DOJ Opinion No. 032, s. 1986

DOJ OPINION NO. 032 , s. 1986 April 22, 1986 The Administrator Maritime Industry Authority PPL Building, U.N. Avenue, Manila Sir : This refers to your request for opinion concerning the legal status of the Shipyard Development Fund (SDF) constituted pursuant to P.D. No. 666 issued on March 5, 1975 and the authority of the Maritime Industry Authority (MARINA) over such funds in the light of the provisions of P.D. No. 1955. The latter decree withdrew, subject to certain conditions, the duty and tax privileges granted to private business enterprises and/or persons engaged in any economic activity. prcd Particularly, your queries are: 1. With the issuance of P.D. 1955, withdrawing the tax incentive under P.D. 666, MARINA-registered shipyards are now required to pay, among others, the contractor's tax, so that from the effectivity of said decree on 15 October 1984 the SDF has ceased to accumulate since its source which is the amount which would have been paid as contractor's tax is now collectible by the BIR as such with the withdrawal of the exemption therefrom. Under the circumstances, what is the legal status of the SDF accumulated as of 15 October 1984 and the remaining balance thereof? 2. Did P.D. 1955 particularly repeal or supersede P.D. 666 only by withdrawing the exemption from the contractor's tax (among others) or did it likewise affect the authority of the MARINA over the SDF accumulated as of 15 October 1984 and the remaining balance thereof at present? 3. If the answer to question No. 2 above is that P.D. 1955 did not affect the MARINA's authority over the SDF accumulated prior to the effectivity of said decree, can the MARINA continue to administer the SDF and regulate the use thereof under the authority granted by P.D. 666 until the same is finally exhausted or liquidated? The provision of P.D. No. 666 which established the SDF reads as follows: "Section 1. Shipbuilding and ship repair yards duly registered with the Maritime Industry Authority shall be entitled to the following incentive benefits: xxx xxx xxx (c) Exemption from contractor's percentage tax . The gross receipts derived by shipbuilding and ship repairers from shipbuilding and ship repairing activities shall be exempt from the Contractor's Tax provided in Section 91 of the National Internal Revenue Code during the first ten years from registration with the Maritime Industry Authority, provided that such registration is effected not later than the year 1990; Provided , That any and all amounts which would otherwise have been paid as contractor's tax shall be set aside as a separate fund, to be known as "Shipyard Development Fund", by the contractor for the purpose of expansion, modernization and/or improvement of the contractor's own shipbuilding or ship repairing facilities; Provided , That for this purpose, the contractor shall submit an annual statement of its receipts to the Maritime Industry Authority; and Provided, further , That any disbursements from such fund for any of the purposes hereinabove stated shall be subject to approval by the Maritime Industry Authority." The foregoing tax exemption was revoked by P.D. 1955 which withdrew, subject to certain exceptions, "all exemptions from or any preferential treatment in the payment of duties, taxes, fees, imposts and other charges theretofore granted to private business enterprises and/or persons engaged in any economic activity." The said Decree took effect on October 15, 1984 by express provision of Section 4 thereof. A reading of P.D. 1955 would show that it purports merely to withdraw the duty and tax privileges heretofore granted to private business enterprises and persons engaged in economic activity. No mention was made as to the authority of MARINA over the SDF accumulated prior to its effectivity. prcd The clear language as to the date of the effectivity of the decree leaves no room for a retrospective application of the said Decree. Moreover, the retroactive application of statutes is not favored in law (Buyco vs. Philippine National Bank, 2 SCRA 682; Cebu Portland Cement Co. vs. Collector of Internal Revenue, 25 SCRA 789). Thus, P.D. No. 1955 cannot be construed to have adversely affected the legal status of the SDF constituted prior to the effectivity of said amendatory law nor to have revoked the authority of the MARINA over the existing SDF. Notwithstanding that P.D. No. 1955 has repealed, amended or modified all other laws, decrees, executive orders, rules and regulations, or parts thereof which are inconsistent with said Decree, the earlier law continues to be in force with regard to all rights that had accrued prior to such amendment (Buyco vs. Philippine National Bank, 2 SCRA 682), specially so in this case where the latter law explicitly provides for its prospective application. In view of the foregoing, we opine that the legal status of SDF accumulated as of October 15, 1984 and the remaining balance thereof as well as the MARINA's authority thereon, have not been affected by P.D. No. 1955. Very truly yours, (SGD.) NEPTALI A. GONZALES Minister of Justice