(NAR) VOL. 11 NO.4 / OCT. – DEC. 2000
WHEREAS, the Government fully appreciates
the valuable role of government officials and employees in providing
vital services to the population at large;
WHEREAS, in
recognition of this vital role, it is the policy of he Government to
continuously look for the welfare of government officials and employees;
WHEREAS,
pursuant to this policy, the Government deems it proper to provide
necessary additional funds to these officials and employees to finance
the education, health or other emergency expenses of these officials and
employees, or any member of their family by tax-free pursuant to
Memorandum Circular No. 31, s. 1991 implementing Joint Civil Service
Commission – Department of Budget and Management Circular No. 1, s. 1991
as amended by Joint CSC-DBM Circular No. 2-97, s. of 1997;
WHEREAS,
it has come to my attention that the Bureau of Internal Revenue had
issued various rulings on the taxability of monetized leave credits,
Section 2.78.1(A) (7), p. 24 of Revenue Regulation No. 2-98 dated April
17, 1998, being the latest, which rulings are in direct contrast to the
CSC intent when the policy on monetization of leave credits tax-free was
institutionalized in 1991 as per its Resolution No. 992630 dated
December 2, 1999;
WHEREAS, said rulings create confusion
on the various government bodies whether or not said monetized leave
credits are subject to income tax and withholding tax;
WHEREAS,
said rulings have discouraged the application for monetization of leave
credits by many officials and employees despite urgent/emergency needs;
WHEREAS, it is my concern and constitutional duty to be a watchman of this problem and provide solution for the same;
NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct:
SECTION 1.
TAX EXEMPTION STATUS OF MONETIZED LEAVE CREDITS. The monetized leave
credits of government officials and employees shall continue to be
exempted from income tax.
SEC. 2. ABROGATION OF BIR RULING
ON MONETIZED LEAVE CREDITS. Hence, pursuant to Section 17, Article VII
of the Constitution, I hereby abrogate all previous rulings, including
Section 2.78.1(A) (7), p. 27 of Revenue Regulation No. 2-98 dated April
17, 1998 issued by the Bureau of Internal Revenue which subjected the
monetization of leave credits to income tax, which I have noted to be
inconsistent with the provisions of Republic Act (R.A.) No. 8424 the
“Tax Reform Act of 1997” as well as the intention on the grant of such
benefits.
SEC. 3. IMPLEMENTATION IN GOVERNMENT
BUREAUCRACY. Accordingly, all heads of departments and agencies and
others concerned are enjoined to implement the strict observance of this
Order.
SEC. 4. EFFECTIVITY. This Executive Order shall take effect immediately.
DONE, in the City of Manila, this 27th day of September in the Year of Our Lord, Two Thousand.
(Sgd.) JOSEPH EJERCITO ESTRADA
By the President:
(Sgd.) RONALDO B. ZAMORAExecutive Secretary