BIR Ruling

August 23, 1973 A.R. Martinez & Associates, CPAS 205 El Hogar Filipino Bldg. Manila Gentlemen : This refers to your letter dated April 18, 1973 requesting information whether your client, the Marviga Industries Inc., is subject to the 3% contractor's tax under Section 191 of the Tax Code or to the 7% sales tax under Section 186 of the same Code, on its business as manufacturer of metal straps which are sold to customers upon their previous orders. Said metal straps are made from plain GI sheets, cut and grooved in accordance with specifications and used by customers to strap wooden cases to make them durable as conveyance in selling bottled soft drinks. In reply, I have the honor to inform you that under the foregoing facts, your client is considered a manufacturer of metal straps. The fact that the articles are manufactured by your client upon previous orders of its customers does not divest of its character from being a manufacturer. The role is, unless an activity is covered by Section 191 of the Tax Code, one who manufactures articles, although upon previous order and subject to specifications of the buyers, constitutes the maker, nonetheless, a manufacturer. (See Celestino Co. and Company vs. Collector G. R. No. L-85506, August 31, 1956). Accordingly, your client is subject to the P50.00 annual fixed tax as a manufacturer, and his sales is subject to the 7% sales tax, pursuant to Sections 182(A)(1) and 186 respectively of the Tax Code. In this connection, it appears that during the year 1972, your client paid the 3% contractor's tax. Since your client is subject to the 7% sales tax and not to the 3% tax, you alleged that it made an overpayment for which a tax credit is now being requested. This matter of tax credit will be decided by this Office as soon as the necessary verification is conducted thereon. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."