Tax Liability of Reliance Motors Inc.

July 31, 1958 BIR RULING NO. 422-58 The Regional Director BIR REGIONAL DISTRICT NO. 3 Manila S i r : This is with reference to your 1st Indorsement dated May 31, 1958 relative to the case of the Reliance Motors, Inc. in the sum of P3,630.58 representing fixed and percentage taxes, surcharge and penalty for the years 1952 to 1955, inclusive. prcd The question to be decided in this case is whether or not the taxpayer is a commercial broker subject to the fixed and percentage taxes prescribed in Sections 193(q) and 195, both of the National Internal Revenue Code. Section 194(t) of the Tax Code defines a commercial broker as follows: "SEC. 194(t) 'Commercial Broker' includes all persons, other than importers, manufacturers, producers, or bona fide employees, who, for compensation or profit, sell or bring about sales or purchases of merchandise for other persons, or bring proposed buyers and sellers together, or negotiate freights or other business for owners of vessels, or other means of transportations, or for the shippers, or consignors or consignees of freight carried by vessels or other means of transportation. The term includes commission merchants." Under the facts of this case as gathered from the memorandum amicus curiae filed by the different entities that deal with the PHILCUSA, there can be no question that the taxpayer brought about the purchase and sale of goods and merchandise between the PHILCUSA and the foreign suppliers. It acted only as an intermediary between the PHILCUSA and the foreign suppliers of goods and merchandise by causing them to agree and consummate the sale. It cannot, be considered an importer inasmuch as it never became the owner of the merchandise ordered does not make it less a commercial broker, as the definition of a commercial broker includes commission merchants. "Commission merchant" is defined as follows: "It is synonymous with the legal term 'factor' and means one who receive goods, chattels or merchandise for sale, exchange, or other dispositions and who is to receive compensation for his services to be paid by the owner, or derived from the sale of the goods." (p. 547 Bouvier's Law Dictionary). Consequently, even under the theory that is has some control over the articles in question, it is still a "commission merchant" and, therefore, a commercial broker within the contemplation of the law. In view of the foregoing, this Office is of the opinion that the Reliance Motors Inc. is a commercial broker subject to the fixed and percentage taxes prescribed in Section 193(q) and 195 of the Tax Code, respectively. Please be guided accordingly. LexLib Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue