DOJ Opinion No. 046, s. 1989

DOJ OPINION NO. 046 , s. 1989 February 22, 1989 Mr. Federico C. Gonzales President and General Manager Home Insurance and Guaranty Corporation First Holdings Centre 349 Sen. Gil J. Puyat Avenue Makati, Metro Manila Sir : This has reference to your request for clarification of this Department's Opinion No. 154, s. 1988 on the tax exemption privileges of the Home Insurance and Guaranty Corporation (HIGC) under R.A. No. 580 (HIGC Charter), as amended, in relation to Executive Order No. 93, s. 1988, in regard to HIGC bonds and interest accumulated by participating banks/lending institutions on mortgages insured under R.A. No. 580. llcd You state that pursuant to said Opinion your Legal Department has adopted the view that E.O. No. 93 did not withdraw the tax exemption on HIGC bonds and the interest accumulated by the insured clients of HIGC. However, some HIGC clients, like the Ayala Land, Inc., have expressed doubts on said interpretation. It is claimed that while it is clear and explicit in Opinion No. 154 that (1) the bonds issued by HIGC in payment of calls on insurance contracts executed prior to promulgation of E.O. No. 93 are still tax-exempt, and (2) that the interest therefor, accumulated by the insured clients, continue to enjoy the tax-exempt privileges of R.A. No. 580, it is silent with respect to those credit insurance/guarantee contracts executed after the promulgation of E.O. No. 93 and thus, they may no longer enjoy tax exemption benefits. We have re-examined said opinion in view of your client's apprehension in respect to interest-income of the insured clients of HIGC on contracts executed after the effectivity of E.O. No. 93 and it is clear therefrom that doubts as to contracts executed after E.O. No. 93 have been resolved in the same opinion. Thus, we stated and we hereby reiterate our position that: "From the foregoing, it would appear that these tax exemption privileges withdrawn by E.O. No. 93 were direct grants to and/or enjoyed by direct operation of the corresponding statutes to the government corporation or private entity. On the other hand, as previously stated, the tax exemption feature of HIGC bonds is enjoyed by the beneficiaries thereof (not by HIGC) through the exercise by HIGC of a power granted by its Charter the execution of a contract of mortgage insurance. Accordingly, as you correctly aver, ' the case of HIGC bonds different from the tax exemption privileges directly granted to entities under their Charters, and which privileges were withdrawn by E . O . No . 93 .' Hence, it is believed that HIGC bonds are not covered by the provisions of E . O . No . 93 ." (Emphasis supplied) prcd Please be guided accordingly. Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice