DOJ Opinion No. 119, s. 1982

DOJ OPINION NO. 119 , s. 1982 July 2, 1982 The Commissioner National Telecommunications Commission Quezon City Sir : This has reference to your request for opinion on certain questions bearing on the application of the Petrophil Corporation, a subsidiary of the Philippine National Oil Company (PNOC),for the installation of additional radio stations for its use, in connection with which Petrophil seeks exemption from the payment of all charges, fees, etc. collected in connection with the permits/licenses issued by that Commission. LibLex You state that the claim for exemption is premised on the provision of Section 15 of the PNOC Charter (P.D. No. 334, as amended), which reads: "Sec. 15. Privileges and Incentives . The Company shall be entitled to all the incentives and privileges granted by law to private enterprises engaged in petroleum or oil operations. "In addition the company shall be exempt from all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities; provided, that, the Company's affiliate corporations as provided in Section 13 hereof, as amended, shall be exempt only from all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities on importations of aircrafts, vessels, tankers, barges and other floating structures, including machinery, engines, motors, equipment, spare parts and materials thereof." The following queries are raised in your letter: "1. Is PNOC exempt from the payment of filing fees, permit and license issued by this Office? "2. If yes, is Petrophil Corporation in its capacity as a subsidiary entitled to the power, privileges and exemption granted to its mother Corporation, the PNOC, with respect to the fees imposed for the construction/installation, operation of telecommunication services and other fees therefor? "3. Is the said Corporation liable to pay penalties for any negligence and/or violations committed against the radio laws, rules and regulations? "4. Is the Petrophil Corporation which is 51% or more capitalized by the PNOC considered a quasi-public corporation like the National Power Corporation?" I 1. The first question is answered affirmatively. The broad and comprehensive language of the exemption granted to PNOC from the payment of all "taxes, duties, fees, imposts and all other charges imposed directly or indirectly by the Republic of the Philippines, ...and other government agencies and instrumentalities," taken in the light of the objectives of the law to give all government assistance and incentives to the Company in its venture to insure adequate supply of oil for the sustained growth of the economy, leaves no doubt about the statutory intent to extend the scope of the exemption to cover any levy, including filing fees, permit and license fees issued by the National Telecommunications Commission. LexLib In this connection, it is pertinent to note that the provisions of Section 23 of P.D. No. 1177, otherwise known as the Budget Reform Decree of 1977, have in effect withdrawn tax exemption privileges of government corporations otherwise exempted by law from the payment of "income taxes, customs duties and other taxes and fees as are imposed under revenue laws" (See Op. No. 1, s. 1980; No. 133, s. 1977). However, the later decree expressly refers to impositions "under revenue laws". Accordingly, if the filing fees and other charges being collected in connection with the permits/licenses issued by that Commission are veritable taxes, or are clearly intended for revenue, the tax exemption may conceivably fall within the purview of P.D. No. 1177, in the same manner that motor vehicle registration fees have been construed as taxes or exactions for purposes of providing public revenue for the support of the government (Op. No. 108, s. 1971). If the filing and permit fees collected by that Office are limited to reasonable charges intended for police purposes, only to cover the cost and expenses of supervision and regulation, they are not intended for revenue (see Ops. Nos. 108, s. 1971; 260, s. 1951; 271, s. 1955; Op. dated January 30, 1964). At any rate, it is academic to expound or rule on this possible legal issue considering that the problem posed here is concerned specifically with the exemption of Petrophil Corporation as a subsidiary of PNOC, which is directly dealt with in the succeeding question. II 2. This query is answered in the negative. As an affiliate corporation Petrophil Corporation (which we are informed is 100% owned by PNOC) is "exempted only from all taxes, duties, fees, imposts and all other charges imposed ...on importations of aircrafts, vessels, tankers, barges, and other floating structures, including machinery, engines, motors, equipment, spare parts and materials thereof." The limited exemption clearly does not cover fees and charges in connection with the installation of radio stations. III 3. With respect to the liability of Petrophil for the payment of penalties for violations of radio laws, rules and regulations, we are not aware of any law or principle that would provide the basis for exemption from such liability. Certainly, the limited tax exemption above-cited does not grant such a basis. IV 4. The term "quasi-public" corporation has been defined as referring to private corporations that render public service or supply public wants. While purposely organized for the gain or benefit of its members, they are required by law to discharge functions for the public benefit (Cooley, Municipal Corporations, p. 12).They have been defined also as corporations private in ownership but having an appropriate franchise from the State to provide for a necessity or convenience of the general public, incapable of being furnished through the ordinary channels of private competitive business. These corporations are also known as "public utilities" or "public service corporations" (1 Fletcher p. 216-217).It has been opined that a quasi-public corporation or one organized for some public purpose, but falling within the class of private corporations may be legally incorporated under the General Corporation Law (See Memo dated January 15, 1969 of Secretary of Justice Juan Ponce Enrile). LexLib We have not been apprised and are not aware of: (a) the particular purposes for which the Petrophil was organized, although it is safe to presume that the investment of PNOC in the Petrophil was intended to promote in general the exercise of the governmental functions of the PNOC; (b) the particular legal context in regard to which the classification of Petrophil would be material, although it is readily perceivable that its classification as a quasi-public corporation will depend on the language and objectives of the law being administered or implemented. Accordingly, we await your supplying us with these particulars to enable us to render opinion upon an existent, valid and real issue and avoid its being premised upon assumptions that may make any discussion for the present purely academic. Until then, we reserve our ruling on the fourth query so as to allow for a more meaningful resolution. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice