Exemption from All Internal Revenue Taxes — AFPMBAI

November 9, 1979 BIR RULING NO. 098-A-79 This refers to your letter dated August 7, 1979 requesting the exemption of that Corporation from all internal revenue taxes. cd It appears that in compliance with the Letter of Instruction No. 596 dated September 9, 1979, the Office of the Insurance Commissioner issued Certificate of Authority No. 144-0 authorizing the Non-Life Division of the Armed Forces of the Philippines Mutual Benefit Association, Inc. (AFPMBAI (NLD)) to engage in non-life insurance with respect to the property of the AFP and of the members of the AFP and INP; that the AFPMBAI (NLD) was then advised to incorporate its non-life insurance business as a distinct and separate corporation for the purpose of insuring effective control and supervision of its non-life operations; that this suggestion to the AFPMBAI (NLD) for a separate incorporation was reiterated when it filed an application for renewal of Certificate of Authority No. 144-0; that in compliance with this requirement, AFPMBAI incorporated its non-life insurance business under the name AFPMBAI General Insurance Corporation; that the Articles of Incorporation of AFPMBAI General Insurance Corporation signed on February 5, 1979 were duly registered with the Securities and Exchange Commission on March 22, 1979; and that meanwhile, Letter of Instruction No. 827 was issued by the President on March 7, 1979 ordering this Office, among others, to consider the AFPMBAI exempt from all taxes and to issue the certificate of exemption corresponding thereto. In reply, please be informed that in said LOI 827, the President stated that AFPMBAI "has been operating as an integral part of the AFP, providing life and non-life insurance services to the AFP, members of the AFP and the INP." Said non-life insurance services were then handled by the Non-Life Division of AFPMBAI which Division was subsequently incorporated and now known as the AFPMBAI General Insurance Corporation. Considering the clear grant of exemption from all taxes on the life and non-life insurance operations of AFPMBAI and inasmuch as AFPMBAI General Insurance Corporation was formed upon suggestion of the Insurance Commission to effectively control and supervise said non-life operations of AFPMBAI, this Office believes, and so holds, that the tax exemption coverage of LOI 827 includes non-life insurance operations of the AFPMBAI General Insurance Corporation. To hold otherwise, would render nugatory LOI 827. In view thereof, your request for exemption from all taxes is hereby granted. aisa dc