Whether GSIS Continues to be Exempt from All Taxes, Assessments, Fees and Charges or Duties of All Kinds

April 23, 1992 BIR RULING NO. 134-92 24 (c) 000-00 134-92 Development Bank of the Philippines Makati, Metro Manila P.O. Box 800, Central Post Office 1200 Attention: Ms . Elizabeth P . Ong Sr . Vice President Gentlemen : This refers to your letter dated 18 February 1992 in effect requesting confirmation on whether GSIS continues to be exempt from all taxes, assessments, fees and charges or duties of all kinds. prll It is contended that the late Secretary of Finance, Jaime V. Ongpin, in his letter dated 12 August 1987 indicated that Executive Order No. 93 did not withdraw the exemption of SSS from income tax and from the final withholding tax on interest income; and the Memorandum Order No. 42 issued on 26 September 1986 granted exemption to the GSIS, amending for this purpose Section 24 (c) of the Tax Code, as amended by Executive Order No. 37. In reply, please be informed that in a previous decision rendered by this Office on March 19, 1991 denying the claim for refund of premium taxes for the period from 1984 to 1987, we had the occasion to rule that the exemption of GSIS from all taxes and assessments under Section 33 of its Charter, as amended by P.D. 1146 has been revoked by P.D. 1177 promulgated on July 30, 1977; that as a continuing policy of the State to abolish tax exemptions of government-owned and controlled corporations, P.D. 1931 was promulgated on June 11, 1984, and E.O. No. 93, on December 17, 1986, [but effective/beginning March 10, 1987] for such abolition, provisions of special or general laws to the contrary notwithstanding: that although Presidential Memorandum Order No. 42 was issued on September 26, 1986 granting the GSIS exemption from the payment of tax on their taxable income and amending for this purpose Section 24 (c) of the Tax Code, as amended by E.O. No. 37, on July 31, 1986, it is our opinion that the PMO was again nullified/repealed by E.O. 273, issued on July 15, 1987, but effective January 1, 1988. Thus, by reason of the authority of the Commissioner of Internal Revenue to codify and consolidate all internal revenue laws embodied in the present NIRC, as amended by various Executive Orders and other issuances (Sec. 28, EO 273), the present Tax Code now provides: "Sec. 24. Rates of Tax on Domestic Corporation . xxx xxx xxx (c) Government-owned or controlled corporations agencies or instrumentalities . The provisions of existing special or general laws to the contrary notwithstanding, all corporate taxpayers not specifically exempt under Section 26 of this Code shall pay the rates provided in this Section. All corporations, agencies, or instrumentalities owned or controlled by the Government, including the Government Service Insurance System , and the Social Security System shall pay such rate of tax upon their taxable income as are imposed by this Section upon associations or corporations engaged in a similar business, industry, or activity." Section 29 of E.O. 273 further provides that the provisions of any law, whether general or special, rules and regulations and other issuances or parts thereof which are inconsistent with this Order are hereby repealed, amended or modified accordingly. Moreover, as a general rule, laws cannot be amended by a mere memorandum order. PMO No. 2 granting tax exemption to the GSIS amended for the purpose Section 24 (c) of the NIRC, as amended by E.O. No. 37. However, it was ascertained that it was never published per certification issued on April 23, 1991 by the Chief, Official Gazette Publication, National Printing Office. Neither was there a publication made in any newspaper of general circulation. The prior publication of laws before they become effective cannot be dispensed with. Under Article 2 of the New Civil Code laws shall take effect fifteen (15) days following the completion of their publication in the official gazette or in a newspaper of general circulation, unless it is otherwise provided. The clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself. ( Taada, et al. vs. Juan C. Tuvera , No. 2-63915, December 29, 1986). Such being the case, Presidential Memorandum Order No. 42 amending Section 24 (c) of the Tax Code has no force and effect of law. In view of the foregoing, it is the opinion of this Office that the GSIS remains subject to income tax under Section 24 (c) of the Tax Code, as amended. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue