Withdrawal of Tax-Exemption Privilege Granted to PAL on Its Purchase of Domestic Petroleum Products

October 31, 1985

LETTER OF INSTRUCTIONS NO. 1483

 

WHEREAS, there is a need for government-owned or controlled corporations and all other units of government enjoying tax privileges to share in the requirements of our economic recovery program;

WHEREAS, Philippine Airlines, Inc. (PAL), pursuant to its franchise, Act No. 1471, as amended by P.D. 1924, is subject to the payment of either a quarterly tax on its gross revenues or the basic corporate income tax, whichever is lower, in lieu of all other taxes, duties and fees that may be imposed by the State; cd i

WHEREAS, under the aforesaid franchise, the tax-exemption privilege of PAL refers only to taxes directly payable by it;

WHEREAS, the payment of specific and ad valorem taxes on domestic petroleum products is the direct liability of manufacturer or producer thereof;

WHEREAS, by virtue of a ruling of the Department of Finance, now Ministry, dated November 17, 1969, domestic petroleum products sold to PAL for use in its domestic operations are exempt from the payment of specific and ad valorem taxes;

WHEREAS, this tax-exemption privilege enjoyed by PAL has resulted in serious tax base erosions and distortions in the tax treatment of similarly situated enterprises.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct that the tax-exemption privilege granted to PAL on its purchase of domestic petroleum products for use in its domestic operations is hereby withdrawn.

This Letter of Instructions shall take effect on November 1, 1985.

DONE in the City of Manila, this 31st day of October, in the year of Our Lord, Nineteen Hundred and Eighty-Five. cdt