10/5/2020 [ G.R. No.

222239, January 15, 2020 ]

FIRST DIVISION
[ G.R. No. 222239, January 15, 2020 ]
ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., APL CO.
PTE LTD., AND MAERSK-FILIPINAS, INC., PETITIONERS, V.
SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL
REVENUE, RESPONDENTS.
DECISION

LAZARO-JAVIER, J.:

Antecedents

On July 1, 2005, Republic Act No. 9337[1] (RA 9337) was enacted, amending select provisions
of the 1997 National Internal Revenue Code (NIRC), namely, Sections 27, 28, 34, 106, 107,
108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288.

In relation to these amendments, then Commissioner of Internal Revenue (CIR) Lilian Hefti
issued Revenue Memorandum Circular No. 31-2008[2] (RMC 31-2008) dated January 30, 2008.
It sought to "clarify certain provisions of the National Internal Revenue Code of 1997, as
amended (Code), as it applies to shipping companies and their agents as well as their suppliers
to ensure that the law is properly implemented and taxes are properly collected, in a manner
that aligns with acceptable business practices." Its relevant portions read:

Q-3: Are on-line international sea carriers subject to VAT?

A-3: No. On-line international sea carriers are not subject to VAT they being subject
to percentage tax under Title V of the Tax Code. They are liable to the three percent
(3%) percentage tax imposed on their gross receipts from outbound fares and freight,
pursuant to Section 118 of the Code.

However, if these on-line international sea carriers engage in other transactions not
exempt under Section 119 of the Code, they shall be liable to the twelve percent
(12%) VAT on these transactions.

Q-4: Are demurrage fees collected by on-line international sea carriers due to delay
by the shipper in unloading their inbound cargoes subject to tax?
A-4: Yes, Demurrage fees, which are in the nature of rent for the use of property of
the carrier in the Philippines is considered income from Philippine source and is
subject to income tax under the regular rate as the other types of income of the on-
line carrier. Said other line of business may likewise be subject to VAT or percentage
tax applying the rule on threshold discussed in the succeeding paragraph.

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Q-5: Are detention fees and other charges collected by international sea carriers
subject to tax?
A-5: Detention fees and other charges relating to outbound cargoes and inbound
cargoes are all considered Philippine-sourced income of the international sea carriers
they being collected for the use of property or rendition of services in the
Philippines, and are subject to the Philippine income tax under the regular rate, and
to the Value added tax, if the total annual receipts from all the VAT-registered
activities exceeds one million five hundred thousand pesos (P1,500,000.00).
However, if the total annual gross receipts do not exceed one million five hundred
thousand pesos, said taxpayer is liable to pay the 3% percentage tax.

xxx

Q-14: Are sales of goods, supplies, equipment, fuel and services to persons engaged
in international shipping operations subject to VAT?
A-14: The sale of goods, supplies, equipment, fuel and services including leases of
property) to the common carrier to be used in its international sea transport
operations is zero-rated. Provided, that the same is limited to goods, supplies,
equipment, fuel and services pertaining to or attributable to the transport of goods
and passengers from a port in the Philippine directly to a foreign port without
docking or stopping at any other port in the Philippines to unload passengers and/or
cargoes loaded in and from another domestic port; Provided, further, that if any
portion of such fuel, equipment, goods or supplies and services is used for purposes
other than that mentioned in this paragraph, such portion of fuel, equipment, goods,
supplies and services shall be subject to 12% VAT.

xxx

Q-34: Are commission incomes received by the local shipping agents from their
foreign principals subject to VAT?
A-34: The commission income or fees received by the local shipping agents for
outbound freights/fares received by their foreign principals which are on-line
international sea carriers (touching any port in the Philippines as part of their
operation) shall be zero-rated pursuant to the provisions of Section 108(B)(4) of the
Code. Said provision does not require that payments of the commission income or
fees for "services rendered to persons engaged in international shipping operations,
including leases of property for use thereof," be paid in acceptable foreign currency
in order that such transaction may be zero-rated. On the other hand, commission
income or fees received by the local shipping agents pertaining to inbound
freights/fares received by their foreign principals/on-line international sea carriers or
pertaining to freights/fares received by off-line international sea carriers shall be
subject to VAT at 12%.

Five (5) years after the enactment of RA 9337, on December 6, 2010, petitioners Association of
International Shipping Lines, Inc.[3] (AISL), APL Co. Pte. Ltd.[4] (APL), and Maersk-Filipinas,
Inc. (Maersk) sought to nullify RMC 31-2008 via a petition for declaratory relief entitled
"Association of International Shipping Lines, Inc. (AISL), APL Co. Pte. Ltd. (APL), and
Maersk-Filipinas, Inc. (Maersk) v. Commissioner of Internal Revenue." The case was raffled to
RTC-Branch 98, Quezon City, and docketed as Civil Case No. Q-09-64241.[5]
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Petitioners prayed that the trial court: 1) issue a writ of preliminary injunction enjoining the then
BIR Commissioner and her representatives, agents, or those acting under her instructions or on
her behalf from implementing, enforcing, or acting pursuant to or on the basis of the challenged
provisions of RMC 31-2008; and 2) render judgment declaring these challenged provisions
void.[6]

According to petitioners, RMC 31-2008 was void insofar as it imposed regular tax rate of thirty
percent (30%) and twelve percent (12%) VAT on the demurrage and detention fees collected by
international shipping carriers from shippers or consignees for delay in the return of containers,
on the domestic portion of services to persons engaged in international shipping operations, and
on commission income received by local shipping agents from international shipping carriers or
in connection with inbound shipments.

By Order[7] dated May 18, 2012, Branch 98 held that international carriers were not subject to
income tax under Section 28 (A)(1)(3b)[8] of the NIRC. Too, demurrage fees were not
considered income derived from other or separate business of the international carrier. Being
incidental to the trade or business of the international carrier, demurrage fees should instead
form part of the Gross Philippine Billings (GPB) subject to 2.5% tax under Section 28. Further
the law did not expressly impose 12% VAT on the domestic portion of the services rendered by
international carriers.[9] Thus:

WHEREFORE, premises considered, and pursuant to Rule 35 of the 1997 Rules of

Civil Procedure, the Court grants the motion for summary judgment and declares as
INVALID, the pertinent portions of Revenue Memorandum Circular No. 31-2008,
insofar as the latter subjects the: a) demurrage and detention fees to the regular
corporate income tax rate under Section 28(A)(1) and 12% VAT; b) domestic portion
of the services rendered to persons engaged in international shipping operation to
12% VAT; and c) commission income or fees received by local shipping agents from
international shipping carriers for the latter's inbound freights/fares to 12% VAT, for
being contrary to Section 28 (A)(1), and (3) and Section 108 (B)(4) of the National
Internal Revenue Code of 1997, as amended.

SO ORDERED.[10]

The Order became final and executory as of June 16, 2012.[11]

On March 7, 2013, Republic Act No. 10378[12] (RA 10378) was enacted, amending Section 28
(A)(3)(a) of the NIRC. The provision now reads:

SEC. 28. Rates of Income Tax on Foreign Corporations.—

(A) Tax on Resident Foreign Corporations. —

(1) xxx
(2) xxx
(3)International Carrier. — An international carrier doing business in the

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Philippines shall pay a tax of two and one-half percent (2 1/2 %) on its
'Gross Philippine Billings' as defined hereunder:

(a) International Air Carrier. — 'Gross Philippine Billings' refers to the

amount of gross revenue derived from carriage of persons, excess
baggage, cargo, and mail originating from the Philippines in a continuous
and uninterrupted f1ight, irrespective of the place of sale or issue and the
place of payment of the ticket or passage document: Provided, That
tickets revalidated, exchanged and/or indorsed to another international
airline form part of the Gross Philippine Billings if the passenger boards
a plane in a port or point in the Philippines: Provided, further, That for a
flight which originates from the Philippines, but transshipment of
passenger takes place at any part outside the Philippines on another
airline, only the aliquot portion of the cost of the ticket corresponding to
the leg flown from the Philippines to the point of transshipment shall
form part of Gross Philippine Billings.

(b) International Shipping. — 'Gross Philippine Billings' means gross

revenue whether for passenger, cargo or mail originating from the
Philippines up to final destination, regardless of the place of sale or
payments of the passage or freight documents.

Provided, That international carriers doing business in the Philippines

may avail of a preferential rate or exemption from the tax herein imposed
on their gross revenue derived from the carriage of persons and their
excess baggage on the basis of an applicable tax treaty or international
agreement to which the Philippines is a signatory or on the basis of
reciprocity such that an international carrier, whose home country grants
income tax exemption to Philippine carriers, shall likewise be exempt
from the tax imposed under this provision.

x x x.

The Secretary of Finance, thereafter, issued the implementing rules under Revenue Regulation
No. 15-2013[13] (RR 15-2013), the validity of which is now the subject of this petition.

The Proceedings Before the Trial Court

Over three (3) years later, on December 4, 2013, petitioners initiated the present petition for
declaratory relief,[14] this time, challenging Section 4.4 of RR 15-2013 and impleading as
respondents both the Secretary of Finance and the CIR. Section 4.4 reads:

4.4) Taxability of Income Other Than Income From International Transport Services.
— All items of income derived by international carriers that do not form part of
Gross Philippine Billings as defined under these Regulations shall be subject to tax
under the pertinent provisions of the NIRC, as amended.

Demurrage fees, which are in the nature of rent for the use of property of the
carrier in the Philippines, is considered income from Philippine source and is
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subject to income tax under the regular rate as the other types of income of the
on-line carrier.

Detention fees and other charges relating to outbound cargoes and inbound
cargoes are all considered Philippine-sourced income of international sea
carriers they being collected for the use of property or rendition of services in
the Philippines, and are subject to the Philippine income tax under the regular
rate. (Emphasis supplied)

The case was raffled to RTC-Branch 77, Quezon City, and docketed Special Civil Action No. R-
QZN-13-05590-CV, then presided by Acting Presiding Judge Cleto R. Villacorta III.

Petitioners' Arguments

Petitioners argued that Section 4.4 of RR 15-2013 invalidly subjects demurrage and detention
fees collected by international shipping carriers to regular corporate income tax rate. This very
same imposition had been previously declared invalid by Branch 98 through its final and
executory Order dated May 18, 2012.[15] Section 4.4 of RR 15-2013 should not, therefore, be
given effect by reason of res judicata.[16] The treatment of demurrage and detention fees on the
carriage of cargoes prior to and after the enactment of RA 10378 did not change. There is
nothing in RA 10378 which even touches on demurrage and detention fees, much less, provides
or even implies that they should be treated as income subject to tax at the regular corporate
income tax rate.[17]

In fact, RR 15-2013 unduly widens the scope of RA 10378 by imposing additional taxes on
international shipping carriers not authorized or provided by law. Besides, demurrage and
detentions fees are not income but penalties imposed by the carrier on the charterer, shipper,
consignee, or receiver, as the case may be, to allow the carrier to recover losses or expenses
associated with or caused by the undue delay in the loading and/or discharge of the latter's
shipments from the containers.[18] They are akin to damages.[19] Assuming that demurrage and
detention fees may be treated as income, these fees are taxable only if they form part of Gross
Philippine Billings (GPB) and taxed at the preferential rate of 2.5%.[20]

Further, RR 15-2013 is invalid because it was promulgated without public hearing as required
by the Revised Administrative Code and case law. Also, no copies of RR 15-2013 were filed
with the University of the Philippines - Law Center, as required by the Revised Administrative
Code, thus, the same is deemed not to have become effective.[21]

Respondents' Arguments

By Comment[22] dated February 3, 2014, the Secretary of Finance, through the Office of the
Solicitor General (OSG), countered that the Order dated May 18, 2012 in Civil Case No. Q-09-
64241 did not preclude the Secretary of Finance from issuing Section 4.4 of RR 15-2013
because a) the first case involves RMC 31-2008 which the CIR issued to clarify matters
involving common carriers by sea, in relation to their transport of passengers, goods, and
services, while the second case involves RR 15-2013 which the Secretary of Finance issued
pursuant to his mandate under RA 10378; b) RMC 31-2008 was issued based on the authority of

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the CIR to interpret the provisions of the NIRC while RR 15-2013 was issued by virtue of the
authority of the Secretary of Finance under RA 10378; and c) the Secretary of Finance was not
impleaded as respondent in the first case, thus, he is not bound by the finality of Order dated
May 18, 2012. Besides, the Secretary of Finance and the CIR are two (2) distinct officials
governing two (2) separate agencies.

According to respondents, RR 15-2013 does not expand the provisions of RA 10378. It simply
clarifies what constitutes Gross Philippine Billings (GPB) such that anything outside the
definition of GPB is subject to the regular income tax rate for resident foreign corporations.
Thus, the law need not specifically mention demurrage or detention fees as among those falling
outside the definition of GPB.[23]

Respondents stress that demurrage and detention fees are income. They not only serve as
penalties for consignees, they also serve as compensation for extended use of containers. As
resident foreign corporations, they are covered by the provisions on the regular income tax rate
and not the preferential rate of 2.5% imposed on GPB.[24]

Lastly, respondents argue that the absence of public hearing prior to the publication of RR 15-
2013 or non-submission of copies thereof to the UP Law Center did not render it ineffective. An
interpretative regulation such as RR 15-2013, to be effective, needs nothing further than its bare
issuance for it gives no real consequence more than what the law itself already prescribes. It
adds nothing to the law and does not affect the substantial rights of any person.[25]

In its Answer[26] dated January 27, 2014, the CIR, through the BIR Litigation Department
riposted that the trial court had no jurisdiction over the petition for declaratory relief because its
subject matter involved a revenue regulation. Under Commonwealth Act No. 55[27] (CA 55),
actions for declaratory relief do not apply to cases involving tax liabilities under any law
administered by the BIR.[28] Further, res judicata does not apply to the case.

Petitioners' Omnibus Motion

Petitioners subsequently filed an Omnibus Motion 1) for Judicial Notice; and 2) for Summary
Judgment[29] dated December 4, 2014.

Petitioners prayed that the trial court take judicial notice of the following: 1) the existence of
RMC 31-2008; 2) the final and executory Order dated May 18, 2012 in Civil Case No. Q-09-
64241 and its Certificate of Finality dated August 28, 2012; 3) the enactment of Republic Act
No. 10378[30] (RA 10378), which recognized the principle of reciprocity for grant of income
tax exemptions to international shipping carriers and rationalized the taxes imposed thereon;
and 4) the issuance of RR 15-2013.

Petitioners also filed a motion for summary judgment on ground that there was no genuine issue
as to any material fact and/or the facts were undisputed and certain based on the pleadings,
admissions, and affidavits on record.

The Ruling of the Trial Court

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Following the parties' exchange of pleadings, the trial court, then presided by Acting Presiding
Judge Villacorta, through its first assailed Order[31] dated September 15, 2015: 1) granted
petitioners' motion for judicial notice of the existence of RMC 31-2008, the issuance of Order
dated May 18, 2012 in Civil Case No. Q-09-64241 and its corresponding Certificate of Finality
dated August 28, 2012, and the enactment of RA 10378 - all these being the official acts of
different branches of government; 2) declared that it had no jurisdiction over the petition for
declaratory relief pursuant to CA 55 which removed from regional trial courts the authority to
rule on cases involving one's liability for tax, duty, or charge collectible under any law
administered by the Bureau of Customs or the BIR; 3) ruled against the application of res
judicata to the case because --- first, res judicata does not give rise to a cause of action for the
purpose of initiating a complaint, res judicata being a shield not a sword and executive and
legislative authorities have the power to enact laws and rules to supersede judge-made laws or
rules, second, the enactment and implementation of RA 10378 constituted a supervening event
which negated the application of res judicata, third, there is no similarity of parties, subject
matters, and causes of action between the present case and Civil Case No. Q-09-64241; and 4)
found RR No. 15-2013 to be a reasonable tax regulation and an interpretative issuance, the
effectivity of which does not require a public hearing, nay, prior registration with the UP Law
Center. Thus, the trial court decreed:

WHEREFORE:

(1) The Motion for Judicial Notice is granted. This Court declares that the issuance
of (i) RMC 31-2008, (ii) RTC-Branch 98 Order dated May 18, 2012 in Civil Case
No. Q-09-64241, (iii) RTC-Branch 98 Certification of the finality of the Order dated
May 18, 2012 in Civil Case No. Q-09- 64241, (iv) RA 10378, and (v) RR 15-2013,
is an established fact in this case.

(2) The Motion for Summary Judgment is denied and as a result the instant petition
for declaratory relief is dismissed.

Costs de oficio.

SO ORDERED.[32]

Petitioners' partial motion for reconsideration was denied under Order dated January 8, 2016.

The Present Petition

Petitioners now seek, on pure questions of law, the Court's discretionary appellate jurisdiction to
review and reverse the assailed dispositions. They essentially reiterate the arguments raised in
their petition for declaratory relief, i.e. a) res judicata and immutability of judgments apply to
this case and the enactment of RA 10378 is not a supervening event which operates to negate
the application of the aforesaid principles; b) RR 15-2013 is invalid because it erroneously
subjects demurrage and detention fees collected by international shipping carriers to regular
income tax rate, albeit these are not income; and c) RR 15-2013 is not an interpretative
issuance, thus, a public hearing and prior registration with the UP Law Center are required for
its validity and effectivity.

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Respondents Secretary of Finance and CIR, through Senior State Solicitor Jonathan dela Vega,
submits: Res judicata does not apply here because there is no commonality of parties between
this case and Civil Case No. Q-09-64241. The Secretary of Finance and the CIR are two (2)
distinct officials.[33] RR 15-2013 does not add to the provisions of RA 10378. It simply clarifies
how the GPB of international sea carriers should be determined. Its issuance is germane to the
purpose of the law.[34] Lastly, RR 15-2013 is an interpretative regulation, thus, to be effective, it
need not be filed with the UP Law Center.[35]

Petitioners' Reply[36] dated October 27, 2016 echoes their previous arguments against RR 15-
2013.

Issues

1. Does res judicata apply in this case?

2. Is a petition for declaratory relief proper for the purpose of invalidating RR No. 15-2013?
3. Is RR 15-2013 a valid revenue regulation?

Ruling

Res judicata does not apply here

Res judicata applies in the concept of "bar by prior judgment" if the following requisites concur:
(1) the former judgment or order must be final; (2) the judgment or order must be on the merits;
(3) the decision must have been rendered by a court having jurisdiction over the subject matter
and the parties; and (4) there must be, between the first and the second action, identity of
parties, of subject matter, and of causes of action.[37]

Here, we rule that there is no substantial identity of parties and subject matter.

a) No substantial identity of parties

Tambunting, Jr. v. Sumabat[38] explains the nature of a petition for declaratory relief, thus:

An action for declaratory relief should be filed by a person interested under a deed,
will, contract or other written instrument, and whose rights are affected by a statute,
executive order, regulation or ordinance before breach or violation thereof. The
purpose of the action is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, contract, etc. for their guidance
in its enforcement or compliance and not to settle issues arising from its alleged
breach. It may be entertained only before the breach or violation of the statute, deed,
contract, etc. to which it refers. Where the law or contract has already been
contravened prior to the filing of an action for declaratory relief, the court can no
longer assume jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject, i.e., the statute, deed,
contract, etc., has already been infringed or transgressed before the institution of the
action. Under such circumstances, inasmuch as a cause of action has already accrued
in favor of one or the other party, there is nothing more for the court to explain or
clarify short of a judgment or final order. (Emphasis supplied)
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Thus, it is required that the parties to the action for declaratory relief be those whose rights or
interests are affected by the contract or statute being questioned.[39] Section 2 of Rule 63 of the
Rules of Court further underscores that a judgment in a petition for declaratory relief binds only
the impleaded parties:

Section 2. Parties. — All persons who have or claim any interest which would be
affected by the declaration shall be made parties; and no declaration shall, except as
otherwise provided in these Rules, prejudice the rights of persons not parties to the
action. (2a, R64)

Heirs of Marcelino Doronio v. Heirs of Fortunato Doronio[40] further elucidates on this

principle, thus:

Petitioners cannot also use the finality of the RTC decision in Petition Case No.
U-920 as a shield against the verification of the validity of the deed of donation.
According to petitioners, the said final decision is one for quieting of title. In
other words, it is a case for declaratory relief under Rule 64 (now Rule 63) of
the Rules of Court, which provides:

SECTION 1. Who may file petition. - Any person interested under a

deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, or ordinance, may,
before breach or violation thereof, bring an action to determine any
question of construction or validity arising under the instrument or statute
and for a declaration of his rights or duties thereunder.

An action for the reformation of an instrument, to quiet title to real property or

remove clouds therefrom, or to consolidate ownership under Article 1607 of the
Civil Code, may be brought under this rule.

SECTION 2. Parties. - All persons shall be made parties who have or

claim any interest which would be affected by the declaration; and no
declaration shall, except as otherwise provided in these rules, prejudice
the rights of persons not parties to the action.

However, respondents were not made parties in the said Petition Case No. U-920.
Worse, instead of issuing summons to interested parties, the RTC merely allowed the
posting of notices on the bulletin boards of Barangay Cabalitaan, Municipalities of
Asingan and Lingayen, Pangasinan. As pointed out by the CA, citing the ruling of
the RTC:

x x x In the said case or Petition No. U-920, notices were posted on the
bulletin boards of barangay Cabalitaan, Municipalities of Asingan and
Lingayen, Pangasinan, so that there was a notice to the whole world and
during the initial hearing and/or hearings, no one interposed objection
thereto.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in
personam, but being against the person in respect of the res, these proceedings are
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characterized as quasi in rem. The judgment in such proceedings is conclusive

only between the parties. Thus, respondents are not bound by the decision in
Petition Case No. U-920 as they were not made parties in the said case.
(Emphasis supplied)

Applying the foregoing principles here, we find that there is no identity of parties between Civil
Case No. Q-09-64241 and this case.

The final and executory Order dated May 18, 2012 of RTC-Branch 98 in Civil Case No. Q-09-
64241 is only binding on herein petitioners Association of International Shipping Lines, Inc.,
APL Co. Pte. Ltd. and Maersk-Filipinas, Inc. and the lone respondent in that case, the CIR.
Meanwhile, in this case, although the petitioners are the same, the respondents include not only
the CIR but the Secretary of Finance as well. Note that the Secretary of Finance was not party in
Civil Case No. Q-09-64241. Consequently, the Secretary of Finance is not bound by the final
and executory judgment in Civil Case No. Q-09-64241. Additionally, unlike in the said case, it
is the Secretary of Finance's issuance which is the subject of the present challenge, not the
CIR's.

The distinction between the CIR and the Secretary of Finance, as respondents, is not
hairsplitting. On one hand, when BIR Commissioner Lilian B. Hefti issued RMC 31-2008 on
January 30, 2008, she did so under the auspices of Section 4[41] of the NIRC. On the other hand,
when Secretary Cesar Purisima issued RR 15-2013 on September 20, 2013, he did so in
obedience to the legislative directive under Section 5[42] of RA 10378 and pursuant to his rule-
making power under Section 244[43] of the NIRC.

Verily, the Commissioner and the Secretary cannot be considered as one, For when they issued
their respective revenue memoranda or regulation, they did so pursuant to the separate powers
and prerogatives granted by law.

b) No substantial identity of subject matter

While it is true that RMC 31-2008, subject of Civil Case No. Q-09- 64241, on one hand, and
RR 15-2013, subject of the present case, on the other, both treat demurrage and detention fees to
be within the prism of regular corporate income tax rate, each, however, differs from the other
with respect to the authority from which it emanated.

In Civil Case No. Q-09-64241, what was challenged was the CIR's authority to issue RMC 31-
2008 pursuant to Section 4 of the NIRC. On the other hand, what is being challenged here is the
Secretary of Finance's authority to issue RR 15-2013 in accordance with Section 244 of the
NIRC and Section 5 of RA 10378. The CIR and the Secretary of Finance derive their respective
powers from two (2) distinct sources, thus, their respective issuances, too, are separate and
independent of each other.

More, the supposed invalidity of the CIR's issuance in Civil Case No. Q-09-64241 does not
preclude the Secretary of Finance from rendering his issuance on the same subject.

More important, the judgment in Civil Case No. Q-09-64241 does not rise to a level of a judicial
precedent to be followed in subsequent cases by all courts in the land, since the same was
rendered by a regional trial court, and not by this Court. Verily, the Order dated May 18, 2012 of
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RTC-Branch 98, although binding on the CIR, cannot serve as a judicial precedent for the
purpose of precluding the Secretary of Finance from promulgating a similar issuance on the
same subject.

A petition for declaratory

relief is not the proper remedy
to seek the invalidation of RR 15-2013;
petition is treated as one for prohibition

To begin with, the trial court dismissed the case below, among others, for lack of jurisdiction
pursuant to Section 1 of CA 55, which reads:

Section 1. Section one of Act Numbered Thirty-seven hundred and thirty-six is

hereby amended so as to read as follows:

"SECTION 1. Construction. — Any person interested under a deed, contract or other

written instrument, or whose rights are affected by a statute, may bring an action in a
Court of First Instance to determine any question of construction or validity arising
under such deed, contract, instrument or statute and for a declaration of his rights or
duties thereunder: Provided, however, That the provisions of this Act shall not
apply to cases where a taxpayer questions his liability for the payment of any
tax, duty, or charge collectible under any law administered by the Bureau of
Customs or the Bureau of Internal Revenue." (Emphasis supplied)

In CJH Development Corp. v. BIR,[44] this Court clarified that CA 55 is still good law, thus:

CJH alleges that CA No. 55 has already been repealed by the Rules of Court; thus,
the remedy of declaratory relief against the assessment made by the BOC is proper.
It cited the commentaries of Moran allegedly to the effect that declaratory relief lies
against assessments made by the BIR and BOC. Yet in National Dental Supply Co. v.
Meer, this Court held that:

From the opinion of the former Chief Justice Moran may be deduced that
the failure to incorporate the above proviso [CA No. 55] in section 1, rule
66, [now Rule 64] is not due to an intention to repeal it but rather to the
desire to leave its application to the sound discretion of the court, which
is the sole arbiter to determine whether a case is meritorious or not. And
even if it be desired to incorporate it in rule 66, it is doubted if it could be
done under the rule-making power of the Supreme Court considering that
the nature of said proviso is substantive and not adjective, its purpose
being to lay down a policy as to the right of a taxpayer to contest the
collection of taxes on the part of a revenue officer or of the
Government. With the adoption of said proviso, our law-making body
has asserted its policy on the matter, which is to prohibit a taxpayer to
question his liability for the payment of any tax that may be collected
by the Bureau of Internal Revenue. As this Court well said, quoting
from several American cases, "The Government may fix the conditions
upon which it will consent to litigate the validity of its original taxes..."
"The power of taxation being legislative, all incidents are within the
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control of the Legislature." In other words, it is our considered opinion

that the proviso contained in Commonwealth Act No. 55 is still in full
force and effect and bars the plaintiff from filing the present action.

As a substantive law that has not been repealed by another statute, CA No. 55 is
still in effect and holds sway. Precisely, it has removed from the courts'
jurisdiction over petitions for declaratory relief involving tax assessments. The
Court cannot repeal, modify or alter an act of the Legislature. (Emphasis supplied)

CIR v. Standard Insurance, Co., Inc.[45] further reinforced the rule that regional trial courts
have no jurisdiction over petitions for declaratory relief against the imposition of tax liability or
validity of tax assessments:

The more substantial reason that should have impelled the RTC to desist from taking
cognizance of the respondent's petition for declaratory relief except to dismiss the
petition was its lack of jurisdiction.

We start by reminding the respondent about the inflexible policy that taxes, being the
lifeblood of the Government, should be collected promptly and without hindrance or
delay. Obeisance to this policy is unquestionably dictated by law itself. Indeed,
Section 218 of the NIRC expressly provides that "[n]o court shall have the authority
to grant an injunction to restrain the collection of any national internal revenue tax,
fee or charge imposed by th[e] [NIRC]." Also, pursuant to Section 11[15] of R.A.
No. 1125, as amended, the decisions or rulings of the Commissioner of Internal
Revenue, among others, assessing any tax, or levying, or distraining, or selling
any property of taxpayers for the satisfaction of their tax liabilities are
immediately executory, and their enforcement is not to be suspended by any
appeals thereof to the Court of Tax Appeals unless "in the opinion of the Court
[of Tax Appeals] the collection by the Bureau of Internal Revenue or the
Commissioner of Customs may jeopardize the interest of the Government
and/or the taxpayer," in which case the Court of Tax Appeals "at any stage of
the proceeding may suspend the said collection and require the taxpayer either
to deposit the amount claimed or to file a surety bond for not more than double
the amount."

In view of the foregoing, the RTC not only grossly erred in giving due course to the
petition for declaratory relief, and in ultimately deciding to permanently enjoin the
enforcement of the specified provisions of the NIRC against the respondent, but
even worse acted without jurisdiction. (Emphasis supplied)

Tambunting, Jr. v. Sumabat,[46] explained the nature of a petition for declaratory relief, thus:

An action for declaratory relief should be filed by a person interested under a deed,
will, contract or other written instrument, and whose rights are affected by a statute,
executive order, regulation or ordinance before breach or violation thereof. The
purpose of the action is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, contract, etc. for their guidance in its
enforcement or compliance and not to settle issues arising from its alleged breach. It
may be entertained only before the breach or violation of the statute, deed, contract,
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etc. to which it refers. Where the law or contract has already been contravened prior
to the filing of an action for declaratory relief, the court can no longer assume
jurisdiction over the action. In other words, a court has no more jurisdiction over an
action for declaratory relief if its subject, i.e., the statute, deed, contract, etc., has
already been infringed or transgressed before the institution of the action. Under
such circumstances, inasmuch as a cause of action has already accrued in favor of
one or the other party, there is nothing more for the court to explain or clarify short
of a judgment or final order.

Verily, since there is no actual case involved in a petition for declaratory relief, it cannot be the
proper vehicle to invoke the power of judicial review to declare a statute as invalid or
unconstitutional. As decreed in DOTR v. PPSTA,[47] the proper remedy is certiorari or
prohibition, thus:

The Petition for Declaratory Relief is not the proper remedy

One of the requisites for an action for declaratory relief is that it must be filed before
any breach or violation of an obligation. Section 1, Rule 63 of the Rules of Court
states, thus:

xxx

Thus, there is no actual case involved in a Petition for Declaratory Relief. It

cannot, therefore, be the proper vehicle to invoke the judicial review powers to
declare a statute unconstitutional.

It is elementary that before this Court can rule on a constitutional issue, there must
first be a justiciable controversy. A justiciable controversy refers to an existing case
or controversy that is appropriate or ripe for judicial determination, not one that is
conjectural or merely anticipatory. As We emphasized in Angara v. Electoral
Commission, any attempt at abstraction could only lead to dialectics and barren legal
questions and to sterile conclusions unrelated to actualities.

To question the constitutionality of the subject issuances, respondents should

have invoked the expanded certiorari jurisdiction under Section 1 of Article
VIII of the 1987 Constitution. The adverted section defines judicial power as
the power not only "to settle actual controversies involving rights which are
legally demandable and enforceable," but also "to determine whether or not
there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government."

There is a grave abuse of discretion when there is patent violation of the

Constitution, the law, or existing jurisprudence. On this score, it has been ruled that
"the remedies of certiorari and prohibition are necessarily broader in scope and
reach, and the writ of certiorari or prohibition may be issued to correct errors of
jurisdiction committed not only by a tribunal, corporation, board or officer
exercising judicial, quasi-judicial or ministerial functions, but also to set right,
undo[,] and restrain any act of grave abuse of discretion amounting to lack or excess
of jurisdiction by any branch or instrumentality of the Government, even if the latter
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does not exercise judicial, quasi-judicial or ministerial functions." Thus, petitions

for certiorari and prohibition are the proper remedies where an action of the
legislative branch is seriously alleged to have infringed the Constitution.
(Emphasis supplied)

In Diaz et at v. Secretary of Finance, et al.,[48] the Court, nonetheless, held that a petition for
declaratory relief may be treated as one for prohibition if the case has far-reaching implications
and raises questions that need to be resolved for the public good; or if the assailed act or acts of
executive officials are alleged to have usurped legislative authority, thus:

On August 24, 2010 the Court issued a resolution, treating the petition as one for
prohibition rather than one for declaratory relief, the characterization that petitioners
Diaz and Timbol gave their action. The government has sought reconsideration of
the Court's resolution, however, arguing that petitioners' allegations clearly made out
a case for declaratory relief, an action over which the Court has no original
jurisdiction. The government adds, moreover, that the petition does not meet the
requirements of Rule 65 for actions for prohibition since the BIR did not exercise
judicial, quasi-judicial, or ministerial functions when it sought to impose VAT on toll
fees. Besides, petitioners Diaz and Timbol has a plain, speedy, and adequate remedy
in the ordinary course of law against the BIR action in the form of an appeal to the
Secretary of Finance.

But there are precedents for treating a petition for declaratory relief as one for
prohibition if the case has far-reaching implications and raises questions that
need to be resolved for the public good. The Court has also held that a petition
for prohibition is a proper remedy to prohibit or nullify acts of executive
officials that amount to usurpation of legislative authority.

Here, the imposition of VAT on toll fees has far-reaching implications. Its imposition
would impact, not only on the more than half a million motorists who use the
tollways everyday, but more so on the government's effort to raise revenue for
funding various projects and for reducing budgetary deficits. (Emphasis supplied)

Here, RR 15-2013 greatly impacts the Philippine maritime industry since it is considered "as
more of the 'backbone' of the Philippines' burgeoning economy due to its significance both for
trade and transportation."[49] For this reason and the fact that the issue at hand has already
pended since 2013 or for more than six (6) years now, first with the trial court and now with this
Court, we resolve to treat the present case as one for certiorari or prohibition and settle the
controversy once and for all. Diaz aptly enunciated:

Although the petition does not strictly comply with the requirements of Rule 65,
the Court has ample power to waive such technical requirements when the legal
questions to be resolved are of great importance to the public. The same may be
said of the requirement of locus standi which is a mere procedural requisite.
(Emphasis supplied)

RR 15-2013 is a valid
issuance

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In treating demurrage and detention fees as regular income subject to regular income tax rate,
the Secretary of Finance relied on Section 28(A)(I)(3a) of the NIRC, as amended by RA 10378,
viz.:

SEC. 28. Rates of Income Tax on Foreign Corporations. —

(A) Tax on Resident Foreign Corporations. —

(1) xxx
(2) xxx

(3). International Carrier.—An international carrier doing business in the

Philippines shall pay a tax of two and one-half percent (2 1/2 %) on its 'Gross
Philippine Billings' as defined hereunder:

(c) International Air Carrier. — 'Gross Philippine Billings' refers to the amount of
gross revenue derived from carriage of persons, excess baggage, cargo, and mail
originating from the Philippines in a continuous and uninterrupted flight, irrespective
of the place of sale or issue and the place of payment of the ticket or passage
document: Provided, That tickets revalidated, exchanged and/or indorsed to another
international airline form part of the Gross Philippine Billings if the passenger
boards a plane in a port or point in the Philippines: Provided, further, That for a
flight which originates from the Philippines, but transshipment of passenger takes
place at any part outside the Philippines on another airline, only the aliquot portion
of the cost of the ticket corresponding to the leg flown from the Philippines to the
point of transshipment shall form part of Gross Philippine Billings.

(d) International Shipping. — 'Gross Philippine Billings' means gross revenue

whether for passenger, cargo or mail originating from the Philippines up to
final destination, regardless of the place of sale or payments of the passage or
freight documents.

Provided, That international carriers doing business in the Philippines may

avail of a preferential rate or exemption from the tax herein imposed on their
gross revenue derived from the carriage of persons and their excess baggage on
the basis of an applicable tax treaty or international agreement to which the
Philippines is a signatory or on the basis of reciprocity such that an
international carrier, whose home country grants income tax exemption to
Philippine carriers, shall likewise be exempt from the tax imposed under this
provision.(Emphasis supplied)

x x x.

This provision is still in effect since it was not amended by RA 10963 or the Tax Reform for
Acceleration and Inclusion law.

To determine whether demurrage and detention fees are subject to the preferential 2.5% rate, we
refer to the definition of "Gross Philippine Billings" (GPB) under Section 28(A)(I)(3a) of the
NIRC, as amended by RA 10378, viz.: "gross revenue whether for passenger, cargo or mail

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originating from the Philippines up to final destination, regardless of the place of sale or
payments of the passage or freight documents."

RR 15-2013 echoes this definition, thus:

B) Determination of Gross Philippine Billings of International Sea Carriers. — In

computing for "Gross Philippine Billings" of international sea carriers, there shall be
included the total amount of gross revenue whether for passenger, cargo, and/or mail
originating from the Philippines up to final destination, regardless of the place of
sale or payments of the passage or freight documents.

xxx

Verily, the GPB covers gross revenue derived from transportation of passengers, cargo and/or
mail originating from the Philippines up to the final destination. Any other income, therefore, is
subject to the regular income tax rate. When the law is clear, there is no other recourse but to
apply it regardless of its perceived harshness. Dura lex sed lex.[50]

Under RR 15-2013, demurrage and detention fees are not deemed within the scope of GPB. For
demurrage fees "which are in the nature of rent for the use of property of the carrier in the
Philippines, is considered income from Philippine source and is subject to income tax under the
regular rate as the other types of income of the on-line carrier." On the other hand, detention
fees and other charges "relating to outbound cargoes and inbound cargoes are all considered
Philippine-sourced income of international sea carriers they being collected for the use of
property or rendition of services in the Philippines, and are subject to the Philippine income tax
under the regular rate."

Demurrage fee is the allowance or compensation due to the master or owners of a ship, by the
freighter, for the time the vessel may have been detained beyond the time specified or implied in
the contract of affreightment or the charter-party. It is only an extended freight or reward to the
vessel, in compensation for the earnings the carrier is improperly caused to lose.[51]

Detention occurs when the consignee holds on to the carrier's container outside of the port,
terminal, or depot beyond the free time that is allotted. Detention fee is charged when import
containers have been picked up, but the container (regardless if it is full or empty) is still in the
possession of the consignee and has not been returned within the allotted time. Detention fee is
also charged for export containers in which the empty container has been picked up for loading,
and the loaded container is returned to the steamship line after the allotted free time.[52]

Indeed, the exclusion of demurrage and detention fees from the preferential rate of 2.5% is
proper since they are not considered income derived from transportation of persons, goods
and/or mail, in accordance with the rule expressio unios est exclusio alterius.

Demurrage and detention fees definitely form part of an international sea carrier's gross income.
For they are acquired in the normal course of trade or business. The phrase "in the course of
trade or business" means the regular conduct or pursuit of a commercial or an economic
activity, including transactions incidental thereto, by any person regardless of whether or not the
person engaged therein is a nonstock, nonprofit private organization (irrespective of the

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disposition of its net income and whether or not it sells exclusively to members or their guests),
or government entity.[53]

Surely, gross income means income derived from whatever source, including compensation for
services; the conduct of trade or business or the exercise of a profession; dealings in property;
interests; rents; royalties; dividends; annuities; prizes and winnings; pensions; and a partner's
distributive share in the net income of a general professional partnership,[54] among others.
Demurrage and detention fees fall within the definition of "gross income" - the former is
considered as rent payment for the vessel; and the latter, compensation for use of a carrier's
container.

RR 15-2013 is an
interpretative and internal issuance

An interpretative or implementing rule is defined under Section 2 (2), Chapter 1, Book VIII of
the Revised Administrative Code, viz.:

Section 2. Definitions. - As used in this Book:

xxx

(2) "Rule" means any agency statement of general applicability that implements or
interprets a law, fixes and describes the procedures in, or practice requirements of, an
agency, including its regulations. The term includes memoranda or statements
concerning the internal administration or management of an agency not affecting the
rights of, or procedure available to, the public.

Chapter 2 of Book VII of the same Code further provides the manner by which administrative
rules attain effectivity:

Section 3. Filing.-

(1) Every agency shall file with the University of the Philippines Law Center three
(3) certified copies of every rule adopted by it. Rules in force on the date of
effectivity of this Code which are not filed within three (3) months from that
date shall not thereafter be the basis of any sanction against any party or
persons.

(2) The records officer of the agency, or his equivalent functionary, shall carry out
the requirements of this section under pain of disciplinary action.

(3) A permanent register of all rules shall be kept by the issuing agency and shall be
open to public inspection.

Section 4. Effectivity. - In addition to other rule-making requirements provided by

law not inconsistent with this Book, each rule shall become effective fifteen (15)
days from the date of filing as above provided unless a different date is fixed by
law, or specified in the rule in cases of imminent danger to public health, safety and
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welfare, the existence of which must be expressed in a statement accompanying the

rule. The agency shall take appropriate measures to make emergency rules known to
persons who may be affected by them.

SECTION 5. Publication and Recording.—The University of the Philippines Law

Center shall:

(1) Publish a quarterly bulletin setting forth the text of rules filed with it during the
preceding quarter; and

(2) Keep an up-to-date codification of all rules thus published and remaining in
effect, together with a complete index and appropriate tables.

SECTION 6. Omission of Some Rules.— (1) The University of the Philippines Law
Center may omit from the bulletin or the codification any rule if its publication
would be unduly cumbersome, expensive or otherwise inexpedient, but copies of
that rule shall be made available on application to the agency which adopted it, and
the bulletin shall contain a notice stating the general subject matter of the omitted
rule and new copies thereof may be obtained.

(2) Every rule establishing an offense or defining an act which, pursuant to law is
punishable as a crime or subject to a penalty shall in all cases be published in full
text.

SECTION 7. Distribution of Bulletin and Codified Rules.—The University of the

Philippines Law Center shall furnish one (1) free copy each of every issue of the
bulletin and of the codified rules or supplements to the Office of the President,
Congress, all appellate courts and the National Library. The bulletin and the codified
rules shall be made available free of charge to such public officers or agencies as the
Congress may select, and to other persons at a price sufficient to cover publication
and mailing or distribution costs.

SECTION 8. Judicial Notice.—The court shall take judicial notice of the certified
copy of each rule duly filed or as published in the bulletin or the codified rules.

SECTION 9. Public Participation.—(1) If not otherwise required by law, an

agency shall, as far as practicable, publish or circulate notices of proposed rules
and afford interested parties the opportunity to submit their views prior to the
adoption of any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the
proposed rates shall have been published in a newspaper of general
circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed.

(Emphasis supplied)

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Excepted are interpretative regulations and those merely internal in nature, which do not require
filing with the U.P. Law Center for their effectivity. On this score, ASTEC v. ERC[55] is proper:

As interpretative regulations, the policy guidelines of the ERC on the treatment of

discounts extended by power suppliers are also not required to be filed with the U.P.
Law Center in order to be effective. Section 4, Chapter 2, Book VII of the
Administrative Code of 1987 requires every rule adopted by an agency to be filed
with the U.P. Law Center to be effective. However, in Board of Trustees of the
Government Service Insurance System v. Velasco, this Court pronounced that "[n]ot
all rules and regulations adopted by every government agency are to be filed
with the UP Law Center." Interpretative regulations and those merely internal
in nature are not required to be filed with the U.P. Law Center. Paragraph 9 (a)
of the Guidelines for Receiving and Publication of Rules and Regulations Filed with
the U.P. Law Center states:

9. Rules and Regulations which need not be filed with the U.P. Law
Center, shall, among others, include but not be limited to, the following:

a. Those which are interpretative regulations and those merely

internal in nature, that is, regulating only the personnel of the
Administrative agency and not the public. (Emphasis
supplied)

RR 15-2013 is an internal issuance for the guidance of "all internal revenue officers and others
concerned." It is also an interpretative issuance vis-à-vis RA 10378, thus:

SECTION 2. SCOPE. — Pursuant to Section 244 of the National Internal Revenue

Code of 1997 (NIRC), as amended, and Section 5 of RA No. 10378, these
Regulations are hereby promulgated to implement RA No. 10378, amending
Sections 28(A)(3)(a), 109, 118 and 236 of the NIRC.

RR 15-2013 merely sums up the rules by which international carriers may avail of preferential
rates or exemption from income tax on their gross revenues derived from the carriage of persons
and their excess baggage based on the principle of reciprocity or an applicable tax treaty or
international agreement to which the Philippines is a signatory. Interpretative regulations are
intended to interpret, clarify or explain existing statutory regulations under which the
administrative body operates. Their purpose or objective is merely to construe the statute being
administered and purport to do no more than interpret the statute. Simply, they try to say what
the statute means and refer to no single person or party in particular but concern all those
belonging to the same class which may be covered by the said rules.[56]

Indeed, when an administrative rule is merely interpretative in nature, its applicability needs
nothing further than its bare issuance, for it gives no real consequence more than what the law
itself has already prescribed.[57] As such, RR 15-2013 need not pass through a public hearing or
consultation, get published, nay, registered with the U.P. Law Center for its effectivity.

ACCORDINGLY, the petition is DENIED for lack of merit. The Orders dated September 15,
2015 and January 8, 2016 of the Regional Trial Court, Branch 77, Quezon City, in Special Civil
Action No. R-QZN-13-05590-CV are AFFIRMED.
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SO ORDERED.

Peralta, C.J., (Chairperson), Caguioa, J. Reyes, Jr., and Lopez, JJ., concur.

[1]AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114,
116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

[2]Clarification of Issues Concerning Common Carriers by Sea and their Agents Relative to the
Transport of Passengers, Goods or Cargoes.

[3]Is a non-stock, non-profit corporation duly organized and existing under the laws of the
Republic of the Philippines, whose members are international shipping carriers and/or their
agents operating in the Philippines.

[4]Is an AISL member-firm engaged in international shipping business. It is a corporation duly

organized and existing under the laws of Singapore and licensed to do business in the
Philippines.

[5] Rollo, p. 102.

[6] Id.

[7] Id. at 102-115.

[8] SEC. 28. Rates of Income Tax on Foreign Corporations. -

(A) Tax on Resident Foreign Corporations. -

(1) In General. - Except as otherwise provided in this Code, a corporation organized,
authorized, or existing under the laws of any foreign country, engaged in trade or
business within the Philippines, shall be subject to an income tax equivalent to
thirty-five percent (35%) of the taxable income derived in the preceding taxable year
from all sources within the Philippines: Provided, That effective January 1, 2009, the
rate of income tax shall be thirty percent (30%).
In the case of corporations adopting the fiscal-year accounting period, the taxable
income shall be computed without regard to the specific date when sales, purchases
and other transactions occur. Their income and expenses for the fiscal year shall be
deemed to have been earned and spent equally for each month of the period.
The corporate income tax rate shall be applied on the amount computed by
multiplying the number of months covered by the new rate within the fiscal year by
the taxable income of the corporation for the period, divided by twelve.
Provided, however, That a resident foreign corporation shall be granted the option to
be taxed at fifteen percent (15%) on gross income under the same conditions, as
provided in Section 27(A).
xxx
(3) International Carrier. -An international carrier doing business in the Philippines
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shall pay a tax of two and one-half percent (2 1/2%) on its 'Gross Philippine Billings'
as defined hereunder:
xxx
(b) International Shipping.- 'Gross Philippine Billings' means gross revenue whether
for passenger, cargo or mail originating from the Philippines. up to final destination,
regardless of the place of sale or payments of the passage or freight documents.
xxx

[9] Rollo, pp. 111-114.

[10] Id. at 114-115.

[11] Id. at 116.

[12]AN ACT RECOGNIZING THE PRINCIPLE OF RECIPROCITY AS BASIS FOR THE

GRANT OF INCOME TAX EXEMPTIONS TO INTERNATIONAL CARRIERS AND
RATIONALIZING OTHER TAXES IMPOSED THEREON BY AMENDING SECTIONS
28(A)(3)(a), 109, 118 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE (NIRC),
AS AMENDED, AND FOR OTHER PURPOSES.

[13]Revenue Regulations Implementing Republic Act No. 10378 entitled "An Act Recognizing
the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International
Carriers and Rationalizing Other Taxes Imposed thereon by Amending Sections 28 (A)(3)(A),
109, 118 And 236 of the National Internal Revenue Code (NIRC), as amended, and for other
Purposes."

[14] With applications for a temporary restraining order and a writ of preliminary injunction,
rollo, pp. 136- 165.

[15] Id. at 139.

[16] Id. at 141-146.

[17] Id. at 149.

[18] Id. at 150-151.

[19] Id. at 152.

[20] Id. at 155.

[21] Id. at 160.

[22] Id. at 411-426.

[23] Id. at 417-418.

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[24] Id. at 420-424.

[25] Id. at 424.

[26] Id. at 427-444.

[27]AN ACT TO AMEND SECTION ONE OF ACT NUMBERED THIRTY-SEVEN

HUNDRED AND THIRTY-SIX, BY PROVIDING THAT THE PROVISIONS OF THE SAID
ACT SHALL NOT APPLY TO CASES INVOLVING LIABILITY FOR ANY TAX, DUTY,
OR CHARGE COLLECTIBLE UNDER ANY LAW ADMINISTERED BY THE BUREAU
OF CUSTOMS OR THE BUREAU OF INTERNAL REVENUE.

[28] Rollo, pp. 428-432.

[29] Id. at 474-491.

[30]AN ACT RECOGNIZING THE PRINCIPLE OF RECIPROCITY AS BASIS FOR THE

GRANT OF INCOME TAX EXEMPTIONS TO INTERNATIONAL CARRIERS AND
RATIONALIZING OTHER TAXES IMPOSED THEREON BY AMENDING SECTIONS
28(A)(3)(a), 109, 118 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE (NIRC),
AS AMENDED, AND FOR OTHER PURPOSES.

[31] Rollo, pp. 89-94.

[32] Id. at 94.

[33] Id. at 654-655.

[34] Id. at 658.

[35] Id. at 665.

[36] Id. at 674-700.

[37] Diaz, Jr. v. Valenciano, Jr., G.R. No. 209376, December 06, 2017, 848 SCRA 85, 96 (2017).

[38] 507 Phil. 94, 98 (2005).

[39] City of Lapu-Lapu v. PEZA, 748 Phil. 473, 512-513 (2014).

[40] 565 Phil. 766, 786-787 (2007).

[41]SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases - The
power to interpret the provisions of this Code and other tax laws shall be under the exclusive
and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.
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The power to decide disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under this Code or other
laws or portions thereof administered by the Bureau of Internal Revenue is vested in the
Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.

[42] Section 5. Implementing Rules and Regulations. — The Secretary of Finance shall, upon
the recommendation of the Commissioner of Internal Revenue, promulgate not later than thirty
(30) days upon the effectivity of this Act the necessary rules and regulations for its effective
implementation. The Department of Finance (DOF), in coordination with the Department of
Foreign Affairs (DFA), shall oversee the exchange of notes between the Philippines and
concerned countries for purposes of facilitating the availment of reciprocal exemptions intended
under this Act.

[43]SEC. 244. Authority of Secretary of Finance to Promulgate Rules and Regulations. - The
Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful
rules and regulations for the effective enforcement of the provisions of this Code.

[44] 595 Phil. 1051, 1057-1058 (2008).

[45] G.R. No. 219340, November 07, 2018.

[46] Supra note 38.

[47] G.R. No. 230107, July 24, 2018.

[48] 669 Phil. 371, 382-383 (2011).

[49]Letran, Bjorn Biel M. "A bustling and thriving sector," BWorldOnline.Com., April 25,
2018. See https://www.bworldonline.com/a-bustling-and-thriving-sector.

[50] Obiasca v. Basallote, 626 Phil. 775, 785 (2010).

[51] Black's Law Dictionary See: < a href="https://thelawdictionary.org/demurrage/"

title="DEMURRAGE" >DEMURRAGE < /a > (Last accessed: November 13, 2019)

[52]PNG Logistics See: http://pnglc.com/detention-and-demurrage-whats-the-difference/ (Last

accessed: November 13, 2019)

[53] Section 105, RA 8424.

[54] See CIR v. PAL, 535 Phil. 95, 106 (2006).

[55] 695 Phil. 243, 280 (2012).

[56]Republic of the Philippines v. Drugmaker's Laboratories, Inc., et al., 728 Phil. 480, 490
(2014).
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[57] Id.

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