BIR Ruling

April 4, 1973 Mr. Ruperto P. Torres, Jr. c/o Philippine Airlines P. O. Box 954, Manila S i r : This refers to your letter dated March 19, 1973 seeking clarification whether or not you are subject to the occupation tax imposed for mechanical engineers. You stated that you are employed with the Philippine Airlines handling airplanes which placed you in the same category as aeronautical engineers and that your employment does not required the possession of a license for mechanical engineers. acd In reply thereto, I have the honor to inform you that under Section 182(B) of the Tax Code, the "mechanical engineers" subject to occupation tax are the professional mechanical engineers as defined in Commonwealth Act No. 294. Section 13(a) and (b) of Commonwealth Act No. 294, as amended, provides as follows: "(a) Mechanical engineering . A person shall be deemed to be practicing mechanical engineering or rendering mechanical engineering service within the meaning and intent of this Act, who shall, for a fee, salary or other reward or compensation paid to himself or to another person, or even without such reward or compensation, render professional mechanical engineering service in the form of consultation, investigation, valuation, planning, design, or preparation of specification or estimates for, or take charge of management, administration and supervision of the construction, erection, installation or alteration of, or render engineering service in connection with the manufacture, sale supply or distribution of, or to manage, operate, tend or maintain any mechanical equipment, machinery or process, for any mechanical works, project or plant; or who shall, by means of signs, cards, advertisement or in any other way, offer to practice mechanical engineering or to render professional mechanical engineering service, or who shall in connection with his name, or otherwise, use, assume or advertise any title or description tending to convey the impression that he is a professional mechanical engineer, or mechanical engineer, or certified plant mechanical engineering as defined in this Act." (As amended by Republic Act No. 5336) "(b) The term "mechanical equipment, machinery or process," as used in this Act, shall include steam engines, internal combustion engines, boilers, turbines, crusher, mills, mixers, pumps, compressors, cranes, conveyors, hoists, elevator, pipe lines, line-shafting, etc., but shall not include motor vehicles, street cars, locomotives, steamships, motorships, airplanes, and similar machinery used as means of transportation , nor shall include generators, motors, transformers, rectifiers, or similar machinery or apparatus primarily electrical in nature, nor mechanical or mill supplies, hardware and similar articles." (Emphasis ours) From the foregoing provisions of law, it would appear that the practice of mechanical engineering is confined to the mechanical equipment, machinery or process therein defined and enumerated, which specifically excluded airplanes. Since you are handling airplanes, you are not considered a mechanical engineer within the purview of Commonwealth Act No. 294, and therefore, you are not subject to the occupation tax imposed for mechanical engineers prescribed under Section 182(B) of the Tax Code, as amended. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5