BIR Ruling No. 049-65

May 18, 1965 BIR RULING NO. 049-65 MULLER & PHIPPS MANUFACTURING CORP. Corner Pioneer and Reliance Sts. Mandaluyong, Rizal Attention : Mr . C . B . Enriquez Treasurer Gentlemen : Reference is made to your letter dated January 20, 1965 stating that you are manufacturers of pharmaceutical products; that previously, the assay tests on your raw materials and products were performed by the Bureau of Research and Laboratories; that because the latter office can no longer be able to perform the assay work, you will create in your company a quality control laboratory; that the laboratory will not only do assay work for yourselves but also for others for a fee; and that the personnel of your quality control laboratory who will render the assay service will be pharmacists and chemical engineers who are duly provided with the corresponding privilege tax receipt on occupation. cd You now request a ruling from this Office on the question of whether or not for the rendition of assay services you are subject to the fixed and percentage taxes. In reply, I have the honor to inform you that for rendering the so-called assay service you shall be constituted independent contractors subject to the fixed and percentage taxes prescribed by Sections 182 and 191 of the Tax Code. It is noted that the service is intended to be done by that corporation and not by the pharmacists and engineers employed by you. Although the pharmacists and engineers will do the assay work, nevertheless, they will actually render the work for you and not for your customers. On the other hand, you are the one to undertake the work for your customers. Under the circumstances, it cannot be said that the work comes under the category of professional services. For while it is true that the assay work constitutes professional practice on the part of the pharmacists and engineers, however, on your part, the assay service is certainly a non-professional service contemplated within the purview of the term "independent contractor" mentioned in Section 191 of the Tax Code. cdll Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue