Bureau of Local Government Finance Opinion

February 26, 1993 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Leoncio S. Cao Assistant Vice President San Miguel Corporation 40 San Miguel Avenue Mandaluyong, Metro Manila S i r : This refers to your letter dated February 4, requesting the views of this Department of the "situs of the tax" rule on local taxation. It is represented that Magnolia Corporation (MC) is a subsidiary company of San Miguel Corporation and that MC is a manufacturer with a principal office in Pasig maintained for management and administrative purposes. It has a factory and sales office in Quezon City, where said route trucks withdraw their products for delivery to the customers in Pasig. Thus, the sales of said rout trucks are recorded in Quezon City and the local business taxes are paid therein. It appears, however, that the Officer-in-Charge, Municipal Treasurer's Office of Pasig insists that MC should pay business taxes in said municipality representing 30% of its gross receipts for maintaining therein its principal office. On the other hand, MC contends that in previous years said Company paid only the charges and fees for maintaining its principal office in Pasig. It maintains the view that the Company is not liable for business taxes to the said municipality as its principal office is merely for management and administrative purposes, and no sales are made nor recorded therein upon which tax is to be based. Hence, the above request. The pertinent provisions of law on the issue is provided for under paragraph (d) (2) of Article 243 of the Implementing Rules and Regulations (IRR) of the Local Government Code of 1991 (RA 7160), which reads: "Art. 243. Situs of the Tax.-(a) For purposes of collection of the taxes under Article 232 of this Rule the following definition of terms and guidelines shall be strictly observed. "xxx xxx xxx" "(d) Sales made by route trucks, vans or vehicles." xxx xxx xxx" "(2) For route sales made in a locality where a manufacturer, producer, wholesaler, retailer or dealer has no branch, sales office or warehouse, the sales are recorded in the branch, sales office of warehouse from where the route trucks withdraw their products for sale, and the tax due on such sales is paid to the LGU where such branch, sales office or warehouse is located." Considering the above provision of law and the representations made in your letter, it is the view of this Department that Magnolia Corporation should pay business taxes to Quezon City and not to the Municipality of Pasig. However, the said municipality may levy and collect the annual fixed tax P500.00 per annum for every delivery truck or van of said Company delivering goods within the municipality under Section 141 of the aforecited Code, in relation with Article 236 (b) of the said IRR, as well as Mayor's permit fee and other regulation fees provided for under existing local tax ordinances of the municipality. It is hoped that this clarifies matters. Very truly yours, By Authority of the Secretary: JUANITA D. AMATONG Undersecretary