REVENUE MEMORANDUM CIRCULAR NO. 41-2009 issued on July 24, 2009 clarifies the meaning of the term “Managerial and Technical Positions” under Section 25(C) of the Tax Code of 1997, as amended.
     BIR Ruling No. DA-061-04 issued in favor of Cypress Semiconductor Philippine Headquarters, Ltd. – Regional Operating Headquarters, which held that certain positions of Filipino personnel of multinational companies qualify as managerial and/or technical positions entitled to the 15% preferential tax rate under Section 25(C) of the Tax Code of 1997, is revoked in so far as it is inconsistent with the provisions of this Circular.
     In Philippine Appliance Corporation vs. Laguesma, 226 SCRA 730 (1993), the Supreme Court held that a “managerial employee” is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. The test of “managerial status” depends on whe ther a person possesses authority to act in the interest of his employer and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment. Where such recommendatory powers are subject to evaluation, review and final action by the department heads and other higher executives of the company, the person having such recommendatory powers is not a managerial employee.  The fact that his work description is either manager or supervisor is of no moment considering that it is the nature of his functions and not the said nomenclature of title which determines his status.
To be a managerial employee, the following elements must concur:

1. 1. 1. 1. His primary duty consists of performance of work directly related to management policies;
         2. He customarily and regularly exercises discretion and independent judgment in the performance of his functions;
         3. He regularly and directly assists in the management of the establishment; and
         4. He does not devote 20% of his time to work other than those above

     The test is whether the position requires use of independent judgment. The employees are not managerial employees if they only execute approved and established policies, leaving little or no discretion at all whether to implement said policies or not. (Villuga vs. NLRC, 225 SCRA 537 [1993])
      On the other hand, the term “technical position” is limited only to positions which are highly technical in nature or where there are no Filipinos who are competent, able and willing to perform the services for which the aliens are desired.
    In view thereof, only Filipinos employed and occupying managerial and highly technical positions as defined above, similar to the positions of the aliens employed by regional or area headquarters and regional operating headquarters of multinational companies, shall be entitled to the option to be taxed at either 15% of gross income or at the regular Income Tax rate on their taxable income in accordance with Section 25(C) of the Tax Code of 1997, as amended, if the employer, i.e. Regional Operating Headquarters/Regional or Area Headquarters, is governed by Book III of Executive Order No. 226, as amended by Republic Act No. 8756.