DOJ Opinion No. 029, s. 1997

DOJ OPINION NO. 029 , s. 1997 April 17, 1997 Ms. Ofelia V. Bulaong Governor Board of Investments Industry and Investments Building 385 Gil J. Puyat Avenue Makati City M a d a m : This has reference to your request for clarification/opinion on the exemption from the Expanded VAT Law (Republic Act No. 7716) of firms registered under Republic Act No. 7103 (The Iron and Steel Industry Act). You state that under Section 6 of the Iron and Steel Industry Act, all enterprises certified by the Board of Investments (BOI) as eligible for incentives are entitled to certain incentives as follows: 1. Power, Infrastructure and Auxiliary Facilities 2. Financing 3. Tax and Duty Exemption on Imported Equipment 4. Tax Credit on Domestic Capital Equipment 5. Other Loans 6. Rational Tariff Incentives and Protection Scheme In addition to the foregoing, the certified enterprise shall enjoy other incentives provided under the Omnibus Investments Code, laws creating processing zones and other laws provided it is also registered thereunder (Sec. 7, R.A. No. 7103). You also state that all fiscal incentives under R.A. No. 7103 shall apply for a duration consistent with the provisions of the Omnibus Investments Code, except for those firms in less developed areas which shall be for a period of fifteen (15) years like all the other incentives embodied in the same law (R.A. No. 7103) which shall apply for a period of fifteen (15) years counted from the effectivity of the said law. (Sec. 8, R.A. No. 7103) The repealing clause of R.A. No. 7716 (approved May 5, 1994), pertinently provides, to wit: "SEC. 20. Repealing Clauses . . . . . Paragraphs (c), (d) and (e) of Article 39 of Executive Order No.226, otherwise known as the Omnibus Investments Code of 1987, are hereby repealed: Provided , however , That the benefits and incentives under said paragraph shall continue to be enjoyed by enterprises registered with the Board of Investments before the effectivity of this Act. xxx xxx xxx All other laws , orders, issuances, rules and regulations or parts thereof inconsistent with this Act are hereby repealed , amended or modified accordingly." (stress supplied). You now request comment on the following: "a) Effect of the repealing clause of the EVAT Law on the availment of the capital equipment incentives of steel corporations certified under R.A. 7103"; and b) Effect of the 15 years' availment of incentives by steel corporations certified under Sections 6, 7 and 8 of R.A. 7103. Suppose the incentives have already expired under the other incentive laws, can the certified steel corporations continue to enjoy the incentives for 15 years?" Section 1 of R.A. No. 7716 amends Sec. 99 of the National Internal Revenue Code by imposing the value added tax on any person who imports goods, among others. The said Section reads: "SECTION 1. Section 99 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: 'SEC. 99. Persons Liable . Any person who, in the course of trade or business sells, barters, exchange, leases goods or properties, renders services, and any person who imports goods shall be liable to the value-added tax (VAT imposed in sections 100 to 102 of this Code . xxx xxx xxx." (emphasis ours). In relation to conflicting provisions of laws, a basic rule of statutory construction states that repeals by implication are not favored and will not be so declared unless it be manifest that the legislature so intended (Villegas v. Subido, 41 SCRA 190, 196; Villegas vs. Enrile, 50 SCRA 10, 15). Because laws are presumed to have been passed with full knowledge of all existing laws on the subject, it must be shown, before any implied repeal can be deemed to exist, that the statutes or statutory provisions deal with the same subject matter and that the latter be clearly, convincingly and irremediably inconsistent or repugnant with the former (id., also U.S. vs. Palacio, 33 Phil. 208, 216). This is because the latter law is not presumed to have been passed to abrogate any former law or provision on the same subject, absent such repugnancy, but is to be construed as a continuation of the first act so far as to two relates to the same subject matter (Mecano vs. Commission on Audit, 216 SCRA 500, 506, citing cases). Comparing the pertinent provisions of the two laws, it is apparent that while all enterprises duly certified by the BOI appears to be "exempt from all customs duties" on the imported equipment and entitled to tax credit on domestic capital equipment, among others, under the earlier law (Sec. 6[c] and [d], R.A. No. 7103), Section 1 of R.A. No. 7716, specifically amending Section 99 of the National Internal Revenue Code, unequivocably mandates that any person who imports goods, i.e., all tangible and intangible objects capable of pecuniary estimation (Sec. 100, NIRC, as amended by R.A. No. 7716), shall be liable to the value-added tax (VAT) imposed in sections 100 to 102 of the National Internal Revenue Code. The provision of the later law, which is clearly and convincingly opposed to the provision of R.A. No. 7103, unmistakably limited the all embracing and comprehensive tax exemption privilege both on imported and domestic capital equipment of the affected enterprises by imposing an indirect tax upon said importation. To such extent, R.A. No. 7716, is deemed to have impliedly amended or modified the pertinent provisions of Section 6 of R.A. No. 7103. aisadc Regarding the other issue, Sec. 7 of R.A. No. 7103 provides that in addition to the incentives under said law, a certified enterprise shall also enjoy other benefits and incentives allowed under other laws, like E.O. No. 226 and laws creating the export processing zones. However the incentives and benefits under E.O. 226 have been specifically withdrawn by the EVAT law, except those already enjoyed by the enterprises certified by BOI when the EVAT law took effect (Sec. 20, R.A. No. 7716). The benefits and incentives available under other laws, however, have not been abrogated by the EVAT law. Please be guided accordingly. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary