1Tax Bulletin January 2012

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

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.

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.

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.

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.

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.

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.

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.

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.

11

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.

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.

13

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.

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.

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.

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.

20 Tax Bulletin

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