DOJ Opinion No. 003, s. 1986

DOJ OPINION NO. 003 , s. 1986 January 9, 1986 Mr. Rodolfo A. Salalima Corporate Counsel Radio Communications of the Phils. Inc. Corner New York and EDSA Cubao, Quezon City Sir : This refers to your "appeal" from the ruling of the City Fiscal of Laoag City upholding the action/decision of the City Treasurer requiring the Radio Communications of the Philippines, Inc. (RCPI) to pay to the City Government of Laoag City the franchise tax due from RCPI for the calendar year 1984. It appears that in his letter dated June 7, 1985, the City Treasurer of Laoag City asked the RCPI, Laoag City Branch, to pay the franchise tax due from RCPI pursuant to City Ordinance No 42, series of 1974, as amended, in view of "the express withdrawal of all of (its) tax exemption privileges by P.D. No. 1955". In its reply, the RCPI, thru counsel, disclaimed any liability for the said franchise tax relying, among others, on Section 14 of its franchise (Republic Act No. 2036, as amended) which grants to RCPI exemption from "any and all taxes of any kind, nature or description," save the tax imposed under said section. For this reason, the City Treasurer referred the matter to the City Fiscal for opinion, who in turn opined that "the city can demand payment of the franchise tax due from RCPI despite the alleged exemptions in its franchise" (see 1st Ind. of the City Fiscal dated July 29, 1985). prcd We take it that your "Appeal" is based on Section 47 of the Local Tax Code (P.D. No. 231) which authorizes the Secretary [now Minister] of Justice to review on appeal the decision of the Provincial or City Fiscal "on the legality of any tax ordinance, or portion thereof." It may be noted, however, that this provision refers only to cases where the legality of a local tax ordinance is in question. As your query is not one raised against the legality of a tax ordinance but actually affects or concerns the interpretation of the provisions of P.D. No. 1955 vis-a-vis the tax exemption privilege of RCPI under R.A. No. 2036, as amended, the Minister of Justice is without authority to exercise the appellate power vested in him under the above-cited provision. Nonetheless, it may be useful to invite attention to the fact that the Minister of Finance is the official empowered to promulgate the necessary rules and regulations to effectively implement the provisions of P.D. No. 1955 (see Sec 2), and that in the exercise of said authority, he issued Ministry Order No. 36-84 entitled "Promulgating Rules and Regulations to Implement the Provisions of Presidential Decree No. 1955," Section 2 of which provides insofar as pertinent as follows: "SECTION 2. Exceptions . The withdrawal of exemption from or preferential treatment in the payment of duties, taxes, fees, imposts and other charges shall not affect the following: . . . "(e)those covered by the non-impairment clause of the Constitution, such as franchises ; . . ." (Emphasis supplied) Since what R.A. No. 2036, as amended, clearly grants to RCPI is a franchise and that in consideration of said franchise, RCPI shall pay a certain amount as tax which "shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal , provincial or national, from which taxes grantee is . . . expressly exempted," it seems quite clear that RCPI's case falls under the above-quoted exception clause of Ministry Order No. 36-84 of the Ministry of Finance. prcd Moreover, a franchise is a contract which is protected by the non-impairment clause of the Constitution. (Manila Railroad Co. vs. Rafferty, 40 Phil. 224; Union Light, Heat & Power Co. vs. City of Fort Thomas, 285 S.W. 228). While franchises are subject to legislative amendment, alteration or repeal (Art. XIV, Sec. 5, Constitution), the legislative intent to repeal or abrogate a particular franchise must be clearly and unequivocably expressed in the later enactment, otherwise, the repeal or modification of the franchise cannot be inferred from the broad language of the later law. (Op., Sec. of Justice, dated March 6, 1975 [appeal No. 1, s. 1975]; Phil. Railway Co. vs. collector of Customs, 95 Phil. 35; Manila Railroad Co. vs. Rafferty, supra .) In this connection, please be informed that the opinions of the Minister of Justice are merely advisory in character and are not binding upon government officials who may refuse to be so bound. For a more authoritative ruling on the matter, you may seek the opinion of the Minister of Finance who is the official charged with the implementation of the law involved (P.D. No. 1955) and whose opinions are binding upon the City Treasurer of Laoag City who is subject to his administrative supervision. Very truly yours, (SGD.) ESTELITO P. MENDOZA Minister of Justice