DOJ Opinion No. 080, s. 1984

DOJ OPINION NO. 080 , s. 1984 2nd Indorsement May 16, 1984 Respectfully returned to the Commission on Audit, Don Mariano Marcos Avenue, Quezon City, the within request for opinions to whether or not the Philippine Global Communications, Inc. is excepted from payment of the 5% franchise tax imposed under its franchise, on dividends and interest income from its money market placements. cdlex It appears that the Philippines Global Communications, Inc., for the period from January 1 to December 31, 1981, had realized a total gross receipt of P165,212,734.75. Based on this gross receipt, the said company is liable to pay 5% thereof or P8,260,636.74 as franchise tax in accordance with Section 8(b) of its franchise, Republic Act No. 4617. However, P144,700.69 has been withheld by government and private entities leaving a balance of P8,115,936.05. Of this amount, the company paid only the amount of P8,046,293.45, leaving a franchise tax delinquency of P69,642.45, which amount represents the franchise tax on dividends and interest income from its money market placements. On February 24, 1983, the Commission on Audit (COA) advised the company to immediately pay the said amount of delinquency tax to the Commissioner of Internal Revenue stating that pursuant to the settled rulings of the Commission, the taxable gross receipts of utility companies subject to franchise tax "should include all principal and incidental revenue realized by the company". On May 12, 1983, the company through its counsel, requested for a reconsideration of such demand for payment citing a Bureau of Internal Revenue ruling (BIR Ruling No. 075-83 dated April 4, 1983) to the effect that "dividend and interest income from money market placements are extraneous income which are not subject to franchise tax, but to income tax". We regret to state that this Ministry is constrained to withhold rendition of opinion on the specific query posed herein for the reason that the same query had already been raised before and resolved by the Bureau of Internal Revenue (BIR). Pursuant to settled practice and precedents, the Minister of Justice does not pass upon legal issues raised by government functionaries which have been previously settled or adjudicated by other coordinate offices of the government, like the BIR in this case. This is because the opinions of the Minister of Justice are essentially advisory and cannot prevail over the rulings and decisions that may be promulgated by the agency charged with the enforcement of the law involved. Besides, the Minister of Justice does not possess revisory authority over the official actuations of other coordinate and separate departments and offices of the government (see Opinions, Sec. of Justice, No. 14, s. 1977; No. 199, s. 1975; and No. 160, s. 1971). LexLib In the case under consideration, it appears that the BIR has already stated its position on the precise issue of whether dividends and interest income from money market placements are subject to franchise tax. Since a franchise tax is an internal revenue tax (Op. No. 89, s. 1984), the issue thus resolved by the BIR is one which properly falls within its official competence to adjudicate, as the agency charged with the enforcement of internal revenue laws, and for that reason, the Minister of Justice should refrain from further expressing his views on the very same issue brought before him since that would be tantamount to are view of the ruling of the BIR over which he exercises no revisory authority. (SGD.) RICARDO C. PUNO Minister of Justice