BIR Ruling [DA-449-05]

October 28, 2005 BIR RULING [DA-449-05] Philippine National Bank PNB Financial Center Roxas Blvd., Metro Manila Attention: Mr. Rey P. Quizon Business Manager, Clarkfield Branch Gentlemen : This refers to your letter dated July 8, 2004 requesting a ruling relative to the following issues: "1. Does BIR Revenue Regulations No. 20-2002 repealing provision cover Executive Order No. 80 and Republic Act No. 7227 as implemented by RR No. 1-95, which RA No. 8424, otherwise known as Tax Code of 1997 has not repealed in consideration of the aforementioned opinion (BIR Ruling No. 149-99 dated September 17, 1999) from your good office as we have quoted from the foregoing paragraph; and 2. What tax treatment shall we apply to income earned by CDC from its investments with our Bank, considering that one of the registered activities of CDC is to invest and deal with money." In reply, please be informed that the repealing clause of Revenue Regulations No. 20-2002 which provides, viz "SEC. 2. REPEALING CLAUSE. Section 6(f) of Revenue Regulations No. 1-95 and the provisions of all other internal revenue issuances inconsistent herewith are hereby repealed, modified or amended accordingly." expressly repealed hereunder Section 6(f) of Revenue Regulations No. 1-95 and all other inconsistent BIR issuances one of which is BIR Ruling No. 149-99. "SEC. 6. TAXES AND FISCAL OBLIGATIONS. xxx xxx xxx (f) Interest from any Philippine currency bank deposits and yield or any other monetary benefit from deposit substitutes, and from trust fund and similar arrangements received by a registered enterprise engaged in business within the Secured Area shall be subject to the preferential tax rate. All other interest, yield or monetary benefit from deposit substitutes, trust funds and other similar arrangements and royalties derived from sources within the Philippines by a person other than a registered enterprises operating within the Secured Area in the Zone shall be subject to the appropriate tax law rates of the Customs Territory." Furthermore, taxation is the rule and exemption, the exception, and, therefore, he who claims exemption must be able to justify his claim or right thereto, by a grant expressed in terms "too plain to be mistaken and too categorical to be misinterpreted." ( Comm., vs. Kiener Co. Ltd .,L-24754, July 18,1975; Reagan vs. Comm .,L-26379, Dec. 27, 1969).An exemption from the common burden cannot be permitted to exist upon vague implication or inference. ( Asiatic Petroleum Co., vs. Ylanes ,49 Phil. 466; Manila Electric Co. vs. Vera ,L-29987, Oct. 22, 1975). CIaASH Such being the case, interest from any Philippine currency bank deposits and yield or any other monetary benefit from deposit substitutes, and from trust fund and similar arrangements received by a registered enterprise engaged in business within the Secured Area shall be subject to the 20% final income tax and the 7.5% tax on foreign currency deposits pursuant to Section 1 of Revenue Regulations No. 20-2002. 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 null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG OIC-Commissioner of Internal Revenue