Refund of the Value of Documentary Stamps Affixed to Tickets Sold to Diplomatic Passport Holders

July 25, 1958 BIR RULING NO. 424-58 The Regional Director BIR Regional District No. 3 Manila S i r : This is in connection with your memorandum for the Chief, Legal Department, relative to the case of Warners, Barnes & Co., Ltd. general agents for Cathay Pacific Airways Ltd., Qantas Empire Airways and British Overseas Airways Corporation, involving the refund of the value of documentary stamps affixed to tickets sold to diplomatic passport holders from November, 1955 to March, 1956. LLphil The question involved in this case is whether or not the documentary stamp tax on passage tickets before the repeal of Section 228 of the National Internal Revenue Code by Republic Act No. 1478, is due from the passenger or the airline company. Section 228 (before it was repealed by Republic Act 1478) of the Tax Code provides in part as follows: "Sec. 228. Stamp tax on passage tickets . On each passage ticket, whether a single fare or return ticket, or any receipt for money paid for the passage of a person on any vessel or other means of transportation belonging to the Government of the Republic of the Philippines from any port or place in the Philippines to any port or place in any foreign country, there shall be collected a documentary stamp tax at the following rates: . . " The law imposes the documentary stamp tax on each passage ticket but does not state specifically whether the tax is due from the transportation company or from the passengers. The ruling of this Office, as recited in your memorandum has changed from time to time. At one time it was held that the tax is due from the company, and at another time it was ruled that the tax was due from the passengers. The latest ruling, which was issued by the Secretary of Finance on March 13, 1956, holds that the documentary stamp tax on passage tickets is the responsibility of the passenger. However, the question of whether or not the documentary stamp tax on passage tickets before the repeal of Section 228 of the tax Code by Republic Act No. 1478 is due from the passenger or the airline company, has been decided by the Supreme Court in the case of Interprovincial Autobus Co, Inc. vs. Commissioner of Internal Revenue, G.R. No. L-6741, prom. January 31, 1956. The Court in this case held as follows: "It is also contended that the tax should be collected from the holder of the receipt, and not from the one who collected it, which is the transportation company. There is no merit in this contention because the law expressly provides that the tax should be paid by the one ' making , signing, issuing, accepting, or transferring the same.' (Sec. 1449, Revised Administrative Code of 1917). The receipts were made and issued by the transportation company; it is therefore liable for the payment of the tax thereon." Like the bills of lading and freight receipts the passage ticket is made and issued by the transportation company. Accordingly, the documentary stamp tax due thereon is also due from the transportation company issuing the same. The fact that the passenger is exempt from tax is immaterial inasmuch as his exemption cannot cover taxes which are not legally due from him. In view of all the foregoing, this Office is of the opinion and so holds that the documentary stamp tax paid by Warner Barnes & Co., Ltd. on passage tickets issued by it to exempt individuals is legally due from said airline company, hence not refundable. LLjur Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue