CASE DIGEST: Celestino Co vs Collector G.R. No. L-8506 (99 PHIL 841) (Yellow Pad Digest)

Celestino Co vs Collector

Facts:

·      Celestino Co doing business under the name of “Oriental Sash Factory”. From 1956-1951 it paid percentage tax of 7% (National Revenue Code sec. 186) on the gross receipts of its sash, door, and window factory. However on 1952 it began to claim liability only to contractor’s 3% tax (Instead of 7%) under sec. 191.

·      Celestino claims that they do not manufacture ready made doors, sah, and windows for the public. He claims hat they only do Special Orders for customers, thus, contending they are not manufacturers.  This did not convince the BIR and the Court of Tax Appeals.

·      CTA said that their tradename gives an impression they do engage in manufacturing and their records suggest that their huge earnings (P188, 754.69) cannot be from special orders from ther few customers, but because it was from ready made products.  They also offered themselves as a “factory” to the public.

Issue: W/ON Petitioner is in engaged in manufacturing

Held: Yes. The company habitualy makes Sash, windows, and doors as it has been represented to the public. The fact that the windows and doors are made only when customers place their orders, does not alter the nature of the establishment, for it is obvious that they accept special orders other than making ready made products. The factory does nothing more than sell the goods that it mass produces or habitually makes.

Source and Full Text: http://www.lawphil.net/judjuris/juri1956/aug1956/gr_l-8506_1956.html