Bureau of Local Government Finance Opinion

June 15, 1995 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully referred, through the Regional Director, BLGF, Region IX, 3rd Floor, Ramon Tan Building, Campaner Street, Zamboanga City, to the Municipal Treasurer, Ipil, Zamboanga del Sur, for comment and/or appropriate action, the herein letter dated January 23, 1995 of the Plant Finance Officer, Coca-Cola Bottles, Philippines, Inc. (CCBPI) Plant, said city, requesting opinion as to whether the CCBPI Sales Office in that municipality, is taxable as distributor or manufacturer. In the said letter, it is also alleged that the Fire Safety Inspection Fee amounting to P16,751.07 imposed by the municipality of Ipil is excessive. It appears that CCBPI Sales Office in that municipality is an extension of its Zamboanga Plant which is classified and Manufacturer and sells exclusively its own products. Under Section 131(o) of the Local Government Code of 1991 (LGC), manufacturer includes every person who, by physical or chemical process, . . ., alters such raw material or manufactured or partially manufactured products, or combines the same to produce such finished products for the purpose of their sale or distribution to others and not for his own use or consumption. (Emphasis supplied) Considering that CCBPI is engaged in the manufacture of soft drinks, the distribution thereof is incidental to its line of business. Accordingly, it is the considered view of this Bureau that the sales office in Ipil, Zamboanga del Sur, should be classified as manufacturer and therefore, taxable in accordance with Art. 232 (a) of the Implementing Rules and Regulations (IRR) implementing Sec. 143 of the LGC, as imposed under the duly enacted local revenue ordinances of that municipality. As regards the alleged excessive imposition of the Annual Fire Inspection Fee, CCBPI contends that under Section 13 (b) of the Fire Code of the Philippines (PD No. 1185), quoted hereunder, said fee should not exceed the amount equivalent to one-hundredth of one per cent (0.01%) of the assessed value of the building or structures. "Section 13. Appropriation and Sources of Income. xxx xxx xxx "b. To partially provide for the funding of the Fire Service the following taxes and fees which shall accrue to the General Fund of the National Government, are hereby imposed: xxx xxx xxx "(2) One-tenth of one per centum (0.1%) of the verified estimated value of buildings or structures to be erected, from the owner thereof, but not to exceed fifty thousand (P50,000.00) pesos, one half to be paid prior to the issuance of the building permit, and the balance, after final inspection and prior to the issuance of the use and occupancy permit; "(3) One-hundredth of one per centum (0.01%) of the assessed value of buildings or structures annually payable upon payment of the real estate tax, except on structures used as single family dwelling; xxx xxx xxx In view thereof, that office is hereby directed to review and recompute the fire inspection fee imposed upon CCBPI in accordance with the abovequoted provision, to be collected by that municipality for remittance to the National Government, pursuant to Section 14 of the said Code. Be guided accordingly. LORINDA M. CARLOS Executive Director