Restoration of Tax Incentives by the Fiscal Incentives Review Board (FIRB)

January 10, 1989 REVENUE MEMORANDUM CIRCULAR NO. 01-89 SUBJECT : Restoration of Tax Incentives by the Fiscal Incentives Review Board (FIRB) TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is published hereunder the letter of the Undersecretary of Finance dated January 3, 1989 to the Commissioner of Internal Revenue to the effect that the Department of Finance has maintained the position that resolutions of the Fiscal Incentives Review Board (FIRB) restoring tax exemptions or preferential treatment pursuant to Section 2 of Executive Order No. 93 are valid, binding and are still enforced to date, notwithstanding the Secretary of Justice Opinion No. 77, series of 1977 finding that provision to constitute an undue delegation of legislative power which is only advisory in nature; and that, therefore, Resolution No. 24-87 issued by the FIRB on July 14, 1987 restoring certain tax and duty privileges of electric cooperatives is considered in full force and effect; hence, BIR Ruling Nos. 369-88 and 469-88 should be cancelled insofar as the same are inconsistent with the said FIRB resolution. acd "03 January 1989 "The Honorable Commissioner Bureau of Internal Revenue Quezon City Restoration of Tax Incentives by the FIRB S i r : "Resolution No. 24-87 issued by the FIRB on 14 July 1987 (copy attached) restoring certain tax and duty privileges of electric cooperatives is considered in full force and effect. Accordingly, BIR Ruling No. 369-88, reiterated by BIR Ruling No. 469-88, should be cancelled in so far as the same is inconsistent with the aforestated FIRB resolution. aisa dc "In this connection, we are sending you copy of our letter dated 28 December 1988 addressed to the Manager, Agusan del Sur Electric Cooperative Inc. reiterating the applicability of FIRB Resolution No. 24-87. It will be appreciated if you would advise your Regional District Officer, Revenue District No. 81, Bayugan, Agusan del Sur of this action. The letter of RDO Eligio C. Rosales dated 21 November 1988 is attached for your reference. "The Department of Finance has maintained the position that resolutions of the Fiscal Incentives Review Board (FIRB) restoring tax exemptions or preferential treatment pursuant to Section 2 of Executive Order No. 93 are valid and binding. The Opinion of the Secretary of Justice issued 06 August 1987 (Opinion No. 77, Series of 1987) finding that provision to constitute an undue delegation of legislative power is advisory in nature; it made no categorical declaration that the action in fact taken theretofore by FIRB are null and void; the opinion of the Secretary of Justice should be taken in the light of the convening of Congress in 27 July 1987 as the lawmaking branch under the 1987 Constitution. In deference to Congress already being in place, the FIRB issued no further resolutions restoring tax exemptions. To complete the picture, there is pending with the Department of Justice a request for reconsideration of that opinion, submitted by the Office of the President last 09 June 1988 (copy attached). "It must be stressed that FIRB has issued a number of decisions restoring tax exemptions and incentives under E.O. No. 93. These decisions are held to be valid and are enforced to date. To strike down all of these issuances would create a chaotic tax situation, even assuming that the Justice opinion would require that step to be taken. "It would be appreciated if rulings of the Bureau which revoke and reverse decisions of other agencies, particularly those within the Department of Finance would best be first cleared with the Office of the Secretary to avoid undesirable results." cd Very truly yours, (SGD.) MARCELO N. FERNANDO Undersecretary" It is desired that this Circular be given as wide a publicity as possible. JOSE U. ONG Commissioner of Internal Revenue