Bureau of Local Government Finance Opinion

January 13, 1993 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Jose K. Milanes Chief Accountant City Limits Properties, Inc. 9th Floor, Ramon Magsaysay Center 1680 Roxas Boulevard, Manila S i r : This refers to your letter dated October 14, 1992 requesting clarification on the tax liabilities of that Company. It is represented that City Limits Properties, Inc., hereinafter referred to as CLPI, is a real estate developer, a corporation duly organized and existing under and by virtue of the Laws of the Philippines. Its principal office is located in Manila while its condominium project is situated in Pasay City. Hence, the request as to which city (Manila or Pasay) that Company will have to pay the municipal taxes and licenses or if there is any proportionate distribution of payment therefor. In this connection, it is informed that before any tax, fee or charge may be collected from taxpayer, like CLPI, the same must first be levied under an enabling local tax ordinance. In the absence of such tax ordinance, there is no basis in the collection of any tax, fee or charge from that company. Likewise, it is informed that the law applicable on the issue is Section 150 of the Local Government Code of 1991 (RA 7160), the pertinent portion of which is quoted hereunder: "Section 150. Situs of the Tax . (a) For purposes of collection of the taxes under Section 143 of this Code, manufacturers, assemblers, repackers, brewers, distillers, rectifiers and compounders of liquor, distilled spirits and wines, millers, producers, exporters, wholesalers, distributors, dealers, contractors, banks and other financial institutions, and other businesses, maintaining or operating branch or sales outlet elsewhere shall record the sale on the branch or sale outlet making the sale or transactions and the tax thereon shall accrue and shall be paid to the municipality where such branch or sales outlet is located. In cases where there is no branch or sales outlet in the city or municipality where the sale or transaction is made, the sale shall be duly recorded in the principal office and the taxes due shall accrue and shall be paid to such city or municipality. (Underlining supplied) "(b) The following sales allocation shall apply to manufacturers, assemblers, contractors, producers, and exporters with factories, project offices, plants, and plantations in the pursuit of their business: (1) 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 (2) 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. (Underlining supplied.) . . .." Based on the aforequoted provision of law and the representation made by that Office, it is the view of this Department that CLPI is subject to the payment of business taxes and fees, as follows: 1) All transactions recorded in Manila is 30% taxable in Manila where the principal office is located; 2) All transactions recorded in Manila is 70% taxable by Pasay where the condominium project is located; and cdt 3) Both cities (Manila and Pasay) may collect Mayor's permit and other regulatory fees. It is hoped that this clarifies matters. Very truly yours, By authority of the Secretary: (SGD.) JUANITA D. AMATONG Undersecretary