Articles Purchased for Maintenance Dredging at Subic Bay are Exempt from Excise Taxes

June 22, 1987 BIR RULING NO. 174-87 128 (a) & (b) 000-00 174-87 Gentlemen : This refers to your letter dated April 29, 1987 requesting tax exemption of the following items which were purchased by that corporation from Caltex Philippines, Inc. to be used as materials for military base construction at Subic Bay, viz: 250,000 liters diesel fuel; 35 drums motor oil Delo 400-40 5 drums motor oil Delo 400-30, and 2 drums grease Marfac AP-2 pursuant to the Military Bases Agreement and Treaty of General Relations between the Republic of the Philippines and the United States of America. Documentary evidence submitted show that on January 16, 1987 the Government of the United States of America had awarded you Bid Item No. 1, Specification No. 43-86-0162 for NAVSTA Spl Proj MI-83 (Rev) Maintenance Dredging (Phase IV and AFDM-5 Area) at the U.S. Naval Ship Repair Facility, Subic Bay, and that on January 28, 1987, after complying with the requirements of performance guarantee and insurance, you were then directed to proceed with the work on contract. adc In reply, I have the honor to inform you that Article V of the U.S. P.I. Military Bases Agreement provides as follows: "No import, excise, consumption or other tax, duty or impost shall be charged on material, equipment, supplies or goods, including food stores, clothing, for exclusive use in the construction, maintenance, operation or defense of the bases, consigned to, or destined for, the United States authorities and certified by them to be for such purposes." Accordingly, it appearing in Certificate of Exemption No. 0180 issued by direction of the OICC Southwest Pacific that aforesaid articles are exclusively destined for maintenance dredging at Subic Bay, the same are exempt from excise taxes imposed under Section 128(a) & (b) of the Tax Code, as amended. (Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, G.R. No. L-19707, August 17, 1987) However, the withdrawal from bonded stocks and delivery to the tax-exempt agency should comply with the following requirements. 1. The withdrawal of said articles from bonded stock be entered in the Official Register Books of the supplier and duly evidenced by a Withdrawal Certificate (BIR Form 2.67), 2. That the U.S. Navy Station, Subic Bay, should provide F.F. Cruz & Co. with Certificate of exemption. (B.I.R. Rulings dated May 22, 1975 & August 27, 1985). Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner