Exemption of Philippine Deposit Insurance Corporation (PDIC) from Local Taxes, Fees and Charges

October 21, 2014 BLGF MEMORANDUM CIRCULAR NO. 043-14 TO : All Regional Directors for Local Government Finance, Provincial, City and Municipal Assessors and Treasurers; and Others Concerned SUBJECT : Exemption of Philippine Deposit Insurance Corporation (PDIC) from Local Taxes, Fees and Charges With reference to the letter dated October 1, 2014 of Ms. CRISTINA Q. ORBETA, Officer-in-Charge of the Philippine Deposit Insurance Corporation (PDIC), copy attached, and for the guidance and information of all concerned, quoted hereunder is the pertinent provision of Republic Act No. 3591, as amended, (PDIC Charter), which provides as follows. "SECTION 17. . . . . (c) It is hereby declared to be the policy of the State that the Deposit Insurance Fund of the Corporation shall be preserved and maintained at all times. Accordingly, all tax obligations of the Corporation for a period of five (5) years reckoned from the date of effectivity of this Act shall be chargeable to the Tax Expenditure Fund (TEF) in the annual General Appropriations Act pursuant to the provisions of Executive Order No. 93, series of 1986; Provided, That on the 6th year and thereafter, the Corporation shall be exempt from income tax, final withholding tax, value-added tax on assessments collected from member banks, and local taxes. " ( As added by R.A. No. 9576, 29 April 2009 ) IEcaHS On the other hand, Section 8 of R.A. No. 9576, amending R.A. No. 3591, as amended, otherwise known as the PDIC Charter, provides the date of reckoning of PDIC exemption, thus: "SEC. 8. An additional paragraph to Section 17 of the same Act is hereby added after subparagraph (b) to read as follows: '(c) It is hereby declared to be the policy of the State that the Deposit Insurance Fund of the Corporation shall be preserved and maintained at all times. Accordingly, all tax obligations of the Corporation for a period of five (5) years reckoned from the date of effectivity of this Act shall be chargeable to the Tax Expenditure Fund (TEF) in the annual General Appropriations Act pursuant to the provisions of Executive Order No. 93, series of 1986; Provided, That, on the 6th year and thereafter, the Corporation shall be exempt from income tax, final withholding tax, value-added tax on assessments collected from member banks, and local taxes .' " (Underscoring for emphasis) In relation thereto, R.A. No. 9576 took effect as follows: "1) Published on May 17, 2009 (The Philippine Star & Philippine Daily Inquirer) 2) Date of Effectivity: June 1, 2009 ." In view of the foregoing, all concerned are hereby enjoined to abide and adhere to the provisions of law expressly exempting the PDIC from paying local taxes . DHcESI Relatedly, PDIC, a Government Instrumentality attached to the Department of Finance (DOF), created pursuant to Republic Act No. 3591, as amended, shall also be exempt from local fees and charges that local government units (LGUs) may have imposed under their duly-enacted local tax ordinance or revenue codes in view of Section 133 of Republic Act No. 7160, otherwise known as the Local Government Code (LGC) of 1991, which provides: " SEC. 133. Common Limitations on the Taxing Powers of Local Government Units . Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: xxx xxx xxx (o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities , and local government units. (Emphasis ours) All BLGF Regional Directors are hereby instructed to disseminate the contents of this Circular to all Provincial, City and Municipal Treasurers and the Office of the Local Chief Executives within their respective jurisdictions. All concerned are enjoined to comply strictly and be guided accordingly. cDCEIA (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director Bureau of Local Government Finance