Tax Liability of a Member-Corporation of an Association

April 27, 1959 BIR RULING NO. 198-59 Philippine Optical Suppliers Association, Inc. 215 (19) Escolta, Manila Attention : Atty . D . Z . Velasco Gentlemen : Reference is made to your letter dated April 14, 1959, requesting for a ruling as to whether or not a member-corporation of your association is subject to the "Graduated fix annual tax", under the following facts, to wit: "1. Member-corporation organized solely for the purpose dispensing eyeglasses in accordance with prescription of its own optometrists; "2. It (member-corporation) has a dollar allocation which is being utilized for the importation of optical supplies exclusively for their own use. They are, however, buying locally some supplies which cannot be accommodated in their dollar allocation; "3. They employ optometrists who examine the patients and upon prescription they make and/or supply the eyeglasses; "4. They do not sell any eyeglass or part thereof to other firms or opticians or in the general market; "5. As of to-date, they are paying the following taxes: (a) Privilege tax (C-14) (b) Occupation tax of optometrists (c) 7% sales tax (d) Income tax" On the basis of the above facts, I have the honor to inform you that a member-corporation is not subject to the graduated fix annual tax prescribed in section 182-A-2 of the National Internal Revenue Code. As a corollary however, it is understood that the locally purchased optical supplies are to be used also in the manufacture of eyeglasses and are not for resale "as is". In this connection, it may be stated that when the law speaks of a dealer, it means one whose business is to buy and sell merchandise, goods and chattels, as a merchant and the term is synonymous with trader. He is not one who buys to keep or makes to sell, but one who buys and sells again. He stands immediately between the producer or manufacturer and consumer and depends for his profit, not upon the labor he bestows upon his commodities, but upon the skill and foresight with which he watches the market. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue