BIR Ruling [DA-184-04]

April 6, 2004 BIR RULING [DA-184-04] Section 32 (B) (7) (f) BIR Ruling No. 002-99 Commission on Audit Commonwealth Avenue Quezon City Attention: Ms. Ma. Mileguas M. Leyno Director Finance Gentlemen : This refers to your letters dated April 26, 2002 and February 9, 2004 requesting for a ruling on whether the following are excluded from the gross income of the taxpayer, and therefore exempt from tax, viz : 1. Unlimited Optional Insurance Premium; and 2. Membership Fee as part of the union dues It is represented that most of your employees are deducted Optional Insurance Premium as well as Unlimited Optional Insurance Premium and a one-time Membership Fee as part of the union dues in addition to the monthly union dues/contribution, as reflected in the attached payroll information of two certified employees, illustrated as follows: Name Description Amount Josephine P. Cruz Philgasea Membership P10.00 Philgasea Monthly 10.00 Contribution Onesina J. Lactuan GSIS Unlimited Optional Insurance Premium 77.90 GSIS Optional Insurance Premium 119.12 In reply, please be informed that Section 32(B)(7)(f) of the Tax Code of 1997, as implemented by Section 2.78(B)(12) of Revenue Regulations No. 2-98, as amended provides "(B) Exclusions from Gross Income . The following items shall not be included in gross income and shall be exempt from taxation under this Title: xxx xxx xxx (7) Miscellaneous Items . xxx xxx xxx (f) GSIS, SSS, Medicare and Other Contributions . GSIS, SSS, Medicare and Pag-ibig contributions, and union dues of individuals." Since the law and implementing regulations do not categorically state that the exemption covers only the regular GSIS contributions, it is safe to conclude that GSIS Optional Insurance Premium and GSIS Unlimited Optional Insurance Premium are likewise excludible from the gross income of the taxpayer and hence, exempt from income tax. This is so, because the provisions of law in question did not make any distinction between regular GSIS insurance and optional/unlimited optional GSIS insurance. Well-settled is the rule that when the law does not distinguish, we should not distinguish ( BIR Ruling No. 002-99 dated January 12, 1999 ). cACEaI On the other hand, under the maxim expressio unius est exclusio alterius in statutory construction, the mention of one thing implies the exclusion of another. In other words, where a statute enumerates the subjects or things on which it is to operate, it is to be construed as excluding from its effects all those not expressly mentioned. Moreover, exemption from the payment of taxes cannot be created by mere implication. An exemption cannot be claimed unless it is expressly provided for in the law ( Collector vs. Manila Jockey Club, 98 Phil 670 ). Membership fee shown in the pay slip as a separate item is distinct from union dues. Since membership fee is not among those enumerated under Section 32(B)(7)(f) of the Tax Code of 1997, it is therefore not excluded from the gross income of the taxpayer, hence, subject to income tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling, shall be considered as null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group