VAT Ruling No. 019-05

September 20, 2005 VAT RULING NO. 019-05 Secs. 102 & 107, NIRC; RA Nos. 776, 7151, 7716 & 8241; P.D. 1590; BIR Ruling Nos. 3-95 & DA-219-97; RMC 6-96; R.R. 7-95 DA 219-97 Romulo, Mabanta, Buenaventura Sayoc & De Los Angeles 30th Floor, Citibank Tower 8741 Paseo de Roxas Makati City Attention: Attys. Perry L. Pe & Jayson L. Fernandez Gentlemen : This refers to your letter dated January 5, 2005 requesting on behalf of your client, Cebu Air, Inc. ("Cebu Pacific" for brevity), for confirmation that the importation of aircraft, aircraft equipment, engines, machinery, spare parts and accessories by Cebu Pacific is exempt from the value added tax ("VAT" for brevity) imposed under Section 107 of the National Internal Revenue Code of 1997 ("NIRC of 1997" for brevity). The facts, as you represent, are as follows: Cebu Pacific is a corporation organized and existing under the laws of the Republic of the Philippines. It is the holder of a legislative franchise granted under Republic Act No. 7151 to establish, operate and maintain transport services for the carriage of passengers, mail, goods and property by air, both domestic and international, with Cebu as its base. As part of its long-term refleeting and modernization program, Cebu Pacific currently intends to import either by way of purchase or lease various aircraft (such as Airbus 319/320) for use in both its domestic and international operations and gradually phase out its existing fleet of 12 DC-9-32 and 3 Boeing 757 aircraft. Cebu Pacific also imports various aircraft equipment, engines, machinery, spare parts, and accessories which are necessary for its day to day operations to ensure the safety and airworthiness of its various aircraft. Such aircraft, aircraft equipment, engines, machinery, spare parts, and accessories are not available in the Philippines. Cebu Pacific is the Philippines' second national flag carrier. It operates under a Congressional franchise, Republic Act No. 7151 which was enacted in 1991, and makes no less than 80 flights daily to 4 international and 14 domestic destinations. It is clearly a scheduled airline operating under a Congressional franchise. Historically, the importation of aircraft, equipment and machinery, and spare parts by scheduled airlines operating under a Congressional franchise has been exempted from the payment of all forms of taxes and duties. Under Section 4 of Republic Act No. 776 (The Civil Aeronautics Act), the encouragement and development of an air transportation system is a matter of public interest and in accordance with the public convenience and necessity. Section 4 of R.A. No. 776 states: "SEC. 4. Declaration of Policies . In the exercise and performance of its powers and duties under this Act, the Civil Aeronautics Board and the Civil Aeronautics Administrator shall consider the following, among other things, as being in the public interest, and in accordance with the public convenience and necessity: (a) The development and utilization of the air potential of the Philippines. (b) The encouragement and development of an air transportation system properly adapted to the present and future of foreign and domestic commerce of the Philippines , of the Postal Service, and of the National Defense; CHDAEc (c) The regulation of air transportation in such manner as to recognize and preserve the inherent advantages of, assure the highest degree of safety in, and foster sound economic condition in, such transportation, and to improve the relations between, and coordinate transportation by, air carriers; (d) The promotion of adequate, economical and efficient service by air carriers at reasonable charges, without unjust discrimination, undue preferences or advantages, or unfair or destructive competitive practices ; (e) Competition between air carriers to the extent necessary to assure the sound development of an air transportation system properly adapted to the need of the foreign and domestic commerce of the Philippines , of the Postal Service, and of the National Defense. (f) To promote safety of flight in air commerce in the Philippines ; and (g) The encouragement and development of civil aeronautics." (Emphasis supplied.) It is therefore within the foregoing policy framework that the State has supported efforts of domestic airlines to expand and improve their services for the benefit of the riding public. Since the Philippines has not developed an aircraft manufacturing industry, the aircraft, aviation equipment and spare parts necessary to fuel this expansion and ensure the continuing safety of the riding public are not locally available in reasonable quantity, quality and price. Hence, domestic airlines have no choice but to import these essential items from abroad. Prior to the declaration of Martial Law in 1972, there were three domestic scheduled airlines which operated under a Congressional franchise, namely: (a) Philippine Airlines, Inc. (PAL for brevity) under Public Act No. 4271, as amended by RA No. 2360; (b) Filipinas Orient Airways, Inc. (Filipinas Orient for brevity) under RA No. 4147 [1964]; and (c) Air Manila, Inc. (Air Manila for brevity) under RA No. 4501 [1965]. Under all the said franchises, the grantee was liable to pay only 2% franchise tax, which shall be in lieu of all other taxes, including the taxes imposed on the importation of aircraft, equipment and machinery and spare parts. The day following the declaration of Martial Law by then President Ferdinand Marcos, Letter of Instructions (LOI No. 2 for brevity) was issued ordering the government to take-over the management, control and operation of PAL, Filipinas Orient and Air Manila, among other public utilities, in order to prevent any disruption of vital public services. President Marcos subsequently imposed a one airline policy and through LOI No. 68 authorized PAL to fly international routes to the exclusion of all other local airlines. On the other hand, pending the completion of studies to complete the final phase of the one airline policy, it was ordered that domestic routes are to be jointly serviced by PAL, Filipinas Orient and Air Manila. The principal guideline was the improvement of efficiency of service provided by the airlines. It was noted that out of 58 domestic routes only 31 were being serviced. The airlines were ordered to increase the serviced routes to 50. In order to increase the domestic routes being serviced by the airlines as mandated by LOI No. 68, it was necessary for airlines to import additional aircraft, equipment and machinery. In support of this effort, Pres. Marcos issued two Presidential Decrees on July 9, 1973. Presidential Decree (PD No. 237 for brevity) reiterated the exemption from compensating tax of importations made by domestic scheduled airlines (i.e. PAL, Filipinas Orient and Air Manila) originally granted under their respective charters. PD No. 238 exempted from customs duties the importation of aircraft, equipment, machinery and equipment, spare parts, commissary and catering supplies, aviation gas, fuel and oil, whether crude or refined, and such other articles or supplies imported by and for the use of domestic scheduled airlines operating under Congressional franchises. PD No. 238 is now Section 105(u) of the Tariff and Customs Code, which states: "Section 105. Conditionally Free Importations . The following articles shall be exempt from the payment of import duties upon compliance with the formalities prescribed in, or with, the regulations which shall be promulgated by the Commissioner of Customs with the approval of the Secretary of Finance; . . . (u) Aircraft, equipment and machinery, spare parts commissary and catering supplies, aviation gas, fuel and oil, whether crude or refined, and such other articles or supplies imported by and for the use of scheduled airlines operating under Congressional franchise ; Provided, That such articles or supplies are not locally available in reasonable quantity, quality and price and are necessary or incidental for the proper operation of the scheduled airline importing the same; xxx xxx xxx" (Emphasis supplied). On December 7, 1973, to implement the Cabinet's decision to have only one airline to service both the international and domestic routes, Pres. Marcos issued LOI No. 151 which directed the Philippine National Bank to take over the assets of Filipinas Orient and Air Manila and place them under the operational control of PAL. Pursuant to LOI No. 194 dated June 17, 1974, the operations of Air Manila were limited and to the operation of charter flights only. On April 12, 1977, PD No. 1115 was issued authorizing Air Manila to pay a 2% franchise tax which shall be in lieu of all other taxes including the compensating and duty taxes on its importation of equipment, fuels, lubricants, spare parts and accessories necessary for its operations. On June 11, 1978, PD No. 1590 was issued to grant PAL a new franchise to establish, operate, and maintain air transport services and the privilege to import aircraft and spare parts tax and duty-free. It is clear from the foregoing legislative history that scheduled airlines operating under a Congressional franchise had always enjoyed exemptions from taxes and duties on their importation of aircraft and spare parts. This was the State's way of fulfilling its mandate to encourage the development of the local airline industry and to ensure the safety of the riding public. Cebu Pacific's exemption from VAT on its importation of aircraft and related equipment had been previously confirmed by the Office of the President in a letter dated April 15, 1996 and the Bureau of Internal Revenue in BIR Ruling Nos. 3-95 dated January 6, 1995 and DA 219-97 dated June 6, 1997. You now respectfully request for a reconfirmation that the importation of aircraft, aircraft equipment, engines, machinery, spare parts, and accessories by Cebu Pacific is exempt from VAT. Your basis of Cebu Pacific's claim of exemption from VAT on the importation of aircraft, aircraft equipment, engines, machinery, spare parts and accessories is summarized as follows: 1. Cebu Pacific is exempt from VAT by virtue of its status as a scheduled airline operating under a Congressional franchise; 2. Cebu Pacific's exemption from customs duties carriers with it an exemption from VAT; 3. Cebu Pacific is exempt from VAT under the so-called ipso facto clause found in Sec. 11 of its RA No. 7151; and 4. Cebu Pacific's exemption has been recognized in Revenue Regulations, Revenue Memorandum Circular and rulings of the BIR. In reply, please be informed that under RA No. 7716, services rendered by domestic common carriers by air became subject to VAT only with respect to their transport of goods and cargo. Section 102 of the Tax Code as amended by RA No. 7716 states that: "Sec. 102. Value-added tax on sale of services and use or lease of properties . (a) Rate and Base of tax . There shall be levied, assessed and collected, a value-added tax equivalent to ten percent (10%) of gross receipts derived from the sale or exchange of services, including the use or lease of properties. cIHCST The phrase 'sale or exchange of services' means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, including those performed or rendered by . . . transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land, air, and water relative to their transport of goods and cargoes ; . . . (Emphasis supplied.) Since PAL is a common carrier and services rendered by domestic carriers by air with respect to the transport of goods and cargo became subject to VAT by virtue of RA No. 7716, the tax exemption enjoyed by PAL under PD No. 1590 had, in effect, been modified by RA No. 7716. Thus, Section 103 of the Tax Code, as amended by RA No. 7716, states: "Sec. 103. Exempt Transactions . The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under PD Nos. 66, 529 and 1590; xxx xxx xxx" The insertion of the related provisions in Section 102(a) and 103(q) quoted above was made only during the bicameral conference committee deliberations and therefore should be read together. Thus, in Revenue Regulations No. 7-95 (RR 7-95 for brevity) and Revenue Memorandum Circular No. 6-96 (RMC 6-96 for brevity), the Secretary of Finance and the Commissioner of Internal Revenue, respectively, interpreted RA No. 7716 to have imposed the VAT only on services of PAL relative to the transport of goods and cargo. Hence, importation of aircraft and equipment as well as the furnishing of other services by PAL, apart from services relative to the domestic transport of goods and cargo, remains exempt from VAT under PD No. 1590. R.R. 7-95, as amended by R.R. 6-97, provides that: Section 4.103-1. Exemptions . xxx xxx xxx (B) Exempt transactions . The following shall be exempt from VAT: xxx xxx xxx (q) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws except those granted under the following laws: xxx xxx xxx Question No. 1 of RMC 6-96 states that: "Q-1 What are the common carriers subject to VAT beginning January 1, 1996? A- The following common carriers will be subject to VAT beginning January 1, 1996: xxx xxx xxx e. Philippine Airlines (PAL) relative to domestic transport of goods or cargoes; . . ." (Emphasis supplied.) Accordingly, it may be concluded that not all transactions of PAL became subject to VAT upon effectivity of RA No. 7716. For instance, the transport of passengers and the importation of aircraft and other equipment by PAL continue to be exempt from the VAT under PD No. 1590. PAL is not subject to VAT for transporting passengers because only the transport of goods and cargoes was included in the definition of sale of services under Section 102 of the Tax Code. The transport of passengers by domestic common carriers by air is ordinarily subject to franchise tax under Section 115 of the Tax Code. Services subject to the percentage tax under Section 115 of the Tax Code are exempt from VAT. Section 103 of the Tax Code provides that: "Sec. 103. Exempt Transactions . The following shall be exempt from the value-added tax: xxx xxx xxx (j) Services subject to percentage tax under Title V;" "Sec. 115. Percentage tax on domestic carriers and keepers of garages . Cars for rent or hire driven by the lessee, transportation contractors, including persons who transport passengers for hire, and other domestic carriers by land, air or water, for the transport of passengers , except owners of bancas, and owners of animal-drawn two-wheeled vehicle, and keepers of garages shall pay a tax equivalent to three per centum (3%) of their quarterly gross receipts. xxx xxx xxx" (Emphasis supplied) In the case of PAL, however, PD No. 1590 gives PAL the choice of paying the ordinary corporate income tax or the franchise tax in lieu of all other taxes, including the franchise tax under Section 115 of the Tax Code and the VAT on its gross receipts from transporting passengers. Similarly, the importation of aircraft and other equipment by PAL remain exempt from VAT under PD No. 1590. RA No. 7716 amended PD No. 1590 only to include within the coverage of the VAT services sold by PAL which relate to domestic transport of goods and cargo. This interpretation was confirmed by the Office of the President in its letter dated April 15, 1996. The provisions of the Tax Code on VAT were further amended by RA No. 8241, which took effect on January 1, 1997 and carried over into RA No. 8424 which took effect on January 1, 1998. Section 102 of the NIRC of 1997 as amended by RA No. 7716 with respect to common carriers remained unchanged. However, Section 103(q) of the NIRC of 1997 was amended by RA No. 8241 by deleting the reference to non-electric cooperatives and rearranging the words as follows: cAaDHT "Sec. 103. Exempt Transactions . The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under PD Nos. 66, 529 and 1590 ; xxx xxx xxx" (Emphasis supplied) Accordingly, Section 4.103-1 (B)(q) of Revenue Regulations No. 7-95 was maintained and reconfirmed by Revenue Regulations No. 6-97, which states that: "Section 4.103-1. Exemptions . xxx xxx xxx (B) Exempt transactions . The following shall be exempt from VAT: xxx xxx xxx (q) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws except those granted under the following laws: xxx xxx xxx (3) PD 1590 Philippines Air Lines (PAL) relative to domestic transport of goods or cargoes " (Emphasis supplied) The language of Section 103(q) of the Tax Code as amended by RA No. 8241 was carried over as Section 109(q) of RA No. 8424. From the foregoing, it is clear that RA No. 7716, as amended by RA No. 8241, modified PD No. 1590 only insofar as the domestic transport of goods and cargoes are concerned. Consequently, services rendered by PAL with respect to domestic transport of goods and cargoes became subject to VAT beginning January 1, 1996, the date when RA No. 7716 took effect. It should be noted, however, that the importation of aircraft and equipment as well as the furnishing of services by PAL, other than services relative to the domestic transport of goods and cargo, continue to be exempt from VAT under PD No. 1590. HACaSc RR 7-95 and RMC 6-96, therefore, only amplified the correct and proper interpretation of RA No. 7716 when such BIR issuances stated that only the domestic transport of goods and cargoes by PAL became subject to VAT beginning January 1, 1996. All other transactions of PAL, including the importation of aircrafts, aircraft equipment and spare parts, remain exempt from VAT under PD No. 1590. The rule is that in case of doubt, tax statutes are to be construed strictly against the Government and liberally in favor of the taxpayer, for taxes, being burdens, are not to be presumed beyond what the applicable statute expressly and clearly declares ( Commissioner of Internal Revenue vs. La Tondea, Inc. and CTA , 5 SCRA 665, citing Manila Railroad Company vs. Collector of Customs , 52 Phil. 950). Statutes creating a new liability or increasing an existing liability are strictly construed in favor of persons sought to be subject to their operation and will not be extended to include liabilities other than those designated as fairly within its terms (Martin, Statutory Construction 5th Ed., 206-207). While it may be true that tax exemption benefits are generally construed strictly against the payees and in favor of the government: where, however, the law is clear in its intent to grant exemptions to special kinds of taxpayers, this is then a matter of public policy of the State and not only an act of grace and favor, and should be liberally construed in favor of the taxpayer and against the State. ( Mamuyac v. CIR , CTA Case No. 3705 dated June 18, 1987) In Roxas vs. Court of Tax Appeals , 23 SCRA 276, 282 (1968), the Supreme Court held: "The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill the 'hen that lays the golden egg'. And, in order to maintain the general public's trust and confidence in the Government this power must be used justly and not treacherously. . . ." To insist on a strict interpretation of the law based on its plain language without considering both the State's policy on the local aviation industry and the history of the tax exemptions would be inaccurate since it would block the growth of the local air transport industry and jeopardize the safety of the riding public. If a 10% VAT on importation of aircraft and spare parts is imposed, no airline could undertake an expansion program without jeopardizing the company's economic viability. This is an added cost which the airline company will not be able to recoup unless it substantially increases the fares charged to the riding public. The revenue of passenger airlines from its cargo operations, which is subject to VAT, is negligible and would not be able to absorb the input VAT from the importation of the aircraft, specially considering that the aircraft in question is intended to carry passengers and not primarily cargo. If a 10% VAT on importation of aircraft and spare parts is imposed, no airline could undertake an expansion program without jeopardizing the company's economic viability. This is an added cost which the airline company will not be able to recoup unless it substantially increases the fares charged to the riding public. The revenue of passenger airlines from its cargo operations, which is subject to VAT, is negligible and would not be able to absorb the input VAT from the importation of the aircraft, specially considering that the aircraft in question is intended to carry passengers and not primarily cargo. Viewed in this light, it becomes clear that Congress could not have intended to withdraw the tax and duty exemption on importation of aircraft and spare parts made by scheduled airlines operating under Congressional franchises. It is worthy to note that the items imported are not luxury items. On the contrary, they are used to serve the public interest and are in accordance with public convenience and necessity. It cannot be denied that the development and expansion of the local airline industry is critical to our nation's social and economic progress as it is necessary for tourism and commerce. The State is therefore mandated to support the local airline industry by providing its players with the necessary incentives to expand and improve their services, which would eventually redound to the benefit of our people. The improvement of the existing fleet of aircraft used by local airline companies would be possible only if the importation of new aircraft and spare parts are exempt from all taxes and duties. Moreover, under RA No. 7151, Cebu Pacific is subject to the (a) corporate income tax; (b) a franchise tax of five percent (5%) of its gross revenue derived from transport operations; and (c) taxes on its real property on earnings from activities other than air transportation. Notwithstanding the foregoing, Cebu Pacific ipso facto enjoys all tax privileges and other favorable terms granted to any competing individual, partnership or corporation. Section 11 of Republic Act No. 7151 states: "Sec. 11. Tax Provisions . The grantee shall pay to the Philippine Government during the life of this franchise a franchise tax of five percent (5%) of the gross revenues derived by the grantee from transport operations. In the event that any competing individual, partnership or corporation receives and enjoys tax privileges and other favorable terms which tend to place the herein grantee at any disadvantage, then such provisions shall be deemed ipso facto part hereof and shall operate equally in favor of the grantee. The grantee shall, however, be subject to income tax levied under Title II of the National Internal Revenue Code, as amended, and tax on its real property under existing laws on revenue earned from activities other than air transportation." In BIR Ruling No. 3-95, dated January 6, 1995, the Commissioner of Internal Revenue confirmed that Cebu Pacific was exempt from the VAT on its importation of aircrafts, aircraft equipment, engines, machinery, spare parts and accessories because Cebu Pacific enjoyed all the tax exemption privileges enjoyed by PAL under PD No. 1590 pursuant to the ipso facto clause under Section 11 of RA No. 7151. The pertinent portions of BIR Ruling No. 3-95 state: "In reply, please be informed that under the pertinent provisions of Section 11 of R.A. No. 7151 in relation to Section 13 of P.D. No. 1590 (franchise of Philippine Airlines) which state as follows: xxx xxx xxx The tax exemption privileges granted to Philippine Airlines shall automatically become part of your franchise and shall operate equally in your favor. EDISaA Such being the case, your importation of subject aircraft under the Deed of Absolute Sale executed on March 23, 1993 is not subject to the value-added tax imposed under Section 101 (a) of the Tax Code, as amended by E.O. No. 273 ." (Emphasis supplied) PAL is exempt from VAT on the importation of aircraft, aircraft equipment, engines, machinery, spare parts and accessories by virtue of its being scheduled airline operating under a Congressional franchise pursuant to PD No. 237. Moreover, under Section 13 of Republic Act No. 1590, PAL is generally subject to either the ordinary corporate income tax or a franchise tax of two percent (2%) of its gross revenues from all sources, whichever would produce the lower tax. The payment by PAL of either of the corporate income tax or the franchise tax shall be in lieu of all other taxes, duties, and other fees and charges of any kind and nature assessed any local or national authority. Section 13 of PD No. 1590 states: "Sec. 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government during the life of this franchise whichever of subsections (a) and (b) hereunder will result in a lower tax: (a) The basic corporate income tax based on the grantee's annual net taxable income computed in accordance with the provisions of the National Internal Revenue Code; or (b) A franchise tax of two percent (2%) of the gross revenues derived by the grantee from all sources, without distinction as to the transport or nontransport corporation provided that with respect to international air transport service, only the gross passengers, mail and freight revenues from its outgoing flights shall be subject to this tax. SacTCA The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license and other fees and charges of any kind, nature or description imposed, levied, established, assessed or collected by any municipal, city, provincial or national authority or government agency, now or in the future, including but not limited to the following : (1) All taxes, duties, charges, royalties or fees due on local purchases by the grantee of aviation gas fuel, and oil, whether refined or in crude form, and whether such taxes duties, charges royalties or fees are directly due from or imposable upon the purchaser or the seller, producer, manufacturer, or importer of said petroleum products but are billed or passed on to the grantee either as part of the price or cost thereof or by mutual agreement or other arrangement provided that all such purchases by, sales or delivery of aviation gas, fuel and oil to the grantee shall be for exclusive use in its transport and nontransport operations and other activities incidental thereto; (2) All taxes, including compensating taxes, duties, charges, royalties or fees due on all importation by the grantee of aircraft, engines, equipment, machinery, spare parts, accessories, commissary, and catering supplies, aviation gas, fuel; supplies, or materials; provided, that such articles or supplier or materials are imported for the use of the grantee in its transport and nontransport operations and other activities incidental thereto and are not locally available in reasonable quality, quality or prices ; (3) All taxes on lease rentals, interest, fees, and other charges payable to lessors, whether foreign or domestic, of aircraft engines, equipment, machinery, spare parts, and other property rented, leased or chartered by the grantee where the payment of such taxes is assumed by the grantee; (4) All taxes on interest, fees, and other charges on foreign loans obtained and other obligations incurred by the grantee where the payment of such taxes is assumed by the grantee; (5) All taxes, fees, and other charges on the registration, licensing, acquisition, and transfer of aircraft, equipment, motor vehicles and other personal and real property of the grantee; and (6) The corporate development tax under Presidential Decree No. 1158-A. The grantee, shall, however, pay the tax on its real property in conformity with existing law. For purposes of computing the basic corporate income tax as provided herein, the grantee is authorized: a. To depreciate its assets to the extent of not more than twice as fast the normal rate of depreciation; and b. To carry over as a deduction from taxable income any net loss incurred in any year up to five years following the year of such loss." (Emphasis supplied) Based on Section 13(2) of PD No. 1590, PAL is exempt from the VAT on the importation of aircraft, aircraft equipment, engines, machinery, spare parts and accessories under its franchise. This served as the basis for the issuance of BIR Ruling No. 3-95 which stated that Cebu Pacific shall likewise be exempt from the VAT on its importations of aircraft under the NIRC as amended by EO No. 273, by virtue of the ipso facto clause found in Section 11 of Republic Act No. 7151 and subsequently reiterated in BIR Ruling No. DA-219-97 dated June 6, 1997. Cebu Pacific's entitlement to PAL's exemption under the ipso facto clause was affirmed by the Department of Finance in its letter dated June 28, 2000. In view of all the foregoing, this Office hereby confirms your opinion that the importation of aircraft, aircraft equipment, engines, machinery, spare parts, and accessories by Cebu Pacific is exempt from the VAT imposed under Section 107 of the NIRC of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Commissioner of Internal Revenue