DOJ Opinion No. 056, s. 1981

DOJ OPINION NO. 056 , s. 1981 March 24, 1981 The Director Bureau of Domestic Trade 126 E. Rodriguez, Sr. Blvd. Quezon City Sir : This is with reference to your request for opinion on whether or not the benefits paid to members of mutual benefits associations are subject to income tax, estate tax and other forms of taxes, considering that mutual benefit associations are organized mainly for the purpose of providing unemployment, sickness, death, retirement and other types of benefits to their members which are practically merely a return of their membership dues, assessments, and voluntary contributions. Under section 83 of the Revised Administrative Code the Minister of Justice may render opinion for the government officials mentioned therein only on questions of law arising in the performance of their respective duties . (Opinion, Secretary of Justice, No. 115, series of 1973) Accordingly, we are constrained to decline rendition of opinion on your query. After an examination of the functions of the Bureau of Domestic Trade (vide: Integrated Reorganization Plan, Part IX, Article III), we are inclined to conclude that the question of whether the benefits received by members of mutual benefit associations are taxable is not one arising in the performance of any of such functions. Moreover, the opinion of the Minister of Justice, being advisory in nature, cannot prevail over the rulings promulgated or that may be promulgated by the agency primarily charged with the enforcement of the law involved, the Ministry of Finance in this particular case. (Opinion of the Secretary of Justice, No. 145, series of 1973) Nonetheless, for the purpose of our providing you with relevant information, attention is invited to the following pertinent provisions of the National Internal Revenue Code (P.D. No. 1158, as amended): Income Tax "Section 29(b). Exclusion from gross income . The following items shall not be included in gross income and shall be exempt from taxation under this Title: "(1) Life Insurance The proceeds of life insurance paid to beneficiaries upon the death of the insured, whether in single sum or otherwise, but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income. "(2) Amount received by insured as return of premium The amount received by the insured, as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at maturity of the term mentioned in the contract or upon surrender of the contract. prcd xxx xxx xxx "(5) Compensation for injuries or sickness Amounts received, through Accident or Health Insurance . . . as compensation for personal injuries or sickness . . . xxx xxx xxx "Sec. 100. Gross estate . The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. . . . xxx xxx xxx "(e) Proceeds of life insurance To the extend of the amount receivable by the estate of the deceased, his executor, or administrator as insurance under policies taken out by the decedent upon his own life, irrespective of whether or not the insured retained power of revocation, or to the extent of the amount receivable by any beneficiary designated in the policy of insurance, except when it is expressly stipulated that the designation of the beneficiary is irrevocable." For a definitive ruling on the matter we advise that you consult the Ministry of Finance, the office which, as abovestated, is called upon to implement and enforce tax laws. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice