BIR Ruling

June 18, 1973 The Director Revenue Region No. 6 Quezon City S i r : This refers to your letter dated June 7, 1973 requesting information as to whether or not the investment income of the Philippine Virginia Tobacco Board, is subject to income tax. It is pointed out that pending the use of the Board's Fund for the purposes of its creation as described by Executive Order No. 331 which created it, the Board is intending to invest it in the meantime, so it can earn. It appears from Executive Order No. 331 that, upon terminations of the existence of the Board, its funds or any residual assets remaining at the time of the termination shall be reverted to the state for disposition in accordance with law. A perusal of the functions of the Board shows that they are more governmental in character, rather than proprietary, and therefore, it cannot be considered as falling within the ambit of R.A. No. 104. For the foregoing premises, it is the opinion of this Offices, as it hereby holds, that the income of the Board from the investment of its Funds is exempt from tax. This exemption proceeds from the cardinal rule that the government in derogation of its sovereignty cannot tax itself. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue