DOJ Opinion No. 043, s. 1999

DOJ OPINION NO. 043 , s. 1999 June 9, 1999 Mr. Thomas G. Aquino Governor, Board of Investments Industry and Investments Building 385 Sen. Gil J. Puyat Avenue Makati City Sir : This has reference to a request for an opinion on whether or not Tax Credit Certificates granted on the duties and taxes paid on raw materials and domestic capital equipment by the Board of Investments (BOI) could be used as payment of taxes to the Bureau of Internal Revenue (BIR). LibLex It is stated that the BOI had been issuing tax credit certificates to BOI-registered enterprises based on Article 21 of Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987. The tax credit certificates are utilized by the registered enterprises for the payment of their taxes, duties and charges due to the National Government. But this practice has been affected by the issuance of BIR Revenue Memorandum No. 86-98 which states, to wit: "5.2 TCC issued under the Omnibus Investments Code . A TCC issued by the Board of Investments, or its duly authorized representative, pursuant to the provisions of the Omnibus Investments Code, as amended may only be used for the purposes for which the same has been issued to the grantee, in accordance with the provisions of the Omnibus Investments Code and its implementing rules and regulations. Any TCC issued jointly by the Board of Investments (BOI) and the Bureau of Internal Revenue (BIR), pursuant to the provisions of the Omnibus Investments Code and its implementing rules and regulations may be used by the grantee or his qualified transferee in payment of the grantee/transferee's internal revenue taxes, except his withholding tax liabilities; Provided, however, that any TCC issued jointly by the Board of Investments (BOI) and the Bureau of Customs (BOC), pursuant to the provisions of the Omnibus Investments Code and its implementing rules and regulations, shall not be used in payment of the grantee/transferee's liability for any internal revenue tax directly payable to the BIR, the provisions of Section 12(a) of the NIRC notwithstanding, hence, the same may only be used in payment of customs duties, charges and taxes on his importation directly payable to the Bureau of Customs." In effect, said BIR Memorandum restricted the use of the tax credit certificates by BOI registered enterprises to the payment of its due to the Bureau of Customs and mandated that such tax credit certificates shall not cover the payment of obligations collected by the BIR. It is BOI's view, however, that the negotiability of tax credit certificates under Article 21 of E.O. No. 226 cannot be amended by the subject BIR Revenue Memorandum considering that said Memorandum, if strictly followed, may run counter to the investment policies enunciated in E.O. No. 226 and that Article 21 which envisages all tax and duty obligations is clear, plain and free from ambiguity and must be given its literal meaning and applied without attempted interpretation. Hence, this request. With regret, this Department has to decline rendition of the opinion requested. First, the resolution of the issue involves the interpretation of the administrative issuance of the BIR, namely BIR Revenue Memorandum No. 86-98 dated November 10, 1998. Pursuant to settled practice and precedents, the Secretary of Justice does not render opinion or express any comment on questions involving the interpretation or application of administrative rules and regulations of other departments/offices which this Department has no revisory authority, unless requested by the promulgating agency, since such matters are best left to the determination of the promulgating agency by reason of its familiarity with the intent and purpose of the issuance and the extent of the application thereof (Secretary of Justice Ops. No. 29, s. 1995, No. 74, s. 1989; No. 97, s. 1982) Second, the query will delve on particular provisions of the National Internal Revenue Code, as amended, the interpretation of which rests with the BIR as prescribed in Section 4 of Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997: "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 jurisdiction of the Commissioner, subject to review by the Secretary of Finance. xxx xxx xxx." It is submitted that the above-mentioned agencies, namely the BIR and the Department of Finance (DOF) be accorded the opportunity to consider the aforestated question which involves matters within their policy-sphere and jurisdiction. This time-honored policy is dictated not only by practical considerations but by a sincere respect for the expertise on, and familiarity with, the policies relating to the subject, and the rightful exercise of jurisdiction by a co-equal and coordinate government office ( Ibid ., Op. No. 5, s. 1997, Op. No. 1, s. 1983; No. 97, s. 1982; No. 123, s. 1980; No. 149, s. 1976). aisadc Very truly yours, (SGD.) JUSTICE SERAFIN R. CUEVAS Secretary