tb jan2012 elec
DESCRIPTION
hjTRANSCRIPT
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1Tax Bulletin January 2012
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2 Tax Bulletin
HighlightsBIR Rulings
DividendspaidbydomesticcorporationstoaSwissfoundationaresubjectto15%finalwithholdingtax(FWT)underSection28(B)(5)(b)oftheTaxCode. (Page 3)
Honorariareceivedbybarangayofficialsasremunerationforservicesaresubjecttowithholdingtax(WT)oncompensation. (Page 4)
InterestincomederivedbyaSavingsandLoanAssociationfromitsbankdeposits,oranyothermonetarybenefitfromdepositsubstitutes,isexemptfromthe20%FWTimposedunderSection27(D)(1)oftheTaxCode. (Page 4)
Acorporationbelongingtothetop20,000corporationsthatpaysitssuppliersthroughcreditcardisnotrequiredtowithholdexpandedwithholdingtax(EWT)whenpresentingitscreditcardtothesuppliers. (Page 4)
BIRRulingNo.039-02onliquidatingdividends,andtheBIRrulingscitedtherein,arereversedandsetaside. (Page 5)
Whenasaleoflandbyanecozonedeveloper/operatorviolatesthedeveloper/operatorsregistrationagreementwiththePhilippineEconomicZoneAuthority(PEZA),profitsfromsuchsalecannotbesubjectto5%preferentialtaxrate. (Page 6)
BIR Issuance
RevenueMemorandumCircular(RMC)No.57-2011wasissuedtoclarifycertaintaxissuesinvolvinggeneralprofessionalpartnerships(GPPs). (Page 6)
BOC Issuance
CustomsMemorandumOrder(CMO)No.1-2012prescribesguidelinestostrengthentheRunAftertheSmugglers(RATS)GroupandintensifytheBOCsanti-smugglingefforts. (Page 7)
BSP Issuance
CircularNo.745prescribesthereportingrequirementsonthewrite-offofloans,othercreditaccommodations,advancesandotherassets. (Page 8)
SEC Issuances
SECMemorandumCircular(MC)No.9prescribestherulesontheelectionofindependentdirectorsinlisted,publicandmutualfundcompanies. (Page 9)
AholdingcompanycannotengageinminingactivitiesunlessspecifiedinitsArticlesofIncorporation(AOI). (Page 10)
AFoundationcanreceiveandtransferdonationsfromforeignsourcesasprovidedinitsAOI. (Page 11)
Adirectorstermisfixedwhilehistenuresurvivesuntilasuccessorisdulyelectedandqualified.Theholdoverperiodthetimefromthelapseofoneyear
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3fromamemberselectiontotheBoardanduntilhissuccessorselectionandqualificationisnotpartofthedirectorsoriginalterm,norisitanewtermbutconstitutespartofhistenure. (Page 12)
Aninvestmentcontractisasecurity,whichissubjecttoregulationbyandregistrationwiththeSEC,consistingofthefollowingelements:(1)aninvestmentofmoney;(2)inacommonenterprise;(3)withexpectationofprofits;and(4)primarilyfromeffortsofothers. (Page 13)
Court Decisions
TheAttritionActof2005anditsimplementingrulesandregulations(IRR)areconstitutional. (Page 14)
Thedateonwhichthecourtactuallyreceivedthepleadingsdeliveredthroughaprivateletter-forwardingagencyisconsideredthedateoffilingincourt,notthedateofdeliverytotheagency. (Page 16)
TheabsenceofaPreliminaryAssessmentNotice(PAN)dulyreceivedbyataxpayernullifiesanydeficiencytaxassessmentissuedbytheBIR. (Page 17)
Ataxpayermay,onappealtotheCTA,questionthevalidityofawaivereveniftheissuewasnotraisedinitsprotestattheBIR.
Tobevalid,awaiverofthedefenseofprescriptionmust(a)besignedbyanauthorizedofficial,(b)indicatereceiptbythetaxpayerontheoriginalcopy,and(c)indicatethespecifickindandamountoftaxdue. (Page 18)
BIR Rulings
BIR Ruling No. 420-2011 dated November 3, 2011
Facts:
PFoundationisanundertakingoftheSwissConfederation,whichwasestablishedtoinsureemployeesagainsttheeconomicconsequencesofoldage,invalidityanddeath.PFoundationownsinvestmentsindomesticPhilippinecompaniesfromwhichitreceivesdividends.ThetaxauthoritiesofSwitzerlandissuedacertificationconfirmingthatthetaxexemptiongrantedtoPFoundationextendstodividendsfromsharesinPhilippinecompanies.
Issue:
ArethedividendspaidbydomesticcompaniestoPFoundationsubjecttothe15%FWTrateunderSection28(B)(5)(b)oftheTaxCode?
Ruling:
Yes.UnderSection28(B)(5)(b)oftheTaxCode,cashand/orpropertydividendsreceivedbyanon-residentforeigncorporationfromadomesticcorporationshallbesubjectto15%FWT,subjecttotheconditionthatthecountryinwhichthenon-residentforeigncorporationisdomiciledshallallowacreditagainstthetaxduefromthenon-residentforeigncorporationtaxesdeemedtohavebeenpaidinthePhilippines,equivalentto15%ofthedividend.Thepreferential15%FWTrateappliessinceSwitzerlandexemptsfromtaxdividendsreceivedfromsharesinPhilippinecompanies.
DividendspaidbydomesticcorporationstoaSwissfoundationaresubjectto15%FWTunderSection28(B)(5)(b)oftheTaxCode.
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4 Tax Bulletin
InterestincomederivedbyaSavingsandLoanAssociationfromitsbankdeposits,oranyothermonetarybenefitfromdepositsubstitutes,isexemptfromthe20%FWTimposedunderSection27(D)(1)oftheTaxCode.
Acorporationbelongingtothetop20,000corporationsthatpaysitssuppliersthroughcreditcardisnotrequiredtowithholdEWTwhenpresentingitscreditcardtothesuppliers.
BIR Ruling No. 422-11 dated November 4, 2011
Facts:
SomebarangayofficialsinDumagueteCityarerequestingforthesuspensionoftheWTonthehonorariatheyreceiveasremunerationforservices.
Issue:
ArethehonorariareceivedbybarangayofficialssubjecttoWToncompensation?
Ruling:
Yes.Honoraria,nomatterhownegligibletheamount,iswealththatflowsintothehandsofabarangayofficial.Thus,thesehonorariaaresubjecttoincometaxand,consequently,WToncompensation.BarangayofficialsfallunderthedefinitionofemployeesunderSection2.78.3ofRevenueRegulations(RR)No.2-98.
BIR Ruling No. 443-2011 dated November 11, 2011
Facts:
SSavingsandLoanAssociation(S-SLA)derivesinterestincomefrombankdepositsandmonetarybenefitfromdepositsubstitutes.
Issue:
IsS-SLAexemptfromthe20%FWToninterestincomefrombankdepositandyield,oranymonetarybenefitfromdepositsubstitutesimposedunderSection27(D)(1)oftheTaxCode?
Ruling:
Yes.UnderSection5ofRepublicAct(RA)No.8367,otherwiseknownastheRevisedNon-StockSavingsandLoanAssociationsActof1997,anassociationshallbeexemptfrompaymentoftaxwithrespecttoincomeitreceives,includinginterestonitsdepositswithanybank.
BIR Ruling No. 456-2011 dated November 16, 2011
Facts:
SCo.isadomesticcorporationclassifiedbytheBIRasoneofthetop10,000(nowtop20,000)privatecorporations.SCo.purchasesgoodsandservicesfromsuppliersandpaysthemthroughcreditcard.Thesupplierscollectpaymentfromthecreditcardcompany,whichinturncollectspaymentfromSCo.
Issues:
1. IsSCo.requiredtowithhold1%or2%EWTimposedunderSection2.57.2ofRRNo.2-98onpaymentstosuppliersuponpresentationofthecreditcard?
2. IsSCo.requiredtowithhold2%EWToninterestpaymentand/orservicefeeandotherchargesimposedbythecreditcardcompany?
3. IsthecreditcardcompanyrequiredtowithholdanytaxonpaymentstothesuppliersofSCo?
HonorariareceivedbybarangayofficialsasremunerationforservicesaresubjecttoWToncompensation.
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5Ruling:
1. No.UnderRMCNo.72-2004,atop20,000corporationisnotrequiredtowithhold1%or2%EWTonpaymentstosuppliersuponpresentationofthecreditcard.Inacreditcardtransaction,themerchant/serviceestablishmentallowsthecardholdertomakethepurchasesoncredit.Themerchant/serviceestablishmentassignsitsreceivablesfromthecardholdertothecreditcardcompanyatadiscountforearlypaymentorsettlementofthetransaction.Whatisbeingsoldtoandpurchasedbythecreditcardcompanyarethereceivablesfromthecardholder.Hence,paymentsmadebySCo.tothecreditcardcompany,whicharetermedsettlementofaccounts,areforthosereceivablesassignedtothembythemerchant/serviceestablishment.Clearly,thepaymentsarenotpaymentsforthepurchaseofgoodsorservices.
2. Yes.UnderRMCNo.72-2004,atop20,000corporationisrequiredtowithhold2%EWToninterestpaymentsand/orservicefeesandotherchargesimposedbythecreditcardcompany.Consideringthatacreditcardcompanyisengagedinfinancingactivitieswithrespecttodiscountingofreceivables,andthatitgeneratesrevenuesprincipallyfromthediscountgrantedbythemerchant/serviceestablishmentandincidentallyfromfeespaidbythecardholder,thecardholderisrequiredtowithhold2%EWToninterestpaymentsand/orservicefeesandotherchargesimposedbythecreditcardcompany.
3. Yes.UnderSection2.57.2(L)ofRRNo.2-98andRMCNo.72-2004,acreditcardcompanyinthePhilippinesshallwithhold1%taxononehalfofthegrossamountspaidtoanybusinessentity,whethernaturalorjuridical,representingsalesofgoodsorservicesmadebythebusinessentitytothecardholder.
BIR Ruling No. 479-2011 dated December 5, 2011
Facts:
ACo.scorporatetermexpiredinDecember2006.InDecember2009,theBoardofDirectorsofACo.,intheircapacityastrusteesofthecorporateassets,orderedthedistributionoftheremainingassetstoitsstockholdersbywayofliquidatingdividends.Consequently,ACo.transferredaparceloflandtoBCo.asliquidatingdividend.CitingBIRRulingNo.039-02,ACo.wantstoconfirmthat:(1)itisnotliableforincometaxoneitherthetransferoftheparceloflandtoBCo.oronitsreceiptofthesharessurrenderedbyBCo.;(2)nodocumentarystamptax(DST)isdueonthesurrenderandcancellationofBCo.sshares;(3)noDSTisdueonthetransferoftheparceloflandtoBCo;and(4)BCo.shallrealizecapitalgainorlossfromthetransferoftheparcelofland.
Issue:
CanACo.sopinionsbeconfirmedonthebasisofBIRRulingNo.039-02?
Ruling:
No.ACo.sopinionscannotbeconfirmedduetolackoflegalbasisundertheTaxCode.BIRRulingNo.039-02andtheBIRrulingscitedarereversedandsetaside.
[Editors Note: BIR Ruling No. 479-2011 departs from several previous rulings and court decisions, such as BIR Rulings No. 039-02, 028-02,092-99,171-92, 059-90, 136-88, and 019-80, and Wise & Co, Inc., et al vs Bibiano L. Meer, CIR, G.R. No. 48231, June 30, 1947 (SC) and Oranbo Realty Corporation v. CIR, C.T.A. Case No. 4820, January 23, 1995 (CTA), without clarifying why the previous rulings are being revoked; it only said that the tax treatment requested by the taxpayer cannot be granted for lack of legal basis under the Tax Code.]
BIRRulingNo.039-02onliquidatingdividends,andtheBIRrulingscitedtherein,arereversedandsetaside.
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6 Tax Bulletin
BIR Ruling No. 504-2011 dated December 19, 2011
Facts:
ACo.isregisteredwithPEZAasanecozonedeveloper/operatorsubjectto5%preferentialtaxrateongrossincomeearned.ACo.enteredintoaContracttoSellwithBCo.,acompanynotregistered,norentitledtoberegistered,withthePEZA,whereACo.willselltoBCo.aparceloflandcoveredbyitsregistrationagreementwithPEZA.Theparceloflandisclassifiedascommercialandwillbeutilizedforcommercialpurposes.
Issue:
AretheprofitsfromthesaleoflandtoBCo.includedinthecomputationofgrossincomesubjectto5%preferentialtaxrate?
