GS Pagtakhan Lechon Manok, Inc.

September 17, 2009 BIR RULING [DA-(VAT-087) 555-09] Section 109 (A); DA-552-2006 dtd. 9/14/06; VAT Ruling No. 009-2007 GS Pagtakhan Lechon Manok, Inc. 335 Tanzang Luma 5, Imus Cavite Attention: Gerlita S. Pagtakhan General Manager Gentlemen : This refers to your letter dated April 22, 2009, requesting exemption from the value-added tax on your sale of lechon manok pursuant to Section 109 (A) of the Tax Code of 1997. Documents submitted disclosed that GS PAGTAKHAN LECHON MANOK, INC. (GS PAGTAKHAN LECHON, for short), with TIN: 006-541-019, is a domestic corporation registered with the Securities and Exchange Commission (SEC) on November 14, 2006, established to engage in the business of selling marinated roasted chicken (Lechon Manok), gravy sauce and other by-products; that it has various branches in Binakayan, Kawit, Cavite; Habay, Bacoor, Cavite; Imus-Hi-way; Dasma-Bayan; Indang, Cavite; Kawit, Cavite; Area F, Dasma-Cavite; Celestino Mkt, Bacoor, Cavite; Rosario, Cavite; and Noveleta, Cavite. In reply, please be informed that pursuant to Section 109 (A) of the Tax Code of 1997, as amended, as implemented by Section 4.109-1 (B) of Revenue Regulations No. 16-2005, the sale or importation of agricultural products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefore is exempt from VAT. Products classified under this paragraph shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking or stripping. SIDTCa From the foregoing, it is clear that the sale of "lechon manok" (roasted chicken) is VAT-exempt under the abovementioned Section as this food product undergoes simple processes and, as such, is considered in its original state. In BIR Ruling No. DA-166-2006 dated March 26, 2006, this Office had occasion to rule that the sole product of the taxpayer's joint venture involves lechon, a VAT-exempt food product under Section 109 (A) of the Tax Code of 1997, as amended. DcSACE It is to be emphasized however, that the exemption applies only if the roasted chicken is purchased on a take out basis. Accordingly, should GS PAGTAKHAN LECHON maintain a facility by which the roasted chicken will be offered as a menu to customers who would dine-in, then it will be subject to VAT on sale of service which is similarly imposed on restaurants and other eateries. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner