Request for Exemption from FWT of Interest and/or Yield on Deposit Substitute Instruments of Pag-I.B.I.G. Fund

December 29, 1986 BIR RULING NO. 284-86 24 (e) 130-85 284-86 Gentlemen : This refers to your letter dated October 10, 1986 requesting exemption from the final withholding tax of the interest and/or yield on deposit substitute instruments and interest on the savings and time deposits of the Home Development Mutual Fund (HDMF), otherwise known as the Pag-I.B.I.G. Fund. cd In reply, please be informed that according to FIRB Resolution No. 4-85 dated January 22, 1985, the benefits derived from the Pag-IBIG Fund, a provident savings system and body corporate, private in character (under P.D. No. 1752), became taxable by virtue of P.D. No. 1955 which took effect on October 15, 1984 withdrawing all exemptions, or any preferential tax treatments and/or privileges granted under special laws, executive orders and letters of instructions to private business enterprises and persons engaged in any economic activity. However, effective February 6, 1986, Letter of Instructions (LOI) No. 1525 reading: "1. The Home Development Mutual Fund shall not be covered by Presidential Decree No. 1931, and shall continue to be exempt from the payment of any and all forms of taxes, assessments and other charges as provided in Presidential Decree Nos. 1530 and 1752." restored, among others, the tax exemption of the Pag-I.B.I.G. Fund and all its assets, collections, receivables and increments not only under P.D. No. 1752 but also under P.D. No. 1530 which provides that "the Fund, as well as the interests and dividends received by the members thereof, shall be exempt from the payment of any and all forms of taxes, tariffs and duties, fees, imposts and assessments, and other charges, and no law hereafter enacted shall repeal this provision unless it is provided therein that the same is applicable to the Fund by specifically stating its name." In view thereof, and in the absence of any subsequent enactment or law that explicitly and specifically subjects the Fund as well as its earnings to tax, this Office is of the opinion as it hereby holds that the Pag-I.B.I.G. Fund is exempt from the 15% (now 20% effective August 1, 1986) final withholding tax on interest and or yield on deposit substitute instruments and interest on the savings and time deposits paid or accrued beginning February 6, 1986. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue