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THE PROVINCE OF MISAMIS ORIENTAL, REPRESENTED BY THE PROVINCIAL TREASURER, PETITIONER V.

CAGAYAN ELECTRIC POWER AND LIGHT COMPANY, INC.(CEPALCO), RESPONDENT


GR no. L-45355 January 12, 1990 Grino-Aquino, J. 1. CEPALCO was granted a franchise under RA 3247 to install, operate and maintain an electric light, heat and power system in CDO and its suburbs. This was later amended twice. First to include the municipalities of tagoloan and Opol(RA 3570) and second, to include the municipalities of Villanueva and Jasaan(RA6020). 2. These 3 Ras provide that in consideratio of the franchise granted, the grantee shall pay a franchise tax equal to 3% of the gross earnings for electric current sold under the franchise (2% goes to the national treasury and the 1% goes to the treasury of the Municipalities of Tagoloan, Opol, Villanueva and Jasaan, and CDO) provided that the 3% shall be in lieu of all taxes and assessments of whatever authority upon privileges and earnings, income, franchise and poles, wires, transformers, and insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted. 3. 1973, the local tax code (PD231) was promulgated. Section 9 provides that (insert provision here). 4. Pursuant to the PD, the Province of Misamis Oriental enacted provincial revenue ordinance no. 19 imposing a franchise tax of % on businesses enjoying franchise. The provincial Treasurer demanded payment from CEPALCO, at first the latter refused but in view of the opinion of the provincial discal, CEPALCO paid under protest. The ruling of the Provincial Fiscal was appealed to the Sec of Justice who reversed it and ruled in favor of CEPALCO. 5. The case was brought to the Sec. Of Finance who affirmed the opinion of the Secretary of Justice. 6. The province filed in the CFI, a complaint for declaratory relief, praying, anong others, that the court exercise its power to construe the Local Tax Code in relation to the franchise of CEPALCO and declare that the Local Tax Code has amended the franchise. CFI dismissed petition and ordered the province to return what was paid (P4,276.28). Hence this appeal. ISSUE: whether the Local Tax Code has amended the franchise of CEPALCO. NO There is no provision in PD231 expressly or impliedly amending or repealing RA 6020. the repugnancy must be clear before the court could decide if there was any amendment made since there is no express provision found in PD231 to that effect. A special and local statute applicable to a particular case is not appealed by a later statute which is general in terms, unless there is manifest intent to repeal or alter the special law. Presumption: special statutes are exceptions to the general law because they pertain to a special charter granted to meet a particular setof conditions and circumstances. The franchise expressly exempts it from payment of all taxes of whatever authority except the 3%. The phrase shall be in lieu of all taxes... were used in previous franchises and in these cases it was held that the franchises were indeed exempt from other taxes imposed on it except for what was stated in the franchise -Visayan Electric co. v. David: shall be in lieu of all taxes and at any time levied, established by, or collected by any authority. Visayan was exempt from the 5% tax on corporate franchise prvided in the Internal revenue code

-Manila Railroad v. Raferty: shall be in lieu of all taxes of every name and nature. exempts the manila railroad from payment of internal revenue tax for importations of coal and oil -PNR v. CIR: same phrase exempted PNR from payment of the tax on its corporate franchise under sec. 29 of IRC. -Cotabato Light and Power co. v. City of Cotabato: shall be in lieu of all taxes exempted cotabato light from payment of the tax imposed by ordinance no. 7 of the city of cotabato -Carcar Electric & Ice Plant v. CIR: such exemption is part of the inducement for the acceptance of the franchise and the rendition of public service by the grantee. It is a private contract, the imposition of another franchise tax would constitute an impairment of the contract betweent he government and the corporation. -CIR v. Lingayen Gulf Electric Power co.: no other tax other than the franchise tax of 2%... shall be collected exempted said electric company from paying the franchise tax under NIRC. Not all were lucky. Balanga Power plant company. Imus Electric co., Guagua electric company, inc. were subjected to 5% tax on corporate franchise under IRC because Act no 667 of the Philippine Commission and the ordinance granting their respective franchise did not contain in-lieu-of-all-taxes clause. Franchise Tax in the Local Tax code shall be collected from business holding franchise but not from those whose franchise contain the said phrase/proviso. The case cited by the province, Meralco v. Vera is not applicable since the issue in that case was not a franchise tax but a compensating tax on the poles, wires, transformers and insulators which it imported for its use. Petition DENIED. CFI decision AFFIRMED. Justin Benedict A. Moreto

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