DOJ Opinion No. 088, s. 1985

DOJ OPINION NO. 088 , s. 1985 August 5, 1985 The Acting Director Bureau of Energy Utilization Ministry of Energy Merritt Road, Ft. Bonifacio Makati, Metro Manila Sir : This refers to your request for opinion on whether Nonoc Mining and Industrial Corporation "("NMIC") may be exempted from securing prior clearance from the bureau of Energy Utilization ("BEU") as regards its fuel oil importations intended for its own consumption. The query is answered in the affirmative in view of the discussion hereinafter set forth. The accompanying documents disclose that on July 3, 1968, the Philippine Government, through the Surigao Mineral Reservation Board, and the Marinduque Mining and Industrial Investment Corporation ("NMIC"), pursuant to the provisions of R.A. No. 1828, as amended, entered into an operating contract for the development and exploitation of the mineral resources in Phase II of the Surigao Mineral Reservation (the "contract"); that following the establishment of the BEU pursuant to P.D. No. 1206, which conferred upon that agency regulatory authority over the importation and distribution of energy resources, the Central Bank issued a Memorandum directing its agent banks that all applications to import refined petroleum products may be given due course only upon prior written clearance from the BEU; that MMIC, which is a wholly-owned government corporation, subsequently succeeded to the rights and interest of NMIC over the contract; and that the NMIC is seeking exemption from the aforesaid clearance with respect to the fuel oil it imports for its operations on the ground that under the provisions of Section 3(3) of R.A. 1828 and Article VI(2) of the operating contract, NMIC "need not secure prior permit from BEU". Apparently, the contract was entered into by the Philippine Government pursuant to the authority vested on Section 2 of R.A. 1828 which provides that the President of the Philippines shall determine whether the Surigao Mineral Reservation shall be developed by the Government itself or jointly with another private enterprise or through an independent contractor. In the instant case, the Government choose the latter option and the contract with MMIC, the predecessor-in-interest of NMIC, stipulates, insofar, as pertinent: "The OPERATOR shall enjoy the following rights and privileges: (1) Necessary rights over an area or areas for investigation within the Surigao Mineral Reservation: (2) Exemption from laws and regulations relating to: (a) importation of machinery, equipment, accessories, spare parts, and/or supplies and materials necessary for and in connection with said operation or processing of minerals. " (Emphasis ours) (Art. VI) xxx xxx xxx It is noted that the aforequoted contractual provision was entered into pursuant to the provisions of Section 3 of R.A. 1828 which is part reads: "The President may grant to the government entity which may operate the Reservation under Paragraph one or two of Section two or to the operator under paragraph three of the same section, as the case may be, the following rights and privileges: (1) Necessary rights over an area or areas for investigation within the Surigao Mineral Reservation; (2) Exemption from laws and regulations relating to: (a) importation of machinery, equipment, accessories, spare parts, and/or supplies and materials necessary for or in connection with said operation or processing minerals". (Emphasis ours) prcd xxx xxx xxx It is clear from the foregoing statutory and contractual provisions that NMIC, as operator, is exempted from any law or regulation pertaining to its importations of "supplies and materials necessary or in connection with [its operations] and processing of minerals". Without doubt, fuel oil is an essential commodity for its manufacturing operations and requiring the firm to secure a prior BEU clearance for the importation of such commodity intended for its consumption would contravene such exemption. The rule is that where the language of the law is clear, it should be taken to mean what it exactly says. (Gonzaga, Statutes and their Constructions, p. 73; Opn. No. 159, s. 1952) Moreover, it is likewise noted that the President has recently confirmed, in LOI No. 1447 dated February 12, 1985, that the tax exemption privileges of NMIC under R.A. 1828, are transferred to NMIC and that all rights and privileges of an operating contractor under the same law are granted to said corporation. Said LOI states that "1. The tax privileges previously enjoyed by Marinduque and Industrial Corporation Under Section 6, Paragraph 1, of Republic Act no. 1828, as amended by Presidential Decree No 1887, are hereby transferred to Nonoc Mining and Industrial Corporation. Pursuant to such tax exemption, the following shall henceforth be made applicable to Nonoc Mining and Industrial Corporation. (a) Ministry of Finance letter dated June 30, 1983 exempting the Surigao Nickel Refinery from payment of the 3% ad valorem tax under PD No. 860; (b) Bureau of Customs Memorandum Order dated April 11, 1984 authorizing the sale of petroleum to Nickel Mining and refinery Operations duty free. 2. All rights and privileges that are granted to an operator of the Surigao Mineral Reservation under Section 3 of Republic Act No. 1828, as amended, are hereby granted to Nonoc Mining and Industrial Corporation." prcd Please be advised accordingly. (SGD.) ESTELITO P. MENDOZA Ministry of Justice