MANILA, Philippines—The Supreme Court on Tuesday ordered the Department of Finance and the Bureau of Internal Revenue (BIR) to answer the petition filed by the association of government employees from various offices to stop the Bureau of Internal Revenue (BIR) from implementing its “absurd” memorandum that imposes taxes on their allowances, bonuses and fringe benefits.
BIR Commissioner Kim Henares. AP FILE PHOTO
High Court’s Information Chief Theodore Te said at a press conference that the DOF and the BIR were given 10 days to comment on the petition.
In their 73-page petition for prohibition, the government employees through their counsel former Senator Aquilino Pimentel Jr. asked the high court to declare as unconstitutional BIR Revenue Memorandum Order (RMO) 23-2014, a tax measure that allows the collection of tax on the benefits of the workers.
Under RMO No. 23-2014, all benefits received by the employee and officers of the government shall be subject to 30 to 32 percent tax. The order was implemented last July 7.
“By taxing those fringe benefits, the government actually engages in a juggling act that is better left to circus clowns. To use a more common cliché, under the circumstances, the government is picking funds from one of its pockets, and transferring them to another,” the petition stated.
The petition also pointed out that Finance Secretary Cesar Purisima and BIR chief Kim Henares have no power to tax unless empowered by law.
“The issuance of the RMO complained of thus appears to be an over-stretched exercise of power and authority by the Respondents (or, at least by the Respondent Commissioner) of what is justifiable under the law.”
The legal action also sought to raise the taxable amount of the 13th month pay, currently pegged at above P30,000 for 20 years despite inflation. Under current taxation rules, bonuses exceeding this amount are already subject to tax.
The petition also questioned the memo’s provision requiring local government units to collect the additional tax from its employees.
“Government officials, no matter how high or mighty, like the Respondent Commissioner and/or the Respondent Secretary cannot on their own steam order Local Government Officials to do this, that or any other thing without the sanction of a law mandating such an act,” the petition stated.
Petitioners are the Confederation for Unity, recognition and Advancement of Government Employees (Courage) and the Judiciary Employees Association of the Philippines (Judea-Phils.).
Co-petitioners are employee associations from the three branches of government including the Senate, Court of Appeals, Sandiganbayan, Department of Agrarian Reform, Department of Trade and Industry, among others.
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