BIR Ruling No. 086-62

July 19, 1962 BIR RULING NO. 086-62 Messrs. Carmelo E. Filart Maximo C. Arlante and Lorenzo Libatique c/o Benguet Auto Line Manila Railroad Co. Baguio City Gentlemen : Reference is made to your letter dated October 20, 1960, copy of which was, however, received by this Office on July 9, 1962, only, requesting that you be considered bona-fide employees of that company and not commercial brokers. cdt You have submitted a copy of the contract executed on April 21, 1956 by and between the Manila Railroad Co. (referred to therein as Party of the First Part) and one of you (referred to as Party of the Second Part) because the same is representative of the contracts of the rest of you have with said company. The pertinent provisions of the contract are as follows: "2. Duties of the PARTY OF THE SECOND PART will be as follows: "(a) He is to sell passenger tickets, bill out-going shipments, make proper delivery of incoming shipments and duly account for the proceeds; "(b) He shall deposit under savings account in the name of the Manila Railroad Company with the Philippine National Bank Agency at Vigan, Ilocos Sur, all his cash collections of any one day during the first banking hours of the next day. In other words, he shall deposit his cash collections everyday without fail, except on Sundays and legal holidays. His cash collections on Sundays and legal holidays shall be deposited on the next business day. In making the deposits he shall accomplish the bank deposit slip in quadruplicate, the original and all 3 copies to be marked by the official stamp of the bank and initialed by the receiving teller and distributed as follows: "1. Original for the Bank "2. Duplicate to be attached to the original of Form ACCTG. 102-A for submittal to the accounting Department at Manila. "3. Triplicate to be attached to duplicate FORM ACCTG. 102-A to be forwarded to the Cashier of the Benguet Auto Line in Baguio. "4. Quadruplicate for agent's file for audit purposes. "He is to safeguard the deposit book furnished him by the Bank and keep it clean for audit purposes, and to surrender all his books, papers, documents and other relative papers of accounts upon demand by MRRC . . . and/or BAL auditors. "(c) For ACCTG. 102-A should be accomplished in triplicate at the close of business every day, the original supported by all necessary papers including duplicate of bank deposit slip and report of tickets sold, to be submitted by him direct to the Accounting Department in Manila by the First available trip of the next morning thru San Fernando, U. Railroad Station, duly covered by service express waybill, the duplicate copy of the Office of the Superintendent, and the triplicate copy for his file; "(d) He is to keep and safeguard all station supplies, accountable forms shipments pending delivery, Company's property, station file copies of reports subject to audit and equipment at his station; "(e) He is to accomplish and forward promptly all reports required and to perform other duties similar to the duties of all regular station agents; "(f) He is to requisition cardboard tickets direct from the Purchasing Agent of the Manila Railroad Company, and all requisitions of cardboard tickets for new points should be made thru the Office of the Superintendent, BAL, Baguio; "(g) In case of breakdown of any equipment, occurring in the vicinity of his territory, he is to report immediately to the Actg. Asst. Superintendent, BAL, Bauang, U. thru fastest available means. In case of accidents, he is to take the names and addresses and statements of eyewitnesses duly signed by them, and forward such statements to the Actg. Asst. Superintendent as early as possible thereafter; "(h) He is to dispatch all buses from his station in accordance with current time table, and he is also expected to be present at his station upon the arrival of the buses at his place, using Form Bal. 2 therefor. "In case there is no conductor of the bus, the driver will sign Form Bal. 2. All vehicles originating from his station should be provided with trip reports, and also all those terminating for the night at his station should be required to submit their trip reports to him. Form Bal. 2 and trip reports submitted to his station should be forwarded to the office of the Superintendent, Bal. Baguio, everyday. "5. The territory of the PARTY OF THE SECOND PART as Commission Agent is within the Municipality of Vigan, and they should confine the sale of tickets and billing of shipments in the station office only and not to follow buses. However, he will be entitled to Commission for excursion trips and/or special freight truck hires by him even if points of origin of such trips are outside of the Municipality of Vigan; "6. In case the PARTY OF THE SECOND PART shall voluntarily and intentionally fail to perform or observe the conditions of this contract, the PARTY OF THE FIRST PART shall proceed immediately and directly for the Collection of the amount due under this Contract, summarily dismiss the PARTY OF THE SECOND PART, hold his commission until all obligations have been liquidated, settled and paid by the PARTY OF THE SECOND PART;" From the aforequoted provisions of the Contract, this Office is convinced that, notwithstanding the fact that your compensation is paid in the form of commissions instead of salaries or wages, you are bonafide employees of the Manila Railroad Co. Accordingly, you cannot be considered commercial brokers as the term is defined in the section 194(t) of the Tax Code and, therefore, are not subject to the commercial broker's fixed and percentage taxes. prcd Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue The above ruling was duly signed by the Acting Commissioner of Internal Revenue on July 19, 1962. (SGD.) P. F. LANDAS Revenue Operations Head (Legal)