BIR RULING NO.

056-84
245-056-83-056-84
Gentlemen :
This refers to your letter dated December 23, 1983 stating that the Welfare Fund
Administration for the Overseas Workers, a government agency attached to the
Ministry of Labor and Employment is seriously considering the purchase of a parcel
of land situated at the corner of Ortigas and Epifanio de los Santos Avenue,
Mandaluyong, Metro Manila, together with the multiple storey building and other
improvements standing thereon which is owned by Delta Motor Sales Corporation, a
private domestic corporation; and that as vendee, you will assume the documentary
stamp tax due on the Deed of Sale.
You now request exemption from documentary stamp tax on the said deed of sale.
In reply, I have the honor to inform you that Section 222 of the Tax Code which
reads:
"Sec. 222. Stamp taxes upon documents, instrument, and papers. Upon
documents, instruments, and papers and acceptances, assignments sales, and
transfers, of the obligation, right, or property incident thereto, there shall be levied,
collected and paid, for and in respect of the transaction so had or accomplished, the
corresponding documentary stamp taxes prescribed in the following sections of this
Title, by the person making, signing, issuing, accepting, or transferring the same,
and at the time such act is done or transaction had,"
places the burden of paying the tax upon the parties to the contract and leave the
tax to be paid indifferently by either party, and accordingly, the party assuming
payment of said taxes becomes directly liable therefor. (Sta. Clara Lumber
Company, Inc. vs. Jose Araas, CTA Case No. 502, June 12, 1959)
In the instant case, therefore, the vendee Welfare Fund Administration for Overseas
Workers has become directly liable for the tax; and although it is a government unit,
it is subject to the documentary stamp tax imposed by Section 245 of the Tax Code,
pursuant to Section 23 of P.D. No. 1177. However, it is entitled to either a tax
subsidy or payments constituting equity contributions in which case, it shall not be
required to pay cash or its equivalent. The revenue collecting agencies shall instead
issue a "Payment Compliance Certificate" indicating the nature of the assessment
and amount due. The subsidy shall be effected through journal vouchers or their
equivalent. (See Joint Budget Circular No. 289 and Pars. 4, 6 and 9, Finance Circular
No. 2-78, implementing Section 23, Presidential Decree No. 1177). cda
Very truly yours,
(SGD.) RUBEN B. ANCHETA

Acting Commissioner

C o p y r i g h t 2 0 0 8 C D T e c h n o l o g i e s A s i a, I n c.

BIR RULING [DA-269-07]

DA 154-04
Cabanero, Katigbak, Clemente & Co., CPAs
4/f Saville Building
8728 Paseo de Roxas
Makati City
Attention: Ma. Cecilia C. Katigbak
Partner
Gentlemen :
This refers to your letter dated September 4, 2006 stating that your client, Golden
Bear Travel Corporation (GBTC), is a domestic corporation engaged in the business
as General Sales Agent (GSA) for airlines, shipping lines and other transportation
and travel related companies; that GBTC's registered address and place of business
is located at Unit 348 Mile Long Building, Amorsolo Street, Legaspi Village, Makati
City; that presently, GBTC is a GSA of some foreign airlines that have no landing
rights and/or airlines which have no flight to and from the Philippines or better
known as "off-line carriers"; that GBTC sells the tickets in the Philippines on behalf
of those foreign airlines for their foreign routes or flights outside the Philippines;
that being a GSA, GBTC serves as the Philippine representative of those foreign
airlines for any of their business transactions in the Philippines including their
obligation to pay taxes if there are any; and that GBTC seeks confirmation on the
issue for the benefit of their existing clients and future clients. DHcESI
In connection therewith, you now request confirmation of your opinion that
1.
An off-line international air carrier, which has no flight operation to and from
the Philippines, is not deemed engaged in business as a common carrier in the
Philippines by reason merely of its entering into a contract with a GSA in the
Philippines for the purpose of selling passage documents covering its off-line flights.
Thus, said off-line carrier is not subject to the two and one-half percent (2 1/2%) tax
on Gross Philippine Billings imposed by Section 28 (A) (3) of the Tax Code of 1997;
and

2.
An off-line international air carrier is not also subject to the three percent
(3%) international carrier's tax imposed by Section 118 (A) of the Tax Code of 1997.
In reply thereto, please be informed that Section 28 (A) (3) (a) of the Tax Code of
1997 provides that
"Gross Philippine Billings" refers to the amount of gross revenue derived from
carriage of persons, excess baggage, cargo and mail originating from the Philippines
in a continuous and uninterrupted flight, irrespective of the place of sale or issue
and the place of payment of the ticket or passage document: Provided, that tickets
revalidated, exchanged and/or indorsed to another international airline form part of
the Gross Philippine Billings if the passenger boards a plane in a port or point in the
Philippines: Provided, further, that; for a flight which originates from the Philippines,
but transshipment of passenger takes place at any port outside the Philippines on
another airline, only the aliquot portion of the cost of the ticket corresponding to the
leg flown from the Philippines to the point of transshipment shall form part of Gross
Philippine Billings.
Corollarily, Section 2 (g) of Revenue Regulations No. 15-02, the phrase "Originating
from the Philippines" shall include the following:
(1)
Where passengers, their excess baggage, cargo and/or mail originally
commence their flight from any Philippine port to any other port or point outside the
Philippines;
(2)
Chartered flights of passengers, their excess baggage, cargo and/or mail
originally commencing their flights from any foreign port and whose stay in the
Philippines is for more than forty-eight (48) hours prior to embarkation save in cases
where the flight of the airplane belonging to the same airline company failed to
depart within forty-eight (48) hours by reason of force majeure;
(3)
Chartered flights of passengers, their excess baggage, cargo and/or mail
originally commencing their flights from any Philippine port to any foreign port; and
(4)
Where a passenger, his excess baggage, cargo and/or mail originally
commencing his flight from a foreign port alights or is discharged in any Philippine
port and thereafter boards or is loaded on another aircraft, owned by the same
airline company, the flight from the Philippines to any foreign port shall not be
considered originating from the Philippines, unless the time intervening between
arrival and departure of said passenger, his excess baggage, cargo and/or mail from
the Philippines exceeds forty-eight (48) hours, except, however, when the failure to
depart within forty-eight (48) hours is due to reasons beyond his control, such as,
when the only next available flight leaves beyond forty-eight (48) hours or by force
majeure. Provided, however, that if the second aircraft belongs to a different airline
company, the flight from the Philippines to any foreign port shall be considered
originating from the Philippines regardless of the intervening period between the

arrival and departure from the Philippines by said passenger, his excess baggage,
cargo and/or mail. HTSIEa
The phrase "Continuous and Uninterrupted Flight" refers to a flight in the carrier of
the same airline company from the moment a passenger, excess baggage, cargo,
and/or mail is lifted from the Philippines up to the point of final destination of the
passenger, excess baggage, cargo and/or mail. The flight is not considered
continuous and uninterrupted if transshipment of passenger, excess baggage, cargo
and/or mail takes place at any port outside the Philippines on another aircraft
belonging to a different airline company. (Sec. 2(h), Rev. Reg. No. 15-02)
The above-cited regulations enumerates four (4) distinct and separate
circumstances, the presence of any of which immediately gives rise to the
presumption that the flight is originating from the Philippines and therefore revenue
derived by the said carrier is subject to the 2.5% Gross Philippine Billings,
conversely, if the flight is not covered by the exclusive enumeration, it is not
considered as originating from the Philippines and consequently not subject to the
Gross Philippine Billings imposed under Section 28 (A) (3) (a) of the Tax Code of
1997, as implemented by Revenue Regulations No. 15-02. On the other hand, the
flight is continuous and uninterrupted from the moment a passenger, excess
baggage, cargo, and/or mail is lifted from the Philippines up to the point of final
destination, otherwise, it is not considered continuous and uninterrupted if the
transshipment takes place at any port outside the Philippine on another aircraft
belonging to a different airline company. cEDIAa
In stressing the rationale of the above-mentioned rule, this Office elucidated the
matter in BIR Ruling No. DA154-04 dated March 31, 2004 as follows:
"It is clear from the foregoing that AAI is an off-line carrier, as it is not engaged in a
continuous and uninterrupted flight originating from the Philippines and
consequently does not derive any income subject to the Gross Philippine Billings
under Section 28(A)(3)(a) of the Tax Code of 1997. This notwithstanding that AAI
has a sales office and ticket office in the Philippines although majority of the ticket
sales being undertaken by its agents for as long as the tickets sold are exclusively
AAI tickets.
"SUCH BEING THE CASE, this Office holds that AAI, an off-line international air
carrier, is not considered as engaged in business as an international air carrier and
therefore not subject to the Gross Philippine Billings tax under Section 28(A)(3)(a)
and the Common Carrier's tax under Section 118(A) of the Tax Code of 1997."
WHEREFORE, in view of the foregoing, this Office hereby confirms your opinion that

1.
An off-line international air carrier, which has no flight operations to and from
the Philippines, is not deemed engaged in business as a common carrier in

Philippines by reason merely of its entering into a contract with a GSA in the
Philippines for the purpose of selling passage documents covering its off-line flights.
Accordingly, said off-line carrier is not subject to the 2 1/2% tax on Gross Philippine
Billing imposed under Section 28 (A) (3) of the Tax Code of 1997. HTAEIS
2.
An off-line international air carrier is not also subject to the 3% international
carrier's tax imposed under Section 118 (A), Ibid.
This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then
this ruling shall be considered null and void. acIHDA
Very truly yours,
(SGD.) JAMES H. ROLDAN
Assistant Commissioner
Legal Service