Bureau of Local Government Finance Opinion

January 6, 1994 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1ST INDORSEMENT Respectfully referred to the Regional Director of Local Government Finance, Regional Office No. X Gonzalo Go Bldg., Corner Burgos and Gomez Streets, Cagayan de Oro City, to the City Treasurer, Butuan City. In his basic letter dated August 20, 1993 Atty. Wilfred D. Asis, counsel for Dy Teban Hardware and Auto Supply, requests reconsideration of letters (a) and (b) of dispositive portion contained in the 2nd Indorsement dated June 23, 1993 of this Department, to wit: casia ". . . (a) Dy Teban Hardware and Auto Supply should secure separate Mayor's permits/licenses for the wholesale and retail businesses it is engaged in; (b) said establishment should pay separate business taxes on the basis of actual gross receipts for its wholesale and retail businesses according to the schedule of rates provided for in the city tax ordinance. . . .". Counsel prays for reconsideration on the following grounds: 1. Segregating wholesale from retail transactions of his client is physically impossible due to non-recording of the nature of said transactions in the usual course of business and requiring such segregation will be inequitable, unjust and oppressive; casia 2. Subject is a dealer as defined under Section 131(k) of RA. 7160 whose business is to buy and sell goods as a merchant and stands immediately between the producer of manufacturer and the consumer and depends for his profit not upon the labor he bestows upon his commodities but upon the skill and foresight with which he watches the market; 3. Article 242 of the IRR does not consider wholesale or retail as separate businesses insofar as dealers are concerned since the business of a dealer of a particular line or class of goods is indivisible because the concept of retail or wholesale is a mere contemplation of the purchaser. In support of the contention that subject taxpayer is a dealer, counsel submitted sixteen (16) duly notarized certifications issued by different manufacturers of commercial and industrial products to the effect that subject is a bonafide dealer of said manufacturers. Counsel also submitted copies of the Butuan City Mayor's Permit issued for CY 1991 to 1993 which show that subject is not engaged in the business of both wholesale or retail transactions as distinct or separate businesses. Specifically, the permit for 1993 lists "hardware/auto supply/appliances" as the business of subject taxpayer. Under the rules, evidence of similar acts or that one did or did not do a certain thing at one time may be received to prove a specific intent or knowledge, identify, plan, system, scheme, habit, custom or usage, and the like. Establishing intent, which is the purpose to use a particular means to effect a definite result, is difficult since it is a mental state. This fact has given rise to the familiar rule that where the issue involves the intent with which an act is done, other acts of a similar character done or committed by the same person are admissible to establish the intent with which the particular act was done. To render evidence of other acts competent, the transaction must be so connected or related with each other as to show a common intent running through all. casia In the instance case, the above mentioned documents submitted by subject, thru counsel, constitute clear and convincing evidence that subject is indeed a dealer within the contemplation of Section 143(b) of the Code and, as such, does not require distinction of retail and wholesale transactions for local business tax purposes. It must be clarified, however, that the instant ruling does not detract from the soundness of the 2nd Indorsement dated June 23, 1993 with respect to the necessity of distinguishing wholesale from retail in the case of those who do not qualify as dealers under the law or fail to prove their actual status as a dealer. It may not be amiss to state herein that this Office secured copies of the business permits of subject taxpayer for the years 1991 to 1993, in its attempt to determine the true nature of the taxpayer's business. However, in referring to the relevant taxable business, said permits only bear the word "Hardware" which is not descriptive of any nature of business and cannot serve as an aid to this Office for this purpose. There being no other competent evidence, this Department must give credence to the above mentioned certificates which, having been authenticated by a notary public, are considered public documents as proof of contractual obligations. cd i Accordingly, the 2nd Indorsement dated June 23, 1993 is hereby modified and the City Treasurer of Butuan should be guided as follows: (a) Dy Teban Hardware and Auto Supply should secure Mayor's Permit/License as dealer of the products which it sells; (b) Said establishment should pay business taxes on the basis of actual gross receipts for its business according to the schedule of rates for dealers provided for in the city tax ordinance; (c) The same firm is subject to the annual basic Community Tax of P500.00 and additional tax of P2.00 for every P5,000.00 gross sales but not to exceed P10,000.00; and, (d) Require the statement of the specific business of local business taxpayers in all documents and papers relevant to the payment of taxes and issuance of permits. By authority of the Secretary: (SGD.) JUANITA D. AMATONG Undersecretary