Bureau of Local Government Finance Opinion

October 12, 1993 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Acting Municipal Treasurer Pasig, Metro Manila S i r : This refers to your letter of May 21, 1993 requesting this Department for the resolution of issues on local taxation as regards the following: 1. RCPI's stand that municipality may not impose the franchise tax already granted to the province pursuant to Sec. 137 of the Local Government Code (LGC) of 1991 (R.A. No. 7160). 2. GSIS stand that the real property it owns is exempt from the payment of real property tax pursuant to the provisions of Sec. 33 of PD 1146 and Sec. 28 of C.A. 186 (its Charter), as amended by R.A. No. 728, both sections quoted in their communication. casia The stand of RCPI is based on the contention that the power to impose a tax on business enjoying a franchise has been vested by the Code to the province, hence, the municipality may no longer exercise the imposition of the same. This contention is correct insofar as municipalities that belong to a province are concerned. However, this does not apply to the municipalities of Metropolitan Manila which are authorized under Section 144 of the LGC, as implemented by Art. 236 of the IRR, to levy the franchise tax imposable by provinces under Section 137 of the Code. Accordingly, the municipality of Pasig may exercise the power to impose and collect the franchise tax provided for in Sec. 137 of the LGC as implemented by Art. 226 of the IRR on businesses holding a franchise located within its territorial jurisdiction such as RCPI. As to the stand taken by GSIS, it is informed that Sec. 234 of the Code, particularly the last paragraph thereof, specifically provides as follow: "Sec. 234. Exemptions from Real Property Tax . The following are exempted from payment of the real property tax: xxx xxx xxx "Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or-controlled corporations are hereby withdrawn upon the effectivity of this Code. aisa dc In view of the foregoing, it is clear that the provisions of the charter of GSIS granting it exemption from the payment of real property taxes have been repealed. It is true that repeal of a special law by implication is not favored in this jurisdiction. However, in the case at bar, it cannot be claimed that repeal of the pertinent GSIS charter provisions is by implication only. The language of Section 234 of R.A. No. 7160 aforecited is clear and explicit the tax exemptions enjoyed by government-owned or-controlled corporations are withdrawn upon the effectivity of the Code, which is January 1, 1992. Considering, therefore, that GSIS is a government-owned or-controlled corporation, it can not be denied that it is covered by the aforecited provisions of Sec. 234 of the Code. The contention of GSIS that its specific name Government Service Insurance System (GSIS) should have been expressly mentioned in the code for its tax exemptions privileges to be considered as having been withdrawn is not tenable. casia Accordingly, in dealing with the issues raised by RCPI and GSIS regarding their respective tax liabilities with the municipality of Pasig, that Office, upon due consultations with the Municipal Mayor and, if deemed necessary, the Sangguniang Bayan may adopt the views expressed herein by this Bureau. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director