BIR Ruling

November 29, 1966 Mr. Juan G. Maniego R-610 Trade & Commerce Bldg. Juan Luna, Manila S i r : This refers to your letter dated July 18, 1966 requesting a ruling as to whether or to the sales agents of corporation X who are paid a monthly salary of P200.00 and a commission of 5% each of their gross sales are to be considered bona-fide salaried employees not subject to the fixed and percentage taxes due from commercial brokers. cdti It is represented that X corporation is engaged in the sale at retail and wholesale of general merchandise; that for the sale of its general merchandise in different parts of the Philippines, X appointed or engaged the services of sales agents; that each sales agent is paid a monthly salary of P200.00 and a commission of 5% on his gross sales, the monthly commission sometimes reaching P1,000.00 to P2,000.00; that the corporation lends each sales agent a truck for the delivery of the goods of the corporation sold by the sales agents and at more times the truck loaned to the sales agents are used not only for delivery but also for peddling the goods; that sales agent pays out of his own pocket, from his salary and commissions and own money the salaries of the driver of the truck, the personnel of the truck who are in charge of delivering and selling the goods and pays also their subsistence; that the sales agent pays for the gasoline and oil used by the truck in the transportation of the goods sold and peddled by the sales agent; and that the sales agent may sell the goods of the corporation for cash or on credit, but if the sales agent sells on credit, he is answerable to the corporation for the purchase price. In reply, I have the honor to inform you that under the foregoing representation, the sales agents are considered commercial brokers subject to the commercial brokers fixed and percentage taxes prescribed by Sections 182(A)(3)(s) and 195(a) of the Tax Code. Each delivery truck allegedly lent by the corporation to each sales agent to peddle the merchandise is considered a distinct and separate establishment where business is conducted; hence, subject to the graduated annual fixed tax under Section 182(A)(2), in relation to Section 178, both of the Tax Code. cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue