BIR Ruling No. 238-82

August 20, 1982 BIR RULING NO. 238-82 24-a 133-79 238-82 Messrs. Ledesma, Saludo & Associates Law Offices 2nd Floor, Spicers Bldg. 2901 Faraday Street Makati, Metro Manila Attention: Mr . A . Pangan Jamon, Jr . Gentlemen : This refers to your letters dated July 13 and 19, 1982 requesting confirmation of your opinion to the effect that the interest income of the Bank of the Philippine Islands (BPI) on its loans insured with Home Financing Corporation (HFC) is exempt from tax and that premium charges collected on top of the interest rate prescribed by HFC shall be subject to tax. In reply thereto, I have the honor to inform you that pursuant to Section 25(c) of Republic Act No. 580, otherwise known as the Home Financing Act, interest accumulated by lending institutions on mortgages insured under the provisions of the Act shall be exempt from all taxation. Moreover, paragraph 15 of Executive Order No. 535 provides that, subject to the approval of the President of the Philippines upon consultation with the Ministry of Finance, the tax exemptions granted in favor of lending institution under Section 25(c) of the Home Financing Act, as amended, shall likewise, extend to mortgages held by other entities and persons, which are insured under the mortgage insurance program of the corporation. In view thereof, this Office is of the opinion as it hereby holds that the interest income of BPI on loans insured with the HFC is exempt from taxes, i.e., the corporate income and percentage taxes imposed by Sections 24 and 260, respectively, of the Tax Code. However, the premium charges collected on top of the interest rate prescribed by the HFC are subject to the income and percentage taxes. aisadc Very truly yours, TOMAS C. TOLEDO Acting Commissioner