PLDT's Books of Accounts and Records Should Be Submitted for Examination and Inspection by Internal Revenue Officers

March 21, 1985 BIR RULING NO. 044-85 324 000-00 044-85 Gentlemen : This refers to your letter dated November 21, 1984 in behalf of your client, Philippine Long Distance Telephone Company (PLDT), informing this Office that you cannot accede to our request that PLDT's books of accounts and accounting records be examined under BIR Letter of Authority No. 0002436 NA dated November 6, 1984. Your position is based on the fact that PLDT is exempt from all internal revenue taxes except the 2% franchise tax under its franchise (Act No. 3436). In reply, I have the honor to inform you that the position taken by you has no legal basis. Section 324 of the Tax Code mandates the examination and inspection by internal revenue officers of all books of accounts of taxpayers who are not only directly liable for the payment of internal revenue taxes but are also liable for the payment of taxes legally due from other taxpayers. The latter arises when the taxpayer is required by law to pay the tax as a withholding agent. Under Section 324 of the Tax Code, books of accounts and records of a particular taxpayer may now be examined for "verification of compliance with withholding tax laws and regulations." Under the "in lieu of all taxes" provisions of its franchise, PLDT is exempt only from taxes for which it is directly liable on said franchise or earnings thereof. In other words, PLDT is not exempt from taxes that are not connected with the franchise or earnings thereof. In view thereof, this Office is of the opinion, and so holds, that PLDT's books of accounts and records should be submitted for examination and inspection by internal revenue officers in accordance with Section 324 of the Tax Code. cdta Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner