I am not a lawyer, but I cannot see any reason why you would pay twice. If you set up a duly registered company in the Philippines, even if it is a company branch, that company will pay taxes in the Philippines for all income generated in the Philippines. And its workers are subject to the Philippines law, not the US one.
The US taxman can chase you on profits submitted to the head office in the US, I presume, but that's all. Because the US and the Philippines must be in a double-taxation agreement, you should not be this kind of trouble. And you are not looking for income in the Philippines anyway, you are just hiring local people.
On a different note, just my 2 cents as a foreigner with a Philippines office, and having gone through some of your issues, I'll tell you that opening a branch in the Philippines is a nightmare. If you are lucky to get a good lawyer on this side, fair enough. I tried to do it myself in the past, and costed my good money and time before I gave up. No matter how many papers I passed through the Phils Embassy, the SEC would always claim that it was not what they needed and would ask for something else. Lawyers, public notaries, etc. It takes forever and I ended giving up.
Options I would suggest:
- Register a local company. There are a few law firms, some of them American that can assist you with this. Not very cheap really, but it is way easier than registering a branch. Your US firm can own 100% of that local company.
- Ask your employees to set themselves as contractors (I cannot remember the exact Filipino term for it) and pay their taxes.
- There a few firms that can hire your guys for you for a monthly fee. The amounts vary, but, if you are not planning to expand much, and you only need 2 or 3 guys, this might be the simplest way to do it. They'll handle your payroll, government contributions and HMO charges for you.
Filipino companies require way too much paperwork, and, unless you plan to expand in the future, it is a lot of hassle in terms of payroll, accountants, etc. I would go for option 2 or 3 at this stage, really.
Hope that this helps.