BIR Ruling

March 8, 1976 Insular-Yebana Tobacco Corporation 67 M. H. del Pilar Street Tugatog, Malabon, Rizal Attention: Mr . Florencio Lim Vice-President Gentlemen : This refers to your letter dated September 16, 1975, requesting that in view of the fact that your La Yebana Menthol Filter King Size and La Yebana Chorritos Largos Regaliz native cigarettes, all of the P3 per M class with maximum retail price of P.60 per pack are both presently selling at a loss due to rising cost of materials in the manufacture thereof, you be permitted to elevate both brands to the P5 per M class with maximum retail price of P0.80 per pack, with the following qualifications: cdta 1. In the event that the above stated brands could not be salable under the maximum retail price of the P5 per M class, you wish to reserve the right to return said brands to the P3 per M class; and 2. Inasmuch as you will price your abovestated brands to retail at below P.80 but more than P.60 per pack, your request will not preclude you from taking advantage of any benefit accruing in case an amendment in the future is made to the Presidential Decree increasing the maximum retail price of the native cigarettes under the P3 per M class. In reply, I have the honor to inform you that under Section 137(b) of the Tax Code, as amended by Presidential Decree No. 753, "Cigarettes subject to tax at lower rates before the effectivity of the new tax rates herein prescribed shall automatically be subject to the corresponding higher rates and there is nothing under this subsection (b) which allows any downgrade re-classification of tax rates for existing brands of cigarettes duly registered at the time the herein rates become effective". Inasmuch as you are the registered manufacturer of the aforecited cigarette brands; and that your request will not result in the downgrade classification of your cigarette products, your request to elevate the classification of your aforesaid cigarette products from the P3 per M to P5 per M tax bracket is hereby granted, without prejudice to reservation No. 1 as hereinabove stated. However, with respect to reservation No. 2 as stated above, please be advised that this Office cannot commit itself to be bound by a condition which may not be allowed by a law that may be enacted in the future. cdtech Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."