Designation of Phil. Council for NGO Certification as Sole Body to Accredit Donee Institutions

DOJ OPINION NO. 018 , s. 2008 April 2, 2008 Secretary Esperanza I. Cabral Department of Social Welfare and Development Batasan Pambansa Complex Constitution Hills, Quezon City Madam : This refers to your request for legal opinion on the queries stated therein relating to the interpretation and application of Executive Order (E.O.) No. 671, 1 dated October 22, 2007, designating certain executive departments, which include the Department of Social Welfare and Development (DSWD),as accrediting entities to determine the qualification of non-stock, non-profit corporations, non-governmental organizations, associations and foundations for accreditation as qualified donee-institutions. aDHCAE Specifically, you raised the following questions: a) Whether or not the delegation of function to the Philippine Council for NGO Certification (PCNC),a private body, to accredit donee institutions for purposes of computing taxable income constitutes undue delegation of power of government agencies, such as the DSWD; and b) Whether or not the Memorandum of Agreement between the Department of Finance (DOF) and PCNC, under which the DOF designated the PCNC as the accrediting entity for donee institutions, pursuant to par. (H), Section 34 of R.A. 8424 (Tax Reform Act of 1997), was already repealed by E.O. No. 671. You state that in view of the absence of a system of accreditation in R.A. 8424, the then Finance Secretary Roberto de Ocampo signed a Memorandum of Agreement dated January 29, 1998 with the PCNC, designating the latter as the sole body to establish and make operational a system of accreditation of donee institutions; and that thereafter, or on December 8, 1998, the then Secretary of Finance Edgardo Espiritu issued Revenue Regulations 13-98 (Implementing R.A. No. 8424) 2 reiterating the authority of the PCNC to accredit donee institutions. It is, however, your position that the delegation of functions of the DSWD and similarly situated government agencies, to the PCNC amounts to undue delegation of power, and that since E.O. 671 does not include PCNC, then it is no longer authorized to issue accreditation. In other words, it is your view that the said executive order effectively repealed the Memorandum of Agreement between the Department of Finance and the PCNC. AaEcDS Hence, the request for our formal opinion. This Department regrets that, in the meantime, it has to decline rendition of the opinion requested. The instant request would inevitably require an interpretation of the said executive order issued by the President. Established precedents, however, forbid this Office from passing upon questions which involve the interpretation/clarification of the official issuances of the President for the reason that unless he believes otherwise, it is his Office which is competent to undertake such interpretation/clarification. 3 Moreover, the issues raised cannot be resolved without taking a closer look at the Memorandum of Agreement entered into by and between the DOF and the PCNC, and Revenue Regulation No. 13-98 issued by the DOF, a coordinate agency of the Department of Justice, which is beyond the revisory authority of this Department. As a matter of policy, the Secretary of Justice does not pass upon the official actuations/rulings/issuances of any government official/office over which this Department exercises neither supervisory nor revisory authority. 4 HSIaAT This policy is, in fact, clearly applicable herein where the issuance of the said revenue regulations was precipitated by par. (H), Section 32, Chapter II (Allowable Deductions to the Gross Income) of R.A. 8424, thus: (H) Charitable and Other Contributions. (1) In General Contributions or gifts actually paid or made within the taxable year to, or for the use of the Government of the Philippines or any of its agencies or any political subdivision thereof exclusively for public purpose, or to accredited domestic corporations or associations 5 organized and operated exclusively for religious, charitable, scientific, youth and sports development, cultural or educational purposes or for the rehabilitation of veterans, or to social welfare institutions, or to nongovernment organizations, in accordance with the rules and regulations promulgated by the Secretary of Finance, upon the recommendations of the Commission, ... Bearing in mind that the accreditation requirement is a precondition for the deductibility of donation or gifts actually paid or made to the accredited donee institution, from the gross income of the donor institution, and eventually, in the computation of the taxable income of the donor institution, the DOF issued Revenue Regulation No. 13-98 by "filling in" the details not provided in the aforesaid provisions of law, for the guidance of all concerned. Having been issued pursuant to its mandate to implement and enforce the Tax Reform Act of 1997, 6 the presumption is that said regulation has the force and effect of law. 7 aDACcH Besides, it is noted that the DOF has yet to express its rulings/opinion on the questions presented herein. With the attendant peculiar problems in the area of taxation, the DOF is in the best position and has the competence to provide the required direct and efficacious, not to say, specific solutions, on the issues affecting their operation/functions. A consideration by us of the questions might be misinterpreted as an undue pre-emption of its prerogative to resolve questions pertaining to its jurisdiction. It is suggested that the DOF should first be accorded the opportunity to consider the issue which involve matters within their sphere and jurisdiction. 8 The recommendation is not only from practical considerations, but also out of due respect for the competence and expertise of the office having primary jurisdiction to resolve matter because of its familiarity with the policy repercussions of the question, as well as from the logical recognition of the lawful exercise of an authority conferred by law. 9 The above recommendation, notwithstanding, your attention is invited to the pertinent portions of E.O. 671, to wit: xxx xxx xxx. "Whereas, the designation of function to the Philippine Council for NGO Certification (PCNC),which is a private body, may amount to an undue delegation of power." xxx xxx xxx. SEC. 1. Accrediting Entity. The following Departments are hereby designated Accrediting Entities to determine the qualifications of non-stock, non-profit corporations, non-governmental organizations, associations, and foundations for accreditation as qualified donee-institutions to wit: a) Department of Social Welfare and Development for charitable and/or social welfare organizations, foundations and associations but not limited to those engaged in youth, child, women, family, disabled persons, older persons welfare and development; b) Department of Science and Technology for organizations, foundations and associations primarily engaged in research and other scientific activities; c) Philippine Sports Commission for organizations, foundations and associations primarily engaged in sports development; d) National Council for Culture and Arts for organizations, foundations and associations primarily engaged in cultural activities; and e) Commission on Higher Education for organizations, foundations and associations primarily engaged in educational activities. ETaSDc SEC. 2. The Accrediting Entities shall comply with the Standards and Guidelines set by the Department of Finance relative to the accreditation of non-stock, non-profit corporations/NGOs as provided for in Revenue Regulation No. 13-98. SEC. 3. All executive and administrative issuances inconsistent with the provisions of the Order are hereby deemed repealed, amended or modified accordingly. xxx xxx xxx Please be guided accordingly. (SGD.) RAUL M. GONZALEZ Secretary Footnotes 1. Designating Appropriate Government Agencies to be the Accrediting Entities that will Certify and Accredit Charitable Organizations as Donee-Institutions Relative to the Deductibility of Contributions or Gifts Received by Them, in Relation to Section 34 of the Tax Reform Act of 1997. 2. An Act Amending the National Internal Revenue Code, as amended, Specifically Section 34 (H) Relative to the Deductibility of Contributions or Gifts Actually Paid or Made to Accredited Donee Institutions in Computing Taxable Income. 3. Secretary of Justice Op. Nos. 3, 88 and 95, s. 1998; and No. 1, s. 1999. 4. Secretary of Justice Op. No. 63, s. 2007, citing opinions. 5. Emphasis supplied. 6. Section 244 of R.A. 8424: Section 244. Authority of Secretary of Finance to Promulgate Rules and Regulations. The Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules and regulations for the effective enforcement of the provision of this Code. 7. Vitug, Textbook on the Tax Law and Jurisprudence, second ed., p. 55, citing Art. 7, Civil Code; Arches vs. Bellosillo, 20 SCRA 32. 8. Sec. 4 and 7 of R.A. 8424: Section 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases . The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdictions of the Commissioner, subject to the review of the Secretary of Finance. xxx xxx xxx. Section 7. Authority of the Commissioner to Delegate Power. The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials . . .; Provided, however, that the following powers of the Commissioner shall not be delegated: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance; (b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; xxx xxx xxx. 9. Secretary of Justice. Op. No. 1, s. 1983.