Request for Opinion Relative to the Implementation of R.A. No. 8794

DOJ OPINION NO. 035 , s. 2012 June 1, 2012 Engr. Adolfo L. Escalona Executive Director, Road Board 2nd Floor, Ave. Maria Bldg. 1517 Examiner St., Quezon Ave. Quezon City Dear Executive Director Escalona : This refers to your request for opinion on the queries stated therein relative to the implementation of Republic Act No. 8794. 1 Specifically, you seek our opinion on the following: EDcIAC 1. Whether or not the proposed increase in the Motor Vehicles User's Charge (MVUC) may be collected or implemented on a staggered basis; and 2. Whether or not the rate of the proposed increase may vary depending on the type, displacement, cost and/or intended use of the motor vehicle. You state that the Road Board, 2 jointly with the Department of Finance (DOF), is proposing an increase in the rates of the MVUC to address the ever increasing demand in the maintenance of national highways; that the Road Board has consulted the National Economic Development Authority (NEDA) which agreed that the MVUC rates may be increased by about thirty to forty percent after due consideration of the Consumer Price Index (CPI) during the past seven (7) years; that the proposed increase will be implemented on a staggered basis ( i.e. , over a period of 2 to 3 years) to soften the economic impact on motor vehicle owners; that the increase will not be uniform and should take into account the principal use, displacement, and the cost of the motor vehicle. You further state that the NEDA opined that the staggered increase in MVUC rates may run counter to the legal provision in R.A. No. 8794 that there should only be one increase every five (5) years. The Road Board Secretariat and the DOF are of the view that the increased MVUC rate will not violate the law because the proposed increase will only be effected once and it is only the actual collection thereof which will be deferred and implemented on a staggered basis. Hence, this request for opinion. Subject to discussion hereunder, we resolve the above-mentioned queries in the affirmative. In rendering this opinion, this Department, however, has not taken into account the financial and technical merits of the proposed increase because they are within the competence and jurisdiction of NEDA, DOF and the Road Board. As regards the legal issue on whether the proposed increase in MVUC rates may be collected or implemented on a staggered basis, the resolution thereof involves an interpretation of Section 3 of RA. No. 8794 which, insofar as pertinent, provides: "SECTION 3. Rates of the Motor Vehicle User's Charge. (a) For private passenger cars registered as of the date of effectivity of this Act, the MVUC to be paid shall be the private motor vehicle tax under Executive Order No. 43, series of 1986, plus twenty-five percent (25%) for the first year, fifty percent (50%) for the second year, seventy-five percent (75%) for the third year, and one hundred percent (100%) for the fourth year and thereafter: Provided, however, That private passenger cars to be registered for the first time after the effectivity of this Act, shall be subject to the MVUC rates prescribed in Section 3(b) hereof. CDEaAI "(b) Except as provided under Section 3(a) hereof, for each motor vehicle under each of the categories as herein provided, the MVUC shall be collected from and paid by the vehicle owner, at the following base rates plus twenty-five percent (25%) in the first year from the effectivity of this Act; the said base rates plus fifty percent (50%) in the second year from the effectivity of this Act; the said base rates plus seventy-five percent (75%) in the third year from the effectivity of this Act; and the said base rates plus one hundred percent (100%) in the fourth year from the effectivity of this Act and thereafter: Provided, That the MVUC for sports utility vehicles shall be fifteen percent (15%) higher than the MVUC herein set for private utility vehicles: Provided, further, That motorcycles for hire with sidecars shall not pay more than Three hundred pesos (P300.00). xxx xxx xxx "After the fourth year from the effectivity of this Act, the President of the Philippines may adjust rates contained in Section 3 which shall be reflective of but shall not exceed the annual rate of increase of the Consumer Price Index (CPI). The President may adjust such rates not more than once every five (5) years ." (emphasis ours) A cursory reading of this provision readily reveals that the President has the power to increase the MVUC rates. Moreover, the limitations imposed on the exercise of that power appear two-fold, namely, 1) the rate of increase shall not exceed the annual rate of increase of the CPI, and 2) the adjustments in the rates can only be done once every five years. We are of the view that the implementation of the proposed increase, although its collection would be on a staggered basis, would not transgress the provision of the law above-quoted. Firstly, it is clear that there is only one rate 3 of adjustment to be proposed by the Road Board for the approval of the President. We take it to mean that that there will be no further adjustments or increase in such rate within the next five (5) years. Secondly, R.A. No. 8794 recognizes the importance of a staggered collection in the MVUC rate to soften its impact on motor vehicle owners. This is evident in Section 3, supra , where the collection of the MVUC rate was done in four (4) tranches to achieve 100% percent of increase from the previous motor vehicle tax imposed under Executive Order No. 43, series of 1986. TaEIAS To our mind, an interpretation that would not admit of allowing a staggered collection would be "to interpret the law by the letter that killeth, not by the spirit that giveth life". In Secretary of Justice vs. Koruga , 4 the Supreme Court ruled: "The general rule in construing words and phrases used in a statute is that in the absence of legislative intent to the contrary, they should be given their plain, ordinary, and common usage meaning. However, a literal interpretation of a statute is to be rejected if it will operate unjustly, lead to absurd results, or contract the evident meaning of the statute taken as a whole . After all, statutes should receive a sensible construction, such as will give effect to the legislative intention and so as to avoid an unjust or an absurd conclusion. Indeed, courts are not to give words meanings that would lead to absurd or unreasonable consequences." The adoption of a staggered collection will definitely cushion the economic impact or render least cumbersome the implementation of the proposed increase in MVUC rates. As regards the second issue, we take the opportunity to highlight that the MVUC rates imposed by R.A. No. 8794 and its Implementing Rules and Regulations are not uniform but varying rates or schedules depending on the type of vehicles. Hence, any proposed increase should reflect the equitable rate used in determining the imposition of the MVUC rate, i.e. , depending on the type, displacement, cost and/or intended use of the motor vehicle. Please be guided accordingly. Very truly yours, (SGD.) LEILA M. DE LIMA Secretary Footnotes 1. Entitled, "An Act Imposing a Motor Vehicle User's Charge on Owners of All Types of Motor Vehicles and for Other Purposes". 2. Under Section 7 of R.A. No. 8794, the Road Board shall be composed of seven (7) members, with the Secretary of the Department of Public Works and Highways as ex officio head, and the secretaries of the Department of Finance, Budget and Management, and Transportation and Communications, as ex officio members. The remaining three (3) members shall come from transport and motorist organizations. 3. The suggested rate of increase is based on the cumulative inflation rate from 2004-2010. 4. G.R. No. 166199, April 24, 2009, citing cases.