DOJ Opinion No. 140, s. 1981

DOJ OPINION NO. 140 , s. 1981 October 5, 1981 The Insurance Commissioner Komisyon ng Seguro P.O. Box 3589, Manila M a d a m : This has reference to your request for advice as to whether the opinion dated November 22, 1961 of then Secretary of Justice Alejo Mabanag, that American insurance companies not authorized to transact business in the Philippines may solicit business exclusively inside US military installations, "still obtains at present" in the light of the 1979 amendments to the RP-US Military Bases Agreement and Section 309 of the Insurance Code (PD 612). We answer your query in the affirmative subject to the extended discussion hereinafter set forth. LLjur You state that the present query has arisen in view of the query posed to your Office by the law offices of De los Reyes, De la Rosa and Associates as to "whether Fidelity Interstate Life Insurance Company, an insurance company not authorized to transact business in the Philippines, may solicit insurance business within the United States military installations or bases located in the Philippines"; and that in the subject opinion, it was ruled that if under the first paragraph of Article XVIII of the Military Bases Agreement of 1947, "the United States is authorized . . . to grant a baseland concession for the establishment of an insurance company catering exclusively to United States military personnel", there is "no reason why it may not, short of granting said concession, merely authorize underwriters of American companies to solicit insurance business within military bases from the class of individuals mentioned above". We take it that you doubt the continuing validity of said ruling in view of the 1979 amendments to the RP-US Military Bases treat, as well as the provisions of Section 309 of the Insurance Code (PD 612), a relatively recent enactment: hence, you query. The 1979 amendments to the RP-US Military Bases Agreement consist of the following: "First, that the bases which are the subject of the agreement are to be known as Philippine Military Bases over which Philippine sovereignty extends, and that only the Philippine flag shall be flown singly at the bases; "Second, that each base shall be under the command of the Philippine base commander; "Third, that the United States shall have the use of certain facilities and areas within the bases, and shall be assured unhampered military operations involving its forces in the Philippines; "Fourth, that the base areas shall be reduced from their erstwhile dimensions; portions of the base areas will be developed by the Philippine Government for non-military purposes, and in this development the United States of America has shown interest and intends to participate; "Fifth, that the Philippine Government will provide for the perimeter security. The proper term will be `will take over perimeter security of the bases'; and "Sixth, that every fifth year from the date of signing of the amendment, and until termination of the Military Bases Agreement, there shall be a thorough and complete review and reassessment of the agreement to ensure that it continues to serve the mutual interest of both parties." [O.G. Vol. 75, No. 7, February 12, 1979] Particularly, the first paragraph of Article XVIII of the said Agreement reads: "Article XVIII Sales and Service Within The Bases "1. It is mutually agreed that the United States shall have the right to establish on bases, free of all licenses, fees, sales, excise or other taxes, or impost; Government agencies, including concessions, such as sales commissaries and post exchanges, messes and social clubs, for the exclusive use of the United States military forces and authorized civilian personnel and their families. The merchandise or service sold or dispensed by such agencies shall be free of all taxes, duties and inspection by the Philippine authorities. Administrative measures shall be taken by the appropriate authorities of the United States to prevent the resale of goods which are sold under the provisions of this Article to persons not entitled to buy goods at such agencies and generally, to prevent abuse of privileges granted under this Article. There shall be cooperation between such authorities and the Philippines to this end." In Opinion No. 125, series 1979, we said in connection with the question of whether the above-quoted modifications of the Bases Agreement have repealed or affected the tax exemption privileges granted thereunder to certain persons and entities inside the military bases, that: prcd "The amendments to the Bases Treaty enumerated are contained in several documents which were executed in the early part of January, 1979 by certain officials of the Government of the Philippines and the United States. These documents consist of (a) the Letter of Presidents Carter to President Marcos, dated January 4, 1979; (b) the letter of US Secretary of States Cyrus Vance to Minister of Foreign Affairs Carlos P. Romulo, dated January 6, 1979; and (c) the Exchange of Notes and Implementing Arrangements concluded between US Ambassador Richard Murphy and Minister of Foreign Affairs Carlos P. Romulo on January 7, 1979. "An examination of the contents of these documents fails to yield any provision which expressly repeals or amend [Articles V, XII and XVIII] of the Bases Treaty granting tax exemptions to certain persons or activities inside the bases, or which may be construed as an implied repeal of any of said articles. There is nothing in these later instruments which deal with taxation or tax-related matters. The principle that repeals by implications are not favored applies to treaties as well as to statutes (See Francesca case cited in O'Connell's International Law, Vol. 2, p. 290; Mamilton vs. One R. Co. 114 NB 399 [1916], John T. Bill Co. vs. U.S. 104 Fed. 2nd 67 [1939]; See also Article 59, Vienna Convention on the law of treaties)." The foregoing observations likewise hold true with regard to the issue of whether the provisions of Article XVIII of the bases treaty granting concessions to the United States have been repealed or modified by the 1979 amendments, supra . Indeed, these is no mention whatsoever in these amendments of services or concessions inside military facilities and installations of the US armed forces in the country. Accordingly, we hold the view that the opinion of former Secretary of Justice Alejo Mabanag to the effect that the United States Government may authorize underwriters of American insurance companies to do business with US military servicemen inside a US military installation, although such companies are not authorized to transact business in the Philippines, has not been adversely affected by the 1979 amendments to the RP-US Military Bases Treaty; and therefore the said opinion is still valid and effective. cdlex As regards the prohibition in Section 309 of the Insurance Code against the solicitation of insurance by "companies not authorized to transact business in the Philippines", we believe that this does not apply to American insurance firms doing business inside US military facilities because section 309 itself explicitly admits the existence of exceptions whenever "otherwise provided by law or treaty". The instant case presents an exception provided for by treaty. Please be advised accordingly. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice