BIR Ruling

January 30, 1969 3rd Indorsement Respectfully returned to the Honorable, the Undersecretary of Finance, Manila, the within papers relative to his 2nd Indorsement dated January 3, 1969, requesting comment on the apparent inconsistency of the BIR Rulings in connection with the interpretation of Section 22(g) of the Host Agreement concluded between the Republic of the Philippines and the World Health Organization. Section 22(g), Article VIII of the aforesaid Agreement is quoted as follows: "Once every three years have the right to import free of duty a motorcar it being understood that the duty will become payable in the event of the sale or disposal of such motorcar to a person not entitled to this exemption within three years upon its importation." The papers show that "in March 1955 the BIR ruled that under the Host Agreement neither the seller nor the purchaser were required to pay any duties or taxes in accordance with Section 22(g) of the Host Agreement;" that recently the BIR made a contrary ruling relative to said provision, stating that the Host Agreement covers only exemption from customs duties and does not cover internal revenue taxes. It is informed that after a careful analysis of the afore-quoted provision, this Office has arrived at the conclusion that the previous ruling had been merely inferred from the doubtful import of the language of the Agreement. It is a settled rule however that exemptions are never granted by mere inference alone. Accordingly, the said ruling issued in March 1955 is revoked by the recent interpretation of this Office to the effect that WHO officials who sell their personally-owned automobiles to non-exempt persons after three years following the date of importation, are exempt from the payment of customs duties only but not from the payment of compensating and other internal revenue taxes considering that the term "duty" does not include taxes. cdll Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue