DOJ Opinion No. 108, s. 1991

DOJ OPINION NO. 108 , s. 1991 July 18, 1991 Mr. Candelario L. Verzosa, Jr. Executive Director Cooperative Development Authority BEN-LOR Bldg., 1184 Quezon Blvd. Quezon City Sir : This has reference to your request for opinion on whether or not bank deposits of cooperatives should be considered as passive investment income subject to the 20% withholding tax under the circumstances stated therein in the light of the provision of Section 7 of Revenue Memorandum Circular No. 48-91 (Publishing the Provisions of Article 61 and 62 of Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines, prescribing the extent of the tax exemptions of Cooperatives and providing the guidelines for the availment thereof), which reads: prcd "SEC. 7. Passive Investment Income . "All cooperatives are subject to the 20% final withholding tax on interest from Philippine currency deposits, yield from deposit substitutes, trust funds and similar arrangements, and royalties derived from sources within the Philippines, the said income not being derived from cooperative economic activity. They shall also be taxed on prizes, winnings and capital gains realized on sales or exchange and property." We regret we have to decline rendition of opinion on the matter. Sound administrative policy and official courtesy enjoin the Secretary of Justice from passing upon the administrative acts or rulings/issuances of the Bureau of Internal revenue, an agency under the Department of Finance, a coordinate and co-equal Department, over which this Department has no revisory authority (Secretary of Justice Opinions No. 203, s. 1961; No. 181, s. 1976; No. 22, s. 1977 and No. 95, s. 1987). This policy is based on the legal principle that the contemporaneous interpretation by the administrative agency to laws which it is duty-bound to execute deserve greatest weight and respect. (Pascual v. Director of Lands, 10 SCRA 354; Ramon v. Court of Industrial relations, 21 SCRA 1982). Wherefore, it is suggested that clarification be sought from the Bureau of Internal Revenue and/or the Department of Finance. Very truly yours, (SGD.) SILVESTRE H. BELLO III Acting Secretary