DOJ Opinion No. 025, s. 1992

DOJ OPINION NO. 025 , s. 1992 February 28, 1992 Commissioner Jose U. Ong Bureau of Internal Revenue Quezon City Sir : This refers to your request for opinion relative to the interpretation of the provisions of the Title IV (Value Added Tax [VAT]) of the National Internal Revenue Code. Specifically, you inquire "on the coverage of the 'export sales' that are entitled to zero rate under the VAT law". The request, it appears, stemmed from the request of several mining companies for refund on input VAT vis-a-vis their respective sales of gold into the Central Bank (CB) and of copper concentrates and other metals to the Philippine Smelting and Refining Corporation (PASAR), a BOI-registered export-oriented enterprise. These companies, citing previous BIR rulings and regulations to support their claim, contend that the VAT export sales should cover the "constructive exports" as defined under the Omnibus Investments Code and that the sales of gold to the Central Bank is export sale. Upon the other hand, your Office, apart from stating that the claim is without basis as zero rate VAT does not embrace constructive and/or indirect exports, says that if an error was committed, the same cannot be corrected by committing further errors. The resolution of the issue raised herein would inevitably require an interpretation and/or examination not only of the provisions of the National Internal Revenue Code and of Revenue Regulations No. 2-88 both issued by the Department of Finance but also of the Central Bank Circulars Nos. 960 and 1301. Under Section 245 of the National Internal Revenue Code, it is the Secretary of Finance who is mandated to promulgate, upon recommendation of the Commissioner of Internal Revenue, all need for rules and regulations for the effective enforcement of the provisions of the Code, and, therefore, the task of interpreting the same appropriately pertains to said officer. The same is true with respect to the two Central Bank issuances. The duty to interpret the provisions thereof properly belongs to the Central Bank. By established policy, this Department does not rule on matters which fall within the primary jurisdiction of another office (Secretary of Justice Ops. No. 39, s. 1986; Nos. 1 and 72, s. 1983). prcd Moreover, the opinion of the Secretary of Justice, being advisory, is not binding upon the party or parties whose substantive rights may be affected thereby (id., No. 144, s. 1973) and who may, all probability, question the same in court in the event that they are not satisfied with the said opinion (id., No. 156, s. 1990; No. 134, s. 1988, and No. 4, 1991). Very truly yours, (SGD.) EDUARDO G. MONTENEGRO Acting Secretary