BIR Ruling No. 003-65

January 25, 1965 BIR RULING NO. 003-65 3rd Indorsement Respectfully forwarded to the Honorable, the Acting Secretary of Finance, Manila, the papers bearing on the question of whether or not shipments of the Philippine National Railways of railway materials consisting mostly of replacement parts are exempt, from among others, the compensating tax. aisadc Section 12 of Republic Act No. 4156 provides as follows: "Section 12. Exemption from taxes , duties and port charges . The Corporation is hereby exempt from payment of all taxes of every name and nature municipal, city, provincial, or national upon its capital stock, franchises, right of way, earnings, and all other property owned or operated by it and all duties on all railways materials , supplies and equipment imported in the Philippines for and/or by the said Corporation and this exemption shall extend to port charges upon vessels whose entire cargo consists of materials for the construction or equipment of the Corporation and to such proportion of the prescribed port charges or other vessels as the tonnage of materials for such constructions or equipment may bear to the tonnage of the entire cargo of the vessel." The doubt as to the exemption from the compensating tax of imported railway materials is premised on the fact that the law made mention only of the word "duties" immediately preceding the statement regarding the exemption of the importation thereof. The exemption from taxes refers only to is capital stock, franchises, right of way, earnings and all other property but not to the importation of railway materials, supplies and equipment. Considering further, that the term "duties" does not include taxes, it is obvious from the context of the law that the compensating tax is not embraced within the exemption provided therefor. Accordingly, the exemption should not be inferred from the doubtful import of the language of the statute, but must clearly appear, either in express words or the necessary intendment of the statute. This Office is, therefore, of the opinion that the exemption of the Philippine National Railways from all taxes does not include compensating tax on its importation of railway materials, supplies and equipment. cdta (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue