BIR Ruling No. 280-82

November 10, 1982 BIR RULING NO. 280-82 024-cc 000-00 280-82 The Government Corporate Counsel Government Corporate Counsel Centre 1203 A. Mabini St., Cor. Arquiza Ermita, Manila S i r : This refers to your letters dated March 9 and September 30, 1981 requesting consideration of the ruling of this Office of July 30, 1979 denying the request of the Government Service Insurance System (GSIS) that the interest income of its savings and time deposits be exempted from the withholding tax on the ground that under Section 23 of P.D. No. 1177 all government-owned and controlled corporations were made subject to all taxes. In reply, please be informed that under Section 33 of Presidential Decree No. 1146 amending Commonwealth Act No. 186, otherwise known as the GSIS Charter, the exemption from taxes, assessments, fees and charges or duties granted thereunder to the GSIS shall continue unless specifically and expressly revoked . Under Opinion No. 126 Series of 1981 dated September 8, 1981, the Minister of Justice ruled that although Section 23 of Presidential Decree No. 1177 subjects all units of government, including government-owned and controlled corporation to pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws, said provision cannot reasonably be interpreted as having expressly revoked or even modified the tax exempt character of the GSIS. Hence, the failure of P.D. No. 1177 to provide for explicit revocation indicates legislative authority to retain the immunity which it had conferred upon the GSIS. In view thereof, in line with the foregoing opinion, your request for reconsideration is hereby granted. Accordingly, the interest income of the bank deposits of the GSIS is exempt from the 15% final withholding tax in the case of the savings deposits and the 20% final withholding tax in the case of time deposits. Moreover, this serves as authority of the depository banks to forego withholding of the tax on the interest earnings of the deposits maintained by the GSIS with them. As regards the claim for refund of the 15% tax already withheld from the interest of the bank deposits of GSIS and remitted to this Office, appropriate action will be taken thereon in accordance with Section 295 of the Tax Code, as amended. Very truly yours, RUBEN B. ANCHETA Acting Commissioner