Bureau of Local Government Finance Opinion

June 21, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Richard L. Yee Finance Director Goldilocks Bakeshop, Inc. 439 Shaw Blvd. Mandaluyong City 1501 Sir : This refers to your letter dated June 2, 2000 requesting ruling/opinion whether or not your product "Bread" is considered as an essential commodity, and whether Goldilocks Bakeshop, Inc. (GBI) may be entitled to the rates prescribed under Section 143 (c) of the Local Government Code of 1991 (LGC) as a manufacturer of locally processed foodstuff. Representations are made that your product "Bread" consists of flour, water, sugar, shortening, salt, improvers and yeast. The processing is done by mixing all the basic components, fermenting, re-mixing, dividing, molding, proofing, baking and cooling. In this connection, inasmuch as the basic ingredients of bread are predominantly essential commodities by themselves, it is clear that, the mixtures of essential commodities into one single product will not negate the ultimate classification of said product into an essential commodity as well. Moreover, it appears that the process by which bread is produced, qualifies the same as a "locally manufactured product." On the basis of the foregoing, it is clear that the bread produced by GBI may be considered as an essential commodity falling well within the contemplation of Section 143 (c) (2) of the Code, and, therefore, shall be subject to business taxes only at the rate of one-half (1/2) of the rates prescribed under Section 143 (a) of the same Code as implemented under a duly enacted tax ordinance of the local government unit concerned. CHIEDS It hears emphasis, however, that the gross receipts from goods other than those enumerated under Section 143 (c) being manufactured by said company, should be computed separately under the pertinent schedule of the same governing local tax ordinance. As regards the issue of tax credit or refund, Section 196 of the LGC provides as follows: "Sec. 196. Claim for Refund of Tax Credit. No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim for refund or credit has been filed with the local treasurer. "No case or proceeding shall be entertained in any court after the expiration of two (2) years from the date of the payment of such tax, fee, or charge or from the date the taxpayer is entitled to a refund or credit." It is hoped that this will help clarify matters. Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a2000-0604.pdf> last visited on October 2, 2013.