DOJ Opinion No. 116, s. 1984

DOJ OPINION NO. 116 , s. 1984 August 6, 1984 The Vice-Chairman Board of Investments Industry and Investments Bldg. 385 Sen. Gil Puyat Ave. Ext. Makati, Metro Manila Sir : This has references to your request for opinion on (a) whether or not BOI-registered exporters are exempt from the export duties imposed by Section 514 of the Tariff and Customs Code; and (b) whether or not such exporters are likewise exempt from the payment of the "windfall profits tax" exacted under P.D. No. 1891. You state that Section 514 of the Tariff and Customs Code, as amended by P.D. 1464, imposes an export duty on certain products enumerated therein and that Executive Order No. 920, inter alia , imposes additional export duty on such products. You further state that under Section 7(e) of R.A. 6135 and Art. 48(h) of P.D. 1789, as amended by B.P. 931, a registered export producer of non-traditional expert products is exempted from any export tax, duty, impost and fee. You argue that since there is "no specific repeal of the exemptions" granted in R.A. 6135 and P.D. 1789, "BOI-registered firms should be exempted from said export duties." You also contend that the aforesaid exemption of BOI-registered export producers are "broad enough to include any impost or fee" and if the windfall profit tax imposed in P.D. 1891 is considered an import then there is basis for such producers to be likewise exempted from such tax. We concur on the first issue, but disagree with respect to the other questions. Section 514 of the Tariff and Customs Code provides that "there shall be levied, assessed and collected an export duty on the gross F.O.B. value at the time of shipment based on the prevailing rate of exchange", on the various products enumerated therein. E.O. No. 920, dated 3 November 1983 levied additional export duties and revoked the suspension of export duties provided for some of the products mentioned in Section 514. On the other hand, P.D. 1789 (The Omnibus Investment Code) as amended by B.P. 319 (The Investment Incentives Policy Act of 1983) states that "The provisions of law to the contrary notwithstanding, exports by a registered export producer of its non-traditional registered export product shall be exempted from any export tax, duty, impost and fee, including wharfage fee." (See. 48[h]) A similar provision is found in Section 7(e) of R.A. 6135 (The Export Incentives Act of 1970). The problem apparently arises from the fact that some export products upon which the export duties are levied are the non-traditional products for which a registered export product may claim exemption. Examination of the repealing clause in E.O. 920 shows that the laws on investments incentives have not been expressly repealed, the repealing clause of the Code being limited to those laws and circulars inconsistent therewith.(Sec. 4) Well-settled is the rule in statutory construction that repeals by implication are not favored, and that implied repeals will result only in cases irreconcilable inconsistency between two provisions of law. In this case the laws imposing export duty on certain products may be reconciled and given concurrent effect with the laws granting exception for export tax for the same products, since the latter will have limited application to BOI-registered export products. The legislative intent to accord the said exporters exemption from export duties is stressed by the use of the phrase "the provisions of law to the contrary notwithstanding" in their tax-exemption clauses found in both P.D. 1789 and R.A. 6135. True, while E.O. 920 is the latest enactment of the law making power, the amended rates of export duty should apply to export products dutiable under the latter Code, but not those which are exempted from the duties imposed thereunder, such as exports of BOI-registered firms. LexLib With respect to the windfall profits tax" imposed in P.D. 1891, however, it is our view that BOI-registered exporters are not exempted therefrom. The reason is that said tax is imposed not on the exportation of a certain product, but upon "the extraordinary gains from export sales arising from any adjustment of the value of the Philippine currency". Expressed differently, the tax imposed in Section 514 of the Tariff Code, from which BOI-registered exporters are exempted, is based upon the act of exporting merchandise for sale abroad, whereas, the tax levied in P.D. 1891 is based on the extraordinary profits realized by exporters as a result of the devaluation of the peso. Since the basis of taxation is different, the exemption from one cannot apply to the other. In sum, it is our opinion that while BOI-registered export producers of non-traditional export products are exempted from the export duties imposed in Section 514 of the Tariff and Customs Code as amended, they are liable for the payment of the "windfall profits tax" exacted under P.D. 1891. Please be advised accordingly. Very truly yours, (SGD.) ESTELITO P. MENDOZA Minister of Justice