BIR Ruling No. 132-82

April 22, 1982 BIR RULING NO. 132-82 202-e 000-00 132-82 Filipinas Eslon Manufacturing Corporation 6th Floor, AIU Building Alvarado and De La Rosa Streets Legaspi Village, Makati, Metro Manila Attention: Mr . Teodorico E . Zaragoza Corporate Financial Controller Gentlemen : This refers to your letter dated June 1, 1981 which was referred to this Office by the Ministry of Finance, requesting whether the UPVC pipes which you sold to Toyo Corporation can be considered as an exported article in order that your company may be qualified for availment of the tax credit on imported raw materials used in the manufacture of said pipes and for exemption from the payment of sales tax thereon. cdtech It appears that Toyo Corporation, a Japanese firm with head office in Tokyo, Japan, is an awardee of local project of the Ministry of Public Works; that your company, a local manufacturer of uPVC pipes, pursuant to a purchase order by said Toyo Corporation, manufactured, and supplied uPVC pipes for said project, payment for which is covered by an irrevocable at sight letter of credit opened in your favor; and that you delivered the said pipes by truck to the MPW compound in Manila. In reply, please be informed that under the foregoing facts, the said manufacture and supply of uPVC pipes in question cannot be considered as exported articles within the purview of Section 202(e) of the Tax Code, quoted as follows: "(e) Articles shipped or exported by the manufacturer or producer, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the articles so exported." Export means to carry or to send abroad; to send, take, or carry an article of trade or commerce out of the country; to transport merchandise from one country to another in the course of trade; to carry out or convey goods by sea. (Black's Law Dictionary). In the present case, the uPVC pipes were not shipped or exported abroad but were actually delivered by you to the Ministry of Public Works compound in Manila. While it is true that the sale was paid in U.S. dollars, this fact alone does not make the transaction as foreign sale. (Rattan Art & Decoration, Inc. vs. Collector of Internal Revenue, G.R. No. L-17744, April 30, 1965) In view thereof, since the uPVC pipes were not exported abroad, the imported raw materials used in the manufacture thereof cannot be allowed as tax credit against your other tax liabilities, as provided in Section 202(f) of the Tax Code, and that said manufactured articles cannot be exempted from the payment of sales tax due thereon. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner