DOJ Opinion No. 151, s. 1990

DOJ OPINION NO. 151 , s. 1990 August 20, 1990 Senator Agapito A. Aquino CIGG Building 116 Herrera St.,Legaspi Village Makati, Metro Manila Sir : This refers to your request for opinion on the correct interpretation of Section 103 (c) of the National Internal Revenue Code (NIRC),which reads: "Sec. 103. Exempt Transactions . The following shall be exempt from the value- added tax: xxx xxx xxx (c) Sale or importation of fertilizers, pesticides and herbicides; chemical for the formulation of pesticides; seeds, seedlings and fingerlings; ... xxx xxx xxx" You state that the sale or importation of chemicals for the formulation of herbicides should be exempt from the imposition of the value-added tax (VAT) for the following reasons: (a) The term "pesticide" necessarily includes the term "herbicides" as per definition of the former under Sec. 3, Par. A of P.D. No. 1144; and (b) A different interpretation of the above-quoted provision would result in a situation where the importation or sale of a finished product, in this case "herbicide",would be exempt while importation of substances for its local formulation are not. This would be contrary to the intent to encourage agricultural production as the imposition of the VAT on inputs for herbicide formulation would increase the cost of the finished chemical and which added cost would ultimately be shouldered by the farmers. LibLex With regret, we are constrained to decline to pass upon the question raised since the issue involved therein would inevitably require an interpretation of a provision on the value added tax (VAT) incorporated in the National Internal Revenue Code, which function properly pertains to the Secretary of Finance. By established precedents and sound administrative practice, this Office has consistently refrained from expressing its views on matters that fall within the primary jurisdiction of another office or agency, in this case, the Department of Finance, unless the head of such office or agency requests this Office for opinion (Sec. of Justice Ops. No. 39, s. 1986; No. 1, s. 1983; No. 123, s. 1980; No. 194, s. 1976). Accordingly, we suggest that the matter be taken up directly with the Department of Finance, which has issued pursuant to Section 27 of E.O. No. 273 (Adopting a Value Added Tax, and Amending the National Internal Revenue Code) the VAT implementing rules and regulations (January 1, 1988). Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary