Bureau of Local Government Finance Opinion

December 22, 1994 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned to the Acting Municipal Treasurer, Pasig, Metro Manila, the herein 2nd indorsement dated June 30, 1994 of Ms. Angelique Santos-Mangaser requesting for a ruling whether that municipality has the authority to collect business tax from Oranbo Realty Corporation (ORC). It is represented that since 1998 ORC is engaged in the business of purchasing, leasing, exchanging or acquiring real properties: that the corporation has a building located in Oranbo Corporation for a fee: and that its principal office is located in Makati where ORC paid its business taxes from 1988 to 1992 as a real estate dealer. Furthermore, the corporation alleges that, as a real estate dealer, it may only be taxed by the municipality of Makati for the rule on situs of taxation is applicable only to manufactures or producers. In this connection , it is stressed that in a letter dated January 12, 1993 addressed to Mr. Jose K. Milanes, Chief Accountant of City Limits Properties, copy attached, this Department held the view that : 30% of all transactions recorded in the principal office shall be taxable by the LGU where the principal office shall be located : 70% of all transactions recorded in the principal office shall be taxable by the LGU where the condominium project is located; and that both LGUs may collect Mayors permit and other regulatory fees. Considering the aforementioned views and the fact that ORC is similarly situated as CLPI, for the year 1992 and thereafter, 70% of all transactions recorded in the principal office shall be taxable by the municipality of Pasig where the project is located and the remaining 30% shall be taxable by the municipality of Makati where the principal office is located. It is emphasized that the views were expressed in pursuance of the provisions of Section 150 of the Local Government Code (LGC) of 1991 as implemented by Articles 243 (b) of the Implementing Rules and Regulations (IRR)quoted hereunder: "Art. 243. Situs of the Tax . (a) . . . "(b) Sales Allocation (1) . . ." "(3) In cases where there is a factory, project Office, plant or plantation in pursuit of business, thirty percent (30%) of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located and seventy percent (70%) of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant or plantation is located. xxx xxx xxx It should be noted, however, that the allocation refers to sales or receipts and the municipalities should impose or apply the rates authorized in their respective duly-enacted ordinances. The Treasurers of said municipalities should coordinate regarding the issue. Both municipalities may collect Mayors permit and other regulatory fees impossible under a duly enacted ordinance. Be guided accordingly. LORINDA M. CARLOS Executive Director