Refund of the Amount Paid to the Government as Percentage Taxes

June 16, 1959 BIR RULING NO. 308-59 Messrs, Somera, Baclig & Savella R-202 Digna Bldg. Dasmarias, Manila Attention : Mr . Cayetano S . Baclig Gentlemen : This is with reference to your letter dated May 14, 1959, requesting, among others, the refund of the alleged total amount of P1,984.19 paid to the Government as percentage taxes by your client, Mr. Teodorico M. Laserna, sole owner and operator of a protective or security agency, known as the "Visayan Security Service Agency" (hereinafter referred to as VSSA for brevity). cdt You did not dispute the fact that private detective agencies are business agents as defined in section 194(v) of the Tax Code which expressly provides that "Business agents (agente de negocios) includes all persons. . . who conduct . . . private detective agencies ." (Emphasis supplied) However, you contended that the VSSA is merely a "watchman agency" and is entirely different and distinct from a private detective "agency". We cannot subscribe to such an opinion. It is a fact that VSSA is engaged in business of giving protection or security to persons, properties, or to both, as the case may be. It is, likewise, a fact that private detective agencies can perform the duties, if not embracing the functions, of watchmen agencies. The legislators, therefore, must have deemed it unnecessary to expressly enumerate or include the term "private watchman agencies" in the definition of the term "business agents" in section 194(v) of the Tax Code because the term "private detective agencies" is broad enough to include "private watchmen agencies". It would be superfluous and impractical to enumerate specifically in the provisions of the Tax Code who are "business agents". The same is true to such terms as "manufacturer", "independent contractor", merchants, among others, which are defined in general terms. The term "watchmen" has been held to be the legal equivalent of "policeman" (Ballentine's Law Dictionary), while the term "policeman" may include detectives (Moore v. Hupp. 105 P. 209, 17 Idaho 232). Logically, therefore, "watchman", "policeman" and "detectives" are synonymous terms. While it may be true that the functions and duties of private watchman agencies are limited in scope than that of private detective agencies, yet, it does not alter, for business tax purposes, out theory that the latter includes the former. Detective agencies, as well as watchman agencies, have common characteristic in purpose to give protection or security, "the condition of being protected or not exposed to danger". (Webster's New International Dictionary, Second Ed.) On the other hand, even assuming that the VSSA does not fall within the category of a private detective agency (business agent) as contemplated in section 194(v) of the Tax Code, yet, the VSSA would still fall under section 191 of the same Code as " independent contractor ", likewise, subject to the percentage tax of 3% on its gross receipts derived from its business for selling their services to the public for compensation, fee, commission, or reward, as the case may be. In view of the foregoing, your request for refund of the taxes allegedly paid as above-mentioned and to stop the further collection of the 3% tax imposed in section 191 of the Tax Code that maybe due from the VSSA, has to be, as it is hereby, denied. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue