4/7/2021 E-Library - Information At Your Fingertips: Printer Friendly shall be subject to tax under the pertinent provisions of the NIRC, as amended. Demurrage fees, which are in the nature of rent for the use of property of the carrier in the Philippines, is considered income from Philippine source and is subject to income tax under the regular rate as the other types of income of the on-line carrier. Detention fees and other charges relating to outbound cargoes and inbound cargoes are all considered Philippine-sourced income of international sea carriers they being collected for the use of property or rendition of services in the Philippines, and are subject to the Philippine income tax under the regular rate. (Emphasis supplied) The case was raffled to RTC-Branch 77, Quezon City, and docketed Special Civil Action No. R-QZN-13-05590-CV, then presided by Acting Presiding Judge Cleto R. Villacorta III. Petitioners' Arguments Petitioners argued that Section 4.4 of RR 15-2013 invalidly subjects demurrage and detention fees collected by international shipping carriers to regular corporate income tax rate. This very same imposition had been previously declared invalid by Branch 98 through its final and executory Order dated May 18, 2012.[15] Section 4.4 of RR 152013 should not, therefore, be given effect by reason of res judicata.[16] The treatment of demurrage and detention fees on the carriage of cargoes prior to and after the enactment of RA 10378 did not change. There is nothing in RA 10378 which even touches on demurrage and detention fees, much less, provides or even implies that they should be treated as income subject to tax at the regular corporate income tax rate.[17] In fact, RR 15-2013 unduly widens the scope of RA 10378 by imposing additional taxes on international shipping carriers not authorized or provided by law. Besides, demurrage and detentions fees are not income but penalties imposed by the carrier on the charterer, shipper, consignee, or receiver, as the case may be, to allow the carrier to recover losses or expenses associated with or caused by the undue delay in the loading and/or discharge of the latter's shipments from the containers.[18] They are akin to damages.[19] Assuming that demurrage and detention fees may be treated as income, these fees are taxable only if they form part of Gross Philippine Billings (GPB) and taxed at the preferential rate of 2.5%.[20] Further, RR 15-2013 is invalid because it was promulgated without public hearing as required by the Revised Administrative Code and case law. Also, no copies of RR 152013 were filed with the University of the Philippines - Law Center, as required by the Revised Administrative Code, thus, the same is deemed not to have become effective. [21] Respondents' Arguments https://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/65912 5/25