MANILA, Philippines – The Supreme Court (SC) upheld a 2008 resolution ordering the Bureau of Internal Revenue (BIR) to refund P3.81-billion worth of taxes it allegedly illegally collected for the sale of the Pantabangan-Masiway Plant and Magat Hydroelectric Power Plant.
Seller Power Sector Assets and Liabilities Management Corporation (PSALM) filed the petition before the SC after the Court of Appeals (CA) in 2010 declared null and void the refund order.
In reversing the CA decision, the SC is now setting back in motion an earlier directive to refund the tax fees.
DOJ resolution
PSALM is the government entity in charge of the sale and privatization of generation assets of the National Power Corporation (NPC).
When PSALM sold the Pantabangan and Magat powerplants, BIR demanded that the NPC pay tax for it. Amid petitions before government bodies to resolve the issue, PSALM paid a P3.81-billion tax under protest.
It argued before the Department of Justice (DOJ) that the sale of the power plant was done under its mandate and therefore should not be subject to tax. In March 2008, the DOJ sided with PSALM and declared the tax assessment null and void. The DOJ also ordered the BIR to refund the tax.
The BIR then went to the Court of Appeals (CA) where they secured a favorable decision. The CA said that the DOJ has no jurisdiction to rule whether or not the sale of power plants is subject to tax.
SC decision
By a vote of 12-2, the SC en banc overturned the CA decision and said the appellate court erred in dismissing the DOJ’s jurisdiction over the issue.
“All disputes and claims between government agencies and offices, including government-owned or controlled corporations, shall be administratively settled or adjudicated by the Secretary of Justice, Solicitor General or the Government Corporate Counsel, depending on the issues and government agencies involved,” the SC said in the rulling penned by Senior Associate Justice Antonio Carpio.
The SC said PSALM’s sale of power plants should not be subjected to tax because it is only pursuant to their mandate under the Electric Power Industry Reform Act of 2001 (EPIRA Law).
“The sale of the power plants is not in pursuit of a commercial or economic activity but a governmental function mandated by law to privatize NPC generation assets,” the SC said.
Carpio’s ruling had concurrences from Chief Justice Maria Lourdes Sereno, Associate Justices Presbitero Velasco Jr, Teresita Leonardo de Castro, Diosdado Peralta, Jose Mendoza, Marvic Leonen, Francis Jardeleza, Benjamin Caguioa, Samuel Martires, Noel Tijam, and Andres Reyes Jr.
Associate Justices Lucas Bersamin and Mariano del Castillo dissented. Associate Justice Estela Perlas-Bernabe did not take part. – Rappler.com