VAT Ruling No. 044-91

May 29, 1991 VAT RULING NO. 044-91 Roving Media Management, Inc. (RMMI) 4th Floor, F. Jacinto House Rada St.,Legaspi Village Makati, Metro Manila Attention: Mr . Eduardo L . Gumaru General Manager Gentlemen : This refers to your letter dated October 10, 1990 requesting information whether your business activity described hereunder may be considered subject to the 10% Value-Added Tax. cdpr It is represented that your company (RMMI) is in the business of leasing a space on public utility vehicles for the purpose of putting up advertising boards thereon. These are then sublet or offered to the general public, for a fee. Some RMMI customers may, by themselves, make or cause the production of their own advertising boards or paraphernalia which are then put up in the said advertising spaces. At times, RMMI undertakes, for its clients/advertisers, the production of advertising paraphernalia which RMMI sub-contracts to outside advertising paraphernalia contractors. RMMI separately charges said clients for the production of such advertising paraphernalia. Please be informed that sales of services made in the course of the taxpayer's business is subject to 10% VAT. (Sections 99 and 102, NIRC, as amended by E.O. 273) The term, sale of service, "means the performance of all kinds of services for others for a fee, remuneration or consideration, including those performed or rendered by . . . lessors or personal property . . . and similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties: . . ." (Sec. 102(a), NIRC; Sec. 2(j), Revenue Regulations No. 5-87) The said law and regulations embraces all kinds of services and regardless of whether or not the seller employs his physical or mental faculties. The same embrace not only the rendering of personal service but rather also include the services or use of ones personal property, viz.,leasing of ones personal property. (supra) RMMI's business activity, viz.,offering its facility, to the general public, for the purpose of advertising the latter's business, whether or not RMMI shall make the advertising paraphernalia by itself or by sub-contracting its production to outside contractors, for and in behalf of RMMI's clients/advertisers, constitute a sale of service based on the 11 inclusive proviso, viz.,all kinds of service. Even granting, for the sake of argument, that RMMI's business activity can only be construed as a sub-leasing of advertising spaces, i.e.,leasing of personal property or property right, such business activity remains a sale of service, RMMI being constituted a lessor of personal property. In view of the foregoing, the said business activity of RMMI involves a sale of service, hence, subject to 10% Value-Added Tax, pursuant to Section 99 and 102, NIRC. prcd Very truly yours, JOSE U. ONG Commissioner of Internal Revenue