Interpretation of the Phrase "Locally Purchased Articles" and Merchants Without the Required "L-3" Permit

April 16, 1958 BIR RULING NO. 237-58 The Philippines Free Press Free Press Bldg., 708 Rizal Avenue Manila Gentlemen : In reply to your letter dated March 6, 1958, relative to the queries of Mr. S. B. Caballes of 35 Alfonso XIII St., Dumaguete City, and Mr. Conrado Crisostomo of Kimba, Cotabato, I have the honor to inform you as follows: 1. The terms "local purchase" and "imported purchase" are not defined in the National Internal Revenue Code. However, we speak of locally purchased articles when we mean articles or products purchased in the Philippines and imported purchase when purchased from abroad. The contractor's tax is imposed on gross receipts. Gross receipts consist of the entire receipts without any deduction. Accordingly, cost of materials used by a printer is not deductible from his gross receipts. 2. Merchants without the required "L-3" permit cannot engage in the buying or selling of leaf tobacco as a wholesale leaf tobacco dealer pursuant to Regulations 17 of the Department of Finance, otherwise known as the Internal Revenue Leaf Tobacco Regulations. However, planters may sell their leaf tobacco within the province where grown at wholesale exclusively to registered wholesale leaf tobacco dealers or to properly authorized buyers of wholesale leaf tobacco dealers without providing themselves with "L-3" permits. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue