Manufacture of Glass Containers, Collapsible Metal Tubes, Lithographed Metal Cans, and Lithograped Metal Screw Caps

January 8, 1959 BIR RULING NO. 005-59 San Miguel Brewery Manila Attention : Mr . D . T . Reyes Attorney-in-fact Gentlemen : Reference is made to your letter dated December 12, 1958, requesting the reconsideration of the ruling contained in our letter dated June 11, 1958 wherein it was held that, for the manufacture of glass containers, collapsible metal tubes, lithographed metal cans, and lithograped metal screw caps specially for your customers and upon their special orders and in accordance with their designs, you are considered contractors subject to tax under Section 191 of the Tax Code, whereas, if manufactured for the general market, you are considered ordinary manufacturers subject to tax under Section 186 of the same Code. LLpr You now contend that you are essentially manufacturers and not contractors. In reply thereto, I have the honor to inform you as follows: We have restudied very carefully your case, and, under the prevailing circumstances, we believe that for the manufacture of glass containers, collapsible metal tubes, lithographed metal cans and metal screw caps, whether or not upon a previous order and subject to the specifications of your customers, you are essentially manufacturers and not independent contractors. prll This conclusion finds support in the "Celestino Co & Company vs. Collector" case, G. R. No. L-8506, August 31, 1956, wherein the Supreme Court, adopting the decision of the Court of Tax Appeals, held that "Even if we were to believe petitioner's claim that it does not manufacture ready-made sash, doors and windows for the public and that it makes these articles only upon order of its customers, that does not make a contractor within the purview of Section 191 of the National Internal Revenue Code" . The Supreme Court further stated that "The important thing to remember is that Celestino Co and company habitually makes sash, windows and doors, as it has represented in its stationary and advertisements to the public. That is"manufactures" the same is practically admitted by appellant itself. The fact that windows and doors are made by it when customers place their orders does not alter nature of the establishments for it is obvious that it only accepted such orders as called for the employment of such materials, mouldings, frames, panels, as it ordinarily manufactured or was in a position habitually to "manufacture". Moreover, even your certificates of tax-exemption contemplate the manufacture of certain articles and not the sale of service. The ruling contained herein supersedes that contained in our letter to you dated June 11, 1958. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue