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PERCIVAL MODAY v. CA

This case has been cited 33 times or more.

2015-09-01
BERSAMIN, J.
CDC was created to be the implementing and operating arm of the Bases Conversion and Development Authority to manage the Clark Special Economic Zone (CSEZ).[20] As a duly-registered enterprise in the CSEZ, CDC has been exempt from paying direct and indirect taxes pursuant to Section 24[21] of Republic Act No. 7916 (The Special Economic Zone Act of 1995), in relation to Section 15 of Republic Act No. 9400 (Amending Republic Act No. 7227, otherwise known as the Bases Conversion Development Act of 1992).[22]
2014-11-26
LEONEN, J.
In 1995, the PEZA was created by virtue of Republic Act No.  7916 or "the Special Economic Zone Act of 1995"[13] to operate, administer, manage, and develop economic zones in the country.[14]  The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones.[15]  By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone[16] and the Mactan Export Processing Zone the Mactan Economic Zone.[17]
2014-11-26
LEONEN, J.
In 1995, the PEZA was created by virtue of Republic Act No.  7916 or "the Special Economic Zone Act of 1995"[13] to operate, administer, manage, and develop economic zones in the country.[14]  The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones.[15]  By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone[16] and the Mactan Export Processing Zone the Mactan Economic Zone.[17]
2014-11-26
LEONEN, J.
In 1995, the PEZA was created by virtue of Republic Act No.  7916 or "the Special Economic Zone Act of 1995"[13] to operate, administer, manage, and develop economic zones in the country.[14]  The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones.[15]  By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone[16] and the Mactan Export Processing Zone the Mactan Economic Zone.[17]
2014-11-26
LEONEN, J.
In 1995, the PEZA was created by virtue of Republic Act No.  7916 or "the Special Economic Zone Act of 1995"[13] to operate, administer, manage, and develop economic zones in the country.[14]  The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones.[15]  By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone[16] and the Mactan Export Processing Zone the Mactan Economic Zone.[17]
2014-11-26
LEONEN, J.
In 1995, the PEZA was created by virtue of Republic Act No.  7916 or "the Special Economic Zone Act of 1995"[13] to operate, administer, manage, and develop economic zones in the country.[14]  The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones.[15]  By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone[16] and the Mactan Export Processing Zone the Mactan Economic Zone.[17]
2014-11-26
LEONEN, J.
As for the EPZA, the law required it to "evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for [the] purpose."[18]
2014-11-26
LEONEN, J.
Similarly, the PEZA is an instrumentality of the national government.  It is not integrated within the department framework but is an agency attached to the Department of Trade and Industry.[250]  Book IV, Chapter 7, Section 38(3)(a) of the Administrative Code of 1987 defines "attachment": SEC. 38. Definition of Administrative Relationship. Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as follows:
2014-11-26
LEONEN, J.
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board is chaired by the Department Secretary.[254]  Among the powers and functions of the PEZA is its ability to coordinate with the Department of Trade and Industry for policy and program formulation and implementation.[255]  In strategizing and prioritizing the development of special economic zones, the PEZA coordinates with the Department of Trade and Industry.[256]
2014-11-26
LEONEN, J.
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board is chaired by the Department Secretary.[254]  Among the powers and functions of the PEZA is its ability to coordinate with the Department of Trade and Industry for policy and program formulation and implementation.[255]  In strategizing and prioritizing the development of special economic zones, the PEZA coordinates with the Department of Trade and Industry.[256]
2014-11-26
LEONEN, J.
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board is chaired by the Department Secretary.[254]  Among the powers and functions of the PEZA is its ability to coordinate with the Department of Trade and Industry for policy and program formulation and implementation.[255]  In strategizing and prioritizing the development of special economic zones, the PEZA coordinates with the Department of Trade and Industry.[256]
2014-11-26
LEONEN, J.
The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating and approving the PEZA's annual budget.[257]  Appointments and other personnel actions in the PEZA are also free from departmental interference, with the PEZA Board having the exclusive and final authority to promote, transfer, assign and reassign officers of the PEZA.[258]
2014-11-26
LEONEN, J.
The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating and approving the PEZA's annual budget.[257]  Appointments and other personnel actions in the PEZA are also free from departmental interference, with the PEZA Board having the exclusive and final authority to promote, transfer, assign and reassign officers of the PEZA.[258]
2014-11-26
LEONEN, J.
As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction by law. Congress created the PEZA to operate, administer, manage and develop special economic zones in the Philippines.[259]  Special economic zones are areas with highly developed or which have the potential to be developed into agro-industrial, industrial tourist/recreational, commercial, banking, investment and financial centers.[260]  By operating, administering, managing, and developing special economic zones which attract investments and promote use of domestic labor, the PEZA carries out the following policy of the Government: SECTION 2. Declaration of Policy. It is the declared policy of the government to translate into practical realities the following State policies and mandates in the 1987 Constitution, namely:
2014-11-26
LEONEN, J.
As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction by law. Congress created the PEZA to operate, administer, manage and develop special economic zones in the Philippines.[259]  Special economic zones are areas with highly developed or which have the potential to be developed into agro-industrial, industrial tourist/recreational, commercial, banking, investment and financial centers.[260]  By operating, administering, managing, and developing special economic zones which attract investments and promote use of domestic labor, the PEZA carries out the following policy of the Government: SECTION 2. Declaration of Policy. It is the declared policy of the government to translate into practical realities the following State policies and mandates in the 1987 Constitution, namely:
2014-11-26
LEONEN, J.
In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a sound and balanced industrial, economic and social development of the country in order to provide jobs to the people especially those in the rural areas, increase their productivity and their individual and family income, and thereby improve the level and quality of their living condition through the establishment, among others, of special economic zones in suitable and strategic locations in the country and through measures that shall effectively attract legitimate and productive foreign investments.[261]
2014-11-26
LEONEN, J.
Although a body corporate vested with some corporate powers,[262] the PEZA is not a government-owned or controlled corporation taxable for real property taxes.
2014-11-26
LEONEN, J.
The PEZA does not compete with other economic zone authorities in the country.  The government may even subsidize the PEZA's operations.  Under Section 47 of the Special Economic Zone Act of 1995, "any sum necessary to augment [the PEZA's] capital outlay shall be included in the General Appropriations Act to be treated as an equity of the national government."[273]
2014-11-26
LEONEN, J.
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic Zone Act of 1995.[287]  Republic Act No. 9728 then converted the Bataan Economic Zone into the Freeport Area of Bataan.[288]
2014-11-26
LEONEN, J.
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located.[292] (Emphasis supplied)
2014-11-26
LEONEN, J.
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located.[293] (Emphasis supplied)
2014-11-26
LEONEN, J.
Petitioners, therefore, are not deprived of revenues from the operations of economic zones within their respective territorial jurisdictions.  The national government ensured that local government units comprising economic zones shall retain their basic autonomy and identity.[295]
2014-11-12
LEONEN, J.
Essentially, the purpose of Republic Act No. 7916 is to promote development and encourage investments and business activities that will generate employment.[59]  Giving fiscal incentives to businesses is one of the means devised to achieve this purpose.  It comes with the expectation that persons who will avail these incentives will contribute to the purpose's achievement.  Hence, to avail the fiscal incentives under Republic Act No. 7916, the law did not say that mere PEZA registration is sufficient.
2014-11-12
LEONEN, J.
Based on these provisions, the fiscal incentives and the 5% preferential tax rate are available only to businesses operating within the Ecozone.[60]  A business is considered in operation when it starts entering into commercial transactions that are not merely incidental to but are related to the purposes of the business.  It is similar to the definition of "doing business," as applied in actions involving the right of foreign corporations to maintain court actions.  In Mentholatum Co. Inc., et al. v. Mangaliman, et al.,[61] this court said that the terms "doing" or "engaging in" or "transacting" business": . . . impl[y] a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization.[62]
2006-07-21
PANGANIBAN, CJ
An entity registered with the PEZA as an ecozone[18] may be covered by the VAT system. Section 23 of Republic Act 7916, as amended, gives a PEZA-registered enterprise the option to choose between two fiscal incentives: a) a five percent preferential tax rate on its gross income under the said law; or b) an income tax holiday provided under Executive Order No. 226 or the Omnibus Investment Code of 1987, as amended. If the entity avails itself of the five percent preferential tax rate under the first scheme, it is exempt from all taxes, including the VAT;[19] under the second, it is exempt from income taxes for a number of years,[20] but not from other national internal revenue taxes like the VAT.[21]
2005-02-16
QUISUMBING, J.
On June 21, 2000, petitioner Commissioner filed a Motion for Reconsideration arguing that respondent was not entitled to a refund because as a PEZA-registered enterprise, it was not subject to VAT pursuant to Section 24[13] of Republic Act No. 7916,[14] as amended by Rep. Act No.  8748.[15] Thus, since respondent was not subject to VAT, the Commissioner contended that the capital goods it purchased must be deemed not used in VAT taxable business and therefore it was not entitled to refund of input taxes on such capital goods pursuant to Section 4.106-1 of Revenue Regulations No. 7-95.[16]
2005-02-11
PANGANIBAN, J.
Sales made by a VAT-registered person in the customs territory to a PEZA-registered entity are considered exports to a foreign country; conversely, sales by a PEZA-registered entity to a VAT-registered person in the customs territory are deemed imports from a foreign country.[74] An ecozone -- indubitably a geographical territory of the Philippines -- is, however, regarded in law as foreign soil.[75] This legal fiction is necessary to give meaningful effect to the policies of the special law creating the zone.[76] If respondent is located in an export processing zone[77] within that ecozone, sales to the export processing zone, even without being actually exported, shall in fact be viewed as constructively exported under EO 226.[78] Considered as export sales,[79] such purchase transactions by respondent would indeed be subject to a zero rate.[80]
2005-02-11
PANGANIBAN, J.
Fourth, even the rules implementing the PEZA law clearly reiterate that merchandise -- except those prohibited by law -- "shall not be subject to x x x internal revenue laws and regulations x x x"[86] if brought to the ecozone's restricted area[87] for manufacturing by registered export enterprises,[88] of which respondent is one. These rules also apply to all enterprises registered with the EPZA prior to the effectivity of such rules.[89]
2005-02-11
PANGANIBAN, J.
Fourth, even the rules implementing the PEZA law clearly reiterate that merchandise -- except those prohibited by law -- "shall not be subject to x x x internal revenue laws and regulations x x x"[86] if brought to the ecozone's restricted area[87] for manufacturing by registered export enterprises,[88] of which respondent is one. These rules also apply to all enterprises registered with the EPZA prior to the effectivity of such rules.[89]
2005-02-11
PANGANIBAN, J.
Fourth, even the rules implementing the PEZA law clearly reiterate that merchandise -- except those prohibited by law -- "shall not be subject to x x x internal revenue laws and regulations x x x"[86] if brought to the ecozone's restricted area[87] for manufacturing by registered export enterprises,[88] of which respondent is one. These rules also apply to all enterprises registered with the EPZA prior to the effectivity of such rules.[89]
2005-02-11
PANGANIBAN, J.
Fourth, even the rules implementing the PEZA law clearly reiterate that merchandise -- except those prohibited by law -- "shall not be subject to x x x internal revenue laws and regulations x x x"[86] if brought to the ecozone's restricted area[87] for manufacturing by registered export enterprises,[88] of which respondent is one. These rules also apply to all enterprises registered with the EPZA prior to the effectivity of such rules.[89]