BIR Ruling

September 18, 1964 Messrs. Lino M. Patajo and Ramon M. Velayo Suite 602 Pacific Bank Bldg. 460 Rosario St., Manila Gentlemen : Reference is made to your letter dated September 7, 1964 requesting the exemption of reparations consumer's goods allegedly imported for the end-use of the WARVETS and LEI in line with the exemption granted to reparations consumers' goods imported for the end-use of the UDVAP (United Disabled Veterans Association of the Philippines). cdpr In reply, I have the honor to inform you as follows: From the memorandum of the Legal Department of the Reparations Commission dated September 16, 1964 which was incorporated by reference in the 2nd Indorsement of the Commission bearing the same date, it appears that the importation of the reparations consumers' goods in question were made under the same circumstances prevailing in the case of the UDVAP. We may quote the pertinent portion of the aforesaid memorandum as factual premise, viz: "Suffice it to state here that from the standpoint of the Commission, all these procurements whether thru the WARVETS, the PVL or LEI, or the UDVAP, have been intended for the generation of the Veterans Trust Fund, the said instrumentalities or agencies having been designated by the Commission pursuant to respective resolutions as the generating instrumentalities in lieu of the NAMARCO pursuant to Section 2(b) of R.A. 1789, as amended. This was because Section 2(d) of the same law before its amendment by R.A. 3079 was silent on the manner of procurement and disposition of goods intended for the generation of the Veterans Trust Fund. Hence, the Commission, in the exercise of its implementing authority had to avail itself of the provisions of Section 2(b) which deals on the procurement of consumer goods in general for the purpose of generating the Veterans Trust Fund." prcd The similarity of the importation for the WARVETS and LEI with that of the UDVAP is, therefore, indubitably established. In deciding the exemption of the importation of reparations consumers' goods for the UDVAP this Office held: "From the legal and factual explanation of the Reparations Commission on the procurement of the reparations consumers' goods in question, it is our understanding that the procurement of the goods was made not for the account of the United Disabled Veterans Association of the Philippines but for the government itself. This is for the reason that under Section 2(b) of the Reparations Law, only the government can avail of the procurement of consumers' goods other than capital goods for disposition thru authorized retailers to consumers. It is also for the same reason perhaps why the law, in Section 14, as amended by Republic Act No. 3079, exempts the government from all taxes on all reparations goods acquired by it but exempts private parties only from the compensating tax, insofar, as internal revenue is concerned." In view of the foregoing, and on the basis of the explanation of the Reparations Commission to the effect that the United Disabled Veterans Association of the Philippines will receive the consumer's goods for disposition solely in the latter's capacity as agent of the Commission, this Office believes, as it hereby holds, that said goods are exempt from the advance sales tax or compensating tax, pursuant to Section 14 of Republic Act No. 1789, the Reparation Law, as amended by Republic Act No. 3079." prll For similar reasons, this Office believes and so holds that the importation of the reparations consumers' goods in question for the WARVETS and LEI is exempt from the advance sales or compensating tax. This will serve a authority for the Commissioner of Customs in effecting the release of the goods in question free from the payment of advance sales or compensating tax. LLpr Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue