Exemption Granted to Provincial Branches of the San Miguel Brewery, Inc. from the Operations of RR No. V-62

November 14, 1960 BIR RULING NO. 528-60 MEMORANDUM FOR: The Commissioner In B.I.R. Ruling No. 320, series of 1960, this Office held that provincial branches of the San Miguel Brewery, Inc. are exempted from the operations of Revenue Regulations No. V-62, as amended by Revenue Regulations No. V-66, provided that all sales invoices issued by said branches shall indicate the name, address and the number of the Class A Residence Certificate of the purchaser regardless of the quantity and value of the beer sold. In his memorandum dated August 30, 1960, the Chief, Alcohol Tax Division, assailed this ruling on the ground that thereby the purpose for which the regulations were promulgated, that is to provide means of counterchecking the operations of manufacturers of articles subject to specific tax, is nullified. In promulgating B.I.R. Ruling No. 320, we were convinced that, with respect to branch establishments of manufacturers of articles subject to specific tax, the application of Revenue Regulations No. V-62, as amended, is unnecessary. Pertinent regulations and the Bookkeeping Regulations already provided adequate measures in checking and counterchecking the operation of manufacturers of articles subject to specific tax. Under Regulations No. 63, the Revised Fermented Liquor's Tax Regulations, as implemented by General Circular No. V-131, the regulation applicable to San Miguel Brewery, the latter is already required to keep books and records much more intricate and detailed than the books and records required by Regulations No. V-62, as amended, where every detail of its operations is recorded. And under the Bookkeeping Regulations, the provincial warehouses are further required to keep such books and records as will clearly reflect the transactions affected therein. Requiring these provincial warehouses to keep the books prescribed by Regulations No. V-62, as amended, will not serve the purpose of its promulgation. The primary information, for instance, that is required to be entered in said books as a countercheck to the operations of the manufacturers concerned in the name of the seller and quantity purchased. These information can certainly be furnished only by wholesalers other than the manufacturers because the latter did not purchase their stock from anybody and if they are required nevertheless to furnish this information by keeping the register book prescribed by Regulations No. V-62, then they will simply put there the stock received from Manila which are already recorded in the books required by the Bookkeeping Regulations and other records, such as delivery receipts. There cannot, therefore, be a countercheck. The countercheck envisaged by Revenue Regulations No. V-62 is one emanating (and it should be) from records other than the taxpayers records. And such records must be one possessed by wholesalers other than the manufacturers themselves. Hence, the enforcement of the provisions of Revenue Regulations No. V-62 against the manufacturers will not serve the purpose of its promulgation. It will, therefore, result in unnecessary burden on their part. cdtech We, therefore, believe that B.I.R. Ruling No. 320, s. of 1960, is well taken. Respectfully submitted: MOISES A. PILAR Acting Chief, Law Division RECOMMENDATION: APPROVED/DISAPPROVED: MELECIO R. DOMINGO Commissioner of Internal Revenue