BIR Ruling

August 29, 1968 Mr. Felix Alberto President, Felix Alberto & Co., Inc. (Operator of Expresscom) 4th Floor, Wilson Building Juan Luna, Manila S i r : This refers to your letter dated July 5, 1968 requesting for a ruling on the applicability of the most favored clause embodied in Section 13 of your franchise, Republic Act No. 2090, which provides "In the event of any competing individual, partnership or corporation receiving from the Congress a similar franchise in which there shall be any term or terms more favorable than those herein granted or tending to place the herein grantee at any disadvantage, then such term or terms shall ipso facto become a part of the terms hereon and shall equally operate in favor of the grantee as in the case of said competing individual, partnership or corporation." in relation to Section 14, Republic Act No. 2036, as amended by Republic Act No. 4054, franchise of the Radio Communications of the Philippines, Inc., which reads "Sec. 14. In consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private public, or quasi-public associations, corporations or joint stock companies, on real estate, buildings, and other personal property except radio equipment, machinery and spare parts needed in connection with the business of the grantee which shall be exempt from customs duties, tariffs and other taxes, as well as those properties declared exempt under this section . In consideration of the franchise, a tax equal to one and one-half per centum of all gross receipts from the business transacted under this franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten days after the audit and approval of the account as prescribed in this Act. Said tax shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which taxes the grantee is hereby expressly exempted ." (Emphasis Supplied). In reply, I have the honor to inform you that in a previous similar case, the Secretary of Finance had the occasion to sustain the view that the grantee of a franchise containing such favored clause can avail of the terms and conditions subsequently granted to another that are more favorable than those contained in his franchise. In view of the foregoing, the Felix Alberto & Co. Inc., is entitled to the exemptions enjoyed by the Radio Communications of the Philippines, Inc. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue