Presentation of Invoices and Receipts for Approval and Registration

July 1, 1960 BIR RULING NO. 285-60 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Gentlemen : Reference is made to your letter dated May 26, 1960, requesting confirmation of your opinion that, under the following facts, your client is not subject to the provisions of Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations and, therefore, need not present its invoices and receipts for approval and registration. cdll "Our client is a grantee of a special franchise by the Congress of the Philippines before the amendment of Section 259 of the Tax Code by Republic Act No. 39. Under the terms of its franchise, our client shall pay to the Insular Treasurer each year, within ten days after the audit and approval of the accounts as prescribed under its franchise, one per centum of all its gross receipts and the said percentage shall be in lieu of all taxes on the franchise granted or its earnings thereof ". In answer, thereto, I have the honor to inform you that in accordance with section 18(g) of the Tax Code, it seems indubitable that franchise taxes are internal revenue taxes (see also section 359, Tax Code). And the fact that when the provisions of a particular franchise precludes the imposition of a higher rate of tax, the rate provided in such franchise prevails over that prescribed in section 259 of said Code does not make the franchise tax any less an internal revenue tax. Such being the case, it follows that a franchise grantee is subject to the provisions of section 204 of the same Code, requiring persons subject to an internal revenue tax to issue sales or commercial invoices or receipts, and Revenue Regulations No. V-1, which requires, among other things, the presentation of said invoices and receipts for approval and registration prior to their use. The case of Manila Railroad Co. vs. Rafferty (40 Phil., 224) and Philippine Railway Co. vs. Collector (G.R. No. 3858, March 25, 1952) cited by you do not seem to be in point, the facts thereof being different from those of the present case. In the Manila Railroad case, the Collector of Internal Revenue collected a tax on the coal and oil imported by the Manila Railroad Company, notwithstanding a provision in its franchise to the effect that the tax prescribed therein shall be in lieu of all taxes; while in the other case, the Collector of Internal Revenue imposed upon the Philippine Railway Company the rate of 5% prescribed in section 259 of the Tax Code, as amended by Republic Act No. 39, despite the fact that under its franchise the rate of tax payable by the latter was only 1. cdta Accordingly, it is regretted that we cannot share the view taken by you. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue