The Question of Whether or Not a Real Estate Broker Can Secure the Release of His Commission from Asiawealth Tower 1 Pending the Issuance of a Ruling is a Matter Which Should be Decided by the Parties Themselves

October 23, 1997 BIR RULING NO. 110-97 102, 107, 108-000-00-110-9 7 Joven & Associates Room 404, TMBC Building Ayala Avenue, Makati City Attention: Atty . Wilhelmina V . Joven Gentlemen : This refers to your letter dated October 10, 1997 requesting on behalf of your client, Mr. Michael Gaviola, a ruling on the following facts: "ASIAWEALTH PROPERTIES, INC. has entered into a MARKETING AGREEMENT dated August 31, 1996, with him, (Michael Gaviola), whereby he was authorized to market its condominium units at Asiawealth Tower 1, Leveriza St. Pasay City to prospective buyers in the United States mainland. prLL "By reason of this Agreement, Mr. Gaviola has earned a total commission due and owing to him as of October 7, 1997 in the amount of US DOLLARS: FIFTY FOUR THOUSAND FIVE HUNDRED NINETY EIGHT & 67/100 (US$54,598.67), which ASIAWEALTH now refuses to pay him and has required him to produce the following: (a) E-VAT Registration with the Bureau of Internal Revenue; (b) Official Receipt duly registered with the Bureau of Internal Revenue "For the record, please be advised that MR. MICHAEL GAVIOLA, although a Filipino citizen, is a non-resident having been granted an immigrant visa to the States and the management and promotion of sales are wholly done in the STATES." In reply, please be informed that Section 107(a) of the Tax Code, as amended by R.A. No. 7716 and as further amended by R.A. No. 8241, provides that any person subject to a value-added tax under Sections 100 and 102 of the Tax Code shall register with the appropriate Revenue District Officer and pay an annual registration fee in the amount of P1,000.00 for every separate or distinct establishment or place of business and every year thereafter on or before the last day of January. To be liable to the value-added tax imposed under Section 102(a) of the Tax Code, the performance of the service must be done or rendered in the Philippines. Since the services of Mr. Gaviola, as a real estate broker, were not rendered in the Philippines but in the United States of America, he is not liable to pay the 10% VAT imposed under said Section 102(a) of the Tax Code, as amended, and consequently, he is not required to register either as VAT or non-VAT taxpayer. For the same reason, he is not required to issue an invoice or receipt prescribed in Sections 108 and 238 of the Tax Code, as amended, for selling the condominium units of Asiawealth Tower 1 in the United States mainland. The question of whether or not Mr . Gaviola can secure the release of his commission from Asiawealth Tower 1 pending the issuance of this ruling, is a matter which should be decided by the parties themselves. llcd This ruling is being issued on the basis of your representations and the same shall be revoked and/or considered null and void if it turns out later in an investigation that the facts are different from those as represented. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue