BIR Ruling

January 17, 1968 The Basilan Lumber Corporation 1861 M. H. del Pilar Malate, Manila Attention: Mr . Nicasio C . Cruz Financial Affairs Manager Gentlemen : This refers to your letter dated December 7, 1967 stating that Mr. and Mrs. Jackson Beaman are temporarily staying in the Philippines under a Treaty Traders Visa; that Mr. Beaman's management services is engaged by your corporation on a temporary basis; that on November 29, 1967, his automobile described as Mercury Wagon 76, Model 1967, with Registration Card No. T.A. 1325626 (State of California dated June 23, 1967) arrived in Manila on board the S.S. "Manila". It is also represented that the automobile in question will be used by Mr. Beaman during his engagement with your company and will be reshipped abroad after the termination of his services. You now request that the above automobile be released from customs' custody under bond. In reply, I have the honor to inform you that although the said automobile is for the personal use of Mr. & Mrs. Jackson Beaman during their temporary stay in the Philippines, the same is subject to the compensating tax prescribed in Section 190 in relation to Section 184, both of the Tax Code. The fact that the car shall be re-exported abroad after the termination of the services of Mr. Beaman does not militate against the taxability therefore because said car shall have been actually used in the Philippines. The compensating tax is a tax on the privilege of using imported articles, not a tax on the articles. (See International Business Machines Corporation vs. Collector, 98 Phil. 598 and the Shell Refining Co. vs. Commissioner of Internal Revenue, CTA Case No. 1394, October 12, 1966). In view of the foregoing, your request that the above automobile be released under bond is denied, for lack of legal basis. atdc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue