Extending The Deadline For Submission Of Inventory List And Other Supporting Requirements

The CIR of the Bureau has recently issued Revenue Memorandum Circular (RMC) No. 61-2015 to extend the deadline, initially set on or before September 30, 2015 per Revenue Memorandum Circular (RMC) No. 57-2015 to on or before October 31, 2015, for the submission of the Inventory Lists and other supporting requirements covering ending inventory as of December 31, 2014, and thereafter every 30th day following the close of the taxable year, depending on the accounting period being adopted by the taxpayer.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC_61-2015_Extension_InventoryList.pdf of the full text of RMC No. 61-2015.

Clarification Of The Provisions On The Submission Of Monthly eSales

Revenue Memorandum Circular (RMC) No. 56-2015 has issued by the bureau to clarify the provisions on the Submission of Monthly eSales Report via the Electronic Sales (eSales) Reporting System Prescribed under Revenue Reulations (RR) No. 5-2005 and Revenue Memorandum Order (RMO) No. 12-2012.

eSales is a real time reporting online of actual sales transactions recorded by Cash Register Machine (CRM)/Point-of-Sales (POS) machine, or other sales machines and/or software.

In the course of implementation of RR No. 5-2005 and RMO No. 12-2012, it was ascertained that several adjustments/amendments were made on the amount of monthly eSales as reported resulting in the reconstitution of sales as recorded in CRM/POS machines.

In view thereof, any amendment in the amount of monthly sales reported, shall require a written justification addressed to the concerned LTS Investigating Office/Revenue District Office (RDO) with the corresponding adjusting entries properly recorded in the Books of Accounts.

Taxpayers who failed to comply with the foregoing requirements shall be included in the priority audit program of the concerned investigating offices.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2056-2015.pdf of the full text of RMC No. 56-2015.

Documents that are Subject to Documentary Stamp Tax of Fifteen Pesos (P15.00)

Revenue Memorandum Circular No. 36-2012 was issued by the Bureau for the clarification on whether documents mentioned in Section 199 of the Tax Code of 1997, as amended by Republic Act (RA) No. 9243, are subject to the documentary stamp tax of P15.00 as prescribed in Section 188 of the said Code.

Documentary stamp tax is a tax upon documents, instruments, loan agreements and papers, and upon acceptances, assignments, sales, and transfers of the obligation, right or property incident thereto.

Only instruments, documents and papers of transactions expressly enumerated in Section 199 of the Tax Code, as amended, are exempt from the documentary stamp tax. Consequently, certificates and other necessary documents issued by the Construction Industry Authority of the Philippines, as hereunder enumerated, are not among those mentioned in Section 199 of the Tax Code of 1997, as amended, viz:

1. Certificate of Registration of Overseas Contractors;

2. Certificate of Renewal of Registration of Overseas Contractors;

3. Contractor's License (Original);

4. Certificate of whether a certain contractor is licensed;

5. Certified true copies of license certificates;

6. Certified true copies of documents such as Affidavit of Undertaking of Sustaining Technical Employee (STE) and Curriculum Vitae of STE;

7. Certificate of Accreditation of Arbitrators; and

8. Case documents to be used to support petition to appeal in Court of Appeals.

These documents are clearly subject to documentary stamp tax of Fifteen pesos (P15.00) as prescribed under Section 188 of the Tax Code of 1997, as amended, to wit:

"Section 188. Stamp Tax on Certificates-On each certificate of damage or otherwise and on every certificate or document issued by any customs officer, marines surveyors, or other person acting as such, and on each certificate issued by a notary public, and on each certificate of any description required by law or by rules or regulations of a public office, or which is issued for the purpose of giving information, or establishing proof of a fact, and not otherwise specified herein, there shall be collected a documentary stamp tax of Fifteen Pesos (P15.00)." (Underscoring ours)

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/64650RMC%20No%2036-2012.pdf of the full text of RMC No. 36-2012

Requirements for Deductibility of Certain Income Payments

The CIR has issued Revenue Regulations No. 12-2013 amending Section 2.58.5 of Revenue Regulations No. 2-98, as amended, relative to the Requirements for Deductibility of Certain Income Payments:

SECTION 2. Amendment. - Section 2.58.5 of RR 2.98, as amended, is hereby further amended to read as follows:

"Sec. 2.58.5. Requirements for Deductibility. - Any income payment which is otherwise deductible under the Code shall be allowed as a deduction from the payor's gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with Secs. 57 and 58 of the Code.

No deduction will also be allowed notwithstanding payments of withholding tax at the time of the audit investigation or reinvestigation/reconsideration in cases where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code."

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/73009RR%2012-2013.pdf of the full text of RR No. 12-2013.

Tax Implications Of General Professional Partnership (GPP)

Revenue Memorandum Circular (RMC) No. 3-2012 was issued by CIR of the bureau to clarify the Tax Implications of General Professional Partnership.

Under Sec 26 of the National Internal Revenue Code (NIRC) of 1997, as amended, a general professional partnership as such shall not be subject to income tax. However, persons engaging in business as partners in a general professional partnership shall be liable for income tax only in their separate and individual capacities, thus:

"SEC. 26. Tax Liability of Members of General Professional Partnerships. - A general professional partnership as such shall not be subject to the income tax imposed under this Chapter. Persons engaging in business as partners in a general professional partnership shall be liable for income tax only in their separate and individual capacities.

For purposes of computing the distributive share of the partners, the net income of the partnership shall be computed in the same manner as a corporation.

Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership."

In relation thereto, Section 2.57.5 of Revenue Regulations No. 2-98, as amended, provides that:

"SECTION 2.57.5. Exemption from Withholding. - The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following:

(A) . . . 

(B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following:

(1) . . .

(4) General Professional Partnerships

XXX          XXX          XXX"

Tax implications_General Professional Partnership

Page 2 of 2

Clearly, a general professional partnership shall not be subject to income tax since it is the individual partners who shall be subject to income tax in their separate and individual capacities. A general professional partnership is defined in Section 22 (B) of the 1997 Tax Code, as amended, as follows:

"SEC. 22. Definitions. - When used in this Title:

(A) . . . 

(B) The term 'corporation' shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participation), associations, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating or consortium agreement under a service contract with the Government. 'General professional partnerships' are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business.

XXX          XXX          XXX"

Relative thereto, income payments made to a General Professional Partnership in consideration for its professional services are not subject to income tax and consequently to withholding tax prescribed in Revenue Regulations No. 2-98, as amended.

It is the individual partners who shall be subject to income tax, and consequently, to withholding tax, in their separate and individual capacities pursuant to Section 26 of the 1997 Tax Code, as amended. Furthermore, each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership.

However, it is worth mentioning that income payments made periodically or at the end of the axable year by a general professional partnership to the partners, such as drawings, advances, sharings, allowances, stipend and the like, are subject to the Fifteen percent (15%), if the payments to the partner for the current year exceeds P720,000.00; and Ten percent (10%) creditable withholding tax, if otherwise, pursuant to Section 2.57.2 (H) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 30-03.

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/61821RMC%20No%203-2012.pdf of the full text of RMC No. 3-2012.

Power To Extend Or Shorten Corporate Term

A private corporation may extend or shorten corporate term as stated in SEC. 37 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines as follows:

SEC. 37. Power to extend or shorten corporate term. - A private corporation may extend or shorten its term as stated in the articles of incorporation when approved by a majority vote of the board of directors or trustees and ratified at a meeting by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the members in case of non-stock corporations. Written notice of the proposed action and of the time and place of the meeting shall be addressed to each stockholder or member at his place or residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally: Provided, That in case of extension of corporate term, any dissenting stockholder may exercise his appraisal right under the conditions provided in this Code.

Powers And Capacity Of Corporations

What are the Powers and Capacity of Corporations?

In SEC. 36 of Batas Pambamsa Blg. 68 "The Corporation Code of the Philippines" refers to the Powers of Corporations with details as follows:

SEC. 36. Corporate powers and capacity. - Every corporation incorporated under this Code has the power and capacity:

1. To sue and be sued in its corporate name;

2. Of succession by its corporate name for the period of time stated in the articles of incorporation and the certificate of incorporation;

3. To adopt and use a corporate seal;

4. To amend its articles of incorporation in accordance with the provisions of this Code;

5. To adopt by-laws, not contrary to law, morals, or public policy, and to amend or repeal the same in accordance with this Code;

6. In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks in accordance with the provisions of this Code; and to admit members to the corporation if it be a non-stock corporation

7. To purchase, received, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real other corporations, as the transaction of the lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution;

8. To enter into merger or consolidation with other corporations as provided in this Code;

9, To make reasonable donations, including those for the public welfare or for hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no corporation, domestic or foreign, shall give donations in aid of any political party or candidate or for purposes of partisan political activity;

10. To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers and employees; and

11. To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as stated in its articles of incorporation.

Executive Committee Of A Corporation

It is stated in SEC. 35 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines", about the creation of Executive of committee as follows:

SEC. 35. Executive committee. - The by-laws of a corporation may create an executive committee, composed of not less than three member of the board, to be appointed by the board. Said committee may act, by majority vote of all its members, on such specific matters within the competence of the board, as may be delegated to it in the by-laws or on a majority vote of the board, except with respect to: (1) approval of any action for which shareholders' approval is also required; (2) the filling of vacancies in the board; (3) the amendment or repeal of by-laws or the adoption of new by-laws; (4) the amendment or repeal of any resolution of the board which by its express terms is not so amendable or repealable; and (5) a distribution of cash dividends to the shareholders.

What Is The Effect Of Disloyalty Of A Director In A Corporation?

What is the effect of the disloyalty of a director in a corporation?

In SEC. 34 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the Disloyalty of a director with details as follows:

SEC. 34. Disloyalty of a director. - Where a director, by virtue of his office, acquires for himself a business opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the latter for all such profits by refunding the same, unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked his own funds in the venture.

Availability Of The Update Of Exemption Of Employees (UEE) Data Entry Module In Filing Of The BIR Form No. 2305 and 2305 Batch File Validation Module

The CIR of the bureau has issued Revenue Memorandum Circular No. 59-2015 in relation to RR 7-2012 to circularize the availability of Updated of Exemption Of Employees (UEE) (BIR Form No. 2305) Data Entry Module and 2305 Batch File Validation Module which shall be used for the following:

 

1. Updating of Employee's Additional Exemption for Dependents;

2. Change of Status; and

3. Execution of the "Waiver to Claim the Additional Exemption" by the husband; or revocation of the previously executed "Waiver to Claim the Additional Exemption by the Husband". 

 

The filing of BIR Form No. 2305 shall be coursed through the employer and shall be electronically filed containing all the required information in the prescribed electronic format using any of the following:

 

Option 1 Microsoft Excel CSV format;

Option 2 Taxpayer's own extract program; or

Option 3 BIR's UEE Data Entry Module.

 

For those who will be using Option 1 or Option 2 are required to use the 2305 Batch File Validation Module. The UEE Data Entry Module and 2305 Batch File Validation Module are available at http://www.bir.gov.ph/index.php/downloadables.html

 

For the Submission of Report, Submission of Supporting Documents, Venue of Submission and Other Concerns, please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2059-2015_copy.pdf of the full text of RMC No. 59-2015.

 

 

 

BIR Audit Program: Audit/Investigation Of Taxpayers of Mandatory Cases and Priority Taxpayers/Industries

The CIR of the BIR just recently issued Revenue Memorandum Order (RMO) No. 19-2015 of the BIR Audit Program that prescribes the policies, guidelines and procedures to be observed in the audit/investigation of tax returns to enhance taxpayers' voluntary compliance by encouraging the correct payment of internal revenue taxes through the exercise of the enforcement function of the Bureau.

 

It is stated in the RMC that in general, all taxpayers are considered as possible candidates for audit. To cover such audit/investigation of taxpayers, electronic Letters of Authority (eLAs) shall be issued. The said audit/investigation shall include, but not limited to, the following cases:

 

1. Mandatory Cases

 

1.1 Taxpayers with claims for income tax refund or issuance of tax credit certificate (Selection Code: ITR for income tax refund and ITC for tax credit certificate)

 

1.2 Taxpayers with claims for Value-Added Tax (VAT) refund/credit (Selection Code: VTR for VAT refund and VTC for VAT credit certificate)

 

1.3 Claims for tax refund/credit of excise tax under Title VI of the Tax Code, as amended, regardless of amount (election Code: ETRS for excise tax refund and ETCS for Excise tax credit certificate)

 

1.4 Claims for tax refund/credit on erroneously/double payment of taxes regardless of amount (Selection Code: ERTR claims for tax refund and ERTC for claims for tax credit certificate)

 

1.5 Request for tax clearance of taxpayers due to retirement/cessation of business with gross sales/receipts exceeding P1,000,000.00 or gross assets exceeding P3,000,000.00 (Selection Code: TRC)

 

1.6 Request for tax clearance of taxpayers undergoing merger/consolidation/split-up/spin-off and other types of corporate reorganizations (Selection Code: TMC)

 

1.7 Cases with unresolved Letter Notices (LNs) (Selection Code: LNA)

 

1.8 Estate tax returns with other tax liabilities (Selection Code: EOT)

 

1.9 Policy cases covered by written directive of the Commissioner (Selection Code: CIR)

 

2. Priority Taxpayers/Industries - Unless revised through the issuance of a Revenue Memorandum Order (RMO), the tax returns to be audited shall be based on the following criteria.

 

Please refer the link:  http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202015/RMO%20No%20%2019-2015.pdf of the Priority Taxpayers/Industries, policies & procedures and full text of RMO No. 19-2015

Use of Non-Thermal Paper For All Cash Register Machines (CRMs) / Point-Of-Sales (POS) Machines And Other Invoice/Receipt Generating Machine/Software

The CIR of the BIR just recently issued Revenue Regulations (RR) No. 10-2015 to inform all Business Establishments, Internal Revenue Officials and Employers and Others Concerned about SECTION 1 of the Regulations that pursuant to the provisions of section 244, in relation to Sections 203, 222 and 235 of the National Internal Revenue Code of 1997 (NIRC, as amended, these Regulations is hereby promulgated to mandate the use of Non-thermal paper for all CRM/POS and other invoice/receipt-generating machine/software.

 

For Retention Periods of books of account, including subsidiary book and other accounting records; information and other concerns please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%20No.%2010-2015.pdf of the full text of Revenue Regulations No. 10-2015

Contracts Between Corporations With Interlocking Directors

Contracts Between Corporations With Interlocking Directors is stated in SEC. 33 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" with details as follows:

SEC. 33. Contracts between corporations with interlocking directors. - Except in cases of fraud, and provided the contract is fair and reasonable under the circumstances, a contract is fair and reasonable under the circumstances, a contract between two or more corporations having interlocking directors shall not be invalidated on that ground alone: Provided, That if the interest of the interlocking director in one corporation is substantial and his interest in the other corporation or corporations is merely nominal, he shall be subject to the provisions of the preceding section insofar as the latter corporation or corporations are concerned.

Stockholdings exceeding twenty (20%) percent of the outstanding capital stock shall be considered substantial for purposes of interlocking directors.

Dealings Of Directors, Trustees Or Officers With The Corporation

Dealings of directors, trustees or officers with the corporation is stated SEC. 32 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the dealings of directors, trustees or officers with the corporation as follows:

SEC. 32. Dealings of directors, trustees or officers with the corporation. - A contract of the corporation with one or more of its directors or trustees or officers is voidable, at the option of such corporation, unless all the following conditions are present:

1. That the presence of such director or trustee in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting;

2. That the vote of such director or trustee was not necessary for the approval of the contract;

3. That the contract is fair and reasonable under the circumstances; and

4. That in the case of an officer, the contract has been previously authorized by the board of directors.

Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director or trustee, such contract may be ratified by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or of at least two thirds (2/3) of the members in a meeting called for the purpose: Provided, That full disclosure of the adverse interest of the directors or trustees involved is made at such meeting: Provided, however, That the contract is fair and reasonable under the circumstances.

Submission Of Inventory List And Other Reporting Requirements

Revenue Memorandum Circular No. 57-2015 was recently issued by the BIR with the purpose to consistently apply the data requirements across different sectors with the peculiarity of the industry where the taxpayers belong directing the volume of reporting.

 

With this, the additional reports or schedules to be submitted and filed with the annual inventory list shall cover companies maintaining inventory of stock-in-trade, raw material, goods in process, supplies and other goods such as manufacturing, wholesaling, distributing/retailing sectors including real estate dealers/developers, service companies, e.g., construction companies, building contractors, etc. It bears stressing that the data/information contained in the said schedules/lists should be reconciled with the amount declared in the financial statements and annual income tax returns. 

 

In Section 2 of the Circular, refers to the prescribed format and deadline for submission. All taxpayers with tangible asset-rich balance sheets, often with at least half of their total assets in working capital assets, e.g., accounts receivable and inventory, shall submit, in addition to the annual inventory list, schedules/lists prescribed herein, in hard and soft copies, using the format as shown in Annex "A" (for manufacturing / merchandising or retail company); Annexes "B" and "B-1" (for real estate company) and Annex "C" (for construction industry). Taxpayers not belonging to the above-described industries shall adopt the herein prescribed format that is applicable to their existing inventory.

 

The soft copies of the inventory list including other applicable schedules shall be stored/saved in Digital Versatile Disk-Recordable (VD-R) properly labeled and submitted, together with a notarized certification, as shown in Annex "D" hereof, duly signed by the authorized representative of the taxpayer certifying that the data/information contained in the DVD-R are true and correct.

 

For initial filing using the herein prescribed format, the schedules and inventory list shall be submitted on or before September 30, 2015 covering ending inventory as of December 31, 2014, and thereafter every 30th day following the close of the taxable year (depending on the accounting period adopted by the taxpayer) as enunciated under Section 13 of Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations, which provides for the filing of an  annual inventory of stocks-in-trade, raw materials, goods in process, supplies and other goods not later than thirty (30) days following the close of the taxable year.

 

The inventory lists as well as other applicable schedules are to be submitted with the concerned Revenue District Office (RDO) where the non-large taxpayers are registered and with the Large Taxpayers Assistance Division (LTAD), Excise Large Taxpayers Regulatory Division (ELTRD), Large Taxpayers Division (LTD) Makati and Cebu, for taxpayers classified as large under the Large Taxpayers Service.

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2057-2015.pdf of the penalties and other concerns and full text of RMC No. 57-2015.

Liability Of Directors, Trustees Or Officers

SEC. 31 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refer to the Liability of directors, trustees or officers with the details as follows:

 

SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.

 

When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.

Compensation Of Directors

Compensation of directors is referred in SEC. 30 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" with details as follows:

 

SEC. 30. Compensation of directors. - In the absence of any provision in the by-laws fixing their compensation, the directors shall not receive any compensation, as such directors, except for reasonable per diems: Provided, however, That any such compensation other than per diems may be granted to directors by the vote of the stockholders representing at least a majority of the outstanding capital stock at a regular or special stockholders' meeting. In no case shall the total yearly compensation of directors, as such directors, exceed ten (10%) percent of the net income before income tax of the corporation during the preceding year.

Vacancies In The Office Of Director Or Trustee

What if there will be vacancies in the office of director or trustee in a corporation?

 

SEC. 29 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the vacancies in the office of director or trustee with details as follows:

 

SEC. 29. Vacancies in the office of director or trustee. - Any vacancy occurring in the board of directors or trustees other than by removal by the stockholders or members or by expiration of term, may be filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a quorum; otherwise, said vacancies must be filled by the stockholders in a regular or special meeting called for that purpose. A directors or trustee so elected to fill a vacancy shall be elected only for the unexpired term of his predecessor in office.

 

Any directorship or trusteeship to be filled by reason of an increase in the number of directors or trustees shall be filled only by an election at a regular or at a special meeting of stockholders or members duly called for the purpose, or in the same meeting authorizing the increase of directors or trustees if so stated in the notice of the meeting.

Removal Of Directors Or Trustees

Removal of directors or trustees in a corporation is referred in SEC. 28 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" as follows:

 

SEC. 28. Removal of directors or trustees. - Any director or trustee of a corporation may be removed from office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or if the corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote: Provided, That such removal shall take place either at regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after previous notice to stockholders or members of the corporation of the intention to propose such removal of directors or trustees, or any of them, must be called by the secretary on order of the president or on the written demand of the stockholders representing or holding at least a majority of the outstanding capital stock, or, if it be a non-stock corporation, on the written demand of a majority of the members entitled to vote. Should the secretary fail or refuse to call the special meeting upon such demand or fail or refuse to give the notice, or if there is no secretary, the call for the meeting may be addressed directly to the stockholder or member of the corporation signing the demand. Notice of the time and place of such meeting, as well as of the intention to propose such removal, must be given by publication or by written notice as prescribed in this Code. The vacancy resulting from removal pursuant to this section may be filled by election at the same meeting without further notice, or at any regular or at any special meeting called for the purpose, after giving notice as prescribed in this Code. Removal may be with or without cause: Provided, That removal without cause may not be used to deprive minority stockholders or members of the right of  representation to which they may be entitled under Section 24 of this Code.

Disqualification Of Directors, Trustees or Officers

SEC. 27 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the disqualification of directors, trustees or officers as follows:

SEC. 27. Disqualification Of Directors, Trustees or Officers. - No person convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years, or a violation of this Code committed within five (5) years prior to the date of his election or appointment, shall qualify as a director, trustee or officer of any corporation.

Report Of Election Of Directors, Trustees And Officers

When is the submission of the names, nationalities and residences of the directors, trustees and officers elected to the Securities and Exchange Commission?

 

The reference is stated in SEC. 26 of Batas Pambansa Blg, 68 "The Corporation Code of the Philippines" with details as follows:

 

SEC. 26: Report of election of directors, trustees and officers. - Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other officer of the corporation, shall submit to the Securities and Exchange Commission, the names, nationalities and residences of the directors, trustees and officers elected. Should a director, trustee or officer die, resign or in any manner cease to hold office, his heirs in case of his death, the secretary, or any other officer of the corporation, or the director, trustee or officer himself, shall immediately report such fact to the Securities and Exchange Commission.

Availability of eBIRForms Package Version 5.1 To Update Version 5.0 and

Revenue Memorandum Circular (RMC) No. 58-2015 was recently issued to informed all Internal Revenue Officials, Employees and Others Concerned the Availability of Electronic Bureau of Internal Revenue Forms (eBIRForms) Package Version 5. 1

The new eBIRForms package has the following modifications:

1. BIR Form No. 1707-A (Annual Capital Gains Tax Return for Onerous Transfer of Shares of Stock Not Traded Through the Local Stock Exchange) is included in the package and thirty seven (37) returns are now available.

2. BIR Form Nos. 1601E, 1702-MX and 2000 were enhanced; and

3. Annual Income Tax Returns (BIR Form Nos. 1700, 1701, 1702-EX, 1702-MX & 1702-RT) can no be submitted online thru the eBIRForms System

The eBIRForms Package Version 5.1 is now available for update to the previous Version 5.0 of the Online eBIRForms System.

Click or copy paste to new tab of the following link: eBIRForms Package Version 5.1 to download the eBIRForms Package Version 5.1.

Alternative sites to obtain/download the Offline eBIRForms Package:

Websites: www.knowyourtaxes.ph; www.dof.gov.ph
Direct link: http://ftp.pregi.net/bir/ebirforms_package_v5.1.zip


eBIRForms Package Version 5.0 may still be used for filing all other BIR forms not mentioned in the modifications stated in A. B. & C.


Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2058-2015.pdf of the full text of RMC No. 58-2015.

 

The bureau just recently updated the eBIRForms Package from v6.1 to v6.2 (New version)

To download the Offline eBIRForms Package v6.2, just click the following link:

http://ftp.pregi.net/bir/ebirforms_package_v6.2.zip

Alternative sites to obtain/download the Offline eBIRForms Package:

Websites: www.knowyourtaxes.ph; www.dof.gov.ph

Direct link: http://ftp.pregi.net/bir/ebirforms_package_v6.2.zip

Corporate Officers; Qurom

Who are the Corporate officers and the definition of quorum in a corporation?

 

SEC. 25 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the Corporate officers; quorum with details as follows:

 

SEC. 25. Corporate officers; quorum. - Immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time.

 

The directors or trustees and officers to be elected shall perform the duties enjoined on them by law and by the by-laws of the corporation. Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of the number of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business, and every decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be valid as a corporate act, except for the election of officers which shall require the vote of a majority of all the members of the board.

 

Directors or trustees cannot attend or vote by proxy at board meetings.

Election Of Directors Or Trustees

SEC. 24 of Batas Pambansa Blg. 68  "The Corporation Code of the Philippines" refers to the Election of directors or trustees with details as follows:

 

SEC. 24. Election of directors or trustees. - At all elections of directors or trustees, there must be present, either in person or by representative authorized to act by written proxy, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. The election must be by ballot if requested by any voting stockholder or member.

 

In stock corporations, every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing, at the time fixed in the by-laws, in his own name on the stock books of the corporation, or where the by-laws are silent, at the time of the election; and said stockholder may vote such as number of shares for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes as the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit: Provided, That the total number of votes cast by him as shown in the books of the corporation multiplied by the whole number of directors to be elected: Provided, however, That no delinquent stock shall be voted. Unless otherwise provided in the articles of incorporation or in the by-laws, members of corporations which have no capital stock may cast as many votes as there are trustees to be elected but may not cast more that one vote for one candidate.

 

Candidates receiving the highest number of votes shall be declared elected. Any meeting of the stockholders or members called for an election may adjourn from day to day or form time to time but not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by proxy, at the meeting, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote.

The Board Of Directors Or Trustees

Who are the board of directors or trustees in a corporation?

SEC. 23 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" would be the reference with regards to the board of directors or trustees as follows:

SEC. 23. The board of directors or trustees.  Unless otherwise provided in this Code, the corporate powers of all corporation formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified.

Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which shall stand in his name on the books of the corporation. Any directors who ceases to be owner of at least one (1) share of the capital stock of the corporation of which he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be members thereof. A majority of the directors or trustees of all corporations organized under this Code must be residents of the Philippines.

Effects Of Non-use Of Corporate Charter And Continuous Inoperation Of A Corporation

What are the effects of non-use of corporate charter and continuous inoperation of a corporation?

SEC. 22 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" would be the reference of the effects of non-use of corporate corporate charter and continuous inoperation of a corporation as follows:

SEC. 22. Effects of non-use of corporate charter and continuous inoperation of a corporation. - If a corporation does not formally organize and commence the transaction of its business or the construction of its works within two (2) years from the date of its incorporation, its corporate powers cease and the corporation shall be deemed dissolved. However, if a corporation has commenced the transaction of its business but subsequently becomes continuously inoperative for a period of at least five (5) years, the same shall be a ground for the suspension or revocation of its corporate franchise or certificate of incorporation.

This provision shall not apply if the failure to organize, commence the transaction of its business or the construction of its works, or to continuously operate is due to causes beyond the control of the corporation as may be determined by the Securities and Exchange Commission.

Corporation By Estoppel

Corporation by estoppel is stated in SEC. 21 of Bilang Pambansa "The Corporation Code of the Philippines" with details as follows:

 

SEC. 21. Corporation by estoppel. - All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such onstensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality.

 

One who assumes an obligation to an onstensible corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation.

De Facto Corporations

SEC. 20 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to De facto corporations as follows:

SEC. 20. De facto corporations.  The due incorporation of any corporation claiming in good faith to be a corporation under this Code,  and its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor  General in quo warranto proceeding.

List Of Accredited Tax Practitioners and Effects of Accreditation

Section 6 of Revenue Regulations No. 14 - 2010 refers to the Effects of Accreditation as follows:

Section 6. Effects of Accreditation. Only those Tax Agents/ Practitioners, Partners or Officers of general Professional Partnerships, or Officers or Directors of Corporate entities engaged in tax practice who have been issued certificate of Accreditation or ID card shall be allowed to represent a taxpayer or transact business with the Bureau of Internal Revenue in representation of taxpayer for the purposed(s) defined in these regulations. The Commissioner or his authorized representative shall only consider as valid document/attachments to tax returns, information returns or other statements or reports required by the Code or Regulations, the financial statements prepared, signed and certified by duly accredited tax practitioners. The BIR can refuse to transact official business with tax practitioners who are not accredited before it and shall required that certain official statements such as returns, financial statements, reports, protests, requests for ruling, official correspondence and other statements, paper or documents filed on behalf of a taxpayer be signed or certified to by accredited persons which shall bear the following information below the signature of the latter.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Lists/RNAB-Report2015July%2031.pdf of the List of Accredited Tax Practitioners as of July 2015.

The Commencement Of Corporate Existence

With regards to the commencement of corporate existence, SEC 19 of Bilang Pambansa 68 "The Corporation Code of the Philippines" would be the reference with details as follows:

SEC. 19. Commencement of corporate existence. A private corporation formed or organized under this Code commences to have corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchanged Commission issues a certificate of incorporation under its official seal; and thereupon the incorporators, stockholders/members and their successors shall constitute a body politic and corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is extended or the corporation is  sooner dissolved in accordance wit law.

Corporate Name

Under SEC. 18 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the Corporate name with details as follows:

SEC. 18. Corporate name. - No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name.

Grounds When Articles Of Incorporation Or Amendment May Be Rejected Or Disapproved

Grounds when the articles of incorporation or amendment may be rejected or disapproved is stated in SEC. 17 of RA No. 68 "The Corporation Code of the Philippines" with details as follows:

SEC. 17. Grounds when articles of incorporation or amendment may be rejected or disapproved. - The Securities and Exchange Commission may reject the articles of incorporation or disapprove any amendment thereto if the same is not in compliance with the requirements of this Code: Provided, That the Commission shall give the incorporators a reasonable time within which to correct or modify the objectionable portions of the articles or amendment. The following are ground for such rejection or disapproval:

1. That the articles of incorporation or any amendment thereto is not substantially in accordance with the form prescribed herein;

2. That the purpose or purposes of the corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations;

3. That the Treasurer's Affidavit concerning the amount of capital stock subscribed and/or paid is false;

4. That the percentage of ownership of the capital stock to be owned by citizens of the Philippines has not been complied with as required by existing laws or the Constitution.

No articles of incorporation or amendment to articles of incorporation of banks, banking and quasi-banking institutions, building and loan associations, trust companies, public utilities, educational institutions, and other corporations governed by special laws shall be accepted or approved by the Commission unless accompanied by a favorable recommendation of the appropriate government agency to the effect that such articles or amendment is in accordance with law. (n)