BIR Ruling No. 015-80

September 24, 1980 BIR RULING NO. 015-80 207 000-00 15-80 Phividec Railways, Inc . Lapuz, Iloilo City Attention : Mr . Carlos C . Capaque Manager, Administrative Services Department Gentlemen: This refers to your request for exemption from the payment of the 2% common carrier's and 3% contractor's taxes. Investigation conducted by this Office disclosed that you are the assignee of the franchise of the Philippine Railways Company under Act No. 1497, Section 13 of which provides: "In consideration of the premises and of the granting of this concession or franchise, there shall be paid by the grantee to the Philippine Government, annually, for the period of thirty years from the date hereof, an amount equal to one-half of one per-centum of the gross earnings of the grantee in respect of the lines covered hereby for each preceding year; after said period of thirty years, and for fifty years thereafter, the amount so to be paid annually shall be an amount equal to one and one-half per centum of such gross-earnings for each preceding year; and after such period of eighty years the percentage and amount so to be paid annually by the grantee shall be fixed by the Philippine Government. "Such annual payments, when promptly and fully made by the grantee shall be in lieu of all taxes of every name and nature municipal, provincial, or central upon its capital stock, franchises, right of way, earnings, and all other property owned or operated by the grantee under this concession or franchise." Considering the above provisions of your franchise to the effect that your payments of the franchise tax prescribed therein "shall be in lieu of all taxes of every name and nature" upon your earnings, you are not subject to the 3% contractor's and the 2% common carrier's taxes imposed by Sections 205 and 207 of the Tax Code of 1977, as amended. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner