Modification of BIR Ruling No. 044-88

August 24, 1988 BIR RULING NO. 410-88 142 (c) (1) 000-00 410-88 Gentlemen : This refers to BIR Ruling No. 044-88 dated February 12, 1988 holding that locally-produced cigarettes bearing a foreign brand which are not listed in the World Tobacco Directory are not considered cigarettes bearing a foreign brand; hence, not subject to the 50% ad valorem tax, but to the 40% ad valorem tax which is imposed "on other locally manufactured cigarettes" packed in twenties. Moreover, this Office has ruled that Philip Morris Menthol 100's" is a foreign brand regardless of the descriptive words appended to it, subject to 50% ad valorem tax. (BIR Ruling No. 267-86 dated June 2, 1988) In this connection, please be informed that under the aforesaid BIR Ruling No. 044-88 interpreting Section 142(c)(1) of the Tax Code, it would seem that the sole test to determine whether or not a particular brand is foreign brand is the listing in the World Tobacco Directory. However, after a restudy, this Office is of the opinion as it hereby holds, that resort to the World Tobacco Directory is only supplementary or secondary. The primary consideration is whether the local manufacturer is granted the right to use or title to the foreign brand by a foreign owner under a licensing agreement, or through outright sale. If under this consideration, the brand is really a foreign brand, there is no need to resort to the World Tobacco Directory. Conversely, if there is no grant of the right to use or title to the local manufacturer by a foreign owner, then the brand is not a foreign brand and again there is no need to resort to the World Tobacco Directory. Only in cases where it cannot be established or there is dearth of evidence as to whether a brand is foreign or not, that resort to the World Tobacco Directory should be made. aisadc Accordingly, BIR Ruling No. 044-88 is hereby modified. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner