DOJ Opinion No. 084, s. 1993

DOJ OPINION NO. 084 , s. 1993 July 1, 1993 Asst. Secretary Aurora F. Timbol Department of Trade and Industry 361 Sen. Gil J. Puyat Avenue Makati, Metro Manila M a d a m : This has reference to your request for clarification regarding "the impact of the Local Government Code on the exemptions [from] real property taxes of the machinery and equipment used in the production of enterprises located in export processing zones." LexLib You state that under Article 78 (a) and (b) of Executive Order No. 226 (Incentives To Export Processing Zone Enterprises), zone registered enterprises are subject to real property taxation; that the exemption granted in said article to such enterprises pertain only to machineries and equipment operated by these entities; that under Article 234 of the Local Government Code (R.A. No. 7160), the aforesaid exemption granted to zone-registered enterprises appears to have been withdrawn, "resulting in the power of the LGUs to tax them in addition to the land itself". You now raise the following queries: "1. Does the Local Government Code repeal the exemptions granted under Executive Order No. 226, e.g. the exemptions of machineries and equipment granted under Art. 78(a) and (b)? (2) Do the LGUs have to share the real property tax collection with the [Export Processing Zone] Authority on a 50-50 basis?" Article 78(a) and (b) of E.O. No. 226 reads as follows: "(a) Exemption from Local and Licenses. Notwithstanding the provisions of law to the contrary, zone registered enterprises shall, to the extent of their construction, operation or production inside the zone be exempt from the payment of any and all local government imposts, fees, license or tax except real estate taxes which shall be collected by the Province/City/Municipality responsible for the collection thereof under the provisions of the Real Property Tax Code; Provided, That machineries owned by zone registered enterprises which are actually installed and operated in the zone for manufacturing, processing or for industrial purposes shall not be subject to the payment of real estate taxes for the first three (3) years of operation of such machineries; Provided, further, That fifty percent (50%) of the proceeds of the real estate taxes collected from all real properties located in the zone and such other areas owned or administered by the Authority shall be remitted to the Authority by the Province/City/Municipality responsible for the collection of such taxes under the provisions of the Real Property Tax Code. All real estate taxes accruing to the Authority as herein provided shall be expended for such community facilities, utilities and/or services as the Authority may determine. (b) Production equipment or machineries not attached to real estate, used directly or indirectly, in the production, assembly or manufacture of the registered product of the zone registered enterprise shall be exempt from real property taxes". prcd On the other hand, Article 234 of the Local Government Code reads, insofar as pertinent, viz : "SEC. 234. Exemption from Real Property Tax . The following are exempted from payment of the real property tax: xxx xxx xxx Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code." With respect to the first question, please be informed that this issue was passed upon in a very recent opinion of this Department. Therein, it was opined "that EPZA-registered zone enterprises which were enjoying realty tax exemption privileges as regards their production machineries and equipment at the time of the effectivity of the LGC shall continue to enjoy such privileges until the relevant expiry date of such privileges" (Secretary of Justice Opn. No. 55. c.s.). Attached hereto is a copy of said opinion for your guidance and further enlightenment. Anent the second question, we believe that the fifty-fifty (50-50) sharing of the proceeds of real property tax collections from zone registered enterprises between the Export Processing Zone Authority and the relevant local government unit has not been repealed or modified by the Local Government Code. T True, Section 271 of said Code provides for a different distribution scheme of the proceeds of real property tax collections, e.g., in the case of provinces, thirty-five (35%) shall go to the province, forty percent (40%) shall go to the municipality and twenty-five (25%) shall go to the barangay. Our view, however, is that this section of law simply lays down the general rule and does not apply to realty tax collections from zone registered enterprises, which should still be governed by the second proviso of Article 78(a) of E.O No. 226 which states that "fifty percent (50%) of the proceeds of the real estate taxes collected from all real properties located in the [export processing] zone and such other areas owned or administered by the [Export Processing Zone] Authority shall be remitted to the Authority by the Province/City/Municipality responsible for the collection of such taxes". The pertinent rule in statutory construction is that a prior legislative act is not impliedly repealed by a later law unless there is a plain, unavoidable and irreconcilable inconsistency between them; if both statutes can by reasonable construction stand together, both will be sustained (See also Lichauco vs. Apostol, 44 Phil. 138; Sec. of Justice Opn. No. 16, s. 1992). Moreover, a general law does not modify a special law; instead, the two should be read together and any inconsistency between them should be reconciled by constituting the special law as an exception to the general law (Manila Railroad Co. vs. Rafferty, 40 Phil. 224; Butuan Sawmill, inc. vs. City of Butuan, 16 SCRA 758). prcd The instant queries are answered accordingly. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary