BIR Ruling [DA-042-96]

January 29, 1996 BIR RULING [DA-042-96] Philippine Sports Commission Rizal Memorial Sports Complex Pablo Ocampo Sr. Street Malate, Manila Attention: Mr . Philip Ella Juico Chairman Gentlemen : This refers to your letter dated October 23, 1995 addressed to the Secretary of Finance but was referred to this Office by the Insurance Commissioner, bearing on your request for the waiver of the 5% premium tax being imposed by the Government Service Insurance System (GSIS) on your insured properties. It is represented that the annual premium on the proposed GSIS insurance plan for your major properties covering the period September 21, 1995 to September 21, 1996 amounts to P4,003,943.39; and that the premium tax due thereon is P200,197.17 which is being passed on to you by GSIS as part of the total premium. In reply, please be informed that although Section 24 of R.A. No. 6847 empowers PSC to "call upon any government entity for full assistance and cooperation to ensure the attainment of its objectives and success of the national sports development program," the same cannot be construed as a grant of tax exemption to PSC. To be entitled to exemption, the law that exempts one from tax must be clearly expressed because exemption cannot be created by implication. Thus, it was held that "exemptions from taxation are highly disfavored by law and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. An exemption from the common burden cannot be permitted to exist upon the vague implication. (Asiatic Petroleum Company vs. Llanes, 49 Phil. 466; Coll. of Internal Revenue vs. Manila Jockey Club, Inc., L-8755 March 23, 1956) "It is well-recognized in the law of taxation that an exemption cannot be permitted to arise by implication; and a charter of a corporation will not be construed as conveying an immunity from the tax laws of the state in the absence of an express provision to that effect contained in the Charter." (House vs. Coll. of Int. Rev., 53 Phil. 338) Accordingly, it is regretted that your aforesaid request for exemption from the 5% premium tax being passed on to you by GSIS cannot be granted for lack of legal basis. cdtech Very truly yours, BEETHOVEN L. RUALO Deputy Commissioner Operations Group