TAXATION

Aranda, Aren Joy

Billete, Maria Christina
Funtalba, Ma. Irish April
Raymundo, Khimberly Angelica

CASE STUDY B:
On June 3, 2007, Victoria L. Javier received from the Prudential
Bank and Trust Company in Pasay City the amount of
US$999,973.70 remitted by her sister, Mrs. Dolores Ventosa,
through some banks in the U.S, among which is Mellon Bank, N. A.
On June 29, 2007, Mellon Bank, N.A. filed a complaint with the
court in Rizal Province against Javier claiming that its remittance of
US$1,000,000.00 was a clerical error and should have been
US$1,000.00 only and praying that the excess amount of
US$999,000.00 be returned on the ground that the defendants are
trustees of an implied trust for the benefit of Mellon bank with the
clear, immediate, and continuing duty to return the said amount
from the moment it was received.

CASE STUDY B:
The commissioner of BIR assessed Javier for income taxes
based on the erroneous remittance received. Javier contended that
the erroneous remittance is not gross income within the meaning
of the Tax Code and therefore not subject to income tax.
On Nov. 5, 2007, the City Fiscal of Pasay City filed an
information with the then Circuit Criminal Court against Javier with
the crime estafa, alleging that they misappropriated, misapplied,
and converted to their personal use and benefit the amount of
US$999,000.00 which they received under an implied trust for the
benefit of Mellon Bank as a result of the mistake in the remittance
by the latter.

CASE STUDY B:
ISSUE:
If the bank fails to recover from Javier
the amount of US$999,000 and it also
fails to prove the crime of estafa against
him, is the money considered as an
income subject to income tax?

ESTAFA OR NOT?
YES

alleging that they

misappropriated, misapplied, and
converted to their personal use
and benefit the amount of
US$999,000.00

ESTAFA
Estafa is the legal term used to describe a
certain forms of swindling.
1. There is an element of deceit or fraud
used by the offender against the victim;
2. As a result of the deceit, the victim
suffered some form of damage or injury.
Source: www.entrepreneur.com.ph
Article written by Peter Imbong | June 8,
2015

Estafa through false pretenses:

Using a fictitious name; pretending to
possess power, influence, credit, false
transactions; pretending to have
bribed any government employee;
issuing a check with insufficient funds.
Source: www.entrepreneur.com.ph
Article written by Peter Imbong | June 8,
2015

ANSWER:
YES
All remittances are considered as income.
Remittances are subjected to income tax.
Gross income and net income are both
taxable.

THANK YOU