Professional Documents
Culture Documents
1. Yes, they are liable for taxes under the Local Government Code. Both PD No. 87 and
PD No. 972 provides that contractors for petroleum and coal are exempt from all
taxes except income tax. Although these laws were enacted before the Local
Government Code of 1991, the LGC expressly provides that the “Local government
units may, through ordinances duly approved, grant tax exemptions, incentives or
reliefs under such terms and conditions as they may deem necessary.” The same code
also provides that “Unless otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals
and educational institutions, are hereby withdrawn upon the effectivity of this Code.”
The law does not mention of petroleum and coal operators being exempt from taxes.
Hence, the general principle of taxation applies that when in doubt, the tax exemption
should be construed strictissimi juris which means that tax exemptions must be
strictly construed against the taxpayer and liberally in favor of the government.