BIR Ruling [DA-138-98]

April 13, 1998 BIR RULING [DA-138-98] Philmotors Corporation Philand Building, Herrera Ext. Across Pasong Tamo Makati City Attention: Mr . C . B . Castrillo President Gentlemen : This refers to your letter dated December 22, 1997 requesting for a reconsideration of our Memorandum dated December 6, 1997, addressed to RDO Jaime Q. Concepcion, denying your application for exemption from ad valorem tax on your importation of six (6) units of Jeep Cherokee and for the issuance of the corresponding Authority to Release Imported Goods (ATRIG). You state that the quantity limitation of 5 units to 25 units prescribed by the Board of Investments (BOI) was already lifted a long time ago; that according to BOI, the definition of "test market" for purposes of the Jeep Cherokee may no longer be necessary; that the Undersecretary of Trade and Industry has issued a memorandum to the effect that the importation of Jeep Cherokee is no longer restricted to a limited quantity for market testing purposes; that in a meeting held on June 7, 1996, a consensus was reached by the group composed of BOI Governor Bulaong, DCIR Rualo and BOC Special Assistant Redubla wherein it was agreed that Cherokee mode "4x4" with engine displacement of 4.0 and 5.2 liters shall be exempt from ad valorem tax; and that on June 11, 1996 DCIR Rualo informed this Office by way of internal memorandum that the 25-unit quantity limitation on the ad valorem tax exemption of Jeep Cherokee shall no longer apply. In reply, I regret to inform you that your aforesaid request cannot be given due course by this Office. The fact that the quantity restriction on the number of imported Cherokee Jeep covered by the excise tax exemption has been lifted by BOI does not necessarily mean that its subsequent importation is exempt from the ad valorem tax. It must be stressed herein that the Presidential Memorandum of May 23, 1995 which granted your request for the classification of Cherokee Jeep as "jeep" not subject to excise tax was authorized for market test purposes only but by no means can it be interpreted as an absolute grant of tax exemption. It is fundamental that to be exempt from tax, the law must be clearly expressed because exemption cannot be created by mere implication. Thus, it has been held that exemptions from taxation are highly disfavored by law and he who claims an exemption must be able to show by the clearest grant of organic or statute law. An exemption from the common burden cannot be permitted to exist upon a vague implication. (Asiatic Petroleum Co. vs. Llanes, 49 Phil. 4666; Coll. Of Int. Rev. vs. Manila Jockey Club, Inc., L-8755 March 3, 1956) To epitomize the principle, it is well settled that "taxation is the rule, tax exemption is the exception". Based on the foregoing and since Cherokee Jeep falls within the definition of the term "automobile" pursuant to Section 2(a) of Revenue Regulations No. 14-97, the same is subject to the ad valorem tax imposed under Section 149 of the Tax Code of 1997. Such being the case, we are fully justified in denying your application for ATRIG with respect to your importation of additional six (6) units Jeep Cherokee and hereby denies your request for reconsideration dealing on the same issue. This constitutes our final decision on the matter. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue