Repualxc of Th E Phyltppxneb Court of Tax Appeals Giue:Zon C:XTV Qantas Airways Limited vs. The Comm Issioner of Internal Revenue

REPUALXC OF TH E

PHYLTPPXNEB

COURT OF TAX APPEALS

GIUE:ZON C:XTV

QANTAS AIRWAYS LIMITED,

Petitioner,

-versus -

C.T.A. CASE NO. 4459

THE COMM ISSIONER OF INTERNAL

REVENUE,

Respondent.

)( - - - -

- - - - - -

)(

This

case involve s a cla im for refund

in

the

alleged

overpay111 e nt

of two and

one - h al f

(2 1/2)

per centum tax on Gross

Philippine

Billings

<GPB>

for

the

per iod

January 1

to June 30, 1988 in the

amoun t of P1,494,387.92.

Petitioner

is· a

r esident

forei gn

' corporation,

organized and existing under

the

laws of Queensland, Australia, a nd is

duly

authorized to

engage in business in

the

Philippines

as

an

internati onal

carrier.

L. t . -

d/ lJ

.J

DECISI ON -

CTA CASE NO. 4453

2 -

For

the two

quarters ended

March 31

and

June

30,

1988,

peti tioner

pai d

a

total

amount of P2,802,278.37 as taxes on

its

Gross

Ph ilippine

Billings

<GPB)

pursuant

to

Section

25 <a> <2 >

of

the

National

Internal

Reven ue

Code,

as

amended.

The

aforesaid t axes

were paid

as follows:

Quarter Ended

Mt:n•ch 31,

1988

June 30, 1988

Total

Gross Phillippin e

Billings

p L•5 , 536 9 536

--- ~Jis .. Q;i_~ - ' -~-'2 I

G~~""~j~:::L9=~:.ts-~~1-;3.

Quarterly Tax

Due at 2

1/2~

and Paid

P 1, 138,413.40

___1 _,Ji~-~-'-~_g ~ • .. .lZ.

~~?:"-""~~'?:f.: ..

t.Kll?d'.~.?..

<See Annexes A and B and s ub- markings>

using

th

amount

refl cted in its t icket

as

cost of

s uch tick t ..

"In

r eal ity,

however,

such amount

is not pet i tioner's

actual

revenue

from

the

sale

of

the

ticket

as the

amount

reflected

t h ere in

did

not consider the discount being given

by

the

i

suing

airline

to

the

travel

agency

to

whose

client

th e

ticket

is

being

issued. "

<Petitioner's Memorandu•,

p.

3. )

What

wa s

r eceived

by

the

petit ioner,

there~ore, was not the a11ount

reflected

in

its

ticket

but

the

di scounted

price

thereof.

Hence,

the

~ .. ,

iJ I

~

_,

.)

DECI S i otJ -·

CTA CASE NO.

4 459

3 -

actual

flown revenue

of

petiti~ne r

fo r

the

same period

as determ ined at the end

of

the taxable

year upon

receipt of the

corresponding

figures

from

its

Head

Off ice

in Au tr li a sho uld only amount to

P52, 315,G26.

Consequently ,

the tax

due

on

the actua l flown revenue, according to

the

pet: it i oner,

should

onl y

be

P1,307,890~G5 computed ag follows:

Quart r Ended

Mcn' ch 31,

J•.1ne

30,

Total

1'988

1988

Conside r ing,

Actual GPB

p 27,761,702

·-··-··&. ·~- ' -~-~ -~ -•. ~:?~.1.

E~.,,,.~,?, , , ,"~U~~=''"~-?,§,

2 1/2" GPB t x

that should

onl y be paid

P

594, (lL~ 2. 55

, __ JiJ. ~ t . 8.L~8- ~. t Q

~}"".!."~g_z,~§2:_~,~" §~=

therefore, that

the ta x due

on

the reported

GPB

of

P11 2,09 1,143.00

was

P2,802 ,278.57 while

the actual f lown

revenue

of

P52, 315,626. 18

was

only

P1,307,890 .. 65,

logically,

there

was,

accord ing

to the

petitioner, a

GPB

tax

overpayment

of

P1,494,387.92.

Hence ,

thi s cl aim for refund.

The

issue to

be

res olved

here

is :

wheth e r

or

not ·' the

two

nd

one- half

percen t

(2

1/ 2~ )

tax on

GPB b

based on

th e

amount ref lected

in the pet itioner's

DECISION —_

CTA CASE NO. 4459

airline ticket or on the discounted price

thereof. '

The law applicable in resolving the

issue is quoted, thuss

"Sec. 25. Rates of tax on

foreign corporation. ~ (a) Tax on

resident foreign corporations (1) In

peneral.

Unless otherwise provided, a

corporation organized, authorized or

existing under the laws of any foreign

country, e@ngaged in trade or business

within the Philippines, shall be

subject to a tax equivalent to 35% of

the taxable income derived in the

preceeding taxable year from all

sources within the Fhilippines.

(2) International Carriers. —

International carriers doing business

in the Philippines ghall pay a tax of

two. and one-half percent (2-1/72%) on

their.“ Bress Philippine Billings’ as

defined hereunder:

(A) International air carrier. -

‘Gross. Philippine Billings

means’ gross revenue realized

from. uplifts of passengers

anywhere in. the world and

excess baggage, cargo and

fail originating from the

Philippines, covered by

passage =$documents gold in

the. Philippines: xxx xx"

(Underscoring supplied)

Petitioner’ s ‘contention that “the

amount actually received by the

petitioner as consideration for its

ticket is ita revenue which should be

subject to the @-1/2% GPB tax and not the