DOJ Opinion No. 093, s. 1998

DOJ OPINION NO. 093 , s. 1998 August 4, 1998 The Vice-President Social Security System Quezon City Sir : This has reference to the request for opinion on the legality of the Department of Finance (DOF) Order No. 91-94, dated September 27, 1994 and DOF Circular No. 2-96, Series of 1996, vis-a-vis the tax exemption of the Social Security System (SSS) under its Charter (R.A. No. 8282). LLphil The subject order and circular of the DOF pertinently provide as follows: "Department Order No. 91-94 . . . that tax-exempt institutions shall be allowed to participate directly or indirectly in the auction because a special window is available for them; except when these institutions are accredited as Government Securities Dealers, in which case they may participate directly in the auction for their trading account which is not tax-exempt." xxx xxx xxx "Circular No. 2-96 Item 2 2.1 Special Series Treasury Bills (SST-Bills) shall be issuable in three (3) tenors of 91 days, 182 days and 364 days and shall be priced at a discount based on 90% of the weighted average interest rate of the immediately preceding regular weekly auction applicable to corresponding tenors. 2.2 Special Series Treasury Bonds (SST-Bonds) shall be priced at par with a coupon rate based on 90% of the coupon rate applicable for the corresponding auctioned Special Series Treasury Bonds." Quoting certain provisions from the SSS Charter, it is your view that the exempt status of the SSS from the payment of any and all kinds of taxes, assessments, fees, charges, customs or import duties is unequivocal. You also state that the tax exemption status of the SSS was not only upheld by this Office in its Decision dated May 2, 1997 in Case No. OSJ-91-16, entitled "Social Security System, vs. Bureau of Internal Revenue, et al.", wherein it declared that the tax exemption status of the SSS under its Charter has not been repealed/withdrawn with the enactment of P.D. Nos. 1177 and 1931 and E.O. Nos. 37, 93 and 273; further, R.A. No. 8282, which took effect on May 24, 1997, "re-stated under no uncertain terms" the aforesaid SSS tax status. Assailing the subject issuances of the DOF, it is your view that the 10%-lower than the regular rate of interest prevailing on the date of placement imposed under D.C. No. 2-96 is a circumvention of tax-exempt privilege of the SSS as it is being indirectly levied a 10% tax on its securities investments; and that while you recognize the authority of the Secretary of Finance to issue rules and regulations governing the issuance, placement, sale, servicing, redemption and payment of government securities under Republic Act No. 245, as amended, you feel that he exceeded his authority in providing rate of interest for tax-exempt institutions like SSS which is different from non tax-exempt entities effectively levying an indirect tax of ten percent (10%). Hence, you pose the instant query. LLphil We are constrained, much to our regret, to decline rendition of opinion on the herein request for the following reasons: First . It is noted that you are actually questioning the authority of the Secretary of Finance in issuing the aforesaid order and circular, and, as a consequence, the legality thereof. By established precedents, this Department does not express its views on the legal propriety of the official actuations of government officers vested with jurisdiction over a particular matter and who are not subject to the revisory authority of the Secretary of Justice (Secretary of Justice Opinion No. 133, s. 1990 and No. 21, s. 1985). Second . This Department does not render opinion on queries involving the legality of duly, issued circulars, orders, rules or regulations of administrative agencies, upon the theory that these administrative issuances, which are issued in the implementation of a law or in the exercise of a function vested by law, enjoy the presumption of validity being in themselves of the same nature as laws which are presumed valid and enforceable until declared invalid and/or unconstitutional (Secretary of Justice Opinion No. 16, s. 1998; No. 133, s. 1990 and No. 160, s. 1989). Premised on the foregoing, it is, therefore, suggested that the matter be discussed directly with the Secretary of Finance. LLphil Very truly yours, (SGD.) JUSTICE SERAFIN R. CUEVAS Secretary