BIR Ruling No. 112-13

March 22, 2013 BIR RULING NO. 112-13 EO 93; Section 27 (C) NIRC; EO 307; PD 626 Occupational Safety and Health Center North Avenue corner Agham Road Diliman, Quezon City Attention: Ma. Teresita S. Cucueco, MD Executive Director Gentlemen : This refers to your letter dated December 5, 2011 requesting, on behalf of the Occupational Safety and Health Center ("OSHC") , exemption from income tax pursuant to Presidential Decree (PD) 626, further amending certain articles of PD No. 442, entitled "Labor Code of the Philippines." THaDEA It is represented that PD 626 was issued to amend Title II of Book IV on Employees' Compensation and State Insurance Fund of the Labor Code of the Philippines providing, among others, for the exemption of the State Insurance Fund and all its assets from any tax, fee and other charges under Article 204 thereof; that OSHC was established in the Employees' Compensation Commission, an attached government agency of the Department of Labor and Employment (DOLE), pursuant to Executive Order (EO) 307, issued by former President Corazon C. Aquino on November 4, 1987. The OSHC is governed by the Employees' Compensation Commission, and has the following powers and functions: a. To undertake continuing studies and researchers on occupational safety and health, including those relating to the establishment of causal connection between diseases and occupations and the development of medical criteria in determining the nature and extent of impairment or diminution in health, functional capacity or life expectancy of the employees as a result of their work and working conditions; b. To plan, develop and implement training programs in the field of occupational safety and health, and related interests; c. To serve as a clearing house of information and innovative methods, techniques and approaches in dealing with occupational safety and health problems and institute a mechanism of information dissemination to the general public; d. To monitor the working environment by the use of industrial hygiene, field and laboratory equipment and conduct medical examinations of workers exposed to hazardous substances for the ready detection of occupational diseases; e. To act as the duly recognized agency to undertake practical testing for safe use and set standard specifications of personal protective and other safety devices; f. To assist government agencies and institutions in the formulation of policies and standard on occupational safety and health and other matters related thereto and issue technical guidelines for the prevention of occupational diseases and accidents; EaCDAT g. To adopt annually a budget of expenditures of the Center and its staff chargeable against the State Insurance Fund: Provided, That the SSS and GSIS shall advance on a quarterly basis the remittances of allotment of the loading fund for this Center's operational expenses based on its annual budget as duly approved by the Department of Budget and Management; Provided, further, That such budget shall not exceed 4% of the 12% loading fund based on the total of the State Insurance Fund and its earnings as of December 31st of the preceding years; h. To perform such other acts as it may deem appropriate for the attainment of the purposes of the Center and proper enforcement of the provisions of this Executive Orders; and i. To enlist the assistance of government agencies and private organizations in carrying out the objectives of the Center. Under Section 7 of EO 307, the operational fund of the OSHC shall be sourced from the loading fund of the State Insurance Fund and its earnings with the Social Security System (SSS) and the Government Service Insurance System (GSIS), on a sharing of seventy percent (70%) for the SSS and thirty percent (30%) for the GSIS. It is further represented that the Employees' Compensation Commission is exempt from taxes as provided under Article 204 of PD 626. Thus, it is contended that OSHC is likewise exempt from income tax being an agency created in the Employees' Compensation Commission. In reply thereto, please be informed that the exemption of Employees' Compensation Commission had already been revoked by Executive Order (EO) No. 93 issued on December 17, 1986 and took effect on March 10, 1987, which revoked the tax and duty exemption privileges of government and private entities, to wit: "Sec. 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn, except: a. those covered by the non-impairment clause of the Constitution; b. those conferred by effective international agreements to which the Government of the Republic of the Philippines is a signatory; c) those enjoyed by enterprises registered with: (i) the Board of Investments pursuant to Presidential Decree No. 1789, as amended; (ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66, as amended; (iii) the Philippine Veterans Investment Development Corporation Industrial Authority pursuant to Presidential Decree No. 538, as amended. d) those enjoyed by the copper mining industry pursuant to the provisions of Letter of Instruction No. 1416; cDSAEI e) those conferred under the four basic codes namely: (i) the Tariff and Customs Code, as amended; (ii) the National Internal Revenue Code, as amended; (iii) the Local Tax Code, as amended; (iv) the Real Property Tax Code, as amended. f) those approved by the President upon the recommendation of the Fiscal Incentives Review Board." The above provision did not specifically mention the Employees' Compensation Commission as one of government agencies whose tax exemption was not withdrawn. Corollary thereto, while EO 307 was issued only on November 4, 1987 or after the issuance of EO 93, which took effect on March 10, 1987, it is worthy to note that EO 307 did not expressly provide for the exemption of OSHC from taxes. Furthermore, Section 27 (C) of the 1997 Tax Code, as amended, expressly mentioned only the following agencies as exempt from income tax, to wit: GSIS, SSS, Philippine Health Insurance Corporation (PHIC), the Philippine Charity Sweepstakes Office (PCSO) and the Local Water Districts (LWDs). The foregoing enumeration does not include OSHC. Thus, under the maxim expression unius est exclusio alterius , the mention of one thing implies the exclusion of another thing not mentioned. 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 ( Tolentino vs. Paqueo , 523 SCRA 377). In the same vein, where the terms are expressly limited to certain matters, it may not, by interpretation or construction, be extended to other matters ( Sarmiento III vs. Mison , 156 SCRA 549). The rule proceeds from the premise that the legislature would not have made specified enumerations in a statute had the intention been not to restrict its meaning and to confine its terms to those expressly mentioned ( Romualdez vs. Marcelo , 497 SCRA 89). Based on the foregoing, this Office is of the opinion, as it hereby holds that OSHC is not exempt from taxes. "A tax exemption cannot arise from vague inference . . . Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer" (Digital Telecommunications, Inc. vs. City Government of Batangas, et al., G.R. No. 156040, December 11, 2008). Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue