Request for Exemption from Internal Revenue Taxes on Petroleum Products Sold and Delivered by Petrophil Corp.

October 14, 1986 BIR RULING NO. 214-86 128 126-86 214-86 Gentlemen : This refers to your request for exemption from internal revenue taxes on petroleum products sold and delivered to you by Petrophil Corporation. It is represented that your firm is a domestic corporation duly registered with the Export Processing Zone Authority (EPZA) as a zone export enterprise at the Mactan Export Processing Zone in Lapu-lapu City, as evidenced by Certificate of Registration No. 85-04 dated July 2, 1985; that the basis of your claim for exemption is your contention that the petroleum products sold and delivered to you by Petrophil Corporation are exempt from the payment of taxes pursuant to Section 17 of P.D. No. 66 and the letter ruling of the Ministry of Finance dated December 11, 1984. In reply, I have the honor to inform you that your request cannot be granted for lack of legal basis. It is to be noted that Section 17 of P.D. No. 66 which is he basis of your request for exemption only state that the petroleum products in question "shall not be subject to customs and internal revenue law and regulations . . ." The said provision of law and the aforesaid ruling of the Ministry of Finance do not state clearly that petroleum products sold and delivered to EPZA registered enterprises are exempt from taxes. It is a settled rule in taxation that tax exemption cannot be created by implication because exemptions from taxation are highly disfavored in law; and one who claims exemption from tax must be able to justify his claim by clearest grant of organic or statute law. An exemption from common burden cannot be permitted to exist on vague implications. (Asiatic Petroleum Co. vs. Llanes, 49 Phil. 466). cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue