BIR Ruling No. 129-65

December 3, 1965 BIR RULING NO. 129-65 Mr. Raul C. Javier 83 Evangelista St. Bo. Tejeros, Makati Rizal S i r : This refers to your letter stating the following: prcd "A non-resident alien has an attorney-in-fact in the Philippines, a resident legal representative to act in his stead and such fact is made known to the withholding agent. A notice of the intention of the said Atty.-in-fact to file the income tax return of the non-resident alien and to claim personal exemptions as provided for in Sec. 23(e) of the NIRC, was served the said withholding agent. Now the question is: Will this notice of the intention of the Atty.-in-fact, as stated above, be sufficient ground for the withholding agent not to withhold the corresponding tax due on the capital gains realized from the proceeds of sales of said non-resident alien? "Since the proceeds of the sales is not remitted to the non-resident alien abroad but to his legal representative here, he claims that the withholding agent is not justified in withholding said capital gains tax due from the proceeds of his sales. "Is the contention here of the non-resident alien right? In case the withholding agent pays the whole proceeds of sales to the legal representative, without deducting the tax due on the capital gains, upon representation by said Atty-in-fact that he will file the tax return for and in behalf of said non-resident alien, what protection is there on the part of the withholding agent if and when the attorney-in-fact fails to file a return or if and when the attorney-in-fact later on remits the whole proceeds of sales to the non-resident alien without deducting the corresponding tax due? "How may the withholding agent protect himself against penalty from non-withholding of tax in the above cases mentioned?" The Income Tax Law and Regulations contain no provision authorizing the legal representative or attorney-in-fact of a non-resident alien individual not engaged in trade or business within the Philippines and not having any office or place of business therein but acquiring income from sources within the Philippines to file the income tax return in behalf of said non-resident alien and pay the tax in accordance with Section 54 in relation to Section 53 of the Tax Code. In fact Section 53(b) of the Tax Code, as amended, provides that all persons, corporations and general copartnerships (compaias colectivas), in whatever capacity acting . . . having control, receipt, custody, disposal, or payment of interest, dividends, rents, salaries, wages, premiums, annuities, compensation, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits and income of any non-resident alien individual, not engaged in trade or business within the Philippines and not having any office or place of business therein, shall . . . "deduct and withhold from such annual or periodical gains, profits, and income a tax equal to twenty per centum thereof . . . ." For this reason, Section 53(c) of the same Code, as amplified by Section 203 of the Income Tax Regulations, authorizes every person required to deduct and withhold any tax from income to make an annual return thereon, in duplicate, on B.I.R. Form No. 17.43 on or before the fifteenth day of April of each year for each non-resident alien individual not engaged in trade or business within the Philippines and not having any office or place of business therein, to whom income was paid during the previous taxable year. Moreover, the same section of the Code provides that the entire amount of the income from which the tax was withheld shall be included in gross income without deduction for such payment of the tax. The fact that the proceeds of the sales are not remitted to the non-resident alien abroad but to his legal representative here will not in any way make the latter the 'withholding agent' as defined by our Internal Revenue Code. prcd Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue