Article 36p. 36

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

paid by such employer to such employee for such period

shall be deemed to be wages.

(B)

Payroll Period. - The term ' payroll period ' means a

period for which payment of wages is ordinarily made to

the

employee

by

his

employer,

and

the

term

'miscellaneous payroll period' means a payroll period

other

than,

a

daily,

weekly,

biweekly,

semi-monthly,

monthly, quarterly, semi-annual, or annual period.

(C)

Employee. - The term ' employee ' refers to any

individual who is the recipient of wages and includes an

officer, employee or elected official of the Government of

the Philippines or any political subdivision, agency or

instrumentality

thereof.

The

term

' employee '

also

includes an officer of a corporation.

(D)

Employer. - The term ' employer ' means the person

for

whom an individual performs or performed any

service, of whatever nature, as the employee of such

person, except that:

(1) If the person for whom the individual performs or

performed any service does not have control of the

payment of the wages for such services, the term

' employer ' (except for the purpose of Subsection(A)

means the person having control of the payment of

such wages; and

(2) In the case of a person paying wages on behalf of

a nonresident alien individual, foreign partnership or

foreign

corporation

not

engaged

in

trade

or

business within the Philippines, the term ' employer '

(except for the purpose of Subsection(A) means

such person.

SEC. 79. Income Tax Collected at Source. -

(A) Requirement of Withholding. - Except in the case of

a minimum wage earner as defined in Section 22(HH) of

this Code, every employer making payment of wages

shall

deduct

and withhold upon such wages a tax

determined in accordance with the rules and regulations

to be prescribed by the Secretary of Finance, upon

recommendation of the Commissioner. [42]

(B) Tax Paid by Recipient. - If the employer, in violation

of the provisions of this Chapter, fails to deduct and

withhold the tax as required under this Chapter, and

thereafter the tax against which such tax may be credited

is paid, the tax so required to be deducted and withheld

shall

not

be

collected from the employer; but this

Subsection shall in no case relieve the employer from

liability for any penalty or addition to the tax otherwise

applicable in respect of such failure to deduct and

withhold.

(C) Refunds or Credits. -

(1)

Employer.

-

When

there

has

been

an

overpayment of tax under this Section, refund or

credit shall be made to the employer only to the

extent that the amount of such overpayment was

not

deducted

and

withheld

hereunder

by

the

employer.

(2)

Employees.

-The

amount

deducted

and

withheld under this Chapter during any calendar

year shall be allowed as a credit to the recipient of

such income against the tax imposed under Section

24(A) of this Title. Refunds and credits in cases of

excessive withholding shall be granted under rules

and regulations promulgated by the Secretary of

Finance,

upon

recommendation

of

the

Commissioner.

Any excess of the taxes withheld over the tax due

from the taxpayer shall be returned or credited

within three (3) months from the fifteenth (15 th ) day

of April. Refunds or credits made after such time

shall earn interest at the rate of six percent (6%) per

annum, starting after the lapse of the three-month

period to the date the refund of credit is made.

Refunds shall be made upon warrants drawn by the

Commissioner

or

by

his

duly

authorized

representative

without

the

necessity

of

counter-signature by the Chairman, Commission on

Audit or the latter's duly authorized representative

as an exception to the requirement prescribed by

Section 49, Chapter 8, Subtitle B, Title 1 of Book V of

Executive Order No. 292, otherwise known as the

Administrative Code of 1987. [43]

(D) Personal Exemptions. -

(1)

In General. - Unless otherwise provided by this

Chapter, the personal and additional exemptions

applicable under this Chapter shall be determined

in accordance with the main provisions of this Title.

(2) Exemption Certificate. -

(a)

When to File. - On or before the date of

commencement

of

employment

with

an

employer,

the

employee

shall

furnish

the

employer with a signed withholding exemption

certificate

relating

to

the

personal

and

additional exemptions to which he is entitled.

(b)

Change of Status. - In case of change of

status of an employee as a result of which he

would be entitled to a lesser or greater amount

of exemption, the employee shall, within ten

(10)

days

from

such change, file with the

employer

a

new

withholding

exemption

certificate reflecting the change.

(c)

Use of Certificates. - The certificates filed

hereunder shall be used by the employer in the

determination of the amount of taxes to be

withheld.

(d)

Failure to Furnish Certificate. - Where an

employee, in violation of this Chapter, either

fails or refuses to file a withholding exemption

certificate, the employer shall withhold the

taxes prescribed under the schedule for zero

exemption

of

the

withholding

tax

table

determined pursuant to Subsection (A) hereof.

(D)

Withholding on Basis of Average Wages . - The

Commissioner

may,

under

rules

and

regulations

promulgated

by

the

Secretary of Finance, authorize

employers to:

(1)

Estimate the wages which will be paid to an

employee in any quarter of the calendar year;

(2)

Determine the amount to be deducted and

withheld upon each payment of wages to such

employee during such quarter as if the appropriate

average of the wages so estimated constituted the

actual wages paid; and

(3)

Deduct and withhold upon any payment of

wages to such employee during such quarter such

amount as may be required to be deducted and

withheld during such quarter without regard to this

Subsection.

(F) Husband and Wife. - When a husband and wife each

are recipients of wages, whether from the same or from

different

employers,

taxes

to

be

withheld

shall

be

determined on the following bases:

(1)

The husband shall be deemed the head of the

family

and

proper

claimant

of

the

additional

exemption in respect to any dependent children,

unless he explicitly waives his right in favor of his

wife in the withholding exemption certificate.

(2)

Taxes shall be withheld from the wages of the

wife

in

accordance

with the schedule for zero

exemption of the withholding tax table prescribed in

Subsection (D)(2)(d) hereof.

(E)

Nonresident Aliens. - Wages paid to nonresident

alien individuals engaged in trade or business in the

Philippines shall be subject to the provisions of this

Chapter.

(F)

Year-end Adjustment. - On or before the end of the

calendar

year

but

prior

to

the

payment

of

the

compensation for the last payroll period, the employer

shall determine the tax due from each employee on

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