MANILA ELECTRIC COMPANY, PETITIONER VS. PUBLIC SERVICE COMMISSION, RESPONDENT.

On November 24, 1958, the Manila Electric Company was, upon its application,
authorized to place a firm order and to install and operate at its Rockwell
Steam Plant in San Pedro, Makati, Rizal, an additional electric generating unit
with a 60,000 KW capacity, complete with boiler and other accessories, by the
Public Service Commission. On December 18, 1958, the PSC handed down an order
requiring the MERALCO “to pay to the Commission within thirty (30) days from the
date of its receipt of this order the sum of P27,346.80 as permit fee
authorizing the increase of capacity of its electric plant based on the
additional investment of P27,346,800.00 at the rate of P0.10 for each one
hundred pesos (P100.00) or fraction of said additional investment”.

Under date of December 29, 1958, the MERALCO presented a motion for
reconsideration 6f the above order, contending that the requirement to pay the
permit fee is contrary to law, particularly Section 40 of the Public Service Act
(CA 146), as amended by Com. Act No. 454. The motion was denied on September 11,
1959; hence this appeal.

There is no question of fact involved. The only issue presented to Us is “the
legality of the imposed permit fee of P27,346.80 by the PSC.”

Petitioner’s argument in objecting to the imposition of the fee is centered
on Section 40 of the Public Service Act, as amended by Com. Act No. 454, which
provides—

“SEC. 40.—The Commission is authorized and ordered to charge and collect from
any public service the following fees:

* * * * * * *

“(g) For each permit authorizing the increase of equipment, the installation
of new units or authorizing the increase of capacity, or the extension of means
or general extensions in the services, ten centavos for each one hundred pesos
or fraction of the additional capital necessary to carry out the permit.

* * * * * * *

“All collections of fees provided in this section shall be covered into the
Philippine Treasury. This article shall not be applicable to the Commonwealth of
the Philippines nor to its instrumentalities, nor to enterprises that have
legislative franchises for the exercise of which the law specifies the payment
of a certain per centum of their earnings in lieu of any other taxes, fees, or
license fees.”

Upon the other hand, the State contends that while the franchise of
petitioner exempts it from the payment of taxes and assessments, it does not
exempt it from the payment of fees; and that there is a great difference between
taxes and assessments on one hand and fees on the other (Manila Electric
Company, contra El Auditor General y la Comision, 73 Phil. 128-142).

The petitioner argues that it is not claiming exemption from paying the
permit fee under its franchise; that the exemption is claimed under the law (CA
No. 146, as amended by CA No. 454), the pertinent provision of which states:
“This article shall not be applicable to * * * enterprises that have legislative
franchises for the exercise of which the law specifies the payment of certain
per centum of their earnings in lieu of any other taxes, fees, or license fees”;
and that the distinction between ‘taxes’ and ‘fees’ in the case cited by the
State, is irrelevant to the resolution of the instant appeal, so that an
extended disquisition thereon is deemed superfluous. Under the above arguments,
petitioner submits that as it already pays 5% of its earnings for the exercise
of its legislative franchise, it is exempted to pay the permit fee, because
paragraph 9 of its franchise (as amended), provides that the 5% shall be “in
lieu of all taxes and assessments of whatsoever nature and by whatsoever
authority upon the privileges, earnings, income, franchise, and poles, wires,
transformers and insulators of the grantee, from which taxes and assessments
the grantee is hereby expressly exempted“.

It is true that petitioner seeks exemption under section 40 of the Public
Service Act, as amended by CA No. 454, but it is no less true that said Act
makes reference “to enterprises that have legislative franchises for the
exercise of which the law specifies the payment of a certain per centum of their
earnings in lieu of any other taxes, fees or license fees”, like the herein
petitioner. In the interpretation or construction of the real meaning and intent
of the said act, we should, therefore, take into consideration the provisions of
petitioner’s franchise. Petitioner’s legislative franchise, as amended,
specifies the payment of 5% of its earnings and expressly exempts applicant from
the payment of taxes and assessments. The franchise limits the exemption to the
payment of taxes and assessments. It does not exempt the petitioner from the
payment of fees. If the intention of the lawmakers was to include permit fees,
it could have easily done so. It is presumed that the lawmakers are familiar
with the distinction between taxes (assessments or ‘impuestos’) and fees
(derechos) (Manila Electric Co. vs. El Auditor General y la Comision de
Servicios Publicos, 73.Phil., 128-142). The exemption from the payment of fees
not having been expressly granted in the petitioner’s legislative franchise,
which is a special law governing its operation, the doubt should be, as it is
hereby resolved in favor of the grantor of the privilege, here the State, and
strictly against the party claiming exemption. Whoever claims exemption must be
able to justify his claim by the clearest grant of organic or statute law. An
exemption cannot be permitted to exist upon vague implication (C. Borja vs.
Coll. of Int. Rev., 113 Phil., 568; See also Coll. vs. Manila Jockey Club, Inc.
98 Phil., 670; 53 Off. Gaz; 3762; Song Kiat Chocolate Factory vs. Central Bank,
102 Phil., 477; 54 Off. Gaz; 615).

In view hereof, the decision appealed from, being in accordance with law and
the evidence, is affirmed, with costs against petitioner.

Bengzon, C. J., Padilla, Bautista Angelo, Concepcion, Reyes J. B. L.,
and Dizon, JJ., concur.