Tax Liability of the Philippine Packing Corporation

March 25, 1958 BIR RULING NO. 206-58 Messrs. Meer, Meer & Meer Attorneys-at-Law Suite 302-306 Singson Bldg. Plaza Moraga, Manila Gentlemen : In reply to the queries propounded in your letter of February 6, 1958, I have the honor to inform you as follows: LLphil I A If as stated by you, the California Packing Corporation, a non-resident foreign corporation, had designated a fiscal year consistently ending on the last day of February, it may continue filing its income tax return on such fiscal year basis in which case the return should be filed on or before April 29 (not April 30 as claimed in your letter), in accordance with Sections 46(b) and (d) of the Tax Code. B The California Packing Corporation, as a corporation whose fiscal year ends on the last day of February may elect to pay the income tax due from it in two equal installments in which case the first installment shall be paid on or before the fifteenth day of the fifth month following the close of its fiscal year, i.e. on or before July 15, and the second installment, on or before the fifteenth day of the eighth month, i.e. on or before October 15, pursuant to the provisions of Sections 51(b) and (c) of the Tax Code. II A The Philippine Packing Corporation, as the withholding agent of California Packing Corporation, is not relieved of its duty to render the withholding tax return covering the amount deducted and withheld by it on or before March first of each year (Sec. 53(c), Tax Code). B For ready reference, your query is repeated hereunder, viz: "B If the Philippine Packing Corporation is not relieved from the duty of making a proforma withholding return on March 1, is it relieved from any responsibility for paying the amount withheld within the time fixed by law as long as the California Packing Corporation, the recipient of the income, files a return in due time and pays the tax due in accordance with law? (Sec. 53(2) (c) of the Tax Code.)" LLjur You verbally contended, thru your Mr. Antonio M. Meer, that under Section 53(e) of the Tax Code which provides: "SEC. 53. Withholding of tax at source . xxx xxx xxx "(e) Tax paid by recipients . . . . nor in cases in which the tax is so paid shall any penalty be imposed or collected from the recipient of the income or the withholding agent for failure to return or pay the same, unless such failure was fraudulent and for the purpose of evading payment." the Philippine Packing Corporation is relieved from any responsibility of paying the amount withheld within the time fixed by law as long as the California Packing Corporation files its ordinary income tax return on or before April 29 and pays the tax due thereon on or before July 15 as to one-half thereof and on or before October 15 as to the other half. In answer to this query, please be informed that the Philippine Packing Corporation cannot be relieved of its liability to pay on the due date the tax withheld from the dividends of the California Packing Corporation, unless it is satisfactorily proven that the latter has already paid on that date the tax due on its income from Philippine sources, including said dividends. Therefore, as correctly pointed out by your Mr. Antonio M. Meer, the Philippine Packing Corporation may be expressly relieved of paying on the due date the withholding tax on the dividend it pays to the California Packing Corporation only if it is shown that the foreign company has previously paid the regular income tax on said dividends. This amplifies our ruling of January 28, 1958, relative to the same subject matter. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue