Tax Imposed on the Insulating Materials, Varnish and Asbestos Blocks Imported by Manila Electric Company

January 15, 1960 BIR RULING NO. 077-60 3rd Indorsement Respectfully returned to the Regional Director, Regional District No. 3, Manila, the papers bearing on the case of the Manila Electric Company on the question of whether or not the insulating materials, varnish and asbestos blocks imported by it, come within the purview of the exemption granted under Act 484, part II, paragraph 9. Applying the decision of the Supreme Court in the case entitled "Panay Electric Company v. The Collector of Internal Revenue", G.R. No. L-6753, promulgated July 30, 1955, it is the opinion that the parenthetical phrase "not including poles, wires, transformers, and insulators" refers only to exemption from the payment of taxes on "installations", that is, the privilege of using public streets and other public places in a way different from the way they are used by the public in general. The protested tax is a compensating tax levied upon articles purchased abroad but used in the Philippines. It is one enjoyed by the public in general but only by the grantee of the franchise. In this connection we should not lose sight of the purpose for which the compensating tax has been instituted which is to place persons purchasing goods from dealers doing business in the Philippines on an equal footing, for tax purposes, with those who purchase goods directly from without the Philippines. Moreover, it should be noted that the subject firm is expressly required by its charter to pay taxes on its "real estate, buildings, plant, machinery and personal property, as other persons are or may be hereafter required by law to pay." The tax on personal property purchased or received from abroad, or the compensating tax, comes quite clearly within the description. Accordingly, the request for tax credit should be denied because the exemption invoked has no legal basis. MELECIO R. DOMINGO Commissioner of Internal Revenue