Publishing Opinion No. 133, s. 1977 of the Secretary of Justice Regarding the Implementation of Section 23 of Presidential Decree No. 1177

March 2, 1978 REVENUE MEMORANDUM CIRCULAR NO. 027-78 TO : All Internal Revenue Officers and Others Concerned SUBJECT : Publishing Opinion No. 133, s. 1977 of the Secretary of Justice Regarding the Implementation of Section 23 of Presidential Decree No. 1177 For the information and guidance of all concerned, Opinion No. 133, s. 1977 dated November 23, 1977 is hereby reproduced in full. "The Deputy Executive Director and Officer-in-Charge National Tax Research Center First BF Condominium Building Aduana St., Intramuros, Manila Sir: This refers to your request for opinion on certain questions concerning the implementation of Section 23 of P.D. No. 1177 (otherwise known as "The Budget Reform Decree of 1977"), which reads: Sec. 23. Tax and Duty Exemptions . All units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws: Provided, that organizations otherwise exempted by law from the payment of such taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties due: Provided, further, that a procedure shall be established by the Secretary of Finance and the Commissioner of the Budget, whereby such subsidies shall automatically be considered as both revenue and expenditure of the General Fund. Particularly, your questions are: 1. Did the above-mentioned provisos of PD 1177 (referring to section 23, supra ) repeal the charters of government-owned or controlled corporations such that even those with tax exemption provisos are now required to pay the taxes and other impositions imposed by existing revenue laws? 2. For a government-owned or controlled corporation to be entitled to subsidy provided in said section 23, is it necessary that said entities must be enjoying tax exemption privileges at the time PD 1177 took effect? I think section 23, supra , has the effect of withdrawing from government-owned or controlled corporations the tax exemptions granted in their respective charters. For I see this provision as a clear and unequivocal expression of the legislative intent to subject all units of government including-owned or controlled corporations to the payment of all taxes, duties and fees imposed under revenue laws. Therefore, the charter of any government corporation which provides for the exemption of the particular corporation from any tax, duty or fee should to the extent of the imposition of the exemption be deemed repealed by P.D. No. 1177. This is in consonance with the rule that prior special laws (the tax exemption provision in the charter) may be repealed by implication upon the enactment of a later general statute (P.D. No. 1177) where the legislative intent to effectuate a repeal is unequivocably expressed (Sutherland, Statutes and Statutory Constitution , Vol. 1, p. 487). In this connection, it might interest you to know that this Office has been reliably informed by the Department of Finance that said department is already enforcing the provisions of the Tariff and Customs Code against all government-owned or controlled corporations, regardless of whether or not they have been enjoying exemptions under their respective charters. As to query No. 2, I think that any government corporation which is exempt by law from tax or duty may ask for the subsidy mentioned in the first proviso of Section 23, supra . And considering that P.D. No. 1177 is aimed at the "institutionalization of budgetary innovations of the New Society" (see its title and 4th preambulatory clause) and is designed to regulate the national budgeting process (see 1st, 2nd, 3rd preambulatory clauses), there would be no reason for differentiating between government corporations which were already enjoying the tax exemption privileges at the time said PD took effect and those which are later granted such exemption, for purposes of carrying out the abovestated purposes of the decree. Indeed, these purposes would not be realized, but on the contrary would be defeated, by an interpretation which would limit the operation of the proviso in question to the former. Accordingly, the second query is answered in the negative. Please be guided accordingly. Very truly yours, (SGD.) VICENTE ABAD SANTOS Secretary of Justice" All internal revenue officers, employees and others concerned are hereby enjoined to be guided accordingly and to give this circular as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8