Commission of Mr. Pineda and Those of His Associates are Not Subject to the Withholding Income Tax

August 29, 1960 BIR RULING NO. 387-60 Mr. Clemente J. Celso Certified Public Accountant Suites 314-315 Yuchengco Bldg. 484 Rosario, Manila S i r : Reference is made to your letter dated August 22, 1960, requesting information as follows: "Mr. Antipas Pineda is a real estate broker and runs an office at 1574 Pasaje Eduque, Paco, Manila, under the firm name of ANTIPAS PINEDA & ASSOCIATES, which is a sole proprietorship. However, in this particular transaction with the Philippine Suburban Development Corporation, he have two other associates. casia "Sometime in 1959, Mr. Pineda obtained an option from the owner of the Hacienda Sapang Palay in San Jose del Monte, Bulacan, to sell the said property. He and his two associates were able to negotiates the sale of the said hacienda to the said Philippine Suburban Development Corporation, who in turn sold the same to the People's Homesite Housing Corporation, government corporation, on the condition that Mr. Pineda and his associates would receive 30% commission on the profits that the Philippine Suburban Development Corporation would realize from the said transaction. The question involved is whether or not the 30% commission of Mr. Antipas Pineda and those of his associates are within the purview of the Withholding Income Tax Law? Furthermore, what other taxes should be imposed on Mr. Pineda on this particular transaction?" In answer thereto, I have the honor to inform you that, based on the aforequoted circumstances, the commission of Mr. Pineda and those of his associates are not subject to the withholding income tax, they not being embraced within the provisions of Supplement A to Title II of the Tax Code." The commission in question are neither subject to the withholding provisions of Republic Act No. 1051, as implemented by Revenue Regulations No. V-40, unless the same are collected by the recipients thereof from the People's Homesite and Housing Corporation itself, in which latter case said corporation is duty bound to deduct and withhold an amount corresponding to 6% of said commissions before effecting payment thereof. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue