DOJ Opinion No. 033, s. 1996

DOJ OPINION NO. 033 , s. 1996 March 19, 1996 Ms. Elvira U. Geronimo Vice-President Physical Resources Group Government Service Insurance System Financial Center, Pasay City M a d a m : This refers to your request for opinion relating to the interpretation of the Opinion, rendered by my predecessor in office (Sec. of Justice Opn. No. 165, s. 1995) which "officially confirm(ed) that the exemption of the (Government Service Insurance System) from the payment of all taxes, assessments, fees, charges and duties of all kinds under Section 33 of its Charter has not been superseded by the Local Government Code of 1991". llcd The opinion is requested, in connection with the GSIS application for tax exemption/subsidy under Section 33 of P.D. No. 1146, as amended, on the importation of airconditioning equipment. The said application is now pending with the Office of the Acting Director, Revenue Office, Department of Finance (DOF). You state that in support of said GSIS request, you cited the aforementioned Opinion of this Department and likewise attached a copy of a Memorandum issued by me as then Executive Secretary touching on the same subject; that from follow-up inquiries, made with the DOF's Fiscal Incentives Review Board (FIRB) it appears that the said Board is " in need of CONFIRMATION AS TO WHETHER THE SAID AFORECITED SECRETARY OF JUSTICE'S OPINION CAN BE INTERPRETED TO MEAN THAT THE GSIS IS EXEMPT FROM NATIONAL TAXES AND DUTIES." Believing that the said Opinion can best be interpreted by this Department you now request for the aforementioned opinion. Particularly, we take it that you request us to issue an "official confirmation" on the extent of the tax-exemption privileges of the GSIS to enable the DOF to favorably and expeditiously consider your request for tax exemption subsidy. At the outset, it must be noted that the extent of the exemption of the GSIS from national income taxes has already been passed upon by the Office of the President in "Government Service Insurance System vs. The Commissioner of Internal Revenue, OP Case No. 5378, copy attached. In said case, the Office of the President, affirming the ruling of this Department dated July 22, 1993, clearly stated, in a Decision dated April 6, 1994, to wit: "As may be noted, RA 728, approved on June 18, 1952, exempted the GSIS from all types of direct or indirect taxes and from duties, with a proviso towards a continuing exemption, unless abrogated by a subsequent legislation specifically identifying the GSIS by name. On the other hand, PD 712 reiterated the tax exemption status of GSIS. The aforequoted provision of RA 5431, as crafted, does no more than to fix the rates of taxes payable by domestic corporations. If the same provision, in the extreme, suggests the abrogation of the tax exemption privileges of domestic corporations in general, it cannot reasonably be interpreted as modifying, let alone revoking, the tax exemption of GSIS under Section 12 of RA 726. This is as it should be for the tax-exempting provision of RA 728 contains this unique proviso: " No law hereafter enacted shall apply to [the GSIS] unless it is so provided therein that the same is applicable to the [GSIS] by expressly stating therein the name of said entity ". Taken in its proper context, the proviso works to exclude the GSIS from the place of any tax-exempt revoking legislation, unless such a law categorically and expressly withdraws the tax privilege of the GSIS. Needless to state, RA 5431 did not withdraw the all-embracing tax exemption of the GSIS in the manner contemplated under Section 12 of RA 726. As aptly observed by the Secretary of Justice, " [T]he failure of the legislature in providing in RA 5431 that the tax rates in domestic corporations shall apply to GSIS as indicative of the intent to retain the tax exemption granted to herein petitioner [GSIS] ." Consequently, we find it unnecessary to issue any opinion on the matter in view of the aforequoted decision of the Office of the President that the GSIS is exempt from income taxes which are national in character. This is also consistent with our opinion in the GSIS Charter which makes no distinction between national taxes and duties and local taxes. Please be guided accordingly. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary