BIR Ruling No. 036-65

May 7, 1965 BIR RULING NO. 036-65 2nd Indorsement Returned to the Regional Director, B.I.R. Regional District No. 5, North Manila, the entire docket bearing on the internal revenue tax case of the Great Pacific Life Assurance Corporation, Yuchengco Bldg., Rosario Manila, involving the total amount of P5,077.95 as deficiency income tax for 1957. This case was referred to the Legal Department for resolution of the question of whether or not commissions earned and other miscellaneous incomes received by the taxpayer are included in the phrase "investment income", mentioned in Section 24(c) of the Tax Code, as amended by Republic Act No. 1855. The provision of the law in question is quoted below as follows: "(c) Rate of tax on life insurance companies . There shall be levied, assessed, collected and paid annually from every life insurance company organized in or existing under the laws of the Philippines, or foreign life insurance company authorized to carry on business in the Philippines, but not including purely cooperative companies or associations as defined in section two hundred fifty-five of this Code, on the total investment income received by such company during the preceding taxable year from interest , dividends and rents from all sources , whether from or without the Philippines , a tax of six and one-half per centum upon such income :"(Emphasis supplied) The records of this case show that the Great Pacific Life Assurance Corporation,(hereinafter referred to as corporation), is a domestic corporation engaged in life insurance business. The corporation computed its income tax liability for the year 1957 in accordance with the provisions of Republic Act No. 1855, that is, on its investment income consisting of interest and dividends without including commissions earned and other miscellaneous incomes. However, upon verification of its 1957 return, Examiner Gregorio Correa computed the taxpayer's tax liability by including commissions earned and other miscellaneous incomes as forming part of its investment income. Under section 24 (c) of the Tax Code, as amended by Republic Act No. 1855, life insurance companies are taxed only on their investment income. The status refers to investment income as constituting of interest, dividends, and rents. The term "investment income" from its literal import also clearly refers to income delivered from capital investment. Besides, speaking of the "investment business" of a life insurance company, the Supreme Court has said: "That phrase may be taken to include activities relating to interest, dividends, and rents constituting the income taxed as distinguished from its 'underwriting business' which embraces its other activities." (Rockford Life Insurance Co. vs. Com., 292 U. S. 382, 78 L.Ed. 1315, 54 S. Ct. 761 (1934)). It is a well-settled principle in statutory construction that if a statute enumerates the things upon which it is to operate, everything else must necessarily and by implication be excluded from its operation and effect. (Page v. Bartlett, 101 Ala. 193, 13 So. 768). In view of the foregoing, this Office is, therefore, of the opinion and so holds that the commission as well as any other income not derived from the use of capital earned by the taxpayer does not form part of its investment income. He is advised to be guided accordingly. aisadc (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue