CHAPTER XI

OTHER INCOME TAX REQUIREMENTS

SEC. 67. Collection of Foreign Payments. - All persons, corporations, duly

registered general co-partnerships (companies colectivas) undertaking for profit
or otherwise the collection of foreign payments of interests or dividends by
means of coupons, checks or bills of exchange shall obtain a license from the
Commissioner, 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. [26]

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.