DOJ Opinion No. 136, s. 1988

DOJ OPINION NO. 136 , s. 1988 June 29, 1988 MEMORANDUM FOR : Executive Secretary Catalino Macaraig, Jr. FROM : The Secretary of Justice SUBJECT : Whether the are legal impediments to the granting of tax exemption to the Japanese Government for the sales lease or any other manner of disposition, of its properties in the event that the Japanese Government asks for it This refers to your request for advisory opinion relative to the implementation of the provisions of Executive Order No. 296 dated July 25, 1987 which authorities the sale, lease or any other manner of disposition, of the properties of the Philippine Government specified therein to non-Filipino citizens or entities owned by non-Filipino citizens. It appears that the properties subject herein consist of four acquired by the Philippine Government pursuant to the Reparations Agreement entered into by and between the Government of the Philippines and Japan on May (, 1956 and duly concurred in by the Senate under Resolution No. 80 on July 1, 1956. While Republic Act No. 1789, as amended, provides that said properties may be sold, leased or otherwise disposed of only in favor of Filipino citizens or entities wholly owned by Filipino citizens, Executive citizens, Executive Order No. 296 expressly allows their transfer to non-Filipinos and/or entities not owned by Filipino citizens. You state that one of the issues taken up by the principal committee created to implement the said executive issuance is the "possibility of securing an exemption from the Japanese Government to the effect that the tax arising out of the disposition of said properties be turned to the Philippine Government", but that it occurred to the Committee that if the request is favorably considered, the Japanese Government may also ask for the same privilege on a reciprocal basis. Accordingly, you inquire "whether there are legal impediments to the granting of said tax privilege to the Japanese Government in case it asks for it." Article III of the Treaty of Amity, Commerce and Navigation Between the Republic of the Philippines and Japan signed on May 10, 1979 and Paragraph 2 thereof provides: "ARTICLE III xxx xxx xxx 2. Notwithstanding the provisions of paragraph 1 of the present Article, each Party reverses the right to accord special tax advances on a basis of reciprocity or by virtue of agreements for the avoidance of double taxation or the mutual protection of revenue ." (Emphasis supplied.) By very terms of the said Treaty, the Philippine Government can legally accord the Japanese Government the subject tax exemption in the event that the said privilege is requested. While our Constitution gives the same weight and value to treaties as statutes passed by the Congress of the Philippines (Section 2, Article II and Section 4(2), Article VIII), they may, either by their terms from their nature, require legislative action to give them full effect (Crandall, Treaties 2d ed, 230 cited in 20 AJIL 448). If the provisions of a treaty are self-executing, it was held that no legislation was necessary to authorize executive action pursuant to its provisions (Cook v. U.S. 288 U.S. 102, 119-120 citing Ford v. U.S. 273 U.S. 593). On the other hand, it has also been held that when the terms of a treaty stipulation import a contract when either of the parties engages to perform a particular act, the same is not self-executing and would require legislation to carry it into effect (Foster v. Neilson, 77 L. Ed. 415). Considering that Article III of the aforementioned treaty by the terms is not self-executing, legislative action is necessary before the same can be considered operative. prcd In view of the foregoing, it is our view that the grant of a tax privilege in favor of the Japanese Government, albeit on a reciprocal basis, is not a mere political decision of the Executive but requires the participation of Congress by way of legislation. (SGD.) SEDFREY A. ORDOEZ Secretary of Justice