Situs of Taxation for Corporation with Branch or Sales Outlet

March 25, 1993 DILG LEGAL OPINION NO. 100-93 LEGAL SERVICE Ms. Avelina C. Pascua 904 Rhodamine Street Camella Homes Phase II Las Pias, Metro Manila Madam : This has reference to your undated letter, which was received by this Department on March 3, 1993, requesting for legal opinion in regard to the payment of local taxes due the municipalities of Makati, Metro Manila and Dasmarinas, Cavite, by Casa Regalia, Inc., a real estate corporation engaged in the development of local housing. It is stated therein that the said corporation has two offices: in Makati where business transactions involving marketing, procession of documents, sales recording and all other accounting functions are being conducted; while activities in Dasmarinas, Cavite, as the subdivision site where a field office for site engineers is located, involve subdivision development, house construction, warehousing of materials and material receiving and issuances. It appears to be your view that since the said corporation has already been made liable to pay its business permit on the gross receipts it derived in its activities in Dasmarinas, Cavite, then said corporation could only be held liable to pay for its office space in Makati. You would now want to be clarified on whether or not Section 150 of the Local Government Code of 1991 (Republic Act No. 7160), on the situs of taxation, would be applicable in the instant case. The aforecited section reads, in part, that: "(a) For purposes of collection of the taxes under Section 143 of this Code, . . . contractors . . . and other businesses maintaining or operating branch or sales outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction, 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 such branch or sales outlet in the . . . 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 . . . municipality. (b) The following sales allocation shall apply to manufacturers, . . ., contractors . . . with . . . project offices . . . in the pursuit of their business: (1) Thirty percent (30%) of all sales recorded in the principal office shall be taxable by the . . . 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 . . . municipality where the . . . project office . . . is located. xxx xxx xxx (e) The foregoing sales allocation shall be applied irrespective of whether or not sales are made in the locality where the . . . project office . . . is located." The aforequoted provision specifies that persons, natural or juridical, maintaining or operating a branch or sales office elsewhere shall record the sales or transactions in such branch or outlet making said sales or transactions and the taxes shall be paid to the municipality where the branch or sales office is located. In relation thereto, Article 243 (b) of the Rules and Regulations Implementing RA 7160 likewise provides, in part, that: "(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 . . . municipality where the same is located. (3) In cases where there is a . . . project office . . . in pursuit of business, thirty percent (30%) of all sales recorded in the principal office shall be taxable by the . . . municipality where the principal office is located and seventy percent (70%) of all sales recorded in the principal office shall be taxable by the . . . municipality where the . . . project office . . . is located. . . ." Hoping that we have enlightened you on the matter. Very truly yours, DIR. JACOB F. MONTESA Department Legal Counsel Department of Interior and Local Government