September 26, 2007

BIR RULING [DA-513-07]

DA 267-06

Dagupeña Long Island Agro Development Corporation

No. 13 Mckinley Street, Poblacion
Binmaley, Pangasinan
Attention: Ms. Anne Marie B. Castro
VP-Operations

Gentlemen :

This refers to your undated letter stating that your business is a non-VAT
domestic corporation with TIN No. 005-575-954-000NV; that it is the producer of
marinated, frozen, vacuum-packed boneless milk sh (bangus) marketed under the
brand name Dagupeña and uses only simple ingredient to maintain the natural state of
the fish; that as of now, it is marketing the following milkfish products, to wit: EHTADa

1. Dagupeña Bangus Steak — deboned whole milkfish marinated in spices

2. Dagupeña Daing na Bangus — deboned whole milk sh marinated in vinegar,
salt and a hint of garlic
3. Dagupeña Pesto Bangus Belly — boneless milk sh belly marinated in a mixture
of oil and organic basil leaves
ECSHID

4. Dagupeña Teriyaki Bangus Belly — boneless milk sh belly marinated in soy

sauce and sugar (homemade)
5. Dagupeña Honey Mustard Bangus Belly — boneless milk sh belly marinated in
a mixture of ground mustard, turmeric and naturally acquired honey from
the mountain
6. Dagupeña Thai Green Chili Belly — boneless milk sh belly marinated in a paste
made of mashed raw green chili and salt
7. Dagupeña Bangus Tocino-Style — boneless milk sh back llet marinated in
sugar and other natural spices, no artificial coloring or flavoring
8. Dagupeña Bangus Chorizo-Style — ground, raw boneless milk sh esh mixed
with milk solids and spices formed in food-grade collagen casing
9. Dagupeña Prime Bangus Belly — boneless milkfish belly, lightly salted ADCTac

10. Dagupeña Daing ni Lola Bangus "Super Pinoy Series" — available in 3-in-1 or 2-
in-1 econopack; halved boneless milk sh marinated in vinegar, garlic and
salt
11. Dagupeña Spicy Daing na Bangus "Super Pinoy Series" — available in 3-in-1
and 2-in-1 econopack; halved boneless milk sh marinated in cayenne
(siling labuyo), vinegar, garlic and salt
12. Dagupeña Inasal Daing na Bangus "Super Pinoy Series" — available in 3-in-1 or
2-in-1 econopack; halved boneless milk sh marinated in lemongrass,
achuete, vinegar and garlic.
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 and that all of the above-mentioned products use any or a combination of the simple
processes of marinating, freezing and vacuum-sealing for the preservation of the
products, however, without the use or application of heat and/or other state-altering
process. TaCDIc

In connection therewith, you now request for a ruling that the sale of the above-
mentioned products is exempt from the 12% value-added tax (VAT) pursuant to Section
4.109-1 (B) (1) (a) of Revenue Regulations No. 16-2005, implementing Republic Act
(RA) No. 9337, which provides that —
"(a) Sale or importation of agricultural and marine food products in their
original state, livestock and poultry of a kind generally used as, or yielding or
producing foods for human consumption; and breeding stock and genetic
materials therefor.
xxx xxx xxx
Marine food products shall include fish and crustaceans, such as, but not
limited to, eels, trout, lobster, shrimps, prawns, oysters, mussels and clams.
Meat, fruit, sh, vegetables and other agricultural and marine food
products classi ed under this paragraph shall be considered in their original
state even if they have undergone the simple processes of preparation or
preservation for the market, such as freezing, drying, salting, broiling, roasting,
smoking or stripping, including those using advanced technological means of
packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pack, and
other similar packaging methods. ESCDHA

xxx xxx xxx"

Section 109 (c) of the Tax Code of 1997, as amended, de nes the phrase "simple
process of preparation or preservation for the market" by way of enumerating certain
chemical or natural processes determined to be simple and usually being done to
preserve the food product. What would be outside of the scope of the term "simple
process" is the kind of physical or chemical process which would alter the exterior
texture or form or inner substance of a product in such a manner as to prepare it for
special use to which it could not have been put in its original form or condition.
Accordingly, this O ce holds that the sale of the above-mentioned products falls
within the purview of the de nition of a food product in its original state and
consequently is exempt from VAT pursuant to Section 4.109-1 (B) (1) (a) of Revenue
Regulations No. 16-2005, implementing Republic Act (RA) No. 9337.
This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then this
ruling shall be considered null and void. HEcSDa

Very truly yours,

(SGD.) JAMES H. ROLDAN
Assistant Commissioner
Legal Service

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