DOJ Opinion No. 046, s. 1999

DOJ OPINION NO. 046 , s. 1999 June 28, 1999 Secretary Edgardo B. Espiritu Department of Finance Manila Sir : Reference is made to the request for opinion of then Undersecretary of Finance Ma. Cecilia G. Soriano, acting under the authority of the former Secretary of Finance, regarding the tax liability of the Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) on its real property at Bacon-Manito I and II (BACMAN I and II) Geothermal Projects in the provinces of Albay and Sorsogon. The request, it appears, is made in connection with the controversy between the General Manager of the PNOC-EDC and the Provincial Assessor of Sorsogon involving the issue of whether the PNOC-EDC's real property used in the above-mentioned projects is subject to the payment of real property tax. It is stated that the General Manager of the PNOC-EDC, contending that the corporation's real property is exempted from real property tax, relies on Clause 6.2(a) of the Service Contract executed by and between the Government of the Republic of the Philippines, through the Department of Energy (then Ministry), and the PNOC-EDC, the contractor, which provides that the contractor shall enjoy "[e]xemption from all taxes, except income tax" as a privilege; that the Provincial Assessor of Sorsogon, on the other hand, has expressed doubts on whether the subject tax exemption has been withdrawn in view of Section 234 of the Local Government Code of 1991 (R.A. No. 7160) which provides that "[e]xcept as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations, are hereby withdrawn upon the effectivity of this Code"; and that the Manager of the PNOC-EDC, however, counters that the real property tax exemption being enjoyed by the PNOC-EDC under the Service Contract has not been withdrawn upon the effectivity of the Local Government Code because Section 5(d) thereof provides that "[r]ights and obligations existing on the date of effectivity of this code and arising out of contracts or any other source of prestation involving a local government unit shall be governed by the original terms and conditions of said contracts or the law in force at the time such rights were vested." Hence, the instant request for opinion with the end in view of resolving the controversy. This Department regrets that it is unable to give due course to the instant request. The resolution of the issue involved herein would inevitably require an interpretation and/or examination of the provisions of the Local Government Code of 1991, a task and duty which primarily pertain to the Department of the Interior and Local Government, being the lead agency in the implementation of such Code pursuant to Administrative Order No. 269 dated February 21, 1992. By settled practice and established precedents, the Secretary of Justice does not pass upon matters that fall within the official competence of another office or agency over whose rulings and/or actuations he has no revisory authority, unless requested by such office or agency. This practice has evolved not only out of respect and deference for the competence and expertise of the office or agency having primary jurisdiction to resolve the matter and for its familiarity with the policy repercussions of the resolution of the question involved but also from a logical recognition of the lawful exercise of an authority conferred by law (Secretary of Justice Opinions No. 156, s. 1993; No. 17, s. 1994; No. 101, s. 1995; No. 7, s. 1996). Moreover, the resolution of the issue would also involve an examination and interpretation of the Service Contract. Pursuant to established precedents, the Secretary of Justice does not render opinion or give legal advice on issues involving the interpretation of contracts (Secretary of Justice Opinion No. 26, current series, citing previous opinions). prLL Very truly yours, (SGD.) JUSTICE SERAFIN R. CUEVAS Secretary