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December 14, 1966

Dated at Manila 14 December 1966;

Entered into force 24 December 1966.

EXCHANGE OF NOTES CONSTITUTING AN AGREEMENT BETWEEN THE UNITED STATES AND THE PHILIPPINES CONCERNING THE SALE OF CERTAIN ITEMS BY TAX-EXEMPT PERSONS AT THE UNITED STATES BASES TO NON-TAX EXEMPT PERSONS IN THE PHILIPPINES

I

EMBASSY OF THE UNITED STATES OF AMERICA

No. 507

The Embassy of the United States of America presents its compliments to the Department of Foreign Affairs and has the honor to refer to recent discussions between officials of the two governments regarding procedures to govern the authorized sale of certain items by tax-exempt persons at the United States bases to non-tax-exempt persons in the Philippines.

During these discussions the two governments recognized that it is the right and the responsibility of the Philippine Government to collect from the buyer those taxes and duties which may be due at the time the sales in question take place, and that United States base officials should cooperate, through the issuance of appropriate base regulations, to afford the Philippine Government a proper opportunity to collect any taxes and duties due before delivery of the items in question to non-tax-exempt buyers. Agreement was reached that procedures for the sale of automobiles set forth in Embassy Note No. 521 of December 28, 1965 and the Department's Note No. 175 of December 29, 1965, modified in part as set forth below, shall apply to the sales of the items prescribed in numbered paragraph one:

1. These procedures shall apply to the sale of each item sold by base personnel to non-tax-exempt individuals at a price equal to U.S. $100.00 or more and to the following items irrespective of sales price:

Television Sets
Washing Machines
Freezers
Refrigerators
Ranges
Air Conditioners

2. After execution of the bill of sale, and before delivery of the article sold, the buyer and seller shall proceed immediately together to the Customs Office Facility nearest to the seller's base to permit the Deputy Collector of Customs to collect any duties or taxes which may be due. The Deputy Collector of Customs or his duly authorized representative will immediately acknowledge in writing and with signature on the reverse side of three copies of the bill of sale that the seller has appeared at Customs Office Facility with the buyer to permit collection of Philippine taxes or duties before delivery of the article. The Deputy Collector will normally assess duties and taxes on the basis of the description of the article on the bill of sale, but in random individual cases at his discretion he may demand to see the article in order to verify the description or obtain additional information. In this case, the seller may choose whether to display the article for the Deputy Collector's inspection in his home or other place of sale or whether to deliver the article to the Customs Office Facility. If the seller chooses to display the article inside the base, he shall obtain the written authorization of the base commander for the entry of the Deputy Collector onto the base for this purpose, and if for any reason the authorization shall not be given the seller must arrange to display the article at a point convenient to the Deputy Collector.

3. If for any reason the buyer fails to pay the duties or taxes assessed, the Customs Office/Facility has the responsibility of taking custody of the article without further responsibility on the part of the seller, and if for any reason it should fail to take possession of the article immediately the seller may deliver the article to the Customs Office/Facility and the latter shall not refuse to take possession thereof and acknowledge receipt in writing.

4. All other features of the agreed procedures for the sale of automobiles shall apply.

These procedures, particularly paragraph 1 indicating the items to which they apply, shall be subject to review after a trial period of six months from the date on which they are first applied as set forth in the following paragraph.

United States military officials have pointed out that a period of time would be required for revision, printing, distribution, and promulgation of military base regulations governing sales of the items in question. It was, therefore, agreed that the procedures described in this note would become effective 30 days following receipt by this Embassy of the Department's reply confirming the Philippine Government's understanding of the arrangements set forth in this note.

During discussion of this subject United States base authorities emphasized that re-sale of most articles purchased at base exchanges and commissaries, including cigarettes, liquors, precious jewels, and food items to non-tax-exempt persons in the Philippines is absolutely prohibited by military regulations. Under long-standing base regulations articles imported by base personnel upon arrival in the Philippines and used in this country, as well as a few types of appliances purchased at base exchanges and used in the Philippines, may be sold to nontax-exempt persons, but only with the prior written approval of the base commander in each case.

The procedures described in this note deal with the sale of items under proper base authorization. Unauthorized sale of items by base personnel is a punishable offense which base authorities are constantly vigilant to prevent.

The Embassy has the honor to propose that if the foregoing is acceptable to the Government of the Republic of the Philippines, this note and the note of the Department in reply indicating such acceptance shall constitute an agreement between the two governments effective on the date of the Department's note.

The Embassy avails itself of this opportunity to renew to the Department of Foreign Affairs the assurances of its highest consideration.

Manila, December 14, 1966.

II

DEPARTMENT OF FOREIGN AFFAIRS

No. 2840

The Department of Foreign Affairs presents its compliments to the Embassy of the United States of America and has the honor to refer to the Embassy's Note No. 507 dated December 14, 1966 concerning the procedures to govern the authorized sale of certain items by tax-exempt persons at the United States bases to non-tax-exempt persons in the Philippines, which reads as follows: [See Note I]

In reply, the Department is pleased to inform the Embassy that the procedure outlined in the Embassy's note hereinabove quoted is acceptable to the Government of the Republic of the Philippines and that the Embassy's note and this note shall constitute an agreement between the two governments effective on the date of this note.

The Department avails itself of this opportunity to renew to the Embassy the assurances of its highest consideration.

Manila, December 14, 1966.