Ruling:
No.ThefiscalincentivesprovidedunderRANo.7916(PEZALaw)mustbereadinconjunctionwithitsimplementingrules.TheimplementingrulesstatethattheavailmentofincentivesshallcontinueforaslongastheregistrantremainsingoodstandingandcommitsnoviolationofthePEZALaworthetermsandconditionsofitsregistrationagreementwithPEZA.Atthetimeofthesaleoftheproperty,BCo.wasneitherPEZA-registerednorentitledtoberegisteredwithPEZA.Ithasalsonotbeenissuedapermittolocateinanecozone.EnteringintoacontractwithBCo.wasaviolationofACo.sregistrationagreement,whichstatesthatitmayonlyselllandtoentitieswhoareregisteredorareentitledtoberegisteredwiththePEZA,andwho,infact,subsequentlyregisterwiththePEZA,orentitiesthatareissuedpermitstolocatebythePEZA.Moreover,sinceBCo.willutilizetheareaforcommercialpurposes,thesaleofthelandmaynotbegrantedfiscalincentivessinceareasintheecozoneareintendedtobeusedforindustrialpurposesonly.
BIR Issuance
Revenue Memorandum Circular No. 3-2012 issued on January 12, 2012
Incomepaymentsmadetogeneralprofessionalpartnerships(GPPs)foritsprofessionalservicesarenotsubjecttoincometaxand,consequently,toWT.Itistheindividualpartnerswhoshallbesubjecttosuchtaxesintheirseparateandindividualcapacities.
Eachpartnershallreportasgrossincomehisdistributiveshare,actuallyorconstructivelyreceived,inthenetincomeofthepartnership.
IncomepaymentsmadeperiodicallyorattheendofthetaxableyearbyaGPPtothepartners,suchasdrawings,advances,allowancesandthelike,aresubjectto15%creditablewithholdingtax(CWT)ifthepaymentstothepartnerforthecurrentyearexceedP720,000whilepaymentsthatdonotexceedP720,000aresubjectto10%CWT.
Whenasaleoflandbyanecozonedeveloper/operatorviolatesthedeveloper/operatorsregistrationagreementwithPEZA,profitsfromsuchsalecannotbesubjectto5%preferentialtaxrate.
RMCNo.57-2011wasissuedtoclarifycertaintaxissuesinvolvingGPPs.
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7BOC Issuance
Customs Memorandum Order No. 1-2012 dated January 12, 2012
TocoordinatetheactivitiesoftheRunAfterSmugglers(RATS)Group,aSecretariatshallbeconstitutedasfollows:
1. CaseEvaluationTeam2. ProfilingTeam3. Prosecution/LitigationTeam
AsheadoftheRATS,theDeputyCommissionerforRevenueCollectionMonitoringGroup(RCMG)isdirectedtoimmediatelyformandorganizetheSecretariat.
AdditionalmembersortechnicalsupportstafffromotherBOCofficesshallbeassignedtotheRATSGroupuponrequestoftheDeputyCommissioner,RCMG,andtheapprovaloftheCommissionerofCustoms.
ThefunctionsoftheRATSGrouparethefollowing:
1. Investigate,profileandgatherevidenceagainstCustomspersonnel,importers,brokersandotherpersonssuspectedtobeinvolvedinsmugglingactivities;
2. Investigate,recommendtotheCommissioner,andinitiatethefilingwiththeDepartmentofJustice(DOJ)ofcriminalcasesagainstCustomspersonnel,importers,brokersandothersuspectedindividuals,andmonitortheprogressofsaidcases;
3. Developadatabaseforinformationrelatedtosmugglingactivities;
4. Researchandmonitorsmugglingactivitiesandestablishadatabaseofallshipmentsalerted,apprehended,abandoned,forfeitedandsoon;
5. Conducttrainingsdesignedtoenhancetheprogramscapacitytoeffectivelytarget,profile,evaluateandlitigatecasesagainsttradelawviolators;
6. Recommend,subjecttotheapprovaloftheCommissioner,internalrulesinbuilding,profiling,monitoringandinvestigatingsmugglingcasesandotherviolationsofcustomsandalliedlaws;
7. Recommendissuanceofordersasmaybenecessarytoeffectivelyperformthemandatedfunctions;
8. RecommendLettersofAuthorityorissueAlert/HoldOrdersagainstshipmentsorestablishmentssuspectedtobeinviolationoftheTariffandCustomsCodeofthePhilippines(TCCP)andotherrelatedlaws;and
9. Recommendtheconductofpost-entryauditofimporterssuspectedofengaginginsmugglingactivities.
CMONo.1-2012prescribesguidelinestostrengthentheRATSGroupandintensifytheBOCsanti-smugglingefforts.
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8 Tax Bulletin
UpontheeffectivityofCMONo.1-2012,allcasefolders,filesandrecordspertainingtotheoperationofRATSandprosecutionofcriminalcasesshallbeturnedovertotheRATSGroup.
Within48hoursafterapprehension,theapprehendingunitsshallfurnishtheHeadoftheRATSGroupcertifiedtruecopiesoftheApprehensionReports,otherpertinentdocumentsandpiecesofevidencerelatedthereto.
AllDistrictCollectorsandPortCollectorsshall,within48hoursfromtheissuanceofaWarrantofSeizureandDetention,furnishtheRATSGroupacertifiedcopyofthewarrantwiththerecommendationoftheapprehendingunit,ExaminationReport,OfficeronCaseReportandApprehensionReportandothersupportingdocuments,forimmediateprofiling,evaluationandinitiationofappropriatecases.
Allapprehendingandinvestigatingofficers,aswellasothercustomspersonnel,shallcooperatewiththedesignatedRATSpersonneland,ifrequired,executeanaffidavittosupporttheadministrativeorcriminalcasestobefiledwiththepropercourts,tribunalsoradministrativebodies.
PursuanttoSection3503oftheTCCP,asamended,theDeputyCommissioner,asHeadoftheRATSGroup,isauthorizedtoissueasubpoenaduces tecumand/orad testificandumtosecuretheproductionofwitnesses,recordsanddocumentsnecessaryfortheinvestigationandprosecutionofcases.
FailurebyresponsiblecustomsofficialsorpersonneltopromptlycomplywithanyofthedirectivesstatedinCMONo.1-2012shallbedealtwithinaccordancewithSection3604oftheTCCP,asamendedandcivilservicerulesandregulations.
Allorders,rulesandregulationsinconsistentwithCMONo.1-2012arerepealed,supersededandmodifiedaccordingly.
CMONo.1-2012shalltakeeffectimmediately.
BSP Issuance
BSP Circular No. 745 dated 10 January 2012
Subsection4306Q.5oftheManualofRegulationsforNon-BankFinancialInstitutions(MORNBFI)onthewrite-offofloans,othercreditaccommodations,advancesandotherassetsisamendedtoread,asfollows:
Subsection4306Q.5(20084308Q.5)Write-offofloans,othercreditaccommodations,advancesandotherassetsasbaddebts
a. xxx
b. xxx
c. Reporting requirements.Noticeofwrite-offofloans,othercreditaccommodations,advancesandotherassetsshallbesubmittedintheprescribedformtotheappropriatedepartmentoftheSESconcernedwithin30businessdaysaftereverywrite-offwith(i)asworn
CircularNo.745prescribesthereportingrequirementsonthewrite-offofloans,othercreditaccommodations,advancesandotherassets.
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9statementsignedbythePresidentoftheQB,orofficerofequivalentrank,statingthatthewrite-offdidnotincludetransactionswithDOSRI,and(ii)acopyoftheBoardResolutionapprovingthewrite-off.
xxx
d. Verification of write-offs.Write-offsofloans,othercreditaccommodations,advancesandotherassetsshallbesubjecttoverificationduringexamination.
AppendixQ-3oftheMORNBFIonthelistofreportsrequiredofQBsisamendedtorevisethedeadlineforthesubmissionoftheNotice/ApplicationforWrite-offofLoans,OtherCreditAccommodations,AdvancesandOtherAssetstowithin30businessdaysaftereverywrite-off.
SubsectionX306.5oftheManualofRegulationsforBanks(MORB)isamendedtoread,asfollows:
SubsectionX306.5Write-offofloans,othercreditaccommodations,advancesandotherassetsasbaddebts
a. xxx
b. xxx
c. Reporting requirements.Noticeofwrite-offofloans,othercreditaccommodations,advancesandotherassetsshallbesubmittedintheprescribedformtotheappropriatedepartmentoftheSESconcernedwithin30bankingdaysaftereverywrite-offwith(i)aswornstatementsignedbythePresidentofthebank,orofficerofequivalentrank,statingthatthewrite-offdidnotincludetransactionswithDOSRI,and(ii)acopyoftheBoardResolutionapprovingthewrite-off.
xxx.
Appendix6oftheMORBonthelistofreportsrequiredofbanksisamendedtorevisethedeadlineonthesubmissionoftheNotice/ApplicationforWrite-offofLoans,OtherCreditAccommodations,AdvancesandOtherAssetstowithin30bankingdaysaftereverywrite-off.
ThisCircularshalltakeeffect15calendardaysfollowingitspublicationeitherintheOfficialGazetteorinanewspaperofgeneralcirculation.
[Editors Note: Circular No. 745 was published in the BusinessMirror on January 13-14, 2012.]
SEC Issuances
SEC Memorandum Circular No. 9 dated December 5, 2011
PursuanttotheauthorityoftheSECunderSection72inrelationtoSection38oftheSecuritiesRegulationCode(SRC),andtoenhancetheeffectivenessofindependentdirectorsandtoencouragetheinfusionoffreshideasintheboardsofdirectors,theSECpromulgatesthefollowingrulesontheelectionofindependentdirectorsinlisted,publicandmutualfundcompanies:
SECMCNo.9prescribestherulesontheelectionofindependentdirectorsinlisted,publicandmutualfundcompanies.
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10 Tax Bulletin
1. ThereshallbenolimitinthenumberofcoveredcompaniesthatapersonmaybeelectedasIndependentDirector(ID),exceptinbusinessconglomerateswhereanIDcanbeelectedtoonly5companiesoftheconglomerate,i.e.,parentcompany,subsidiary,affiliate.
2. IDscanservefor5consecutiveyears,providedthatserviceforaperiodofatleast6monthsshallbeequivalentto1year,regardlessofthemannerbywhichtheIDpositionwasrelinquishedorterminated.
3. Aftercompletionofthe5-yearserviceperiod,anIDshallbeineligibleforelectioninthesamecompanyunlesstheIDhasundergoneacoolingoffperiodof2years,providedthatduringsuchperiod,theIDconcernedhasnotengagedinanyactivitythatunderexistingrulesdisqualifiesapersonfrombeingelectedasIDinthesamecompany.
4. AnIDre-electedinthesamecompanyafterthecoolingoffperiodcanserveforanother5consecutiveyearsundertheconditionsmentionedinparagraph2above.
5. AfterservingasIDfor10years,theIDshallbeperpetuallybarredfrombeingelectedinthesamecompany,withoutprejudicetobeingelectedasIDinothercompaniesoutsideofthebusinessconglomerate,whereapplicable,underthesameconditionsprovidedforinthisCircular.
6. TheforegoingrulesshalltakeeffectonJanuary2,2012.AllprevioustermsservedbyexistingIDsshallnotbeincludedintheapplicationofthetermlimitssubjectofthisCircular.
7. AllpastresolutionsorcircularsoftheSECthatareinconsistentwiththisCircularshallbedeemedrepealedormodifiedaccordingly.
[Editors Note: SEC MC No. 9 was published in the ManilaBulletin on December 15, 2011.]
SEC Opinion No. 11-46 dated November 11, 2011
Facts:
CCo.isadomesticcorporationwhoseprimarypurposeasstatedinitsArticlesofIncorporation(AOI)isasfollows:
Topromote,establish,operate,manage,hold,ownorinvestincorporationsorentitiesthatareengagedinminingactivitiesormining-relatedactivities,inpowerandenergyactivitiesorpowerandenergyrelatedactivitiesandrealestatebusinessorassistorparticipateintheorganization,mergerorconsolidationthereofandinconnectionwithsuchactivitiestosubscribe,topurchase,orotherwiseacquire,sharesofstockorotherevidenceofequityparticipationinanysuchbusinessorenterpriseortopurchaseorotherwiseacquireallorpartoftheassets,franchise,concession,licensesorgoodwillofsaidfirmorestablishmentandassumeorotherwiseprovideforthesettlementofitsobligationandliabilities.
Issue:
CanCCo.engageinminingactivitiesbyitselfunderitsprimarypurposeasstatedinitsAOI?
AholdingcompanycannotengageinminingactivitiesunlessspecifiedinitsAOI.
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Ruling:
No.CCo.sAOIdoesnotspecificallystatethatitshallengageinthebusinessofminingbyitself,butmerelypromote,establish,operate,manage,hold,ownorinvestincorporationsorentitiesthatareengagedinminingactivitiesormining-relatedactivities.Thephrasetopromote,establish,operate,manage,hold,ownorinvestincorporationsorentitiestakenasawhole,stronglyshowsthattheprimarypurposeistoengageinholdinginterestsinthesaidcompanies.Thisisreinforcedbythestatementthatitcanassistorparticipateintheorganization,merger,orconsolidationofthesecompanies,andthat,inconnectionwithsuchactivities,itisauthorizedtosubscribe,topurchase,orotherwiseacquiresharesofstockorotherevidenceofequityparticipationinanysuchbusinessorenterpriseortopurchaseorotherwiseacquireallorpartoftheassets,franchise,concession,licensesorgoodwillofsaidfirmorestablishmentandassumeorotherwiseprovideforthesettlementofitsobligationandliabilities.Theuseofthewordsmanageandoperateisnotinconsistentwiththeideaofaholdingcompany.
Moreover,CCo.snamereferstoitsprimarypurpose,whichisthatofaholdingcompany.Inaddition,itsAOIdoesnotstateanysecondarypurposeforwhichitmayalsobeclassified.InasmuchasCCo.sAOIdoesnotstatethatitshallengageinminingactivities,itisthusamereholdingcompanyofcorporationsorentitiesthatareengagedinminingactivitiesormining-relatedactivities,inpowerandenergyactivitiesorpowerandenergyrelatedactivitiesandrealestatebusiness.Therefore,CCo.cannotengageinminingactivitiesbyitself.
SEC-OGC Opinion No. 11-47 dated November 25, 2011
Facts:
PFoundationisadomesticfoundationthatreceivedfundsfromaforeignfoundationfortheconstructionofamemorial.ItwasarrangedthatthefundswillbedonatedtoPfoundation,whowillthendonatethemtoDCommitteeandPAcademysincebotharegovernmentinstitutions.UndertheprimarypurposeinitsAOI,PFoundationcanengageinthefollowingactivities:
xxx
e)AssistinginstrengtheningthexxxotherfacilitiesofthePAcademy.
Inthefurtheranceoftheaforesaidpurposeandactivities,andnotinlimitationofthepowersgrantedbythelawsofthePhilippines,thefoundationshallhavethepowers:
a) Tosolicitand/oracceptanydonation,contribution,gift,endowment,bequest,legacyorinheritance,oranyotherassetsfromanysourcewhatsoever,andtomakeuseordisposeofthemasmaybenecessarytocarryoutthepurposeandactivitiesoftheFoundation;
xxx
PFoundationsby-lawsprovidethatFundsoftheFoundationshallcomefromdonations,contributions,gifts,bequests,legacies,endowments,loans,investmentincomeandproceedsfromfunddrives.
AfoundationcanreceiveandtransferdonationsfromforeignsourcesasprovidedinitsAOI.
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12 Tax Bulletin
Issues:
1. CanPFoundationreceivedonationsfromaforeignsource?
2. CanPFoundationtransferthedonationsfromaforeignsourcetoDCommitteeortoPAcademy?
Ruling:
1. Yes.PFoundationsAOIandby-lawsprovidethatitcanreceivedonationsfromaforeignsource.
2. Yes.PFoundationsAOIprovidesthatithasthepowertomakeuseordisposeofdonationsacceptedasmaybenecessarytocarryoutitspurposeandactivities.Consideringthatthefundsdonatedwillbeusedinbuildingamemorial,suchdonationfurthersitsobjectiveofassistinginthescholasticprogressandstrengtheningofPAcademysfacilities.However,whetherDCommitteeandPAcademy,whoarebothgovernmentagencies,havethepowertoreceivesuchdonationsisamatterwithintheirownjurisdictionanddiscretion.TheSECcanonlyinterpretthelawsandrulesitenforcesandimplements.
SEC-OGC Opinion No. 11-48 dated December 2, 2011
Facts:PCo.isadomesticcorporation.Thepresentmembersoftheboardofdirectorswereelectedtotheirpositionsin2000andhavecontinuedtodischargetheirfunctionsandresponsibilitieswithoutre-election,intheabsenceoftheirsuccessorshavingbeenelectedorqualified.TheBy-LawsofPCo.provideforthere-electionofitsofficersanddirectorsfornotmorethantwosuccessiveterms.
Issue:
ArethemembersoftheboardofdirectorsofPCo.qualifiedtorunforre-election?
Ruling:
Yes.UndertheCorporationCode,whileadirectorstermisfixed,thetenureofadirectorsurvivesuntilasuccessorisdulyelectedandqualified.Termisthetimeduringwhichtheofficermayclaimtoholdtheofficeasofright,andfixestheintervalafterwhichtheseveralincumbentsshallsucceedoneanother.Tenurerepresentsthetimeduringwhichtheincumbentactuallyholdsoffice.
UnderSection23oftheCorporationCode,theboardofdirectorsshallholdofficeforoneyearuntiltheirsuccessorsareelectedandqualified.Thismeansthatthetermofthemembersoftheboardshallbeforonlyoneyear;theirtermexpiresoneyearaftertheirelectiontotheoffice.TheholdoverperiodthetimefromthelapseofoneyearfromamemberselectiontotheBoardanduntilhissuccessorselectionandqualificationisnotpartofthedirectorsoriginalterm,norisitanewterm.Theholdoverperiodconstitutespartofhistenure.
Basedontheforegoing,theincumbentdirectorsofPCo.arequalifiedtorunforre-electionprovidedthatthetermwhichtheycurrentlyholdisnotbyvirtueofasecondconsecutivere-electionpursuanttoitsBy-Laws.
Adirectorstermisfixedwhilehistenuresurvivesuntilasuccessorisdulyelectedandqualified.TheholdoverperiodthetimefromthelapseofoneyearfromamemberselectiontotheBoardanduntilhissuccessorselectionandqualificationisnotpartofthedirectorsoriginalterm,norisitanewtermbutconstitutespartofhistenure.
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Aninvestmentcontractisasecurity,whichissubjecttoregulationbyandregistrationwiththeSEC,consistingofthefollowingelements:(1)aninvestmentofmoney;(2)inacommonenterprise;(3)withexpectationofprofits;and(4)primarilyfromeffortsofothers.
SEC-OGC Opinion No. 11-49 dated December 21, 2011
Facts:TCo.isadomesticcorporation.ItistheassigneeofalltherightsandobligationsofRCo.forthedevelopment,operationandmanagementof65.5hectaresofleasedland.UndertheAgreement,aportionoftheleasedpropertyisdesignatedandutilizedforthedevelopmentofarealestateprojectwhereTCo.willassignitsleaseholdrightsoversubdividedandindividuallotstointerestedassignees.TCo.isnowcontemplatingonexpandingtherealestatecomponentoftheAgreementtoincludetheconstructionanddevelopmentofacondominium-hotel(condotel)project.Underthecondotelproject,TCo.willbuildcondotelunitsandassignbothitsleaseholdrightsoverthelotsandtheunitstointerestedassigneesforvaluableconsideration.Thecondotelunitswillbeenrolledbytheassigneesinthepoolofunitstoberentedoutashotelrooms.ThecondotelprojectwillbemanagedbyTCo.oritsauthorizedoperator.
Issue:
IsthecondotelprojectofTCo.consideredaninvestmentcontractandthereforeasaleofsecuritiesundertheSecuritiesRegulationCode(SRC)?
Ruling:
Yes.TheSRCdefinessecuritiestoincludeinvestmentscontracts,certificatesofinterestorparticipationinprofit-sharingagreements.UndertheSRC,theterminvestmentcontractmeansacontract,transaction,orschemewhereapersoninvestshismoneyinacommonenterpriseandisledtoexpectprofitsprimarilyfromtheeffortsofothers.Thus,aninvestmentcontractconsistsofthefollowingelements:(1)aninvestmentofmoney;(2)inacommonenterprise;(3)withexpectationofprofits;and(4)primarilyfromeffortsofothers.
Anagreementinwhichabuyerpurchasesincome-producingpropertyandauthorizesthesellertomanagethepropertyandtoremitthenetprofitstothebuyerisconsideredaninvestmentcontract.Itisunimportantthatthepurchaseorleaseagreementmaybeseparatefromthemanagementcontractsincebothagreementswillbeconsideredaspartofanoverallschemetopoolfundsofanumberofindividualsinacommonventuremanagedbypersonsotherthantheinvestorsorbuyers.
Basedontheforegoing,TCo.scondotelprojectisaninvestmentcontractbecauseitinvolves(1)aninvestmentoffunds,whichinthiscaseisthevaluableconsiderationfortheassignmentofthecondotelunitsandthelot;(2)acommonenterpriseorprofit-makingventure,whichistheleasetothepublicanditscommonareastobemanagedbyTCo.oritsauthorizedoperator;(3)withexpectationofprofit,whichisrevenuetobegeneratedontheleaseofthecondotelunits;and(4)primarilyfromtheeffortsofothers,whichisapparentintheservicestobeofferedbyTCo.oritsauthorizedoperatorpursuanttothemanagementcontract.
Hence,sinceTCo.scondotelprojectisaninvestmentcontract,itisasecuritysubjecttoregulationbyandregistrationwiththeSEC.
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14 Tax Bulletin
Court Decisions
Bureau of Customs Employees Association (BOCEA) vs. Hon. Margarito B. Teves, et. al.SupremeCourt(En Banc)G.R.No.181704promulgatedDecember6,2011
Facts:
RANo.9335,otherwiseknownastheAttritionActof2005,tookeffectonFebruary11,2005,whileitsimplementingrulesandregulations(IRR)becameeffectiveinJune2006.
Enactedtooptimizetherevenue-generationcapabilityandcollectionoftheBIRandtheBOC,thelawintendstoencourageBIRandBOCofficialsandemployeestoexceedtheirrevenuetargetsbyprovidingasystemofrewardsandsanctions,throughthecreationofaRewardsandIncentivesFund(Fund)andaRevenuePerformanceEvaluationBoard(Board).ItcoversallBIRandBOCofficialsandemployeeswithatleast6monthsofservice,regardlessofemploymentstatus.
EachBoardintheBIRandtheBOChasthedutyto:
(1) Prescribetherulesandguidelinesfortheallocation,distributionandreleaseoftheFund;
(2) Setcriteriaandproceduresforremovingfromtheserviceofficialsandemployeeswhoserevenuecollectionfallsshortofthetarget;
(3) TerminatepersonnelinaccordancewiththecriteriaadoptedbytheBoard;(4) Prescribeasystemforperformanceevaluation;(5) Performotherfunctions,includingtheissuanceofrulesandregulations;and(6) SubmitanannualreporttoCongress.
InitspetitionwiththeSupremeCourt,petitionerBureauofCustomsEmployeesAssociation(BOCEA),anassociationofrank-and-fileemployeesoftheBOC,arguesthatthelawisunconstitutional.
IntheearliercaseofAbakada Guro Party List vs. Purisima (G.R. No. 166715, promulgated on August 14, 2008),whichsimilarlyinvolvedtheconstitutionalityofRANo.9335,Section12ofthelawcreatingaJointCongressionalOversightCommitteetoapprovetheIRRwasdeclaredunconstitutionalandviolativeoftheprincipleofseparationofpowers.However,theconstitutionalityoftheremainingprovisionsofthelawwasupheld.[ThepartiesfailedtohavethepresentcaseconsolidatedwiththeAbakadacaseinatimelymanner.]
BOCEAarguesthatRANo.9335anditsIRRareunconstitutionalbecause:
(1) ThereisunduedelegationoflegislativepowertotheBoard;(2) ThelawanditsIRRviolatetherightsofBOCEAsmemberstoequalprotection
ofthelaws,securityoftenureanddueprocess;and(3) Thelawisabillofattainder(i.e.,alegislativeactwhichinflictspunishmenton
individualsormembersofaparticulargroupwithoutajudicialtrial).
Issues:
1. IsthereunduedelegationoflegislativepowertotheBoard?
2. DothelawanditsIRRviolatetherightsofBOCEAsmemberstoequalprotectionofthelaws,securityoftenureanddueprocess?
3. IsRANo.9335abillofattainder?
TheAttritionActof2005anditsIRRareconstitutional.
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Ruling:
1. No.Anexceptiontotheprincipleofnon-delegationofpowersisthedelegationoflegislativepowertovariousspecializedadministrativeagenciesliketheBoardsinthiscase.
Thetwoteststodeterminethevalidityofthedelegationoflegislativepower,i.e.,thecompletenesstestandthesufficientstandardtest,werefullysatisfied.
ThelawsetsforththepolicyandthestandardstoguidethePresidentinfixingrevenuetargetsandtheimplementingagenciesincarryingouttheprovisionsofthelaw.RANo.9335clearlyprovidesthepolicyofoptimizingtherevenue-generationcapabilityandcollectionoftheBIRandtheBOCbyprovidingforasystemofrewardsandsanctionsthroughthecreationofaRewardsandIncentivesFundandaRevenuePerformanceEvaluationBoardineachagencyforthepurposeofencouragingtheirofficialsandemployeestoexceedtheirrevenuetargets.
ThedeterminationoftherevenuetargetsdoesnotrestsolelyonthePresidentasitundergoesscrutinybytheDevelopmentBudgetandCoordinatingCommittee.
Moreover,thelawlimitstheBoardsauthorityandidentifiestheconditionsunderwhichofficialsandemployeeswhoserevenuecollectionfallsshortofthetargetbyatleast7.5%mayberemovedfromservice.
2. No,thelawanditsIRRdonotviolatetherightsofBOCEAsmemberstoequalprotectionofthelaws,securityoftenureanddueprocess.
Onthematterofequalprotection,sincethesubjectofthelawistherevenue-generationcapabilityandcollectionoftheBIRandtheBOC,agencieswhichhavethedistinctprimaryfunctionofgeneratingrevenuesforthegovernment,theincentivesand/orsanctionsprovidedunderthelawpertainonlytothesaidagencies.
Ontheguaranteeofsecurityoftenure,anemployeecannotbedismissedfromtheserviceforcausesotherthanthoseprovidedbylawandonlyafterdueprocessisaccordedtheemployee.RANo.9335laysdownareasonableyardstickforremoval(whentherevenuecollectionfallsshortofthetargetbyatleast7.5%)withdueconsiderationforallrelevantfactorsaffectingthelevelofcollection.Thisstandardisanalogoustoinefficiencyandincompetenceintheperformanceofofficialduties,whichisagroundfordisciplinaryactionundercivilservicelaws.Theactionforremovalisalsosubjecttocivilservicelaws,rulesandregulationsandcompliancewithsubstantiveandproceduraldueprocess.
Ondueprocess,thissimplymeansanopportunitytobeheardor,asappliedtoadministrativeproceedings,afairandreasonableopportunitytoexplainonesside.ThelawdoesnotsimplygivetheconcernedBIRorBOCofficialoremployeeatargetrevenuecollectionbutalsoprovidesfortheconsiderationofallrelevantfactorsthatmayaffectthelevelofcollection.Exemptionsfromthetargetwerealsoset.Andtheemployeeretainshisrightstobeheardandtoappeal.
3. No,thelawisnotabillofattainder.Instead,thelawmerelylaysdownthegroundsfortheterminationofaBIRorBOCofficialoremployeeandprovidesfortheconsequences.Thedemocraticprocessesarestillfollowedandtheconstitutionalrightsoftheconcernedemployeeareamplyprotected.
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16 Tax Bulletin
Thedateonwhichthecourtactuallyreceivedthepleadingsdeliveredthroughaprivateletter-forwardingagencyisconsideredthedateoffilingincourt,notthedateofdeliverytotheagency.
Philippine National Bank vs. Commissioner of Internal RevenueSupremeCourt(FirstDivision)G.R.172458promulgatedDecember14,2011
Facts:
ThePhilippineNationalBank(PNB)filedwiththeCommissionerofInternalRevenue(CIR)aclaimforrefundofoverpaidincometaxforcalendaryear1998.WhentheBIRdidnotactontheclaim,PNBfiledaPetitionforReviewwiththeCourtofTaxAppeals(CTA).
TheCTADivisionpartiallygrantedtheclaimandPetitionerPNBmovedforareconsiderationtotheextentofthedenial.AftertheCTADivisionaffirmeditsdecision,PNBappealedtotheCTAEn Banc,whichdeniedtheappealforhavingbeenfiled4daysbeyondtheadditional15daysgrantedtoPNBtofileitspetition.Moreover,indismissingthecase,theCTAEn BancruledthatPNBfailedtoattachtothepetitiontheduplicateoriginalsorcertifiedtruecopiesoftheassailedCTADivisionDecisionsandanAffidavitofService.
PNBarguedthatthepetitionwasfiledinatimelymanner,viaLBCExpress,onthelastdayoftheadditional15-dayperiodgrantedbyCTAEn Banc.Onitsnon-compliancewiththeotherrulesofprocedure,PNBclaimedthatthesewereduetoinadvertenceandoversight.
Issue:
Isthedateofdeliveryofapleadingtoaprivateletter-forwardingagencyconsideredthedateoffilingwiththecourt?
Ruling:
No.Whatconstitutesthedateoffilingofapleadingisthedateofactualreceiptbythecourt.
Therulesprovidethatapleadingshallbefiledbypresentingtheoriginalcopypersonallytotheclerkofcourtorbysendingitthroughregisteredmail.Servicebyordinarymailisallowedonlyininstanceswherenoregistryserviceexists.
Moreover,attachingtoaPetitionforReviewtheduplicateoriginalorcertifiedtruecopyoftheassaileddecisionismandatory,andnon-complianceisasufficientgroundtodismissthepetition.
AlthoughthefailuretoattachtherequiredAffidavitofServiceisnotfataliftheregistryreceiptattachedtothepetitionclearlyshowsservicetotheotherparty,thiswasnottheonlyruleofprocedurewhichPNBfailedtosatisfy.Rulesofproceduremustbefaithfullyfollowedexceptonlywhen,forpersuasivereasons,thesemayberelaxedtorelievealitigantofaninjusticecommensuratewithhisfailuretocomplywiththeprescribedprocedure.Thepartyinvokingliberalityontheapplicationoftherulesmustadequatelyexplainhisfailuretoabidebytherules.
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Laurence Lee V. Luang vs. Commissioner of Internal RevenueCourtofTaxAppeals(SecondDivision)CaseNo.7967promulgatedJanuary5,2012
Facts:
RespondentCIRissuedaLetterNoticedatedApril30,2007toPetitionerLaurenceLeeV.Luang(Mr.Luang)asaresultofacomputerizedmatchingofinformationwhichdisclosedthatMr.Luangallegedlyunder-declaredhispurchasesfortaxableyear2005.
OnNovember5,2008,Mr.LuangreceivedaFormalLetterofDemandandaFinalAssessmentNotice(FAN)forallegeddeficiencyvalue-addedtax(VAT)andincometaxfortaxableyear2005.OnDecember5,2008,Mr.LuangprotestedtheFAN.SincetheCIRfailedtoactontheprotest,Mr.LuangfiledonAugust28,2009aPetitionforReviewwiththeCTA.
Mr.LuangarguedthattheassessmentisvoidsincehedidnotreceiveaPreliminaryAssessmentNotice(PAN)asprescribedunderRevenueRegulations(RR)No.12-99.Ontheotherhand,theCIRassertedthattheabsenceofaPANdidnotinvalidatetheassessmentsinceMr.LuangwasabletofilehisprotesttotheFANwithintheperiodprovidedbylawandregulations.
Issue:
DidtheabsenceofaPANinvalidatetheassessment?
Ruling:
Yes.ThereceiptbythetaxpayerofaPANispartofthedueprocessrequirementintheissuanceofadeficiencytaxassessment,theabsenceofwhichnullifiesanyassessmentmadebytaxauthorities.
Section228oftheTaxCoderequiresthatthetaxpayermustfirstbeinformedthatheisliablefordeficiencytaxesthroughthesendingofaPAN.RevenueMemorandumOrderNo.42-2003,whichprescribestheguidelinesforassessmentscoveredbyLetterNotice,alsoprovidesthataPANandFANshallbeissuedfollowingtheprocedureunderRRNo.12-99.UnderRRNo.12-99,ifafterreviewandevaluation,itisdeterminedthatthereexistssufficientbasistoassessdeficiencytaxes,aPANshallbeissuedtothetaxpayershowingindetail,thefactsandthelaw,rulesandregulations,orjurisprudenceonwhichtheproposedassessmentsarebased.FailuretostrictlycomplywithnoticerequirementsprescribedunderSection228oftheTaxCodeandRRNo.12-99istantamounttoadenialofdueprocess.
AlthoughacopyofanundatedPANwaspresentedduringtrial,theCIRdidnotpresentclearevidencerebuttingMr.LuangscategoricaldenialthathereceivedthesaidPANeitherpersonallyorbyregisteredmail.TheCIRthereforefailedtoobservedueprocessinissuingtheassessment.
TheabsenceofaPANdulyreceivedbyataxpayernullifiesanydeficiencytaxassessmentissuedbytheBIR.
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18 Tax Bulletin
Union Cement Corporation vs. Commissioner of Internal RevenueCourtofTaxAppeals(SecondDivision)CaseNo.6842promulgatedJanuary18,2012
Facts:
OnMarch28,2003,PetitionerUnionCementCorporation(UCC)receivedaPANfromRespondentCIRforallegeddeficiencyincometaxandVATforthetaxableperiodJune1999toApril22,2000.OnApril14,2003,UCCprotestedthePANandexecutedawaiverofthedefenseofprescriptionunderthestatuteoflimitations,extendingtheassessmentperioduntilJune30,2003.
OnJune30,2003,UCCreceivedaFormalLetterofDemandfromtheCIRforallegeddeficiencyincometaxforthetaxableperiodJunetoDecember31,1999.OnJuly10,2003,UCCprotestedthesaidassessment.OnDecember4,2003,theCIRissuedaFinalDecisiononDisputedAssessmentdenyingUCCsprotest.
OnDecember30,2003,UCCfiledaPetitionforReviewwiththeCTAandargued,amongothers,thattheassessmentwasissuedbeyondtheprescriptiveperiodasthewaiverisdefective.Ontheotherhand,theCIRarguedthatthewaiverisvalidandfurtherassertedthatUCCisbarredfromquestioningthevalidityofthewaiversincethesamewasraisedforthefirsttimeonappeal.
Issues:
1. IsUCCbarredfromcontestingonappealthevalidityofthewaiver?
2. Wasthewaivervalid?
Ruling:
1. No.UCCcanquestionthevalidityofthewaiverforthefirsttimeonappealattheCTA.TheCTAmayresolvetheissueofprescriptioneveniftheissuewasnotraisedintheadministrativeprotestfiledbyUCC.
TheCTAcitedrulingsoftheSupremeCourtwhichheldthattheCourtisauthorizedtoentertainissuesormattersnotraisedinthelowercourtsintheinterestofsubstantialjustice.Moreover,theCTAisacourtofrecordthatisrequiredtoconductaformaltrialwherethepartiesmustpresenttheirevidenceforconsideration.TheCIRhadtheopportunitytopresentevidencetoprovevalidityofthewaiver.
2. No,thewaiverisdefectiveandthereforedidnottollthe3-yearprescriptiveperiodfortheBIRtoissueanassessment.Thewaiverfailedtocomplywiththerequisitesprescribedforitsvalidityasthefollowingdefectswerenotedinitsexecution:
a. ThewaiverwassignedbyMs.FlorMercadoforthenAssistantCommissioneroftheBIRLargeTaxpayersService,Atty.EdwinR.Abella;
Ataxpayermay,onappealtotheCTA,questionthevalidityofawaivereveniftheissuewasnotraisedinitsprotestattheBIR.
Tobevalid,awaiverofthedefenseofprescriptionmust(a)besignedbyanauthorizedofficial,(b)indicatereceiptbythetaxpayerontheoriginalcopy,and(c)indicatethespecifickindandamountoftaxdue.
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b. Theoriginalcopyofthewaiverdoesnotindicatethefactofreceiptbythetaxpayer;and
c. Thewaiverfailedtoindicatethespecifickindoftaxandtheamountoftaxdue.
RevenueDelegationAuthorityOrder(RDAO)No.05-01authorizescertainofficialstosignandacceptawaiver.TheCIR,however,failedtoprovethatMs.MercadowasauthorizedtosignthewaiverexecutedbyUCC.
RMONo.20-90specificallyprovidesthatreceiptbythetaxpayerofhisfilecopymustbeindicatedintheoriginalcopyofthewaiver.TheCIRdidnotpresentevidencetoshowUCCsreceiptofthesignedwaiver.Thepurposeofthisrequirementistonotifytaxpayersoftheexistenceofthedocument,theacceptancebytheBIR,aswellastheperfectionoftheagreement.
Thewaiveralsofailedtostatethespecifickindoftaxandtheamountofthetaxdue.Thepurposeofstatingthespecifickindoftaxandtheamountoftaxdueisforthetaxpayertopinpointwhichamongtheproposedtaxassessmentsmaysubsequentlybeissuedwithouthiminvokingthedefenseofprescription.RMONo.20-90requiresspecificinformationwhichcannotbesubstitutedwithgeneralstatements.
Lastly,theBIRcannothidebehindtheDoctrineofEstoppeltocoveritsfailuretocomplywithRMONo.20-90andRDAONo.05-01.Havingcausedthedefectsinthewaiver,theBIRmustbeartheconsequences.
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20 Tax Bulletin
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