BIR Ruling No. 061-63

August 21, 1963 BIR RULING NO. 061-63 The Provincial Revenue Officer Inspection District No. 42 Dagupan City S i r : This is in reply to your letter dated July 29, 1963, requesting a ruling on a query stated as follows: "Dr. Gerardo L. Adan a native of this City, filed his 1962 income tax return with this office on even date. The said return shows that he derived a gross income of P25,000.00 in 1962, representing his salary from the World Health Organization, United Nations. The said return further shown that he is a Filipino Citizen. Queries: 1. Is the said income from salary received from the World Health Organization, United Nations exempt from the income tax and the additional residence tax? 2. Is Dr. Adan subject to a compromise penalty for his failure to file his 1962 income tax return within the time prescribed by law? As the subject taxpayer is leaving for his station at the WHO Ministry of Health, Bangkok, Thailand at the end of this month, it is respectfully requested that this matter be given prompt attention so that his pending Application for Tax Clearance may be acted upon by the office." For ready reference, we quote hereunder pertinent provisions of the Agreement Between the World Health Organization and the Government of the Republic of the Philippines": "Article VIII: Officials "Section 22. Officials of the Organization shall; . . . ; (b) be exempt from taxation in respect of the salaries and emoluments paid to them by the Organization; . . ." "Section 21. The Director-General or the Regional Director as his duly authorized representative, shall from time to time communicate to the Government of the Republic of the Philippines the names of those officials to whom the provisions of this Article and Article IX shall apply." The above-quoted Agreement took effect on July 22, 1961, and is binding upon the Republic of the Philippines as one of its signatories and for being a member of the organization itself. (Section 29(b)(6), N.I.R.C.) Accordingly, if Dr. Adan can be considered as one of officials" contemplated in Section 21 of Article VIII, aforequoted, then all salaries and emoluments received and paid to him by the World Health Organization (WHO), hereinafter known as the organization, are exempt from the payment of income as well as residence taxes. The exemption, however, covers not just any official of the organization, for the Agreement is specific, that is, his name must be included among the list of officials which shall from time to time be communicated and made known to the Government of the Republic of the Philippines. cdtech Moreover, if Dr. Adan is really one of those "officials" exempt from taxation under Section 22, Article VIII of said Agreement, and if his income in 1962 consisted of only the salaries and emoluments paid to him by the WHO, this office is of the opinion that his failure to file on time an income tax return for the year 1962 will not subject him to the compromise penalty prescribed by law. In view thereof, it is suggested that before giving due course to Mr. Adan's request for tax clearance, he should present a certificate from the Department of Foreign Affairs that he is one of those officials accorded the privileges and immunities under Section 22, Article VIII, of the agreement. aisadc Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue