Exemption of Items Purchased Locally for Delivery to US Navy from the Sales and the Excise Taxes

August 31, 1988 BIR RULING NO. 423-88 145 (a) & (b) 174-87 423-88 Gentlemen : This refers to your request for tax exemption referred to this Office by the Department of Finance bearing on the following items which you purchased locally for delivery to the United States Navy at Subic Bay, viz: cdtech 10 gals. paint thinner 10 gals. Red lead oxide primer 15 gals. concrete masonry neutralizer 175 gals. concrete masonry sealer 35 gals. white glazing putty 2,000 ltrs. fuel, gasoline regular 18,000 ltrs. fuel, diesel 5 pcs. plate checkered 53 rls. welded mesh, wire ga. 400 pcs. Zambo plyform, oil impregnated and edges wax sealed 150 gals. Chlordane 334 pcs. cast in place concrete welded wire fabric non-galvanized 219 pcs. welded wire fabric 50 gals. thinner T-10 Zinc Chromate 95 gals. Devos/Prufcoat-Zinc rich metal primer pursuant to the Military Bases Agreement and Treaty of General Relations between the Republic of the Philippines and the United States of America. In connection therewith, please be informed that Article V of the U.S. P.I. Military Bases Agreement provides as follows: "No import, excise, consumption or other tax, duty or imposts 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 purpose." Accordingly, it appearing in Certificates of Exemption Nos. 0234, 0235, 0236 dated February 18, 1988 and Certificates of Exemption Nos. 0237 and 0238 dated February 23, 1988 issued by direction of the OICC Southwest Pacific that the aforesaid articles are for use on military base construction and that the same were all purchased by you before the effectivity of the VAT law on January 1, 1988, the same are exempt from the sales and the excise taxes imposed under then Section 163 and Section 128(a) & (b) of the Tax Code. However, the withdrawal from bonded stocks of gasoline and diesel fuel 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); and 2. That the U.S. Navy Station, Subic Bay, should provide Philippine National Construction Corporation with Certificate of Exemption. (B.I.R. Ruling dated May 22, 1975 and August 27, 1985) cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner