DoF seeks reconsideration of SC wage ruling

Posted on March 30, 2017

THE Department of Finance (DoF) has filed a motion for reconsideration on a Supreme Court (SC) ruling that nullified limits on tax exemptions enjoyed by minimum wage earners.

The Supreme Court building in Manila.
According to Finance Assistant Secretary Mark Dennis Y.C. Joven, the DoF has not drafted rules for the tax refunds to minimum wage earners (MWEs), as it is still waiting for the SC to act upon its motion following its receipt of the decision last month.

“It is currently pending on motion for reconsideration with the Supreme Court. If denied by the SC and upon attaining finality, a refund process will be formulated in accordance with the SC’s ruling,” said Mr. Joven in an e-mail yesterday.

Tax Management Association of the Philippines (TMAP) President Maria Lourdes P. Lim said the SC decision is “highly unlikely” to be reversed, adding that the DoF may be just buying time before implementing the ruling.

“[The DoF] has the right to appeal or to file a motion for reconsideration. I think it’s really more of exercising their right and buying some time,” said Ms. Lim in a phone interview yesterday.

“In terms of substance, they won’t be able to overturn the Supreme Court’s decision, but at least that would buy time as well for the BIR (Bureau of Internal Revenue), because I guess, it’s not that easy to implement,” she added.

“I don’t think they will have new arguments, it will just be a reiteration of the [regulation]. I think they know that the Supreme Court has a strong decision” said Ms. Lim.

On Jan. 24, the SC released a 56-page unanimous decision that found revenue regulation 10-2008, approved by the DoF and the BIR, to be void as the regulation disqualifies minimum wage earners from availing of tax exemptions granted by law under Republic Act (RA) 9504. The law granted MWEs exemption from payment of income tax on minimum wage, holiday pay, overtime pay, night shift differential pay and hazard pay.

The Court also ordered the Secretary of Finance and Commissioner of Internal Revenue to grant tax refunds through withholding tax adjustments or direct tax credits for affected individual taxpayers.

The high court decision however, has not set a timetable for its implementation.

Ms. Lim said that the BIR will face difficulties if taxpayers who overpaid their obligations are no longer with the same employer, since the tax exemption limit was imposed back in 2008.

“We think that it is easier if it is a tax credit on the part of employers, however what if the employee have already left the company?” said Ms. Lim in Filipino.

“Another issue would be if the employer has ceased to operate,” said Ms. Lim.

TMAP -- one of the petitioners in the Supreme Court case -- is coordinating with the BIR to identify procedures that would facilitate the refund, according to Ms. Lim. -- Elijah Joseph C. Tubayan