Bureau of Local Government Finance Opinion

December 18, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Dante T. Ramos Corporate Secretary Filinvest Alabang, Inc. 173 P. Gomez St. San Juan, Metro Manila S i r : This refers to your letter dated October 24, 1997 requesting confirmation of your opinion on the following matters involving the principal office and Makati Office of Filinvest Alabang, Inc. (FAI): 1. All sales made by FAI shall be recorded in the principal office and the tax shall accrue to the city where the principal office is located; and 2. FAI is not liable to any local business tax with respect to its office in Makati considering that no sales are being conducted thereat. It is represented that FAI is a domestic corporation engaged in the business of acquiring, developing and selling real estate properties. Prior to July 1997, its principal office was located in San Juan, Metro Manila. In June 1997, FAI transferred its principal office to Alabang, Muntinlupa City. It is represented further that FAI has an existing Joint Venture Agreement with the Public Estates Authority for the development of a 244-hectare property known as the Filinvest Corporate City (FCC) located in Alabang, Muntinlupa. FAI has an office at the Fortune Office Building, Makati City, which serves merely as a showroom, display area and documentation office for the development project at the FCC. The Makati Office does not issue invoices or receipts nor record sales transactions. Said functions are being done at the principal office. FAI contends that since the sales office making the sale and the principal office are both located in Muntinlupa, then all sales shall be recorded in the principal office and the tax thereon shall accrue to Muntinlupa. The governing provision of law in this case is Section 150 of the Local Government Code of 1991 (LGC) as implemented by Article 243(b)(1) of the Implementing Rules and Regulations (IRR), quoted hereunder: "ART. 243. Situs of the Tax . . . . "(b) Sales Allocation . (1) All sales made in a locality where there is a branch or sales office or warehouse shall be recorded in said branch or sales office or warehouse and the tax shall be payable to the city or municipality where the same is located. xxx xxx xxx On the basis of the aforequoted rule, FAI is deemed liable to the payment of business taxes and fees as follows: 1. Considering that both the principal office and the sales office are located in the City of Muntinlupa, all sales made therein, whether recorded in the sales office or in the principal office shall be taxable by the City of Muntinlupa, and not by the City of Makati. EHcaAI 2. The display office of FAI in Makati City is not a branch or sales office as contemplated in the Code and its IRR, hence, FAI may only be required by the City of Makati to pay the Mayor's permit and regulatory fees for maintaining said display office in the city. 3. The City of Muntinlupa, moreover, may likewise collect Mayor's permit and other regulatory fees imposed under its duly enacted tax ordinances. The City Treasurers of Makati and Muntinlupa, in separate letters, are being furnished with a copy hereof, for their information and guidance. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director