Tax Liability of A.T. Suaco & Co., Inc.

February 2, 1960 BIR RULING NO. 053-60 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Gentlemen : Reference is made to your letter of November 9, 1959 requesting information whether or not, under the following facts, your client, A.T. Suaco & Co., Inc., is liable for any tax on the bodega it is contemplating to establish in Cebu City. cdll "A.T. Suaco & Co., Inc., a domestic corporation, is engaged in the manufacture of drugs and other medicinal products. Its factory is located in the city of Manila where it pays its monthly sales tax on all of its sales. It intends to set up a bodega in Cebu City for the purpose of servicing its customers in the Visayas and Mindanao area and its functions shall be limited to the following activities: "1. To receive and store merchandise from Manila in such quantities as to meet the needs and demands of its customers in the Visayas and Mindanao. "2. To fill orders sent in by provincial and city salesmen. "3. To receive collections if any, and to remit the same to the Manila Office. No invoice shall be issued from Cebu although deliveries are made from Cebu bodega to cover orders from the Visayas and Mindanao areas. The Manila Office of the company shall issue invoices for orders solicited and obtained by the city and provincial salesmen. A delivery truck shall be used to deliver goods only on previous orders of the customers or to the shipping companies for shipment outside of Cebu City. The truck will not be used to peddle merchandise from place to place and make sales on the road even without previous orders of the customers." In answer thereto, I have the honor to inform you that, as said bodega will fill in orders from the provincial and city salesmen of the corporation and collect payments therefor, this Office is of the opinion and so holds that the bodega is a distinct and separate business establishment or place of business within the meaning of section 178 of the Tax Code. Accordingly, your client is, for maintaining the bodega, subject to a separate privilege tax. In this connection, it may be stated that the Cebu establishment must issue the necessary invoices or receipts covering the orders filled in thereat and keep such books and records as will clearly reflect the transactions effected therein, pursuant to the provisions of Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations. For the purpose of paying the sales tax on the sales effected thereat, such sales may be consolidated with those made at the Manila establishment and the tax paid in Manila. lexlib Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue