BIR Ruling [DA-583-04]

November 15, 2004 BIR RULING [DA-583-04] Rev. Reg. No. 25-003; BIR Ruling No. 073-96 Tolentino Corvera Macasaet & Reig 3/F Corporate Centre 1506 Finance Road, Madrigal Business Park Alabang, Muntinlupa City Attention: Atty. Pitero M. Reig Gentlemen : This refers to your letter dated August 04, 2004 requesting in behalf of your client, Rosehills Memorial Management (Rosehills) for a confirmation that the professional vehicle converted from a 2004 Cadillac De Ville base car model for exclusive use in the funeral and mortuary business of Rosehills falls under the category of a Special Purpose Vehicle as defined in R.A. No. 9224 and Revenue Regulations No. 25-2003, hence, exempt from the ad valorem tax. It is represented that Rosehills is a corporation duly organized and existing under Philippine laws; that the primary corporate purpose of Rosehills is to engage in the funeral and cemetery management business, that it operates crematory and mortuary facilities in, and is the Park Administrator of Heritage Park; that it is an accredited member of the International Cemetery and Funeral Association; that it is one of the top funeral companies in the country; that the external appearance of the subject vehicle gives the unmistakable impression that it is for exclusive use in the funeral business; that an ordinary commuter who is not in mourning or taking part in funeral rights or a funeral procession would find it inappropriate or would be ill-at ease or awkward riding in the subject vehicle in the same manner that it would be inappropriate for a person who is not sick or who is not accompanying a sick person to ride an ambulance; that the subject funeral coach shall not transport revelers or ordinary commuters; that the modifications done on the base car model is really tailor fitted for funeral service; that for a funeral hearse, the base car model is converted to accommodate and transport the casket, while a funeral coach shall be used to accommodate and transport the grieving relatives of the deceased; that you opine that the funeral coach is a Special Purpose Vehicle as defined in Revenue Regulations No. 25-2003; and that Rosehills is willing to have said restriction annotated at the back of its registration papers, among other safeguards that may be deemed appropriate by the Bureau of Internal Revenue. TcADCI In reply, please be informed that Section (1) (f) of Republic Act No. 9224 also called the Act Rationalizing the Excise Tax on Automobiles, dated August 29, 2003 which amended Section 149 of the Tax Code of 1997 provides as follows: "SEC. 1. Section 149 of the National Internal Revenue Code of 1997 is hereby amended to read as follows: xxx xxx xxx (f) Special purpose vehicle shall mean a motor vehicle designed for specific applications such as cement mixer, fire truck, boom truck, ambulance and/or medical unit, and off-road vehicles for heavy industries and not for recreational activities." Section 2 (g) of Revenue Regulations No. 25-2003 dated September 16, 2003 provides: "SEC. 2. Definition of Terms. For purposes of these Regulations, the following words and phrases shall have the meaning indicated below: xxx xxx xxx (g) SPECIAL PURPOSE VEHICLE shall refer to a motor vehicle, other than truck, cargo, van, jeep/jeepney/jeepney substitute, bus, single cab, chassis as defined herein, designed for specific applications such as cement mixer, fire truck, boom truck, ambulance and/or medical unit, and off-road vehicles for heavy industries and not for recreational activities. For this purpose, "designed for specific applications" shall mean the motor vehicle is designed in such a manner that it can only be used strictly for the intended purpose for which it was manufactured." As gleaned from the above provisions, a funeral coach , is covered by the definition of special purpose vehicles, as it is designed in such a manner that it can only be used strictly for the intended purpose for which it was manufactured. Further, said restriction should be annotated at the back of its registration papers. IN VIEW OF THE FOREGOING, the special vehicle converted from a 2004 Cadillac De Ville base car model for exclusive use in the mortuary and funeral business of Rosehills, is among the enumerations considered as a special purpose vehicle, hence exempt from the ad valorem tax. EHcaDT Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group