BIR Ruling

December 10, 1972 Messrs. Kalaw, Felipe, Baldonado & Associates Attorneys-at-Law Suite 202 Marietta Apts. 1200 Jorge Bocobo St. Manila Attention: Mr . Ricardo F . Requinta, Jr . Gentlemen : This refers to your letter dated November 21, 1972 stating that your client, Caliraya Realty and Development Corporation is a domestic corporation engaged in the development of certain resort areas in Lumban Laguna and re-selling the developed lots to the public; that within the corporation, a sort of an office, which you call the "sales division" exists which takes charge of the sale or disposal of the corporation's subdivided lots of the public; that this division does this through its group of men whose job is to solicit prospective buyers of lots and, if the sale is effected, are paid on commission basis for their efforts; and that in order to identify this group of men, the corporation, through its sales manager, has printed certificates of authority which reads as follows: cdti "This is to certify that ____________ is an authorized agent of Caliraya Realty & Development Corporation and is entitled to all the rights and privileges given to him in accordance with the terms and conditions of his appointment. 'This certificate of authority is to be expired on _______, 19______. 'Given at Manila this _______ day of _____________ 19_____. ________________ Sales Manager" Under the foregoing facts, you would like to be informed of the following: "1. May said agents be construed as brokers? "2. Can the corporation legally issue such certificate as above to its agents who are not licensed brokers? "3. In the event to answer No. 1 is in the affirmative, who ought to pay the broker's license fee? And how much? "4. In the event that the answer to No. 1 is in the negative, is there necessity to amend the wording of the aforequoted certificate? In reply, I have the honor to inform you that under the foregoing facts the agents are considered real estate brokers within the purview of Section 194(s) of the Tax Code. As such real estate brokers, they are subject to the P300.00 annual fixed tax prescribed in Section 182 (A)(3)(bb) of the Tax Code, and their gross compensation shall be subject to the 6% broker's tax prescribed in Section 195 of the same Code. The fixed and percentage taxes are the liability of the real estate brokers concerned. The question of whether the corporation can legally issue the certificates to the agents who are not licensed brokers, is not within the province of this Office to answer. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue