BIR Ruling No. 143-82

April 23, 1982 BIR RULING NO. 143-82 204-00 000-00 143-82 South-Eastern Sierra Madre Resources, Inc. 6th Floor Alliance Building Rosario Street, Binondo M a n i l a Attention: Mr . Alfonso V . Agcaoili President Gentlemen : This refers to your letter dated April 29, 1981 requesting for clearance to export one (1) unit of EMSCO 350 OIL DRILLING RIG, with accessories and tubular pipe, for sale to Messrs. WESTERN RESOURCES, LTD. and JOHN L. NAYLOR in the amount of US$420,000.00. You represented that the above-mentioned equipment was brought into the Philippines tax-free in 1971 in your favor (SESMAR) by Bawden Drilling International Ltd. (BAWDEN), a foreign corporation licensed to do business in the Philippines and engaged in the business of providing services and drilling rigs to petroleum industry and to oil exploration companies on a contract basis, pursuant to a Drilling Contract with you dated December 4, 1970. Thereafter, you got entangled in a court litigation against BAWDEN wherein damages in the amount of US $568,500 were awarded in your favor. Subsequently, by virtue of a Compromise Agreement between you and BAWDEN, the rights, interest and title to the subject drilling rig were conveyed and transferred in your name. It is further represented that due to the aforestated court litigation which began in 1972 and ended only in 1978, nothing could be done to save the rig from deterioration and destruction that it cannot, by itself alone, be used for drilling purposes. In that regard, you sought clearance from the Bureau of Energy Development to sell the aforementioned equipment which request was granted on March 11, 1981 by virtue of Section 12 (b) of Presidential Decree No. 87, as amended. You, thereafter, sought Central Bank's approval on the exportation and sale of the aforesaid equipment to Messrs. WESTERN RESOURCES, LTD. and JOHN L. NAYLOR for US $420,000, which is the highest offer so far that you have been able to receive after extensive canvassing. Accordingly, Central Bank is now requiring you to submit clearances from the Bureau of Customs and from this Office to sell the said equipment before your Export Declaration could be issued to you. In reply, I have the honor to inform you that the Bureau of Energy Development can allow and approve the sale, transfer or disposition of imported machinery and equipment for petroleum operations without tax for reasons of technical obsolescence. (Sec. 12 (b), P.D. No. 87) Such being the case, your re-exportation of the imported machinery and equipment, to avoid their deterioration and destruction, may be made without being subject to any internal revenue tax. cdta Very truly yours, RUBEN B. ANCHETA Acting Commissioner