3% Franchise Tax on Gross Receipts and Corporate Income Tax on Income

March 2, 1987 BIR RULING NO. 063-87 227 000-00 063-87 Gentlemen : This refers to your letter dated January 28, 1987 requesting in behalf of your client, Globe Mackay Cable and Radio Corp. (GMCRC) a ruling as to the effectivity of Executive Order No. 72 which imposes a 3% franchise tax on telecommunication companies, among others, and subjecting them to income tax. In effect, you are requesting a modification of Revenue Memorandum Circular No. 49-86 and BIR Ruling No. 282-86 particularly that portion thereof which states that "the provisions of Executive Order shall be enforced strictly beginning December 1, 1986". In reply, please be informed that the Supreme Court, in the case of Taada, et al. vs. Tuvera, et al ., G.R. No. 63915 dated December 29, 1986 held that all statutes, including those of local application and private laws, presidential decrees and executive orders promulgated by the President shall be published as a condition for their effectivity, and that while newspapers of general circulation could better perform the functions of communicating the laws to the people as such periodicals are more easily available, have a wider readership and come out regularly, that kind of publication is not the one required or authorized by existing law but publication in the Official Gazette despite its erratic releases and limited readership, as provided for in Article 2 of the new Civil Code . Accordingly, notwithstanding its publication in full on December 1, 1986 in newspapers of general circulation, Executive Order No. 72 became effective only upon its publication in the Official Gazette dtd. December 15, 1986. However, since the Official Gazette which published said Executive Order was released for circulation only on January 26, 1987 as evidenced by a Certification issued by the Copy Editor of the Official Gazette Section, its effectivity should be reckoned from that date. Such being the case, pursuant to Article 2 of the new Civil Code reading: iatdc "Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. . . . " and in line with the Supreme Court decision in the case of Lara vs. Del Rosario, 94 Phil. 778, your client will start paying the 3% franchise tax on gross receipts and corporate income tax on income accrued after fifteen (15) days reckoned from January 26, 1987, the date when the Official Gazette publishing Executive Order No. 72 was released for circulation or on February 10, 1987. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner