Bureau of Local Government Finance Opinion

June 7, 2010 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Ramon M. Zialcita General Manager Honda Cars Global City Bonifacio Global City, Taguig Sir : This refers to your letter dated May 12, 2010, relative to the letter addressed to Mr. George F. Blaylock dated January 16, 2004 of this Bureau, confirming the classification of car dealers of Quezon City as "dealer" in accordance with Section 143 (b), 151 and 191 of the Local Government Code (LGC) of 1991 contrary to this Bureau's ruling dated June 25, 1998. DICcTa In view of the above, a request for confirmation is being made by that Office that the above reply is also applicable to Honda Cars Global City (HCGC) dealership (a branch of Honda Cars Makati, Inc.) It is claimed that said dealership was originally classified and taxed by the City of Taguig as dealer. However, HCGC was recently advised by revenue examiner of the city government that it should have been and shall be classified, hence on, as retailer on the premise that it sells directly to end users. In this connection and if HCGC is similarly situated as the car dealers of Quezon City, the ruling embodied in a letter dated December 9, 2003 addressed to Chato and Eleazar Law Office, shall apply, the pertinent portion of which is quoted as follows: "(a) if a 'car dealer' can show proof that he entered into a dealership agreement with the producer or manufacturer of a car, he shall be classified as a 'dealer'; "(b) if no dealership agreement can be shown, this Bureau's ruling dated 25 June 1998 shall prevail, thus, 'a business entity shall be considered a retailer when it sells directly to end-users. However, if it sells to retailers, then it shall be classified as a dealer. If it acts in both capacities, then it should segregate its sales as retailer and as a dealer in order that the appropriate tax could be applied." We hope that this will clarify matters. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director