BIR Ruling No. 069-83

April 15, 1983 BIR RULING NO. 069-83 Gentlemen : This refers to your letter dated July 26, 1982 requesting confirmation of your opinion that your client, the First Philippine Industrial Corporation (FPIC) is not a general engineering contractor within the meaning of Revenue Regulations No. 13-78, as amended, and therefore, payments by its customers should not be subject to the 3% expanded withholding tax. It is represented that your client is a domestic corporation engaged in the business of transporting petroleum products; that under Art. 86 of the Petroleum Act (Republic Act No. 387), your client is considered as a common carrier; that it is not engaged as general engineering contractor; and that some of its customers which are oil companies are withholding 3% of the contract price for transporting their petroleum products through the Philippines. In reply, I have the honor to inform you that Section 1(e) of Revenue Regulations No. 13-78 as amended by Revenue Regulations No. 6-79, implementing Section 53(f) of the Tax Code, provides among others, that a 3% withholding tax shall be imposed on 15% of the gross payments to general engineering contractors whose principal contracting business is in connection with fixed works requiring specialized engineering knowledge and skill including the construction and laying of pipelines and other systems for the transmission of petroleum and other liquid or gaseous substances. Accordingly, since your client is a pipeline concessionaire that is engaged only in transporting petroleum products, it is considered a common carrier under Republic Act No. 387 and not a general engineering contractor. Such being the case, it is not subject to the withholding tax prescribed by Revenue Regulations No. 13-78 as amended. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue