Bureau of Local Government Finance Opinion

May 28, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Region VII, 3rd Floor, BF Building, N. Escario Street, Cebu City, the herein preceding indorsement relative to the letter dated January 14, 2002 seeking opinion regarding the request of Shemberg Biotech Corporation (SBC) to pay its business tax based on Section 143 (c) of the Local Government Code of 1991 (LGC) or fifty percent (50%) of the prescribed rates in Section 143 (a) of the LGC for the reason that carrageenan may be considered an essential commodity falling within the definition of "other agricultural, marine . . . product." Section 143 (c) (2) reads: SEC. 143. Tax on Business . The municipality may impose taxes on the following businesses: xxx xxx xxx (c) On exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities enumerated hereunder at a rate not exceeding one-half (1/2) of the rates prescribed under subsection (a), (b) and (d) of this Section: TSAHIa (1) . . . (2) Wheat or cassava flour, meat, dairy products, locally manufactured, processed or preserved food, sugar, salt and other agricultural, marine, and fresh water products, whether in their original state or not; [emphasis supplied] Representations were made that SBC was paying business tax at the rate based on Section 143 (a) of the LGC. However, in a letter dated January 14, 2002, SBC filed a request to the Office of the Municipal Treasurer to issue an assessment or a statement of account for business tax due based on the gross sales of P279,181,436.00 at a rate not exceeding one-half (1/2) of the rates prescribed under Section 143 (a), on the ground that carrageenan clearly falls within the definition of "other agricultural, marine product". This Bureau, however, believes otherwise. For carrageenan to fall within the ambit of the general expression " and other agricultural, marine, and fresh water products, whether in their original state or not ", it is imperative that carrageenan must be an essential commodity. This is because the expression " and other agricultural, marine, and fresh water products, whether in their original state or not " should be restricted in its application to include only essential commodities considering that paragraph (c) explicitly stated that the enumeration therein pertain to essential commodities. This view is justified on the ground that if the lawmaking body intended the general term to be used in its non-restricted sense, it would not have qualified the enumerated items as "essential commodities". In this case, the manifest legislative intent to qualify the use of the said general expression cannot be ignored. In fact, the enumerated items, all of which are evidently essential commodities, preceding the subject general expression reinforces further this position. It may be stated here that while it is true that general words or expressions in a statute are, as a rule, accorded their full, natural and generic sense, they will not be given such meaning if they are used in association with specific words or phrases. Otherwise stated, where a statute describes things of particular class or kind accompanied by words of generic character, the generic words will usually be limited to things of a kindred nature with those particularly enumerated, unless there be something in the context of the statute to repel such inference. This canon of statutory construction is known as ejusdem generis (or the same kind of specie). 2 Thus, in this case, the subject phrase should be deemed to include essential commodities only. ECaITc This Bureau is, however, unable to find any legal basis to state that carrageenan is an essential commodity. In fact, SBC does not even claim that it is. And whereas there is no reason at all to believe that SBC is a manufacturer of an essential commodity, we cannot concur in SBC's position that the company should be taxed based on Sec. 143 (c). Nonetheless, that SBC is a manufacturer is not disputed. And whereas SBC does not appear to fall within the coverage of any of the provisions of Section 143 applicable to specific types of manufacturers, SBC would then fall under the general category of "manufacturers of any article of commerce of whatever kind or nature" found in Section 143 (a). This means that SBC should be taxed based on Sec. 143 (a), which is presently the case. It is the opinion of this Bureau, thus, that SBC is a manufacturer covered by Section 143 (a) and as such should be taxed based on this section of the LGC. Be guided accordingly. (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF <www.blgf.gov.ph/downloads/opinion/localtax/2002/a2002-0115.pdf> last visited January 14, 2014.