DOJ Opinion No. 064, s. 1998

DOJ OPINION NO. 064 , s. 1998 June 4, 1998 The Postmaster General Philippine Postal Corporation 3rd Floor, PhilPost Main Building Liwasang Bonifacio, Manila Sir : This has reference to the request of that Office for opinion on certain queries regarding the Philippine Postal Corporation (PPC) which was created pursuant to the Postal Service Act of 1992 (R.A. No. 7354. Specifically, opinion is requested on the following queries: 1. Is the PPC a government-owned or controlled corporation? 2. When was the PPC legally constituted as a corporation? 3. What is the scope of the PPC's exemption from taxes, customs and tariff duties under Section 14 of R.A. No. 7354? Does the exemption not cover income taxes and value-added taxes? 4. Since the PPC's exemption from the payment of "local government imposts and fees" shall only start "after December 31, 1997," may the local government units where the postal offices are located collect business and real property taxes, fees and charges from the PPC for the period starting June 3, 1992, the effectivity date of R.A. No. 7354, and ending December 31, 1997? 5. Is there a need to affix documentary stamps to the original issues of Class "A" shares subscribed by the National Government pursuant to Section 9 (Capitalization) of R.A. No. 7354? What about Class "B" shares to be subscribed by private entities? 6. Are conveyances of real property from the Bureau of Posts and its successor Postal Services Office to the PPC subject to capital gains tax and documentary stamp tax under Section 196 of the National Internal Revenue Code, as amended? It appears that the request for opinion has been prompted by the deficiency assessment of P3,834,389,543.00 which represents alleged unpaid income taxes, value-added taxes and documentary stamp taxes for the taxable years 1992 to 1995 as contained in an undated letter of Mr. Jaime Q. Concepcion, Revenue District Officer, Revenue District No. 33, Manila, to Ms. Norma F. Maog, Assistant Postmaster General for Finance, PPC. We answer the first query in the affirmative but regretfully have to decline rendition of opinion on the other queries for reasons stated hereunder. Regarding the first query, it is clear from Section 4 of R.A. No. 7354 that what has been created is a corporate body . Said provision states: "SEC. 4. Creation . There is hereby created a corporate body to be known as the Philippine Postal Corporation, hereafter referred to as the corporation, which shall be attached to the Department of Transportation and Communications for purposes of policy coordination". (Emphasis supplied.) Section 2(a) of Administrative Order No. 59 dated February 16, 1988 defines a government-owned or controlled corporation (GOCC) as one " created by special law or organized under the Corporation Code in which the Government, directly or indirectly, has ownership of the majority of the capital or has voting control" (stress supplied). An earlier law, P.D. No. 2029, similarly defines such term as follows: "SEC. 2. Definition . A government-owned or controlled corporation is a stock or non-stock corporation, whether performing governmental or propriety functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding voting capital stock. xxx xxx xxx (Emphasis supplied.) This Department has ruled that since the Constitution prohibits the creation of a corporation by special law except those owned or controlled by the government or a subdivision or instrumentality thereof, "an entity which is created by special law, acquires a juridical personality exclusively on the basis of that special law, [and] is endowed with the corporate form of organization under that special law may automatically be considered a government corporation". This is the so-called "charter test", which means, basically, that if a corporate body is directly chartered by law , such corporate body is a GOCC. (See Op. No. 79, s. 1985). The PPC was created as a corporate body under R.A. No. 7354, a special law. Applying the "charter test", there is no doubt that the PPC is a GOCC. It became a GOCC on the precise date of the law's effectivity, that is, on June 3, 1992, or thirty (30) days after its publication in the Official Gazette as provided for in Section 36 of said law. R.A. No. 7354 was published in the May 4, 1992 issue of the Official Gazette, Vol. 88, No. 18, p. 2577. We are constrained to decline rendition of opinion on the other queries for the following reasons: 1. It involves issues of taxation and upon which the Bureau of Internal Revenue (BIR) has already made an initial position through the action of its Revenue District Office in Manila. Pursuant to settled practice and precedents, the Secretary of Justice does not render opinion on matters falling within the exclusive cognizance of another government agency, in this case the BIR, whose decisions and actuations are not subject to the revisory authority of the Department of Justice (Sec. of Justice Opns. No. 97, s. 1972; No. 95, s. 1987; No. 114, s. 1994; No. 73, s. 1995; No. 3, s. 1998). 2. The PPC is GOCC and, by law, the principal law office of all GOCCs is the Office of the Government Corporate Counsel (Sec. 1, R.A. No. 2327, as amended; Sec. 1, P.D. No. 1415; Sec. 10, Chap. 3, Title III, Book IV, Administrative Code of 1987). Thus, Section 1 of Administrative Order No. 130 dated May 19, 1994 directs that "[a]ll legal matters pertaining to government-owned or controlled corporations, their subsidiaries, other corporate offsprings and government-acquired asset corporations . . . shall be exclusively referred to and handled by the Office of the Government Corporate Counsel . . . unless their respective charters expressly name the Office of the Solicitor General . . . as their legal counsel." Please be guided accordingly. Very truly yours, (SGD.) SILVESTRE H. BELLO III Secretary