BIR Ruling

May 8, 1970 MEMORANDUM FOR: The Chief, Accounting Division (Thru the Revenue Operations Head, Management Planning) There is referred to you herewith the papers relative to the claim of Mr. Antonio Cabarles, Assistant Chief, Accountable Forms Division of this Bureau requesting reimbursement of the freight charges which he paid to the Filipinas Orient Airways, Inc. for having shipped revenue accountable forms. It appears that, in making reimbursement to Mr. Cabarles, that Division invariably deducts the 2% common carrier's tax from the amount due to him. Mr. Cabarles, however, claims whenever he pays freight charges to the airline the latter refuses to allow the deduction of the 2% tax. Mr. Cabarles further contends that since the airline has already paid the 2% tax on the freight charges he has paid, there is no basis in deducting the tax on the same charges, the reimbursement of which he now claims from this Office. Mr. Cabarles also asks for a refund of all the previous deductions of the 2% tax made on his reimbursement vouchers. In this connection, it would be noted that the Filipinas Orient Airways is not subject to the 2% common carrier's tax imposed by Section 192 of the Tax Code. In lieu thereof and all other taxes of any kind, nature or description, levied, established or collected by any municipal, provincial or national authority, the airline is subject to the 2% tax on its gross receipts or gross earnings payable quarterly, pursuant to Section 12 of its franchise (Republic Act No. 4147). However, even it is a franchise tax, the said tax due from the airline can be fixed, determined, computed or ascertained. Consequently, since the payments made by Mr. Cabarles of the freight charges in question to the airline are in effect, money payments made by this Bureau to the airline, the 2% franchise tax due from the airline on account of said money payment should be deducted and withheld, pursuant to Republic Act. No. 1051. As regards, the claim for refund of Mr. Cabarles on the 2% tax deducted on his reimbursement vouchers, the same may be granted upon certification by the airline that all the freight charges paid to it by Mr. Cabarles have been declared for franchise tax purpose with corresponding tax due thereon paid. MISAEL P. VERA Commissioner of Internal Revenue