Tuesday, February 07, 2012

Province of Misamis Oriental vs. CEPALCO

Facts: CEPALCO was granted a franchise which imposes upon it a franchise tax of 3% of the gross earnings in lieu of all taxes. Pursuant to the Local Tax Code, the Province of Misamis enacted an ordinance imposing a franchise tax of ½ of 1% of CEPALCO’s gross annual receipts for the preceding calendar year. It demanded payment from CEPALCO, which paid under protest. 

Issue: Whether a corporation whose franchise expressly provides that the payment of the “franchise tax of 3% of the gross earnings shall be in lieu of all taxes and assessments of whatever authority upon privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee” is exempt from paying a provincial franchise tax.

Held: No. There is no provision in the Local Tax Code, expressly or impliedly amending or repealing the tax exemption granted to CEPALCO . The rule is that a special and local statute applicable to a particular case is not repealed by a later statute which is general in its terms, provisions and application even if the terms of the general act are broad enough to include the cases in the special law unless there is manifest intent to repeal or alter the special law. The franchise of CEPALCO expressly exempts it from payment of “all taxes of whatever authority” except the 3% tax on its gross earnings. Such exemption is part of the inducement for the acceptance of the franchise and the rendition of public service by the grantee.

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