BIR Ruling [DA-409-05]

October 4, 2005 BIR RULING [DA-409-05] Mr. Joaquin L. Libardo, Jr . Revenue District Officer Revenue District Office No. 09 La Trinidad, Benguet S i r : This refers to your letter dated September 9, 2005 requesting for clarification of Section 291 of the Tax Code of 1997 in relation to Section 7(B) of Republic Act (R.A.) No. 8424, as amended, which provide that TITLE XIII REPEALING PROVISIONS "Sec. 291. In General . All laws, decrees, executive orders, rules and regulations or parts thereof which are contrary to or inconsistent with this Code are hereby repealed, amended or modified accordingly." TITLE XIV FINAL PROVISIONS "Sec. 7(B) The provisions of the National Internal Revenue Code, as amended, and all other laws, including charters of government-owned or controlled corporations, decrees, orders or regulations or parts thereof, that are inconsistent with this Act are hereby repealed or amended accordingly." on the effect and implementation of the tax incentives provided for under special laws, viz. R.A. No. 7279, otherwise known as the Urban Development and Housing Act of 1992; and R.A. No. 6657, otherwise known as the Agrarian Reform Act of 1997. In reply thereto, please be informed that upon a close examination of the above-cited sections of the Tax Code which is a general law vis-a-vis R.A. Nos. 7279 and 6657 which are special laws, this Office holds that the former did not repeal the latter, notwithstanding the Tax Code has a repealing clause as above-mentioned. This is so because of the following: (1) were it the intention of the legislature to repeal R.A. Nos. 7279 and 6657, it could have easily stated so in the repealing clause of the Tax Code; and (2) it is settled that a general law cannot repeal a special law by implication. The repeal must be express and specific ( People vs. Palma, 76 SCRA 243 ). Repeals by implication are not favored ( Valdez vs. Tuazon, 40 Phil. 943; Bocobo vs. Estanislao, 72 SCRA 520 ) For the legislature is presumed to know all the existing laws on the subject. ( U.S. vs. Palacio, 33 Phil. 208 ) It is to be emphasized, however, that the provisions of the Tax Code would directly apply only on commercial/profitable activities, otherwise, if the authorized activities are imbued with public interest or the taxpayer is mandated to undertake such activity in pursuance of national policy as embodied in the Constitution, the enabling laws (R.A. Nos. 7279 and 6657), which grant the tax incentives to the affected taxpayer, cannot be repealed by legislature's subsequent act of general character (R.A. No. 8424). In other words, the inconsistencies between the general law and special law do not exist where the latter has qualified the transaction to be exempt from taxes. The repealing provisions of the general law will apply only where no special law provides for exemption or where the special law allows only partial exemption. SUCH BEING THE CASE and considering the foregoing circumstances that there is no inconsistency between the general law (R.A. No. 8424) and special law (R.A. Nos. 7279 and 6657), this Office holds that the former did not repeal the latter notwithstanding the repealing clause provided in the general law. TCDcSE Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service