Any Bookkeeping System Authorized under Existing Laws or Regulations on the Matter may be Adopted by Taxpayers

October 19, 1959 BIR RULING NO. 572-59 Mr. Nicolas G. Gela c/o Ramon Parreo No. 16-B, Smith St. Bacolod City S i r : With reference to your letter dated September 7, 1959, I have the honor to inform you as follows: casia (1) Any bookkeeping system authorized under existing laws or regulations on the matter may be adopted by taxpayers. If any authorized bookkeeping system is not understandable to the fieldmen of this Bureau, the taxpayer must necessarily have to explain such system. If notwithstanding such explanation, the fieldmen cannot understand its operations, they may disregard such bookkeeping records so kept and resort to the best evidence available reflecting the operations of the taxpayer. At any rate, this Office will not countenance any system of bookkeeping which is not generally understandable. (2) It is the general principle of law that "Ignorance of the law excuses no one." Hence, a mistake committed by a taxpayer arising from the ignorance of the law and regulations will nevertheless result in a violation, and, therefore, the taxpayer so committing will become amenable to the penal provisions of the National Internal Revenue Code. (3) Agricultural producers, being subject to internal revenue taxes, are required to comply with the following self-explanatory provision of the Tax Code which reads: "Sec. 334. Corporations, companies, partnerships, or persons required to keep books of accounts . All corporations, companies, partnerships, or persons required by law to pay internal revenue taxes shall keep a journal and a ledger, or their equivalents: Provided , however, That those whose gross quarterly sales, earnings, receipts, or output do not exceed five thousand pesos shall keep and use a simplified set of Bookkeeping Records duly authorized by the Secretary of Finance wherein all transactions and results of operations are shown and from which all taxes due the Government may readily and accurately be ascertained and determined anytime of the year: And, provided, further, That in the case of corporations, companies, partnerships or persons whose gross quarterly sales, earnings, receipts or output exceed twenty-five thousand pesos, shall have their Books of Accounts audited and examined yearly by Independent Certified Public Accountants and their income tax returns accompanied with certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding incomes therefrom and other relevant statements. (As amended by sec. 2, Republic Act No. 438; sec. 1, Republic Act No. 658.)" [Emphasis supplied]. (4) The term "adopted child" as used in Section 23(c) of the Tax Code, as amended, means legally adopted child. In other words, a child legally adjudged as such by a competent court pursuant to the provisions of Rule 100 of the Rules of Court. Accordingly, a mere affidavit purporting to show that a child had been "adopted" by you is not a valid ground for additional exemption for income tax purposes. LLphil Please be guided accordingly. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue