DOJ Opinion No. 071, s. 1981

DOJ OPINION NO. 071 , s. 1981 April 24, 1981 Minister Jose P. Dans, Jr. Ministry of Transportation and Communications PHILCOMCEN Bldg., Ortigas Ave. Pasig, Metro Manila Sir : This refers to your request for opinion on "Whether the fee of 3% of [the] gross income charged by the Bureau of Air Transportation (BAT) as concession privilege fee for the use of its airport facilities by concessionaires is a tax". Subject to the extended discussion hereunder, we answer the query in the negative as the subject fee is being imposed by the BAT in the exercise of its regulatory powers. Nonetheless, PAL should be exempted from the payment of subject fee pursuant to section 13 of its franchise, infra . llcd You state that pursuant to its authority under section 32 of Republic Act No. 776, the Director of the BAT promulgated Revised Administrative Order No. 4, series of 1980, which imposed inter alia , a three percent (3%) charge on the monthly gross income on all ground handling and catering operators servicing airlines at the Manila International Airport (MIA), that the subject fee is collected from the abovesaid operators for their use of the MIA facilities, such as the apron, taxiways, lighting system necessary in the operation of their ground handling and catering services, which use contributes to the wear and tear of such facilities: and that while all other groundhandling and catering operators have paid the imposition in question, the Philippine Airlines (PAL) has refused to pay the same on the ground that the charge is a tax and it is exempted from paying such taxes under Section 13 of its franchise Hence, the present query. The distinction between a tax and a fee are well established in Philippine jurisprudence, to wit: "Impuestos o Taxes son, segun todas las autoridades conocidas, 'an enforced contribution of money or other property assessed in accordance with some reasonable rule of apportionment by authority of a sovereign state, on persons or property within its jurisdiction, for the purpose of defraying the public expenses (26 R.C.L. par. 2, page 13); o 'a rate or sum of money assessed on the person or property of a citizen by government for the use of the nation or state; burdens or charges imposed by the legislative power upon persons or property to raise money for public purposes : (61 C.J., 65); y Derechos O Fees , son por otra parte, 'a reward or compensation allowed by law to an officer for specific services performed by him in the discharge of his official duties; a sum certain given a particular service; the sum prescribed by law as charge for services rendered by public officers ." (25 C.J., 1009) (Manila Electric Co. vs. El Auditor General, 73 Phil. 128; emphasis supplied.) "The difference between the license and property tax are well established. The license represents the permission conceded to do an act, is not supposed to be imposed for revenue , and is in the main for police purposes. A property tax, on the other hand, is a tax in the ordinary sense, assessed according to the value of the property." (City of Manila vs. Tanquintic, 58 Phil. 297; emphasis supplied.) "The character of a tax as a property tax or license or occupation tax must be determined by its incidents, and from the natural and legal effect of the language employed in the act or ordinance, and not by the name by which it is described, or by the mode adopted in fixing its amount. If it is clearly a property tax, it will be so regarded, even though nominally and in form it is a license or occupation tax: and, on the other hand, if the tax is levied upon persons on account of their business, it will be construed as a license or occupation tax, even though it is graduated according to the property used in such business." (Phil. Transit Assn. vs Treasurer of Manila, 83 Phil. 722) The foregoing authorities make it quite clear that when an imposition is collected as an incident of the power to regulate, such imposition is a fee and not a tax. Said imposition may be denominated a "tax", but it is not a tax in the real sense, i.e., an imposition in the exercise of the taxing or revenue-making authority. prcd Applying the foregoing precedents, we believe that subject fee is not a tax, as it is imposed by BAT in the exercise of its regulatory power in regard to the "technical and operational aspects of civil aviation". (Sec. 33[1], RA 776) The BAT is, by law, vested with the management, control and operation of all aerodromes and navigational and other air transport facilities of the government and in the discharge of its administrative jurisdiction over such facilities it is empowered to regulate their use entitles who wish to avail of them. Such regulation may be effected by imposing reasonable fees and charges upon the users of said facilities. Moreover, in the case of Philippine Transport Association vs. Treasurer of Manila, supra , it was held that a property tax imposed upon every motor vehicle being kept in the City of Manila is not a property tax but a license or fee, for the reason that the said tax is imposed for the privilege of operating motor vehicle in the Streets of said city. By analogy, where the BAT charges a fee upon all ground handling and catering operators for the use by the latter of the MIA facilities, such charges should likewise be deemed a license or fee inasmuch as it is imposed upon such operators for the privilege of using facilities. Indeed, it must be for this reason that the fee in question is designated as a concession privilege fee. At any rate, we believe that whether the subject imposition is a tax or fee PAL should not be subject to the payment thereof in view of Section 13 of its franchise (R.A. No. 4271, as amended by P.D. No. 1294) which reads: "Sec. 13.In consideration of the franchise and rights hereby granted, the grantee shall be taxable as provided under subsections (a) or (b), hereunder whichever will result in a lower tax: (a) A tax payable quarterly of 2% on the gross revenues on the grantee from domestic operations plus its gross revenues derived from its outgoing freight and passenger operations; or (b) The basic corporate income tax based on the grantee's worldwide income as provided under Section 24(a) of the National Internal Revenue Code, it being understood that the corporate development tax is imposed by Presidential Decree No. 1158-A shall not apply to the grantee. "The tax paid by the grantee in any of the above alternatives shall be in lieu of all taxes, duties, fees, and licenses of any kind, nature or description , levied, established or collected by any municipal, provincial or National authority; Provided, That the grantee shall pay the tax on its real property in conformity with existing law." (Emphasis supplied) prcd In several opinions, this Office has ruled that when the law uses language as broad and all-embracing as the employed in the second paragraph of the above quoted section, the manifest legislative intent is to exempt the grantee from all kinds of burdens imposed by the government. (See Ops., Secretary of Justice, dated August 31, 1955; No. 16, s. 1978 & No. 171, s. 1979) Thus, regardless of whether the imposition in question may be categorized as fee or a tax, PAL is exempted therefrom on account of the comprehensive nature of its statutory immunity from taxes and fees, expressed in the above-quoted provision of its franchise. Please be guided accordingly. Very Truly yours, (SGD.) RICARDO C. PUNO Minister of Justice