Tax Status of a Traveling Salesmen

May 12, 1959 BIR RULING NO. 255-59 Alhambra Cigar & Cigarette Mfg. Co. P.O. Box 209 M a n i l a Attention : D . A . Fernando , Personnel & Public Relations Manager Gentlemen : This is with reference to your letter dated January 9, 1959, requesting information as to whether or not your traveling salesmen, who are paid on commission basis, are covered by the requirements prescribed by Revenue Regulations No. V-62, dated July 16, 1958. You stated the following facts: "Our Company has in its employ traveling salesmen who are paid on commission. All transactions undertaken by these salesmen on commission are recorded by the Company and reflected in BIR Form 31.19 (A-4 for cigars) and BIR 31.25 (A-5 for cigarettes) accomplished and submitted by our Company to your office. Actually, all sales of cigars and cigarettes made by our salesmen are properly accounted for and recorded in detail by our office. . . . our traveling salesmen on commission are constantly on the move within their assigned territories every day of the working week. "It might be worthwhile mentioning here that our traveling salesmen on commission use company trucks in covering their assigned territories, sell the products of the company at prices set down by the Company, use company invoices and delivery receipts, and liquidate with the company once a month. Our salesmen on commission are subject to the control of the Company with respect to the manner they sell our products and are in effect employees of the Company save for the fact that instead of being paid on a salary basis, they are paid on commission." Your salesmen, under the foregoing facts, are mere peddlers, and as such they do not come within the purview of Revenue Regulations No. V-62. However, the sales effected by your salesmen should be duly entered in your books of accounts. Inasmuch as your salesmen are apparently disposing of your products for the purpose of resale, each of them should be provided with a wholesale peddler of manufactured tobacco privilege tax-receipt. cdll Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue