Article 34p. 34

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

and

shall

be subject to such rules and regulations

enabling

the

government to obtain the information

required under this Title, as the Secretary of Finance,

upon

recommendation

of

the

Commissioner,

shall

prescribe.

SEC. 68. Information at Source as to Income Payments.

-

all

persons,

corporations

or

duly

registered

co-

partnerships (companies colectivas), in whatever capacity

acting, including lessees or mortgagors of real or personal

property, trustees, acting in any trust capacity, executors,

administrators, receivers, conservators and employees

making payment to another person, corporation or duly

registered general co-partnership (compania colectiva), of

interests,

rents,

salaries, wages, premiums, annuities,

compensations,

remunerations, emoluments or other

fixed or determinable gains, profits and income, other

than payment described in Section 69, in any taxable

year, or in the case of such payments made by the

Government of the Philippines, the officers or employees

of

the

Government

having

information

as

to

such

payments

and

required

to

make

returns

in

regard

thereto, are authorized and required to render a true and

accurate return to the Commissioner, under such rules

and regulations, and in such form and manner as may be

prescribed

by

the

Secretary

of

Finance,

upon

recommendation of the Commissioner, setting forth the

amount of such gains, profits and income and the name

and address of the recipient of such payments: Provided,

That such returns shall be required, in the case of

payments of interest upon bonds and mortgages or

deeds of trust or other similar obligations of corporations,

and in the case of collections of items, not payable in the

Philippines,

of

interest

upon

the

bonds

of

foreign

countries and interest from the bonds and dividends

from

the

stock

of

foreign

corporations

by persons,

corporations or duly registered general co-partnerships

(companies

colectivas),

undertaking

as

a

matter

of

business or for profit or otherwise the collection of foreign

payments of such interests or dividends by means of

coupons or bills of exchange.

SEC. 69. Return of Information of Brokers. - Every

person,

corporation

or

duly

registered

general

co-partnership (compania colectiva), doing business as a

broker in any exchange or board or other similar place of

business, shall, when required by the Commissioner,

render a correct return duly verified under oath under

such rules and regulations as the Secretary of Finance,

upon

recommendation

of

the

Commissioner,

may

prescribe, showing the names of customers for whom

such

person,

corporation

or

duly registered general

co-partnership (compania colectiva) has transacted any

business, with such details as to the profits, losses or

other information which the Commissioner, may require

as

to

each

of

such

customers

as

will

enable

the

Commissioner to determine whether all income tax due

on profits or gains of such customers has been paid.

SEC. 70. Returns of Foreign Corporations. -

(A)

Requirements.

-

Under

rules

and

regulations

prescribed

by

the

Secretary

of

finance,

upon

the

recommendation of the Commissioner, any attorney,

accountant,

fiduciary,

bank,

trust company, financial

institution or other person, who aids, assists, counsels or

advises in, or with respect to; the formation, organization

or reorganization of any foreign corporation, shall, within

thirty (30) days thereafter, file with the Commissioner a

return.

(B) Form and Contents of Return. - Such return shall be

in such form and shall set forth; under oath, in respect of

each

such

corporation,

to

the

full

extent

of

the

information within the possession or knowledge or under

the control of the person required to file the return, such

information

as

the

Secretary

of

Finance,

upon

recommendation of the Commissioner, shall prescribe by

rules and regulations as necessary for carrying out the

provisions of this Title. Nothing in this Section shall be

construed

to

require

the

divulging

of

privileged

communications between attorney and client.

SEC. 71. Disposition of Income Tax Returns, Publication

of Lists of Taxpayers and Filers. - After the assessment

shall have been made, as provided in this Title, the

returns, together with any corrections thereof which may

have been made by the Commissioner, shall be filed in

the Office of the Commissioner and shall constitute

public records and be open to inspection as such upon

the order of the President of the Philippines, under rules

and regulations to be prescribed by the Secretary of

Finance, upon recommendation of the Commissioner.

The

Commissioner

may,

in

each

year,

cause to be

prepared

and published in any newspaper the lists

containing the names and addresses of persons who

have filed income tax returns.

Income tax returns of specific taxpayers subject of a

request for exchange of information by a foreign tax

authority pursuant to an international convention or

agreement on tax matters to which the Philippines is a

signatory or a party of, shall be open to inspection upon

the order of the President of the Philippines, under rules

and regulations as may be prescribed by the Secretary of

Finance, upon recommendation of the Commissioner. [41]

SEC. 72.

Suit to Recover Tax Based on False or

Fraudulent Returns. - When an assessment is made in

case of any list, statement or return, which in the opinion

of the Commissioner was false or fraudulent or contained

any understatement or undervaluation, no tax collected

under such assessment shall be recovered by any suit,

unless it is proved that the said list, statement or return

was not false nor fraudulent and did not contain any

understatement or undervaluation; but this provision

shall not apply to statements or returns made or to be

made in good faith regarding annual depreciation of oil

or gas wells and mines.

SEC.

73.

Distribution

of

Dividends

or

Assets by

Corporations. -

(A) Definition of Dividends. - The term ' dividends ' when

used in this Title means any distribution made by a

corporation to its shareholders out of its earnings or

profits and payable to its shareholders, whether in money

or in other property.

Where

a

corporation

distributes

all

of its assets in

complete liquidation or dissolution, the gain realized or

loss sustained by the stockholder, whether individual or

corporate, is a taxable income or a deductible loss, as the

case may be.

(B) Stock Dividend. - A stock dividend representing the

transfer of surplus to capital account shall not be subject

to tax. However, if a corporation cancels or redeems stock

issued as a dividend at such time and in such manner as

to make the distribution and cancellation or redemption,

in

whole

or

in

part,

essentially

equivalent

to

the

distribution

of

a

taxable

dividend,

the

amount

so

distributed in redemption or cancellation of the stock

shall be considered as taxable income to the extent that it

represents a distribution of earnings or profits.

(C) Dividends Distributed are Deemed Made from Most

Recently Accumulated Profits. - Any distribution made

to the shareholders or members of a corporation shall be

deemed to have been made from the most recently

accumulated profits or surplus, and shall constitute a part

of the annual income of the distributee for the year in

which received.

(D)

Net

Income

of

a

Partnership

Deemed

Constructively Received by Partners. - The taxable

income declared by a partnership for a taxable year which

is subject to tax under Section 27 (A) of this Code, after

deducting the corporate income tax imposed therein,

shall be deemed to have been actually or constructively

received by the partners in the same taxable year and

shall

be

taxed to them in their individual capacity,

whether actually distributed or not.

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