BIR Ruling

October 2, 1969 The City Mayor Bais City S i r : This is in reply to your letter dated July 15, 1968 requesting that the second installment of the income tax paid for the calendar year 1967 by the Central Azucarera de Bais to the revenue collection agent in Tanjay, Negros Oriental, be credited in favor of the City of Bais, Negros Oriental. It has been verified that the Central Azucarera de Bais (hereinafter referred to as the Central) has a branch (field) office in Luka, Municipality of Tanjay, Negros Oriental, which handles the following operations of the Central, viz: sugar warehousing, molasses storage, shipping agency and stevedoring; that the Central has other major undertakings and installations within the territorial jurisdiction of Tanjay, Negros Oriental, which are necessary and indispensable to its milling and business operations; and that during the crop year 1966-1967, Tanjay is one of the various sugar producing municipalities comprising the Bais Milling District. cdlex Furthermore, our investigating examiner reporting on the result of his investigation in this case stated thus: "The first installment of the Central's 1967 income tax was paid in Bais City, while the other half (second installment) was distributed to the following municipalities which are likewise substantial producers of sugar can milled by the Central: cdlex Municipality Official Receipt Number Amount Tanjay 1882763 P865,272.50 Pamplona 1886611 100,000.00 Najuyod 1889416 80,000.00 Bindoy 1889558 50,000.00 P1,095,272.50 "The mill compound and industrial site of the Central Azucarera de Bais is co-terminus of the territorial boundary line of the then municipality of Bais and the town of Tanjay. Historically, however, it has always considered Bais its place of business because the mill itself and the administration building are the Bais side of the 'unnumbered parallel line', so that in the natural course of business, the books of accounts are kept on that side. Bur common usage and understanding in this milling district is that both Bais and Tanjay are co-principals in the industry, and are both indispensably identifiable with every mention of the sugar central, although named after one of them only. Bais holds the head, as it has the principal organs of the Central (administration building and mill, among others) on its side, and Tanjay holds the essential adjuncts-accessories, as it has the infra-structural facilities (wharf, terminal, warehouses, among others) on its side." Pursuant to Sections 46 and 51 of the Tax Code, as implemented by Revenue Memorandum Circular No. 19-66 dated April 11, 1966, a corporations, partnership or association should file its income tax return with, and pay the income tax due therefrom, to the Collection Agent of the City or municipality where the principal office of its business is located and its books of accounts are kept. If the tax is payable in installment, i.e., the tax due is in excess of five hundred pesos, the first installment as well as the second installment should be paid to the collection agent of the city or municipality where the return is filed. Where a corporation, partnership or association has branches or factories in one or more cities or municipalities other than the city or municipality where the principal office of its business is located, it should file its return with, and pay the tax due to the collection agent of the latter. However, the corporation, partnership or association may apportion the second installment among the cities and/or municipalities where it has branches or factories and pay to each of them the portion allocated to them. In view thereof, and considering that Central Azucarera de Bais has a branch and most if its infra-structural facilities, e.g., wharf, terminal, warehouses, in the municipality of Tanjay, this Office believes and so holds that the payment of a portion of the second installment of its income tax liability for 1967 to the Collection Agent of Tanjay, Negros Oriental is legal and proper. Accordingly, your request that said payment made by the Central to the Municipality of Tanjay be credited to that City has to be, as it is hereby, denied. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue