Project "Mango, a Humanitarian Aid and Human Resources./Infrastructure Development Program for the Republic of the Philippines

April 14, 1997 BIR RULING [DA-164-97] MEMORANDUM FOR : Secretary Roberto F . de Ocampo FROM : Commissioner Liwayway Vinzons-Chato Bureau of Internal Revenue SUBJECT : Project "Mango, a Humanitarian Aid and Human Resources./Infrastructure Development Program for the Republic of the Philippines This refers to your memorandum dated January 15, 1997, relative to the implementation of Project Mango covering two (2) Socio-Economic programs: the Humanitarian Aid Distribution (HAD) Program which, as the name suggests, was created for the distribution of foreign aids generally covering the delivery of medical services; and the Human Resources Development (HRD) and Infrastructure Development (ISD) Programs which include extensive human resources/livelihood development programs and the creation of advanced systems integrated self-powered world-class industrial and manufacturing centers. cdt It appears that the project will be fully-funded through the sponsorship of the Red Rock Dragons, Ltd. (herein referred to as the Trust), a U.S.-based private foreign trust which administers the European Humanitarian Aid Fund; that Argonaut Corporation (TAC), a private multi-national corporation registered in the Cayman Islands, British West Indies, was contracted by the Trust to execute all facets of the humanitarian aid and socio-economic development programs of the Project; that the primary business of TAC has been the design and development of advanced state-of-the-art, private sector power and industrial development a manufacturing complexes known as the EARTSATs (Earth Science and Technologies); and that one of the conditions in the release of the funds by the Trust is that the President must sign an executive order granting the Trust, and its employees and contractors exemptions from taxation of goods, materials and equipment brought into the Philippines, tax holidays, freedom to repatriate earnings, and all other tax and duty, privileges accorded to business, who qualify for "Pioneer Status," for the duration of the humanitarian aid program . Based on the foregoing, you address the issued whether an Executive Order issued by the President granting tax exemption to this project will suffice for the purpose intended. Pursuant to Article 6 Section 28 (4) of the 1996 Constitution of the Philippines stating: "No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress." this Office issued BIR Ruling No. 042-92 to the effect that if an International Agreement granting tax exemption has not been ratified by Congress, the same is without force and effect. Thus, in the instant case, even if the President will issue an Executive Order granting the Mango Project exemption from taxes, without the ratification by the concurrence of the majority of the members of Congress, the tax exemption clause therein is without force and effect. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue