BIR Ruling No. 248-61

June 2, 1961 BIR RULING NO. 248-61 The President Aparri Filipino Traders' Association, Inc. Aparri, Cagayan S i r : This has reference to your letter dated January 16, 1961 requesting this Office for the reconsideration of its opinion BIR Ruling No. 192, Series of 1960 to the effect that the members of your association are not within the scope of the exemption provided for by Republic Act No. 2376 exempting from the 3% tax the receipts of restaurants, refreshment parlors, and other eating places situated in public markets. LLjur The only question to be considered is whether or not the members of your association are operating within the Aparri public market and the rentals thereof are income from said market. "The term 'market' does not denote a place to be used by transient vendors only, but stalls therein may be rented to merchants for long terms and continuous use without destroying the character of the place as a municipal market." (Municipality of Albay v. Benito, 43 Phil. 576) "A 'market' may be defined, with practical accuracy, as a place designated by the municipal authorities of a city or an incorporated town for the sale of articles necessary or convenient for the subsistence of men and domestic animal." (Strickland v. Pennsylvania R. Co., A 431 A. 431, 154 PA. 348, 21 L.R.A. 224) "To appoint a market place or even to established market does not necessarily mean to erect a market house. But since it is often necessary that a suitable market house be provided, it is well settled that a power in city or town to establish a market includes the power to acquire a suitable market house and to rent stalls therein to private persons, provided that every dealer is at liberty to rent a stall and do business there, as far as the capacity of the market house will permit." (Gale v. Kalamazoo, 23 Mich 344, 9 Am Rep 80; 35 Am Jur 136-137) In the above-cited definition, the term "market" does not only refer to the building where the merchants place their goods but to the entire specified places designated by the Municipal Ordinance creating the same. The same is true with the stalls erected therein rented by merchants where goods are displayed and/or stored. "A market may be established on ground or in a building belonging to a private individual or corporation, but under municipal permission and subject to municipal control, as where a city authorizes persons to build markets and to collect the revenues thereof for a fixed period in consideration of their conveying the property to the city at the end of the term." (35 Am Jur 137) Since it appears quite clear from the above-mentioned case, the Resolution No. 69 of the Municipal Council of Aparri and the lease contract between the Municipality and Mr. Calixto G. Aquino, that the parcel of land on which the market tiendas were erected is part of the market site, that the lessee shall pay an advance monthly rental of the market space at the amount of P0.40 per square meter or P183.20 and that after the expiration of the 5-year lease contract, the improvements on the leased premises shall automatically belong to the municipality, this Office is convinced that the market tiendas wherein the members of your association do business are parts of the Aparri public market. Considering, however, that said market stalls were constructed on August 5, 1957 and the Aparri Municipal Council's declaration of the market site under Resolution No. 69 was made on April 3, 1959, members of your association are not covered by Republic Act No. 2376 within said period. aisadc In the light of the foregoing, all member-vendors of your Association selling exclusively at retail all forms or kinds of food products, meat, fruits, vegetables, game, poultry, fish and other raw and/or cooked food products inside the market tiendas in question are exempt from the fixed and percentage taxes, pursuant to Republic Act No. 2376. This supersedes BIR Ruling No. 192, Series 1960. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue