealing the assessment of its properties, it cannot assail the validity of the said assessment before the courts.
“Petitioner is deemed to have admitted the correctness of the assessment of its properties. In addition, Section 64 of PD No. 464 requires that the taxpayer must first pay under protest the tax assessed against him before he could seek recourse from the courts to assail its validity,” the SC pointed out.
“In view whereof, petitioner’s appeal is denied. The Nov. 15, 2005 decision of the Court of Appeals in CA-G.R. CV No. 67188 is affirmed,” it ruled.
Justices Antonio T. Carpio, Renato C. Corona, Adolfo S. Azcuna and Teresita J. Leonardo – de Castro concurred in the decision.
The editorial “Everybody happy” (Philippine Daily Inquirer, 1/24/09) hit the proverbial nail on the head. Some segments of society are not really happy with how the lawmakers appropriated the P1.41-trillion national budget for 2009, especially because they voted for themselves a P9.665-billion pork barrel. While they tucked in another P35 billion for themselves, they did not bother to allocate the P2 billion promised by President Gloria Macapagal-Arroyo during her speeches at the 2006 and 2007 commemoration of the Araw ng Kagitingan at Mt. Samat, Bataan to World War II veterans, who are now in the twilight of their lives — some of them already bedridden.
Neither has Congress allocated the amount needed to adjust the veterans’ old-age pension from P5,000 to P10,000 per month to cushion the impact of the worst economic crisis; nor has it appropriated funds to the unfunded Republic Act 6948 as amended by another unfunded law, RA 7696, under which veterans and their wives are supposed to be entitled to an administrative disability pension of P1,700 and P500, respectively, per month upon reaching the age of 70. Most of them are now in their 80s and 90s and, needless to say, they need more maintenance medicines whose prices have been skyrocketing.
Yes, there is something that can be done to stop these lawmakers from their callous and heartless maneuverings for a “much bigger pork barrel and a bigger war chest for the 2010 elections.” Let’s replace the “trapos” [traditional politicos] among them with young and energetic Filipinos who have the ardent desire to help alleviate the sufferings of the poor in the countryside. Other sectors of society can do no less.
GODOFREDO O. PETEZA, post commander, Veterans Federation of the Philippines, Daet South-Imelda Veterans Post, Camarines Norte Veterans District, Daet
In the 2007 budget law, a right-to-information provision was vetoed by President Gloria Macapagal-Arroyo. (In 2008, the provision did not even find its way into the budget law.) In the P1.4-trillion General Appropriations Act of 2009 that the President is about to sign, the provision is back. Will the President veto it again?
Sen. Francis Pangilinan is right to sound the alarm. “Mindless of the numerous corruption scandals that rocked the nation last year, the Office of the President once again did not include the Right to Information section in its proposed 2009 P1.4-trillion budget. It is not clear whether this was devious desire or just an oversight,” he noted in a press statement. He said a people’s organization, Alyansa Agrikultura, had alerted him to it.
What does the section say?
“Right to Information. Subject to limitations as may be provided by law, the right of the people to information on matters of public concern, guaranteed under Section 7, Article III of the Constitution as well as with the state policy of full disclosure of all its transactions involving public interest, every government agency shall, upon request by any citizen, make available the data under their possession for information, scrutiny, copying, or reproduction of all records of information, in any form whatsoever, pertaining to the implementation of the appropriations under this Act including but not limited to information on projects, disbursement of funds, reports, contract bidding and awards.”
This is a tonic provision that can help restore public confidence in the political process. It is also, after the passed budget was amended to accommodate a P50-billion “economic stimulus package,” a necessary one. Requiring “every government agency” to “make available the data” a citizen may request “pertaining to the implementation of the appropriations under this Act” will help counter inordinate greed in government spending – or at least supply concerned citizens with the legal ammunition to fight corruption.
But President Arroyo vetoed a similar provision in the 2007 budget. She did not include the provision in the 2009 bill. Now that it has been inserted into the budget and actually passed, will she veto it again? We can think of only one reason she would do so: to protect the corrupt.
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The use of bicameral conference committees to forge a legislative measure acceptable to both the House and the Senate is a longstanding practice – and one that, as we and others have pointed out more than once, is prone to abuse. It has, all too often, given rise to the so-called third chamber of Congress, a shadow (and shadowy) branch of government. The way the “bicam” on the 2009 budget has conducted its business, however, occasions deeper worry; the concentration of power that we know is unhealthy for democracy has become even more acute.
The substance of the “economic stimulus package” that is a feature of the 2009 budget as finally approved is crucial, of course. A pro-administration congressman said of the P50-billion package: “This could be construed as a way to bankroll the political ambitions of some people.” Or the political interests of the administration.
But it is the way the administration engineered the passage of the budget that is gravely troubling.
Members of the bicameral conference committee had authorized Rep. Junie Cua, the chairman of the House appropriations committee, and Sen. Edgardo Angara, the chairman of the Senate finance committee, to meet over the holidays to thresh out the differences between the respective bills. The members were wrong to do this: to concentrate the power of the purse in only two pairs of hands.
But Cua and Angara did meet; they did the work of reconciling provisions and amending the budget – and they did not bother to report to their members afterwards.
“I cannot recall any similar occurrence in the past when this has happened,” House Deputy Minority Leader Ronaldo Zamora said. Oh, the bicam did meet, after the changes had been fixed. But only for 15 minutes. “This is farcical,” Zamora said.
That much is transparent.