Republic of the Philippines MINISTRY OF FINANCE Office of the Minister Manila MINISTRY ORDER NO.ft-92, __ TO
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SUBJECT :
The Chief, Financial and Management Service Others Concerned Exemption from Income Tax of the Allowances of Finance Attaches -
Sec. 6, Article XV of the Constitution of the Philippines provides that "No salary or any form of emolument of any public officer or employee, including constitutional officers, shall be exempt from the payment of income tax." The Secretary (now Minister) of Justice in Opinion Nos. 29 dated May 7, 1974, 50 dated April 19, 1974, and 56 dated April 8, 1975 ruled that all allowances, except cost of living allowance, received by personnel of the Department (now Ministry) of Foreign Affairs are not considered "emolument" within the meaning of aforesaid section of the Constitution as they are spent in connection with the discharge of official functions in the interest of the government. Cost of living allowance however was specifically excluded because the Secretary (now Minister) of Justice stated that this allowance is intended to augment salary and should be considered additional compensation subject to income tax. Subsequently, Presidential Decree No. 1285 was issued which provides that cost of living allowance (now overseas allowance) is "declared as paid and received in furtherance of the interest of the Republic of the Philippines" (Section 6), in effect exempting also the cost of living (overseas allowance) allowance of Foreign Service personnel from income tax. Under Section 3 (b) of Presidential Decree No. 1285 and paragraph 1.2 of LOI 63, Finance Attaches assigned abroad are considered Foreign Service personnel; hence, entitled to the same exemption from income tax on their allowances as other Foreign Service personnel.
In view hereof, the Chief, Financial & Management Service, this Ministry, and all others concerned, are hereby enjoined to desist from withholding income taxes on all allowances of Finance Attaches, except on their salaries. It is further directed that the income tax withheld from the allowances of said attaches from January to September 1982 be refunded immediately. This Order shall take effect immediately and all concerned should be guided accordingly.
ALFREDO PIO DE ROD?! JR. Acting Minis,
September 20, 1982
"Isang Bansa, Isang Diwa"