Case-Spec Com Digest

CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF
GOVERNMENT EMPLOYEES (COURAGE); JUDICIARY EMPLOYEES

ASSOCIATION OF THE PHILIPPINES (JUDEA-PHILS); SANDIGANBAYAN
EMPLOYEES ASSOCIATION (SEA); SANDIGAN NG MGA EMPLEYADONG
NAGKAKAISA SA ADHIKAIN NG DEMOKRATIKONG ORGANISASYON
(S.E.N.A.D.O.); ASSOCIATION OF COURT OF APPEALS EMPLOYEES (ACAE);
DEPARTMENT OF AGRARIAN REFORM EMPLOYEES ASSOCIATION (DAREA);
SOCIAL WELFARE EMPLOYEES ASSOCIATION OF THE PHILIPPINES-
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT (SWEAP-DSWD);
DEPARTMENT OF TRADE AND INDUSTRY EMPLOYEES UNION (DTI-EU);
KAPISANAN PARA SA KAGALINGAN NG MGA KAWANI NG METRO MANILA
DEVELOPMENT AUTHORITY (KKK-MMDA); WATER SYSTEM EMPLOYEES
RESPONSE (WATER); CONSOLIDATED UNION OF EMPLOYEES OF THE
NATIONAL HOUSING AUTHORITIES (CUE-NHA); AND KAPISANAN NG MGA
MANGGAGAWA AT KAWANI NG QUEZON CITY (KASAMA KA-QC),
PETITIONERS, V. COMMISSIONER, BUREAU OF INTERNAL REVENUE AND
THE SECRETARY, DEPARTMENT OF FINANCE, RESPONDENTS.
NATIONAL FEDERATION OF EMPLOYEES ASSOCIATIONS OF THE

DEPARTMENT OF AGRICULTURE (NAFEDA), REPRESENTED BY ITS
EXECUTIVE VICE PRESIDENT ROMAN M. SANCHEZ, DEPARTMENT OF
AGRICULTURE EMPLOYEES ASSOCIATION OFFICE OF THE SECRETARY
(DAEA-OSEC), REPRESENTED BY ITS ACTING PRESIDENT ROWENA
GENETE, NATIONAL AGRICULTURAL AND FISHERIES COUNCIL EMPLOYEES
ASSOCIATION (NAFCEA), REPRESENTED BY ITS PRESIDENT SOLIDAD B.
BERNARDO, COMMISSION ON ELECTIONS EMPLOYEES UNION (COMELEC
EU), REPRESENTED BY ITS PRESIDENT MARK CHRISTOPHER D. RAMIREZ,
MINES AND GEOSCIENCES BUREAU EMPLOYEES ASSOCIATION CENTRAL
OFFICE (MGBEA CO), REPRESENTED BY ITS PRESIDENT MAYBELLYN A.
ZEPEDA, LIVESTOCK DEVELOPMENT COUNCIL EMPLOYEES ASSOCIATION
(LDCEA), REPRESENTED BY ITS PRESIDENT JOVITA M. GONZALES,
ASSOCIATION OF CONCERNED EMPLOYEES OF PHILIPPINE FISHERIES
DEVELOPMENT AUTHORITY (ACE OF PFDA), REPRESENTED BY ITS
PRESIDENT ROSARIO DEBLOIS, INTERVENORS.
[G.R. No. 213658, July 3, 2018]
JUDGE ARMANDO A. YANGA, IN HIS PERSONAL CAPACITY AND IN HIS

CAPACITY AS PRESIDENT OF THE RTC JUDGES ASSOCIATION OF MANILA,
AND MA. CRISTINA CARMELA I. JAPZON, IN HER PERSONAL CAPACITY AND
IN HER CAPACITY AS PRESIDENT OF THE PHILIPPINE ASSOCIATION OF
COURT EMPLOYEES-MANILA CHAPTER, PETITIONERS, V. HON.
COMMISSIONER KIM S. JACINTO-HENARES, IN HER CAPACITY AS
COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE, RESPONDENT.
THE MEMBERS OF THE ASSOCIATION OF REGIONAL TRIAL COURT JUDGES
IN ILOILO CITY, INTERVENORS.
Facts: On June 20, 2014 CIR issued RMO No. 23-2014, in furtherance of
Revenue Memorandum Circular (RMC) No. 23-2012 dated February 14, 2012 on
the "Reiteration of the Responsibilities of the Officials and Employees of
Government Offices for the Withholding of Applicable Taxes on Certain Income
Payments and the Imposition of Penalties for Non-Compliance Thereof," to clarify
and consolidate the responsibilities of the public sector to withhold taxes on its
transactions as a customer and as an employer under the National Internal
Revenue Code (NIRC or Tax Code) of 1997, as amended, and other special laws.
On August 6, 2014, Confederation for Unity, Recognition and Advancement of
Government Employees (COURAGE), et al., organizations/unions of government
employees from the different departments of the government, filed a Petition for
Prohibition and Mandamus, imputing grave abuse of discretion on the part of
respondent CIR in issuing RMO No. 23-2014. According to petitioners, RMO No.
23-2014 classified as taxable compensation, the following allowances, bonuses,
compensation for services granted to government employees, which they alleged
to be considered by law as non-taxable fringe and de minimis benefits.
On August 19, 2014, petitioners Armando A. Yanga, President of the Regional
Trial Court (RTC) Judges Association of Manila, and Ma. Cristina Carmela I.
Japzon, President of the Philippine Association of Court Employees – Manila
Chapter, filed a Petition for Certiorari and seeking to nullify RMO No. 23-2014
on the following grounds: (1) respondent CIR is bereft of any authority to issue
the assailed RMO. The NIRC of 1997, as amended, expressly vests to the
Secretary of Finance the authority to promulgate all needful rules and
regulations for the effective enforcement of tax provisions; and (2) respondent
CIR committed grave abuse of discretion amounting to lack or excess of
jurisdiction in the issuance of RMO No. 23-2014 when it subjected to
withholding tax benefits and allowances of court employees which are tax-
exempt.
Issue: Whether there was grave abuse of discretion on the part of the CIR in
issuing RMO No. 23 – 2014.
Ruling: Yes, as to the Section VI of Revenue Memorandum Order No. 23-2014
is DECLARED null and void insofar as it names the Governor, City Mayor,
Municipal Mayor, Barangay Captain, and Heads of Office in government
agencies, government-owned or -controlled corporations, and other government
offices, as persons required to withhold and remit withholding taxes. However,
on the other provisions questioned by the petitioners there is no grave abuse of
discretion.
Sections III and IV of the assailed RMO do not charge any new or additional tax.
On the contrary, they merely mirror the relevant provisions of the NIRC of 1997,
as amended, and its implementing rules on the withholding tax on compensation
income as discussed above. The assailed Sections simply reinforce the rule that
every form of compensation for personal services received by all employees
arising from employer-employee relationship is deemed subject to income tax
and, consequently, to withholding tax,[78] unless specifically exempted or
excluded by the Tax Code; and the duty of the Government, as an employer, to
withhold and remit the correct amount of withholding taxes due thereon.
While Section III enumerates certain allowances which may be subject to
withholding tax, it does not exclude the possibility that these allowances may
fall under the exemptions identified under Section IV – thus, the phrase, "subject
to the exemptions enumerated herein." In other words, Sections III and IV
articulate in a general and broad language the provisions of the NIRC of 1997,
as amended, on the forms of compensation income deemed subject to
withholding tax and the allowances, bonuses and benefits exempted therefrom.
Thus, Sections III and IV cannot be said to have been issued by the CIR with
grave abuse of discretion as these are fully in accordance with the provisions of
the NIRC of 1997, as amended, and its implementing rules.
As a final point, the Court cannot turn a blind eye to the adverse effects of this
Decision on ordinary government employees, including petitioners herein, who
relied in good faith on the belief that the appropriate taxes on all the income they
receive from their respective employers are withheld and paid. Nor does the Court
ignore the situation of the relevant officers of the different departments of
government that had believed, in good faith, that there was no need to withhold
the taxes due on the compensation received by said ordinary government
employees. Thus, as a measure of equity and compassionate social justice, the
Court deems it proper to clarify and declare, pro hac vice, that its ruling on the
validity of Sections III and IV of the assailed RMO is to be given only prospective
effect

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CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF

GOVERNMENT EMPLOYEES (COURAGE); JUDICIARY EMPLOYEES

NATIONAL FEDERATION OF EMPLOYEES ASSOCIATIONS OF THE

[G.R. No. 213658, July 3, 2018]

JUDGE ARMANDO A. YANGA, IN HIS PERSONAL CAPACITY AND IN HIS

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