BIR Ruling

December 12, 1972 Mr. Mariano Chingtoco New Laguna Bakery, Sta. Cruz Laguna S i r : This refers to your letter to our Revenue District Officer at San Pablo City dated October 17, 1972, requesting a ruling as to your tax liability under the contract entered into between you as owner operator of the New Laguna Bakery and the United States Agency International Development, the terms and conditions of which are as follows: cdta "1. New Laguna Bakery will bake for USAID 30,000 or more pieces of nutribuns a day for distribution to the flood victims in the province of Laguna; 2. USAID will furnish the flour and the powdered milk, needed in baking the nutribuns in accordance with the formula furnished by USAID; 3. New Laguna Bakery will furnish the yeast, salt, sugar and shortening, and will hire laborers, using its oven and other equipments; 4. USAID will pay New Laguna Bakery a baking fee of P0.065 for each nutribun; and 5. USAID will continually supply New Laguna Bakery with flour and powdered milk for as long as the agreement exists or during the period of two months and every month thereafter if there is a necessity for further distribution of nutribuns in the province of Laguna." In reply, I have the honor to inform you that under the foregoing facts, and since nutribuns in question are specially manufactured for the USAID and upon its special order and not for general public, the contract between you and the USAID is one for a piece of work. (Act 1467 New Civil Code). Accordingly, you are an independent contractor subject to the annual fixed tax of P50.00 and to the 3% tax on your gross receipts pursuant to Sections 182(A)(1) and 191(18) of the Tax Code. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue