DOJ Opinion No. 023, s. 1991

DOJ OPINION NO. 023 , s. 1991 February 15, 1991 Ms. Rosalina S. Cajucom Treasurer of the Philippines Bureau of the Treasury Intramuros, Manila M a d a m : This has reference to your request for clarification of this Department's Opinion No. 144, series 1990, insofar as it concerns the computation of the National Government's ("NG") 50% share in the gross earnings of the Philippine Amusement and Gaming Corporation ("PAGCOR"). LLphil It is your interpretation of the subject opinion that both the 50% share of the NG and the 5% share of the Philippine Sports Commission ("PSC"), "being legally mandated deductions to PAGCOR's gross earnings, should be based on such earnings after deducting the franchise tax. However, PAGCOR's own interpretation is that "the 5% intended for Franchise Tax is to be deducted first; and from the balance of 95%, the 5% share of the PSC is to be computed; thereafter only from the balance after two deductions shall [the]NG's share be computed", PAGCOR's argument being that it is "neither proper nor rational for [the] NG's share to stay at 50% of the 95% balance when PSC's share of 5% is required to be deducted ahead of [the] NG's share, following the DOJ's abovementioned opinion." At the outset, we wish to state the long-standing policy of this Office to decline requests for reconsideration or clarification of its opinions, unless made at the instance of the government functionary for whom, or in whose behalf, the opinion was rendered, which in this case, is the Chairman of the Philippine Sports Commission (Secretary of Justice, Opns. No. 49, s. 1984; No. 167, s. 1983; and No. 55, s. 1974). Considering, however, that the subject opinion directly affects your agency and the PAGCOR's understanding thereon differs from yours, we feel obliged to render the desired clarification. PAGCOR's abovequoted interpretation of Opinion No. 144, s. 1990 proceeds from a misreading of its concluding portion, which states: "Thus, reading together the second paragraph of Section 26 of R.A. No. 6847 and Section 12 of P.D. No. 1869, abovequoted, the proper interpretation should be that the 5% share of the PSC in the gross income of the PAGCOR should be determined only after deducting from such income the 5% franchise tax thereon, but prior to setting aside the 50% government share on such income." In arriving at the foregoing conclusion, we rejected PSC's view that its 5% share, although a legally mandated deduction of PAGCOR's gross earnings under Section 26 of R.A. No. 6847, should be computed on the basis of such earnings, without any deduction first being made thereon. the reason, as pointed out in the said opinion, is that Section 117 of the National Internal Revenue Code 1986, as amended, imposes a 5% franchise tax on the gross earnings of PAGCOR, and it is settled that the term "gross earnings" as a taxable base for purposes or computing the franchise tax refers to the "entire receipts from the business covered by the franchise without deductions". We likewise disagreed with the PAGCOR's position that the 5% share of PSC should be computed only after the franchise tax and government share, which pursuant to Section 12 of P.D. No. 1869, as amended, should accrue. to the General Fund, have been deducted and set aside. the reason, as also explained in the said opinion, is that while said Section 117 provides sufficient basis for deducting the franchise tax ahead of the 5% PSC share, no similar basis can support the deduction of the 50% government share from the gross earnings of PAGCOR after franchise tax before the 5% PSC share is computed. This led us to rule that the 5% share of PSC in the gross income of PAGCOR should be determined only after deducting from such income the 5% franchised tax thereon, but before, setting aside the 50% government share on such income. prcd There is nothing in the opinion under consideration stating expressly or implicitly that insofar as the 50% government share is concerned, the same should be computed after the 5% franchise tax and the 5% PSC share have been deducted and set aside. For such interpretation would contravene-and render ineffective Section 12 of P.D. No. 1869, as amended, which requires that the government share in the gross earnings of PAGCOR shall be immediately set aside after deducting the franchise tax from said earnings. The well-settled rule is that in the absence of an express repeal or absolute repugnancy between two statutory provisions, effect should be given to both. (US vs. Palacio, 33 Phil. 208; Smith Bell & Co. vs. Maronilla, 41 Phil. 557). In view whereof, we find your interpretation of Opn. No. 144, series 1990 that both the 50% government share and the 5% share of the PSC should be computed on the basis of the gross earnings of PAGCOR after the 5% franchise tax has been deducted and set aside in consonance therewith. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary