Taxability of a Company Which Buys Marble Blocks from a Quarry-Owner in Remedios Trinidad, Bulacan

May 4, 1987 BIR RULING NO. 119-87 161 (1) 164, 170 000-00 119-87 Gentlemen : This refers to your letter dated April 8, 1987 stating that: 1. Our company buys marble blocks from a quarry-owner in Remedios Trinidad, Bulacan, paying P100.00 per cubic meter; another party does the quarrying for which our company pays P1,000.00 per cu. m. of cut-size marble blocks; that cut size marble blocks are then transported to our warehouse/yard in Meycauayan and paying P300.00 per cubic meter hauling charge; that in both instances, the company deducts the corresponding 1% expanded withholding tax. 2. Our company has a special kind of machine which cut, polish and/or install marble, mactan stones (white adobe), ordinary adobe and other stones to meet the desired specification of our various customers. For engaging in this kind of business, it is provided with the corresponding privilege tax as contractor. Based on the foregoing representation, you now request information as to the classification of your aforesaid businesses and the kind of tax you should pay. In reply, please be informed that you are correct in saying that you are a dealer subject to the annual fixed tax of P200.00 pursuant to Section 161(1) of the Tax Code, as amended, and to the 1.5% subsequent sales tax under Section 164 of the same Code on your sale of marble blocks. However, the money payments to the party who does the quarrying are not subject to the expanded withholding tax since under Revenue Regulations No. 6-85 implementing Section 51(f) of the Tax Code, only income payments to persons enumerated therein are subject to the expanded withholding tax. On the other hand, the money payments to the person who transports the cut-size marble blocks to your warehouse in Meycauayan are subject to the 1% expanded withholding tax, pursuant to said revenue regulations as amended by Revenue Regulations No. 8-85 provided that the freight payment for such shipment/carriage is P5,000.00 or more. For rendering services to your various customers by cutting, polishing and/or installing marbles, mactan stones (white adobe), ordinary adobe and other stones thru the use of special kind of machine, you come within the purview of a contractor subject to the P200.00 annual fixed tax and your gross receipts are subject to 4% contractor's tax imposed by Section 170(q) of the Tax Code. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner