WEEKLY TAX UPDATES [JULY 5] Kim Henares discourage fresh graduates from working for gov’t. Here’s why
Relevant Highlights:
- TAX & BUSINESS-RELATED NEWS [JUNE 27-JULY 5]
- COURT OF TAX APPEALS CASE
- SEC LEGAL OPINION
I. TAX & BUSINESS-RELATED NEWS [JUNE 27-JULY 5]
- FedEx to double size of Clark logistics hub
- Unions get all demands in deal signed with Sofitel
- UST Santa Rosa builds Belo research institute
- Leyte NGO calls on AMLC to unfreeze bank accounts
- CHED approves transnational education partnership between Mapua, Arizona State universities
- Jollibee acquires top South Korean coffee chain Compose Coffee
- Arthaland recalibrates as office demand dwindles
- Dali reports P3.26 billion in losses over 3 years
- Offices in the dark as Zamboanga del Sur town fails to pay electric bills
- Meralco-Batelec JV gains traction
- Filipinos most sleepless people in Asia, 4th in the world — study
- Bill creating Bulacan EcoZone lapses into law
- Kim Henares discourages fresh graduates from working for gov’t. Here’s why
II. CTA CASE
FOR THE ACCUSED TO BE CONVICTED, THE PROSECUTION SHOULD FULFILL THE TEST OF MORAL CERTAINTY NEEDED TO SUPPORT A CONVICTION
The Accused was charged with violation of Section 255 of the 1997 Tax Code, as amended, for the taxable year 2008 without formally protesting against or appealing the same. When arraigned, Accused entered a plea of not guilty to the charge. In support of the allegations, the Prosecution presented in evidence the Preliminary Assessment Notice (PAN) with the corresponding Registry Return Notice and the Formal Letter of Demand (FLD) with the corresponding Registry Return Receipt. Following the review of the evidence presented by both parties, the Court found that the evidence of the Prosecution fails to fulfill the test of moral certainty needed to support a conviction. To sustain a conviction for willful failure to pay taxes punishable under Section 255 of the 1997 Tax Code, the Prosecution must prove beyond reasonable doubt the existence of the following elements: (1) the taxpayer is required to pay any tax, make a return, keep any record or supply correct and accurate information or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations; (2) the taxpayer failed to do so; and (3) such failure is willful. The Prosecution’s failure to prove that the PAN and FLD were properly served upon the Accused renders void the deficiency assessment issued by the BIR. It follows, then, that the first element of the crime as charged has not been proven. The CTA also found that the second and third elements were not present either since there being no requirement to pay the taxes sought to be collected, the Accused was justified in not paying the same, and much less is his failure to do so willfully. Even if the assessment here was found to be void due to the Prosecution’s failure to prove that the PAN and the FLD were properly served upon the Accused, that, in itself, is not reason for the Court not to proceed to render judgement on the civil liability, the Accused’s civil liability for taxes must and can be proven by competent evidence other than assessment. No such competent evidence was presented by the Prosecution in the case. Neither were any of the Prosecution’s documentary evidence offered to prove the Accused civil liability. None of the pieces of evidence, nor the testimony of the Prosecution’s witness qualify, individually or taken together, as competent evidence to prove his civil liability. The Accused has been ACQUITTED of the crime charged on the ground of reasonable doubt. [PEOPLE OF THE PHILIPPINES V. ANGELITO O. DELA PENA, CTA CRIMINAL CASE NO. 0-844, JUNE 2, 2024]
III. SEC LEGAL OPINION
MERE INVESTMENT IN STOCK OWNERSHIP IN A DOMESTIC CORPORATION DOES NOT FALL WITHIN THE COVERAGE OF THE TERM “DOING BUSINESS” FOR PURPOSES OF LICENSING OF FOREIGN CORPORATIONS
L Co. is seeking a clarification on whether its undertaking constitutes doing business in the Philippines and as such is required to obtain a license from the Commission. As represented, L. Co. is a foreign corporation registered under the laws of the British Virgin Islands. Other than its passive investment to two (2) domestic corporations where it holds 40% and 33.24%, it does not maintain office and employees in the Philippines, and no activities or products or services offered in the Philippines. However, it entered into service agreements with its investee company to provide support, maintenance, and development services performed entirely outside the Philippines. In reply, the SEC referred to the Foreign Investments Act (FIA) of 1991, as amended, and its implementing Rules and Regulations, which provides that mere investment in the form of stock ownership or subscription in a domestic corporation does not fall within the coverage of the term “doing business” for purposes of licensing of foreign corporations. The SEC further stated that there is no general rule or governing principle as to what constitutes “doing” or “transacting” business. Each case must be judged in the light of its own peculiar environmental circumstances. However, the attendant circumstances such as the place of the perfection and consummation of the contract, place of performance, income derived, and the element of continuity should be considered following the tests under the law and jurisprudence. Further, under the “Twin Characterization Test” which has since become the hallmark of what constitutes doing business in the Philippines, what is determinative of doing business is not really the number or quantity of the transactions, but more importantly, the intention of an entity to continue the body of its business in the country. The number and quantity of transactions are merely evidence of such intention citing the Substance and Continuity Tests. Under these conditions, SEC opined that L Co. is not doing business in the Philippines and is not required to secure a License from the Commission as long as, the investments are through stock ownership or subscription; the support, maintenance, and development is all performed outside of the Philippines; the service agreement is an isolated transaction; and there is no intention to continue the body of its business in the country. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 24-09, APRIL 24, 2024]
FedEx to double size of Clark logistics hub [Philippine Daily Inquirer, July 5, 2024]
American multinational conglomerate Federal Express Corp. (FedEx) will be doubling the area of its logistics facility inside Clark International Airport in Pampanga, the Bases Conversion and Development Authority (BCDA) said on Thursday.
https://newsinfo.inquirer.net/1958038/fedex-to-double-size-of-clark-logistics-hub
Unions get all demands in deal signed with Sofitel [Philippine Daily Inquirer, July 4, 2024]
Under the settlement agreement, employees have until July 5 to voluntarily signify acceptance of a separation package, which includes retroactive salary increases, the computation of separation pay at 100-150 percent of the adjusted basic monthly salary per year of service, and the grant of an “appreciation bonus” for every covered employee.
https://newsinfo.inquirer.net/1957720/unions-get-all-demands-in-deal-signed-with-sofitel
UST Santa Rosa builds Belo research institute [The Manila Times, July 4, 2024]
THE Dr. William T. Belo Interdisciplinary Research Institute of the University of Santo Tomas Santa Rosa (UST-WiTBIRIn) in Laguna is being developed as the venue for the institution’s research, innovation and entrepreneurship (RIE) programs.
Leyte NGO calls on AMLC to unfreeze bank accounts [GMA News Online, July 3, 2024]
The head of a non-governmental organization (NGO) in Palo, Leyte on Wednesday called on the Anti-Money Laundering Council (AMLC) to unfreeze their bank accounts, which she said was used for humanitarian aid.
https://www.gmanetwork.com/news/topstories/nation/912077/leyte-ngo-amlc-bank-accounts/story/
CHED approves transnational education partnership between Mapua, Arizona State universities [Manila Standard, July 3, 2024]
In a news release emailed late Tuesday, CHED said it has authorized the opening of five undergraduate courses jointly offered by Mapua and ASU beginning this academic year.
Jollibee acquires top South Korean coffee chain Compose Coffee [The Philippine Star, July 2, 2024]
As of June 2024, the coffee chain has 2,612 stores in South Korea, according to Compose Coffee’s website. Compose Coffee and its roasting facility, JMCF Co. Ltd., were established in Busan in 2014.
Arthaland recalibrates as office demand dwindles [Philippine Daily Inquirer, July 1, 2024]
Po family-led developer Arthaland Corp. will shift its focus toward residential projects due to the apparent decline in office space occupancy in the postpandemic era as more companies favor hybrid work arrangements.
https://business.inquirer.net/466459/arthaland-recalibrates-as-office-demand-dwindles
Dali reports P3.26 billion in losses over 3 years [GMA News Online, July 1, 2024]
Hard Discount Philippines Inc., (HDPI), the corporate entity behind Dali, reported a P1.88 billion loss, which was a 110% increase compared to the P894.68 million loss reported in 2022.
Offices in the dark as Zamboanga del Sur town fails to pay electric bills [Inquirer Mindanao, July 1, 2024]
As a stop-gap measure, Mayor Charlotte Dumanjug-Panal had asked the Zamboanga del Sur 1 Electric Cooperative (Zamsureco 1) to temporarily connect the offices, especially the local police and the disaster body, to the power line of the municipal hall so they could continue on their regular operations.
Meralco-Batelec JV gains traction [The Philippine Star, June 29, 2024]
A proposed joint venture between Manila Electric Co. (Meralco) and electric cooperatives in Batangas has received support from at least 18 mayors in the province.
https://www.philstar.com/business/2024/06/29/2366293/meralco-batelec-jv-gains-traction
Filipinos most sleepless people in Asia, 4th in the world — study [The Philippine Star, June 28, 2024]
Harvard Medical School recommended at least seven hours of “quality” sleep for every person, no matter what the age, for body restoration and to prevent higher risk of acquiring diseases such as Diabetes, stroke, heart disease, and mental health problems like depression and anxiety.
Bill creating Bulacan EcoZone lapses into law [Manila Bulletin, June 28, 2024]
The Republic Act 11999 or the Bulacan Special Economic Zone and Freeport Act which lapsed into law on June 13 also creates the Bulacan Special Economic Zone and Freeport Authority.
https://mb.com.ph/2023/2/10/bill-creating-bulacan-eco-zone-lapses-into-law
Kim Henares discourages fresh graduates from working for gov’t. Here’s why [Bilyonaryo, June 27, 2024]
“I think they should go to the private sector, develop themselves and then after that, make yourself financially stable so that you don’t have to depend on government salary or bribe,” the much-feared ex-BIR chief said in a podcast.
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