DOJ Opinion No. 164, s. 1989

DOJ OPINION NO. 164 , s. 1989 August 18, 1989 Mr. Emmanuel V. de Ocampo President Veterans Federation of the Philippines Veterans Memorial Annex Building Arroceros St., Manila Sir : This refers to your request for opinion as to whether or not the tax exemption accorded to the Veterans Federation of the Philippines (VFP) by Section 11 of R.A. No. 2640, is deemed withdrawn by Section 1 of Executive Order No. 93 dated December 17, 1986, which provides: "SECTION 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn, except: a) those covered by the non-impairment clause of the Constitution ; b) those conferred by effective international agreements to which the Government of the Republic of the Philippines is a signatory; c) those enjoyed by enterprises registered with; (i) the Board of Investments pursuant to Presidential Decree No. 1789, as amended; (ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66, as amended; (iii) the Philippine Veterans Investment Development Corporation Industrial Authority pursuant to Presidential Decree No . 538, as amended ; . . . (Emphasis ours) You contend that the tax exemption granted to the VFP R.A. No. 2640 still subsists as the creation of the Federation by the said law is in the nature of a "contract between the government and the veterans, their widows and orphans," which falls within the first exception (par. [a]) mentioned in Section 1 of E.O. No. 93. You also cite judicial precedents and legal provisions (Sec. 4 & 6, R.A. No. 2640) showing the benevolent and non-profit character of the Federation, and conclude that the inclusion of the VFP within the purview of E.O. No. 93, would be inconsistent with the provisions of Section 7 Article XVI, of the 1987 Constitution, which reads: "SEC. 7. The State shall provide immediate and adequate care, benefits, and other form of assistance to war veterans and veterans of military campaigns, their surviving spouses and orphans. Funds shall be provided therefor and due consideration shall be given them in the disposition of agricultural lands of the public domain and in appropriate cases, in the utilization of natural resources." We regret to inform you that we are constrained to decline your request for an opinion on the aforesaid issued. As a matter of policy and by well-established precedents, the Secretary of Justice refrains from rendering opinion or giving legal advise on matters falling within the competence of a coordinate and co-equal department of the government over whom he has no revisory authority. Under Section 4 of E.O. No. 93, the Department of Finance is charged with the responsibility to promulgate the necessary rules and regulations for the implementation of the said Executive Order. Accordingly, it is suggested that you consult with that Department. prcd However, for your information only, we are quoting hereunder authorities which may be relevant to the subject matter of your query concerning the tax exemption granted to the Veterans Federation of the Philippines, a "public corporation" created by law (R.A. No. 2640) under the control and supervision of the Secretary of National Defense. In Ongsiako v. Gamboa, (86 Phil. 50, 54-55 [1950] cited in Illusorio v. CAR, 17 SCRA 25, 29 [1966] the Honorable Supreme Court adopted a U.S. ruling that: "The prohibition contained in constitutional provisions against impairing the obligation of contracts is not an absolute one and it is not to be read with literal exactness like mathematical formula. Such provisions are restricted to contracts which respect property, or some object or value, and confer rights which may be asserted in a court of justice, and have no application to statute relating to public subjects within the domain of the general legislative powers of the State , and involving the public rights and public welfare of the entire community affected by it." . . . (Emphasis ours) A former Associate Justice who became Chief Justice of the Supreme Court stated: "A charter by the state to a private corporation is a contract, but excepted out of its coverage [non-impairment clause] in view of the explicit declaration in the Constitution itself that no 'franchise or right shall be granted to any individual, form or corporation, except, under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the public interest so requires.' Charters granted to municipal or other public corporations do not come within the category of contracts thus protected." (E.M. Fernando on the Bill of Rights, 2nd ed. [1972] Phoenix Press, Inc., Q.C., p. 110) "A problem as to a taxing measure giving rise to a question of non-impairment is not likely to arise except where previously a tax exemption for a valid consideration had been granted. It is easy to understand why such should be the case. Where the tax burden is made to fall, there it must rest and must be satisfied. . . This brings us then to a case of a tax exemption. Where a charter whether national or local either exempts the grantee from taxation or limits the rate of the tax collectible, there is nothing to prevent Congress, or, where a reservation is made, a municipal corporation, from doing away with or diminishing such a privilege, without giving rise to a non-impairment question." (ibid, p. 116) prcd Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice