Petition of National Market Vendors Association of the Philippines, Inc.

November 17, 1958 BIR RULING NO. 667-58 His Excellency The President of the Philippines (Thru the Legislative Secretary) Malacaang, Manila Your Excellency : This has reference to the letter dated October 27, 1958 of the National Market Vendors Association of the Philippines, Inc. petitioning the following: "1. To declare categorically that all persons engaged in the sale at retail inside public markets, including the "Cooked Food, Sari-Sari and Dry Goods', are included under the exceptions provided for in Par. 6, particularly No. 2 of Sec. 182 of C.A. No. 466 as amended by Rep. Act 1856; or 2. To suspend the enforcement of Sections 182 b, 188 b, and 191 par. 2 of C.A. 466 as amended by R.A. 1856 until said sections are further amended to EXEMPT all persons engaged in the sale at retail of whatever commodities inside public market places, from the coverage of said sections clearly and unequivocably." Carinderias in public markets are clearly eating establishments. As a matter of fact petitioner-vendors manifested that the Secretary of Justice had rendered an opinion sometime in 1939 that the cooked food sections (carinderias) in public markets are classified as restaurants. As eating establishments, these carinderias in public markets should pay a 3% tax on their gross receipts, pursuant to Section 191 of the Tax Code. cdt The exemption from the privilege tax provided for by sub-paragraph (2) of paragraph (C) of Section 182 of the Tax Code has reference only to persons engaged in public market places, selling exclusively domestic meat, fruits, vegetables, game, poultry, fish, and other domestic food products. Under the principle of ejusdem generis , the phrase "other domestic food products" apply only to articles similar to the enumeration preceding it. Cooked foods cannot, therefore, be covered within the purview of this provision. Such being the case, owners or proprietors of carinderias in public markets cannot be exempted from the privilege tax. The exemption provided for by subparagraph (b) of the second paragraph of Section 188 of the Tax Code has, likewise, reference only to persons in public market places selling exclusively domestic meat, fruits, vegetables, game, poultry, fish and other domestic food products. This exemption refers to the percentage (sales tax). This percentage (sales) tax is different from the percentage tax prescribed by Section 191 of the Tax Code. The persons covered by the sales tax are the producers and manufacturers while the persons covered by the 3% tax under Section 191 are those specifically enumerated therein who are ordinarily referred to as contractors. Hence, proprietors or operators of eating establishments in public market places cannot claim exemption under the provisions of this subparagraph. The assessments against the cooked food vendors-members of the National Market Vendors Association of the Philippines, Inc. are, therefore, in conformity with law. There is no truth in the allegation of the petitioners that this Bureau is applying force and intimidation against them in the assessment and collection of the tax. Perhaps what they consider as applying force and intimidation is the resort by this Office to the collection of taxes by distraint and levy. Such method of collection is expressly provided for in Section 316 of the National Internal Revenue Code. However, this Office resorts to such method only when a taxpayer persistently fails or refuses to pay his tax obligation. Neither is there truth in the allegation that your predecessors prevented the Bureau of Internal Revenue from enforcing the collection of the tax against the petitioners. Considering that under our Constitutional set-up the Executive Power cannot suspend, much less set aside the execution of laws, it is obvious that your predecessor could not have prevented this Bureau from enforcing the collection of the tax in question. On the other hand, the records of the Bureau show that the market vendors association had always been petitioning the President's office for exemption from the payment of taxes whenever the Bureau of Internal Revenue tries to enforce the collection of taxes from market vendors who are not entitled to exemption under the provisions of Section 182(C)(2) and subparagraph (B) of the second paragraph of Section 188, both of the Tax Code. These petitions were always referred by your predecessors to this Office for comment and, in all cases, this Office rendered comment purely from the viewpoint of law. We have not any instance on record where any of your predecessors ordered this Office to desist from collecting any tax that is legally due and payable. The arguments of petitioners are not within the bounds of law. Such arguments are not, therefore, entitled to any consideration. It has been repeatedly said that an exemption from taxation must be clearly defined and founded upon plain language, without doubt or ambiguity. Whenever doubt arises, it is to be resolved against the exemption. A claim to a tax exemption must be in terms too plain to be mistaken; that it must be clear beyond reasonable doubt; and that it must be so plain as to leave no room for controversy, or so clear and unmistakable as to leave no doubt of the legislative purpose. In the light of the foregoing, this Office earnestly recommends the denial of the requests contained in the letter of the National Market Vendors Association of the Philippines, Inc., dated October 27, 1958. cdta Very respectfully yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue