DOJ Opinion No. 034, s. 1996

DOJ OPINION NO. 034 , s. 1996 March 25, 1996 Mr. Lamberto V. Pia Deputy Administration for Operations and Officer-In-Charge Maritime Industry Authority PPL Building, U.N. Avenue Manila Sir : This has reference to your request for legal opinion on the correct interpretation and/or application of Sections 100 and 105 of the Tariff and Customs Code (TCC) being implemented by the Department of Finance through the Bureau of Customs. LLjur You state that P.D. No. 760, as amended, allows temporary registration of foreign-registered vessels under charter or lease to Philippine nationals for use in domestic coastwise trade under certain conditions prescribed therein; that a "charter party" is an agreement whereby the charterer (lessee) agrees to hire and the shipowner (Lessor) agrees to let his vessel for an agreed period of time or specified voyage, the remuneration therefor being known as hire; and that "rental, lease or charter hire derived by a non-resident shipowner of the chartered vessel is subject to a 4.5% withholding tax pursuant to the provisions of Section 25 (b)(3) of the National Internal Revenue Code". You also state that under the present policy of the Department of Finance, the chartered vessel shall be released from the custody of the Bureau of Customs "on the condition that a bond equal to 150% of the duties and taxes dues [ sic ] thereon shall be posted by the shipping company (charterer) and conditioned for the re-exportation thereof or payment of duties and taxes upon termination of the charter period". Particularly, you ask "whether or not the charterer is subject to the posting of a re-export bond"? It is your view that re-export bonds are specifically imposed on transactions termed as "conditionally free importations" and your reading of Section 105 of the TCC reveals that vessels under charter are not covered thereby. Contrary to the alleged view of the Department of Finance, you also insist that neither should "chartered vessels" be treated as importation within the context of Section 100 of the TCC considering that it does not involve transfer of ownership where import tax is not relevant; and that upon the expiration of the "charter party" the vessel reverts back to its status as foreign-registered vessel unless it is purchased by the charterer in which case payment of regular import duties, fees and charges will apply. Based on the above premises, we cannot with propriety render the desired opinion for the following reasons: 1. The issue basically involves the interpretation of Section 105 of the TCC. The said provision, however, expressly provides that the regulations to implement the same "shall be promulgated by the Commissioner of Customs with the approval of the Secretary of Finance". By established precedents, this Department has consistently abided by the rule that it cannot render opinion on matters which fall within the primary jurisdiction of another office, unless the head of such office or agency requests this Department for opinion on a matter or matters in connection with a question of law arising in the performance of the assigned functions of said office or agency. This rule arises not only from practical consideration, but also out of due respect and deference for the competence and expertise of the Office having primary jurisdiction to resolve the matter and for its familiarity with the policy repercussions of the question as well as from a logical recognition of the lawful exercise of an authority conferred by law' (Sec. of Jus. Opn. No. 1, s. 1983 citing other opinions). 2. Moreover, you imply that the Department of Finance has already made a ruling that chartered vessels should be treated as importation within the context of Section 100 of the TCC. As a matter of policy and official courtesy, the Secretary of Justice does not pass upon matters which involve the actuations of a coordinate department over which he exercises no revisory authority, unless upon request by the Department concerned (Ibid., No. 89, s. 1994, Nos. 95 and 97 s. 1987). It is suggested that the matter be threshed out with the Bureau of Customs and the Department of Finance. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary