BIR Ruling No. 304-82

November 29, 1982 BIR RULING NO. 304-82 199-a 000-00 304-82 San Miguel Corporation P.O. Box 271 M a n i l a Attention: Mr . B . H . Enriquez Asst . Vice President Gentlemen : This refers to your letter dated August 12, 1981 requesting opinion as to the correct rate of percentage tax due on your business involving the manufacture of custom-made glass bottles strictly according to specifications stipulated in the contract between you and a particular customer. cdti You have represented that the aforesaid glass bottles are different from the bottles you manufacture for your internal use in that specially made molds usually owned by a particular customer is used in the manufacture of the same and in some instances, your said customer would ask your Corporation to order the molds abroad for them; that on the finished glass bottles are embossed the names of the particular product to be filled therein and the manufacturer of said product; that the glass bottles are patented or registered by the particular customer with the government agencies concerned thus no one else can use the same without the knowledge and consent of the said customer; that the size, shape, color, weight and calibration of content of the said glass bottles are strictly according to specifications in the contract mentioned above; and that should the customers fail to take delivery of the bottles ordered for whatever reason, your Corporation cannot sell or use the same. You also alleged that your Corporation has always been collecting the corresponding sales tax of 10% on the contract price in exactly the same way ordinary stock bottles are taxed when sold but that some of your customers are complaining against the 10% sales tax because other glass manufacturers collect only 3% contractor's tax for similar transactions. In reply, please be informed that the fact that the glass bottles you manufacture for your customers are specially made for them strictly in accordance with specifications stipulated in the contract and no one else can use the same without the knowledge and consent of the said customers does not divest you of your character as a manufacturer of bottles. cdtech Quoted hereunder is the relevant portion of the Supreme Court decision on Celestino Co & Co. case: " MANUFACTURER; FILING ORDERS ACCORDING TO SPECIFICATIONS DOES NOT ALTER CHARACTER OF ESTABLISHMENT . A factory which habitually makes sash, windows and doors, and sells the goods to the public is a manufacturer. The fact that the windows and doors are made by it only when customers place their orders and according to such form or combination as suit the fancy of the purchasers does not alter the nature of the establishment. (Celestino Co & Co. vs. CIR, 99 Phil. 841)" In view thereof, and as the subject custom-made glass bottles are admittedly "manufactured" by you, this Office is of the opinion as it hereby holds that you are a manufacturer of said bottles subject to the 10% sales tax prescribed under Section 199(a) of the Tax Code, as amended. cd Very truly yours, RUBEN B. ANCHETA Acting Commissioner