Tax Consequence of Using a New Business Name for Sales and Marketing Division

August 24, 1999 BIR RULING NO. 133-99 133-99 National/Panasonic Matsushita Electric Philippines Corporation (MEPCO) Bonaventure Plaza Building Ortigas Avenue, Greenhills San Juan, Metro Manila Attention: Mr . Manuel B . Espinoza Finance General Manager Gentlemen : This refers to your letter dated March 12, 1999 stating that on April 24, 1998, you filed with the Department of Trade and Industry, Region IV an application for registration of new "Business Name" for your Sales and Marketing Division under the name and style of National Panasonic Sales Philippines (Division of Matsushita Electric Philippines Corporation); that this was approved and consequently used by your sales and marketing division in all its business transactions; that since it is only your intention to have a new business name for the said division, you did not register with any government agency, whether national or local for the purpose; and that your manufacturing division uses the corporate name, Matsushita Electric Philippines Corporation where your factory and head office is located. llcd In connection therewith, you now request for a ruling on the following issues: "1. Now that your sales and marketing division has its own business name and is reflective of the business engaged in, is there a need for you to secure a new Tax Identification Number (TIN) for the new business name National Panasonic Sales Philippines?; "2. Is there a need for you to separate the set of books which was not the real intention in the registration of the new business name but merely to advertise your product reflected in the new business name National Panasonic Sales Philippines?; and "3. Is there any violation to any existing rules of the department if you will reflect on the invoice and other documents of sales and marketing division the new business name National Panasonic Sales Philippines (Division of Matsushita Electric Philippines Corporation)?" In reply, please be informed of the following: 1. Section 236(J) of the Tax Code of 1997 provides that any person required under the authority of the Code to make, render or file a return, statement or other document shall be supplied with or assigned a Taxpayer Identification Number (TIN) which he shall indicate in such return, statement or document filed with the Bureau of Internal Revenue for his proper identification for tax purposes, . . . Being merely a sales and marketing division of Matsushita Electric Philippines Corporation, National Panasonic Sales Philippines is not to be treated as a separate and distinct entity and is no longer required to procure a TIN of its own, since the return or statement of the former necessarily includes that of the latter. 2. Section 232(A) of the Tax Code of 1997 provides that all corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger or their equivalent: . . . While it is true that National Panasonic Sales Philippines is merely a division of Matsushita Electric Philippines Corporation, it is nevertheless deemed as a marketing arm of the latter, where its activities are not limited to the advertisement of its product under the new business name but also sales are perfected therein. Consequently, National Panasonic Sales Philippines is under obligation to keep a subsidiary books of accounts and records for its purpose. 3. Finally, since there is no violation under Revenue Regulations No. V-1, otherwise known as the "Bookkeeping Regulations", the National Panasonic Sales Philippines, a sales and marketing division of Matsushita Electric Philippines Corporation, may be allowed to use and reflect in its invoices and documents of sales the new business name under the style of National Panasonic Sales Philippines (Division of Matsushita Electric Philippines Corporation) provided that the same are serially numbered and shall show, among others, the name, business style, Taxpayer Identification Number (TIN) and business address of Matsushita Electric Philippines Corporation pursuant to Section 238 of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing representation, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue