BIR Ruling

March 27, 1972 Steelcote, Philippines 167-B E. de los Santos Avenue Mandaluyong, Rizal P. O. Box 1076, Manila Attention: Mr . Secundino Tarectecan Administrative Manager S i r : This refers to your letter dated February 23, 1972 requesting information as to whether or not Steelcote, Philippines is subject to 3% percentage tax as an independent contractor or 7% percentage tax as manufacturer. It is represented that Steelcote, Philippines is a licensee of a foreign-based company, engaged in the manufacture, sale and application of: anti-corrosive coating and primers; industrial coatings; heavy duty-floor materials; water proofings, roofing cements; heavy duty interior and exterior wall coatings; master marine coatings and sealants and adhesives. In reply, I have the honor to inform you that under the foregoing circumstances, you are a manufacturer of construction materials. As such manufacturer, you are subject to the annual fixed tax of P50.00 prescribed in Section 182(A)(2) of the Tax Code, and your sales of the manufactured products is subject to the 7% sales tax imposed in Section 186 of the same Code. The fact that articles sold by your firms are only made upon previous orders of its customers, does not divest it of its character as manufacturer. The rule is, unless an activity is covered by Section 191 of the Tax Code, one who manufactures articles, although upon a previous order and subject to specifications of the buyer, constitute the maker, nonetheless a manufacturer (See Celestino Co & Co. vs. Collector, G.R. No. L-8506, August 31, 1956). Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue