BIR Ruling

March 11, 1969 Tax Service of the Philippines, Inc. A. Soriano Building 8776 Paseo de Roxas cor. Ayala Avenue Makati, Rizal Attention: Mr . Demosthenes B . Gadioma Vice President & General Counsel Gentlemen : This refers to your letters dated February 19 and 20, 1969, both requesting reconsideration of our decision contained in our letter dated October 25, 1968 upholding the assessments against your client, STOCK TRANSFER SERVICE, INC. as independent contractor in the total amount of P5,245.11 contained in our three letters of demand Nos. 20636 and 20637, both dated May 27, 1966 and No. 25956 dated August 15, 1962 for the years 1957 and 1960. In reply, I have the honor to inform you that as correctly stated in our letter to you dated October 25, 1968, the intent and purpose for which the term "independent contractor" is contemplated under Republic Act No. 1612, is to include all persons whose activity consists essentially of the sale of all kinds of services for a fee, and that it is the position of this Office that a corporation engaged in business as a contractor, regardless as to whether or not the performance of which calls for the exercise or use of the mental or physical or manual faculties of its employees, falls under the category of other independent contractor under Section 191 of the Tax Code. It should be noted that in your letter dated November 6, 1967 requesting cancellation of our assessments against your client, you contended that your client does not come within the purview of Section 191 of the Tax Code for the reason that an independent contractor refers only to one who performs work which are predominantly physical in nature, and since your client performs work which involves the exercise of judgment, it cannot be considered an independent contractor. In view of the foregoing, and there being no cogent reason to disturb our decision, your request for the reconsideration of our decision holding your client subject to the 3% tax is hereby denied. It shall be appreciated if you will urge your client to pay the foregoing taxes within ten (10) days from receipt hereof, otherwise, this Office will enforce the collection thereof thru the summary remedies provided by law. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue