VAT Ruling No. 035-97

April 1, 1997 VAT RULING NO. 035-97 Sec. 107; 000; 035-97 Peak Marketing Group Inc. 8th Floor, Strata 200 Building Emerald Avenue, Ortigas Center Pasig City, Attention: Atty . Fe L . Concepcion Gentlemen : This is in reply to your letter dated March 5, 1996, requesting for confirmation as to whether offices and showrooms maintained by the commission agents of your client, the Peak Marketing Group Inc., (Peak) considered as its branch offices and whether the commission agents are required to register under the EVAT rules and regulations. It is represented that the commission agents of your client, Peak, operating under the direct selling method of marketing various merchandise, are in no way considered as Peak's employees since they are not given any regular or standard compensation or remuneration of any kind; that Peak does not control the details and the manner of how these agents sell its merchandise; that any and all expenses incurred by the commission agents, including their transportation and communication, advertisement, representation and the like, are all for their exclusive accounts; and that their only entitlements from Peak are the commissions given them, in amounts conditioned on the volume of merchandise they are able to sell. In reply, please be informed that your opinion is confirmed. Sec. 4.107-1 of Rev. Reg. 7-95 defines a branch office as "a fixed establishment in a locality which conducts sales operation of the business as an extension of the principle office." Since the offices and showrooms of the commission agents are maintained by the same who are not employees of Peak, but as independent contractors, then the aforementioned offices and showrooms cannot be considered as branches as hereinabove defined. Accordingly, said commission agents are still required to register as being in business for themselves, and not as branches of Peak, at the RDO having jurisdiction over the location of their respective offices and showrooms. This ruling is being issued to Peak Marketing Group Inc. based on the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. cdti Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue