BIR Ruling [UN-043-95]

January 23, 1995 BIR RULING [UN-043-95] De Goitia Publishing Co. 118 13th Avenue, Murphy Quezon City Attention: Mr . Benigno C . de Goitia Gentlemen : This refers to your letter dated October 12, 1994 stating that you entered into an agreement with the Boy Scouts of the Philippines regarding the co-production of the story "Munting Bayani (The Young Hero)"; that the printer, Mr. Demetrio Boo entered into an agreement with you on November 28, 1991 to print 6,000,000 pieces of Boy Scouts of the Philippines tickets for the film showing of "Munting Bayani"; that without securing first the necessary permit from the Bureau of Internal Revenue, Mr. Boo delivered to you 4,000,000 tickets without the statement that a permit was secured from the BIR; that after you noticed that it has no BIR permit number, you instructed him to secure the necessary permit in compliance with Revenue Regulation No. 2-78, but he refused and did not continue printing the remaining balance of 2,000,000 tickets; that instead, Mr. Boo filed a case of violation of B. P. 22 against you, for issuing postdated checks as a guaranty to said agreement; and that you interposed the defense that Mr. Boo has no right to demand payment for the 4,000,000 BSP tickets he delivered because said tickets are not in compliance with R. R. 2-78. Based on the foregoing, you now request for our opinion on your following queries, viz: cdtech "1. Are the tickets to be used by the Boy Scouts of the Philippines for a benefit show to generate funds for their projects covered by the said Revenue Regulation? "2. Are the tickets printed for the said purpose without prior approval or authority from the Bureau of Internal Revenue considered illegal or invalid and therefor, not saleable to the public?" "3. Who is responsible in securing the permit to print the tickets? Is it the client or the printer? In reply, please be informed that the foregoing are not covered by Revenue Regulations No. 2-78 pursuant to Section 2(c) of the said Regulations, which is quoted as follows: "SEC. 2. Definition of Terms . a) . . . b) . . . c) "Sales or commercial invoice" is a written account of goods sold or services rendered and the prices charged therefor, or a list of goods consigned and the value at which the consignee is to receive them or any other list by whatever name it is known which is used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer goods and services, e.g. purchase orders; job orders; provisional and temporary receipts, etc.; except (1) freight stub receipts; (2) passage tickets; and (3) amusement tickets and other similar receipts which are governed by Revenue Regulations No. V-1, as amended." (emphasis supplied). However, it is covered by Section 17 of Revenue Regulations No. V-1 as amended (Bookkeeping Regulations) which is quoted as follows: "SEC. 17. Admission Tickets and Other Records to be issued or Kept by Persons Subject to Amusement Tax: xxx xxx xxx Before the proprietor, lessee or operator of the place of amusement or business orders tickets for printing he shall first send to the Commissioner of Internal Revenue, if the business is located in Manila or to the provincial revenue agent or deputy provincial or city treasurer, if in the province, a written notice stating the name and address of the printer with whom he intends to place the order, the classes of tickets, the inclusive serial numbers, the admission fee or cover charge, and the total number of each class of tickets. The proprietor, lessee, or operator shall keep for record purposes the invoice or receipt issued by the printer covering the order. (emphasis supplied) Before being used, the tickets shall first be presented to the Commissioner of Internal Revenue, if the place of amusement or business is located in Manila, or to the provincial revenue agent or deputy provincial or city treasurer, if in the province for approval and registration. The said officers shall keep a register of tickets in the form of a ledger, such that each place of amusement or business shall have a separate account or record for the purpose of entering therein all the tickets presented for approval and registration, indicating the date of registration, the class of tickets, and the admission prices, the inclusive serial numbers, and the number of tickets of each class. The proprietor, lessee or operator of the place of amusement or business shall likewise keep a true and correct record of his stock of tickets, indicating the total number of registered and unregistered tickets, and of the registered tickets, how much has been sold from day to day. xxx xxx xxx" The said provision requires that before the admission tickets are used, they should first be registered with the Bureau of Internal Revenue without any mention as to who is responsible for securing approval or authority to print from the BIR. It has been ruled, however, that even complimentary admission tickets to benefit shows are required to be registered with the office concerned before the same are used or disposed of, pursuant to Section 17 of Revenue Regulations No. V-1. (BIR Ruling dated January 5, 1954). It can be inferred though from the said provision that it is the responsibility of the client (proprietor, lessee or operator) to secure the permit to print the tickets. It is only in printing any receipt or sales or commercial invoice where the printer shall file an application for authority to print pursuant to Revenue Regulations No. 2-78. Furthermore, Chapter VI of the said Regulations provides penal provisions for violations committed thereto, viz: "A person who violates any provisions of this Code or any regulation of the Department of Finance made in conformity with the same, for which delinquency no specific penalty is provided by law, shall be punished by a fine of not more than three hundred pesos or by imprisonment for not more than six months, or both". (Sec. 352, Commonwealth Act No. 466). xxx xxx xxx" Accordingly, admission tickets are required to be registered with the Bureau of Internal Revenue before the same are sold or disposed of pursuant to Section 17 of Revenue Regulations No. V-1. (BIR Ruling dated February 17, 1953) cdta Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)