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REPUBLIC OF THE PHILIPPINESDEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUEQuezon City

January 29, 2003

REVENUE REGULATIONS NO. 4-2003

SUBJECT : Amending Certain Sections of Revenue Regulations No. 14-97, asAmended by Revenue Regulations No. 14-99, Otherwise Known asthe Revenue Regulations Governing the Imposition of Excise Tax onAutomobiles.

TO : All Internal Revenue Officers and Others Concerned.

SECTION 1. SCOPE. - Pursuant to the provisions of Section 244 in relation toSection 245 of the Tax Code of 1997 (Code), these Regulations are hereby promulgatedto implement the provisions of Section 149 of Title VI of the said Code, imposing anexcise tax on automobiles.

SEC. 2. THE DEFINITION OF TERMS. - Section 2 of Revenue RegulationsNo. 14-97, as amended by Revenue Regulations No. 14-99, is hereby further amended toread as follows:

“(a) AUTOMOBILE – shall refer to any four- (4) ormore-wheeled vehicle, other than a truck, pick-up, jeep/jeepney, bus,or vehicle used for special purpose, which is propelled by gasoline ordiesel and specially designed to transport persons and not primarilyto transport freight or merchandise. The term automobile shall alsoinclude utility vehicles and Light Commercial Vehicles (LCVs)designed to carry both passenger and cargo, except when the seatingcapacity thereof is at least 10 or more adult passengers, including thedriver, subject to the criteria used in determining the seating capacityherein prescribed;

Provided that, notwithstanding any contrary rule, closed orcovered four-wheel drive vehicle, primarily designed to carrypassengers, regardless of the number of seats, shall be considered andtaxed as an automobile for purposes of these Regulations.

Provided, finally, that ocular inspection must be conducted inall cases, taking careful consideration of the criteria stated in this sub-

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paragraph (a) for the proper determination as to whether or not saidvehicle is an automobile. A written report of each ocular inspectionmust be prepared by the inspecting officer to enable the reviewingofficer to determine whether the inspected vehicle meets the criteria ofan automobile as defined in these Regulations.

The passenger seats must conform to the following rules andarea specifications for the uniform application of the number of seatscriterion:

1. Each seat shall be of a horizontal rectangular areawith seat and feet space of not less than thirty-fivecentimeters (35 cm.) wide and sixty centimeters (60cm.) long for each passenger, and fifty centimeters (50cm.) wide and sixty centimeters (60 cm.) long for thedriver or operator. Provided, in cases of contouredand bucket type-seats or with shapes other than theconventional horizontal rectangular form, seat widthshall be measured at the middle portion thereof.Provided further, that for the corresponding spacethat will be occupied by any obstruction such as, butnot limited to, doorside built-in armrest, overhead aircondition duct, protruding amplifier box or wheelhouse, an imaginary straight line along the obstructedspace shall be drawn, measured and deducted fromthe total width of the seat. The length of seats locatedat the front row shall be measured from the lowestpoint of the backrest in a straight and level line up tothe dashboard. Moreover, the distance between thepassenger shoulder level and the backrest of the seatin front shall always approximate the minimumlength measurement prescribed herein. In cases ofpassenger seats facing opposite each other, the lengthof each passenger seat, representing one half (1/2) ofthe entire distance between the points where the inneredge of each seat will intersect with the lowest part ofits backrest, shall likewise meet the prescribedminimum length.

2. The numbe r of seats of an automobile as defined bythese Regulations shall be determined by counting thenumber of seat spaces that meet the minimum areaspecifications prescribed herein. Half-seat shall not becounted as one passenger seat even if there are

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multiples of half-seats. Thus, a utility vehicle with nine(9) and one-half (½) seat or nine (9) and two (2) half-seats and so on shall be considered as an automobilesubject to ad valorem tax. A contiguous row of seatsshall have as many number of passenger seats as thereare seat spaces that meet the minimum prescribedmeasurements. However, any seat space in excess ofthe aforesaid area specifications, if any, shall not becounted as one seat even if it meets the half-seatspecifications of seventeen and one-half (17 ½) wide.In cases of contiguous row of seats with shapes otherthan the conventional horizontal rectangular form,each seat shall be treated individually applying theminimum prescribed measurements for such type ofseats.

3. Aside from meeting the aforesaid measurements, theseat area must include the corresponding feet spaces,leg and head rooms as described herein that willafford an average-built adult passenger to sit. Anyseat space without the corresponding feet spaces, legand head rooms, even if it meets the areameasurements, shall not be counted as a passengerseat.

For this purpose, the feet space shall refer tothe corresponding floor area of a passenger seat, uponwhich a sitting passenger normally rests both his feet.A passenger seat whose corresponding feet space isobstructed by a gear box shall be considered withoutseat space. Leg room shall mean that the passengerseat shall have enough elevation from the floor so as toallow the normal bending of the knees and positioningof the legs of a seated passenger. A seat laid downdirectly on the floor with only the seat itself providingits elevation from it or whose elevation is lower thanthe rest of the passenger seats thereby depriving thepassenger to seat normally, shall be consideredwithout leg room. Head room shall refer to theunobstructed ceiling space of a passenger seatedupright. It shall be considered without head room ifthe ceiling or any side of the vehicle touches any partof the head of a passenger seated upright. Theserequirements shall be applicable to all seats of thevehicle.

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All seats, whether or not these are jump seats,fold-away or fold-down seats, shall be consideredpassenger seats if the intended passengers thereof willhave access thereto through the side door(s) of themotor vehicle and that they are factory installed andmeet the area specifications prescribed in theseregulations; provided, that seats located at the rearportion of the vehicle normally utilized as cargocompartment and accessible through the back doorshall not be considered as passenger seats if these arefoldable or adjustable to allow for cargo storage evenif the same are factory installed and meet the areaspecifications .

4. A factory-installed seat shall be considered as a seat ifthe intended passenger is seated comfortably thereatwith his back, including his shoulder, fully rested onthe back rest of the seat. Accordingly, a seat withoutits own back rest shall not be counted notwithstandingthat such seat is factory installed and complies withthe requirements on seat measurements, feet spaces,leg and head rooms.

(b) LIGHT COMMERCIAL VEHICLE (LCV) - shallrefer to a motor vehicle, whether four-wheel drive or not, such ascommuter vans; utility vehicles; Sports Utility Vehicles (SUVs); andthe like, except pick-ups.

(c) VEHICLE USED FOR SPECIAL PURPOSE - shallrefer to a vehicle designed and used for a special purpose or for aspecific application such as cement mixer, fire truck, ambulanceand/or medical unit, armored military vehicle, crane, hearse, andthe like.

(d) TRUCK - shall refer to a motor vehicle of 3.5 tonsgross vehicle weight or more of any configuration that is primarilydesigned for the carriage of goods and with any number of wheels andaxles.

(e) JEEP/JEEPNEY - shall refer to a locally assembledmilitary type vehicle manufactured by local firms with no foreignaffiliation, which is similar in appearance to the MacArthur orEisenhower type with canvas or hard top shell. It shall also includelocally assembled variant of the said vehicle primarily used fortransport of passengers.

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(f) BUS - shall refer to a motor vehicle of 3.5 tons grossvehicle weight or more of any configuration, which is generallyaccepted and specially designed for the public transportation ofpersons and with any number of wheels and axles.”

Items (e) to (n) of Revenue Regulations No. 14-97, as amended by RevenueRegulations No. 14-99, are accordingly re-numbered as Items (g) to (p).

SEC. 3. AMENDATORY PROVISION ON AUTOMOBILESSUBJECT TO EXCISE TAX. - Section 4 of Revenue Regulations No. 14-97, asamended by Revenue Regulations No. 14-99, is hereby further amended to read asfollows:

“SECTION. 4. AUTOMOBILES SUBJECT TO EXCISETAX. – The excise tax under Section 149 of the Tax Code of 1997shall be imposed on the production, assembly or importation ofautomobiles, including LCVs as herein defined, payable beforeremoval from place of production/assembly or from Bureau ofCustoms’ custody.”

SEC. 4. AMENDATORY PROVISION ON THE REGISTRATION OFBRAND NAMES UNDER RR 14-97.- Section 10 of RR 14-97 is hereby amended toread as follows:

“SEC.10. REGISTRATION OF BRANDS/MODELS ANDVARIANTS . – Every manufacturer, assembler, producer, andimporter of automobiles shall, before commencement of actualmanufacture, assembly, production or importation, file with theappropriate BIR Office having jurisdiction over the taxpayer-registrant an application for brand/model registration. In caseswhere previously registered brands/models are modified, anymodification shall be compared with the international version thereofas reflected in the original assembler’s/manufacturer’s certificationand the published international catalogue, brochure or otheradvertising materials to determine whether or not such modifiedversion conforms to the requirements of these Regulations.Accordingly, such modified version shall thereafter be registered withthe appropriate BIR Office having jurisdiction over the taxpayer-registrant.”

“xxx xxx xxx.”

SEC. 5. AMENDATORY PROVISION ON MANUFACTURER’S ORIMPORTER’S BOND. - Section 12 (a) of Revenue Regulations No. 14-97, asamended by Revenue Regulations No. 14-99, is hereby further amended as follows:

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“SEC. 12. MANUFACTURER'S AND IMPORTER'S BOND.-Every manufacturer/assembler and/or importer of automobiles for saleshall post a surety bond which shall be conditioned upon the faithfulcompliance with laws and regulations relating to such business and for thesatisfaction of all fines and penalties imposed by the Code.

(a) Basis of surety bond to be posted. -

(1) Initial Bond. - In case of initial bond, the amount shallbe equal to one hundred thousand pesos (P100,000): Provided,however, that if after six (6) months of operation, the amount of theinitial bond is less than the amount of the total excise tax paidduring the period, the amount of the bond shall be adjusted to twicethe tax actually paid for the period.

(2) Bond for the Succeeding Years of Operation. - Thebonds for the succeeding years of operation shall be based on theactual total excise tax paid during the year immediately preceding theyear of operation.”

“ xxx xxx xxx.”

SEC. 6. TRANSITORY PROVISIONS. -

(a) The provisions of Revenue Regulations No. 14-97, as amended byRevenue Regulations No. 14-99 shall be applicable to all automobilescompletely assembled or imported (Completely-Built-Up (CBU) units,including Completely-Knocked-Down (CKD) and Semi-Knocked-Down(SKD) units), that are still in the custody of the Bureau of Customs or inthe place of production, assembly plant or warehouse, as the case may be,as of the date immediately preceding the date the Regulations becomeeffective.

(b) For this purpose, the following must be complied with:

(i) All importers and/or assemblers shall submit a duly notarized listof inventory on-hand of completely assembled automobiles orCBUs, including Completely-Knocked-Down (CKD) and Semi-Knocked Down (SKD) units, that are located within the assemblyplant or warehouse or the customs’ premises as of the dateimmediately preceding the date of effectivity of these Regulations,indicating the engine, body and chassis numbers thereof. The listshall be submitted to the Commissioner of Internal Revenue, thruthe Chief, Large Taxpayers Assistance Division II, within ten (10)days from the date of effectivity of these Regulations. Failure tosubmit the inventory list on the part of the importers/assemblers

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shall be construed that said importers/assemblers do not have anyinventory on hand of CBUs, CKDs and SKDs as of the dateimmediately preceding the effectivity of these Regulations.

(ii) A stocktaking of the aforesaid inventories shall be conducted bythe Bureau of Internal Revenue for purposes of validating the saidlist, within five (5) days from the date of submission thereof.

(iii) Prior to the date of effectivity of these Regulations per Section 8hereof, an ocular inspection and measurement shall be conductedon the different brands/models of vehicles to determine whether ornot such brands/models are considered automobiles as definedunder the provisions of these Regulations.

SEC. 7. REPEALING CLAUSE. – Subject to the provisions of Section 6 (b)(iii) hereof, any provision of Revenue Regulations No.14-97, as amended by RevenueRegulations No.14-99, or portions thereof which are inconsistent herewith are herebyamended accordingly.

SEC. 8. EFFECTIVITY CLAUSE. - These Regulations shall take effect afterfifteen (15) days following publication in a newspaper of general circulation.

(Original Signed)JOSE ISIDRO N. CAMACHO Secretary of Finance

Recommending Approval:

(Original Signed)GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue