Republika ng Pilipinas
KAGAWARAN NG KATARUNGAN
Department of Justice
OPINION NO. 59, S. 1998
May 25, 1998
Hon. Melito F. Salazar, Jr.
DTI Undersecretary and
BOI Vice-Chairman and
Board of Investments
Industry and Investments Bldg.
S i r :
This refers to your request for confirmation of your view “that the fiscal incentives with a different availment period granted to the downstream oil industry under Republic Act No. 8479, constitutes a grant of new benefits,” despite a reference in the said law to E.O. No. 226 (The Omnibus Investments Code of 1987), as amended, whose capital equipment incentive already expired on December 01, 1997.
The query, it appears, is raised in connection with the implementation of R. A. No. 8479, specifically, the drafting of Guidelines to govern the registration of persons engaged in the downstream oil industry which, you claim, is already listed in the 1996 Investment Priorities Plan as a mandatory inclusion, and in an effort of the Board of Investments to identify “not only the criteria for covered oil industry enterprises and their location but also and more importantly, the duration of allowable capital equipment incentives.”
You state that R. A. No. 8479 and its Implementing Rules and Regulations expressly provide for a period of five (5) years fiscal incentives such as income tax holiday, additional deduction for labor expenses, minimum tax and duty of 3% and value added tax (VAT) on imported capital equipment, tax credit on domestic capital equipment, exemption from contractor’s tax, unrestricted use of consigned equipment, exemption from real property tax on production equipment or machineries, exemption from taxes and duties on imported spare parts and other applicable incentives under Article 39 of E. O. No. 226.
You also state that while under Article 39 (c) of E. O. 226, as amended by R. A. 7918, BOI enterprises “enjoy virtually the same set of incentives as referred above, including the availment of a 100% tax and duty exemption on imported equipment and its accompanying spare parts, said tax and duty exemption “already expired on December 31, 1997 for BOI enterprises registered in 1994 and 1995 and located within the National Capital Region.”
The above, notwithstanding, is your view that “enterprises with new investments in refining, storage, marketing and distribution of petroleum products as determined by the Department of Energy and registered with the Board of Investments shall be entitled to the fiscal incentives enumerated in R. A. No. 8479.”
Section 9 of the Downstream Oil Deregulation Act of 1998 (R. A. No. 8479) is clear and categorical, to wit:
“SEC. 9. Incentives for New Investments. – To the extent applicable, persons with new investments as determined by the DOE and registered with the BOI in refining, storage, marketing and distribution of petroleum products, shall be extended the same set of incentives in a preferred area of investments pursuant to the ‘Omnibus Investments Code of 1987.’”
Such incentives shall include:
“(1) Income tax holiday;
“(2) Additional deduction for labor expenses;
“(3) Minimum tax and duty of three percent (3%) and value-added tax (VAT) on important capital equipment;
“(4) Tax credit on domestic capital equipment;
“(5) Exemption from contractor’s tax;
“(6) Unrestricted use of consigned equipment;
“(7) Exemption from the real property tax on production equipment or machineries;
“(8) Exemption from taxes and duties as imported spare parts; and
“(9) Such other applicable incentives under Article 39 of Executive Order No. 226.
“Any provision of law to the contrary notwithstanding, the said incentives may be availed by persons with new investments for a period of five (5) years from registration with the BOI: Provided, however, That in the storage, marketing and distribution of petroleum products, only the investments of new industry participants shall be entitled to incentives provided in the said Code. As used herein, “marketing of petroleum products” shall include the establishment of gasoline stations.
“For this purpose, the industry shall be included in the annual Investment Priorities Plan (IPP); Provided, That nothing herein contained shall preclude qualified persons or entities as provided under the “Omnibus Investments Code” from applying for or continue enjoying incentives and benefits under the said Code.” (R.A. No. 8479) (stress ours.)
It is basic in interpretation of statutes that when the words and phrases of the statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what it says (Baranda vs. Gustilo, 165 SCRA 757, 758-759) without attempted interpretation (Pascual vs. Pascual-Bautista, 207 SCRA 562, 657). The legislature is presumed to know the meaning of the words, to have used the words advisedly, and to have expressed its intent by the use of such words as are found in the statute. Verbe legis non est recindandum, or from the words of a statute, there should be no departure (Globe-Mackay Cable and Radio Corporation vs. NLRC, 206 SCRA 701).
The clear and explicit language of R. A. No. 8479, earlier quoted, leaves no room for doubt. Persons, natural or juridical, with new investments in refining, storage, marketing and distribution of petroleum products, as determined by the Department of Energy (DOE) and registered with the Board of Investments (BOI), shall be entitled to the fiscal incentives granted to BOI-registered enterprises under the Omnibus Investments Code (E.O. No. 226), as amended, including the 100% exemption from taxes and duties on imported equipment and its accompanying spare parts notwithstanding the tax and duty exemption for imported equipment and its accompanying spare parts provided for in the Omnibus Investments Code already expired on December 31, 1997.
By the very language of R. A. No. 8479, the fiscal incentives mentioned herein, as well as those in E.O. 226 which were therein adopted shall be considered as new grants of benefits or incentives for new players in the industry. This conclusion finds ample support in the Sponsorship Speech of Senator Freddie Webb, to wit:
“Senator Webb: Mr. President, although some of the oil companies are not happy about these certain provisions the bill that give new entrants certain advantages, we are doing this to share the lady Senator’s opinion about the importance of competitiveness. So, there is an enticement in the bill for new players to get involved in the industry by tax relief, by incentives. There are a couple of things that I feel will entice the new entrants to enter into the oil industry.
x x x x x x
“Having said that, Mr. President, just to put on record, I mentioned about incentives that hopefully would be granted to the new players: If I may, first is the income tax holiday; second is the TAX ON DUTY EXEMPTIONS ON IMPORTED CAPITAL EQUIPMENT; third is tax credits on domestic capital equipment; fourth is tax credits for taxes and duties on raw materials used in the manufacture, processing and production of exports; fifth is the additional 50% deduction on labor expense; sixth is the simplification of customs procedures; seventh is the unrestricted use of consigned equipment; and the last is the employment of foreign nationals.
x x x x x x
(Records of the Senate, Senate Bill No. 2386, pp. 84-85).”
Indeed, that statement of legislators, while not controlling (Resins, Inc. vs. Auditor General, 25 SCRA 754) may be considered when, in the instant case, there are expressed in the law itself (see 2 Sutherland, Stat. Const., 3rd ed. p. 505 cited in Martin, Statutory Construction, Revised (1972) Ed., p. 112).
The foregoing considered, we agree with and confirm your view that the fiscal incentives granted to the downstream oil industry participants under R. A. No. 8479 are new grants of benefits which the subject industry players may avail of notwithstanding the reference in said Republic Act to E. O. No. 226 whose capital equipment incentives are already non-existent.
Please be guided accordingly.
Very truly yours,
SILVESTRE H. BELLO III
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