Beruflich Dokumente
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TAX SEMINAR
Tuesday, April 22, 2008, Dusit Hotel Nikko, Makati City
G.R. No. 150947, July 15, 2003, 406 SCRA 178, the Supreme Court (SC),
administration, has the last word on what the law is; it is the final arbiter of
any justifiable controversy. There is only one Supreme Court from whose
In its March 28, 2007 resolution, the Supreme Court denied taxpayer’s
petition filed on March 9, 2007 assailing the January 18, 2007 decision of the
CTA for: (a) failure of counsel to submit his IBP proof of payment for current
comply with the 2004 Rules on Notarial Practice with respect to competent
service was not done personally as required by Section 11, Rule 13 in relation
to Section 3, Rule 45 and Section 5(d), Rule 56 of the Rules of Court. On July
persuasive reasons. The high tribunal held that a second motion for
personam binds only the parties in the case. Most importantly, SC is not
bound by the CA decisions & its rulings are binding on all courts.
On the merits, the Supreme Court held that under Section 76 of the
1997 NIRC, a taxable corporation with excess quarterly income tax payments
carry-over the excess tax for crediting against its income tax liabilities in the
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over its excess credits for the year 2000 in the amount of P4,627,976 as tax
credits for the following year, it could no longer claim a refund. Again, at the
risk of being repetitive, once the carry-over option was made, actually or
Asset Management, Inc., the amount will not be forfeited in favor of the
government but will remain in the taxpayer’s account. Petitioner may claim
and carry it over in the succeeding taxable years, creditable against future
Systra Philippines, Inc. vs. CIR, G.R No. 176290, September 21, 2007.
The taxpayer’s claim for refund of 1997 unutilized tax credit was
allowed although it marked “x” indicating “to be carried as tax credit next
year” on the box appearing on its 1998 income tax return. Under Section 69
of the pre-1997 NIRC, excess income tax credit may only be carried over to
the succeeding taxable year. Hence, the explanation of the taxpayer that the
marking was only meant to indicate that it meant to carry over its 1998 excess
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income tax to the succeeding year. The Tax Code merely requires the filing of
the final adjustment return for the preceding – not the succeeding – taxable
year. There is no legal requirement that the final adjustment return of the
rate, the taxpayer attached its 1999 and 2000 annual income tax returns. In
1999 the taxpayer incurred losses and had no tax liabilities against which the
1997 excess tax credits could be applied or utilized. State Land Investment
fertilizers of not less than P10 per bag in favor of Planters Products, Inc.
(PPI). Fertiphil Corporation sought a refund of the levy in a suit for collection
and damages before the Makati Regional Trial Court (RTC), which granted
the refund. The Court of Appeals (CA) affirmed the RTC decision. In
sustaining the CA and RTC decisions, the Supreme Court ruled that Fertiphil
has locus standi or right to appear in court since it suffered direct injury from
the levy being required to pay it. It further held: The RTC has jurisdiction to
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and other issuances pursuant to Section 5, Article VIII of the 1987
The constitutionality of LOI 1465 is the very lis mota of the complaint for
collection. The refund could not be granted without LOI 1465 being declared
unconstitutional. The imposition of the levy was an exercise by the State of its
taxation power. The primary purpose of the levy is revenue generation. “An
exacted only for a public purpose.” The levy is not for a public purpose.
“First, the LOI expressly provided that the levy be imposed to benefit PPI, a
private company. x x x Second, the LOI provides that the imposition of the
P10 levy was conditional and dependent upon PPI becoming financially
‘viable.’ x x x Third, the RTC and the CA held that the levies paid under the
LOI were directly remitted and deposited by the FPA to Far East Bank and
Trust Company, the depositary bank of PPI. x x x Fourth, the levy was used
to pay the corporate debts of PPI.” The LOI is unconstitutional even if enacted
under the police power as it did not promote public interest. Planters
Products, Inc. vs. Fertiphil Corporation, G.R. No. 166006, March 14, 2008.
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PAYMENTS; NEED FOR PUBLICATION OF RULES;
ASSESSMENTS ARE VOID DUE TO LACK OF DUE
PROCESS
deficiency excise taxes for the taxable years 1992 and 1994 to 1997. Shell had
paid its excise tax liabilities through Tax Credit Certificates (TCCs) acquired
through the Department of Finance (DOF) One Stop Shop Inter-Agency Tax
companies. The payments were duly approved by the Center through the
issuance of Tax Debit Memoranda (TDM), and the BIR likewise accepted the
TCCs by issuing its own TDM covering said TCCs, and corresponding
protested and appealed to the CTA, which sitting in Division ruled in favor of
PSPC. [Incidentally, the contested payments here are also covered by a case
pending appeal before the CA, where the CTA previously ruled in Shell’s
favor.] However, upon appeal, the CTA En Banc upheld the assessments. On
appeal, the Supreme Court reversed the CTA En Banc and reinstated the CTA
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1. TCCs duly issued by the Center are immediately valid and
(MOA) between the MOF and BOI merely requires is that the
by the August 29, 1989 MOA between the DOF and BOI, such
internal agreement.
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5. Moreover, there is lack of publication with the National
that provides for the liability of the transferee in the event that
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subject TCCs to the corporations who in turn conveyed the
acceptance as payment.
11. Center has authority to cancel TCCs but may only do so before
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13. There was non-compliance with statutory and procedural due
and cancellation of the subject TCCs and TDM was not even
acted upon. Shell was merely informed that it is liable for the
1992 and 1994 to 1997 covered by the subject TCCs via the
14. For being formally defective, the November 15, 1999 formal
the BIR merely relied on the findings of the Center which did
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E. BUREAU OF CUSTOMS COLLECTION SUIT ON
CANCELLED TDMs/TCCs IS PROPER
the BOI and the One Stop Shop Inter-Agency Tax Credit and Duty Drawback
Bureau of Customs (BoC) for its taxes and import duties in 1997 and 1998.
The Secretary asked Shell to immediately pay the BoC and the BIR the value
1999. However, the BoC did not act thereon. Consequently, Shell filed a
petition for review questioning the legality of the cancellation of the TCCs in
the CTA. On April 22, 2002, the respondent RP, as represented by the BoC,
filed a complaint for collection before the Manila Regional Trial Court (RTC)
for P10,088,912 in unpaid customs duties and taxes, alleging that its TCCs
purchased from Filipino Way Industries and used to pay customs duties and
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Shell questioned the RTC’s jurisdiction. Both the RTC and the Court of
Appeals (CA) on petition for certiorari ruled that the RTC has jurisdiction.
year from the date of final payment except when (a) there was
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importer’s liability constitutes a lien on the article which the
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F. PRESCRIPTIVE PERIOD
On April 14, 2000, the taxpayer filed its petition for review claiming
refund based on its final adjusted return filed on April 14, 1998. Counting 365
days as a year pursuant to Article 13 of the Civil Code, the CTA found that
the petition was filed beyond the two-year prescriptive period equivalent to
730 days for filing the claim under Section 229 of the NIRC, ruling that the
petition was filed 731 days after the filing of the return. On appeal, the CA
reversed the CTA and ruled that Article 13 of the Civil Code did not
distinguish between a regular year and a leap year. The SC affirmed the CA’s
reversal but ruled that the basis for the reversal is EO 292 of the
Administrative Code of 1987, a more recent law, which provides that a year is
composed of 12 calendar months. Using this, the petition was filed on the last
day of the 24th calendar month from the day the taxpayer filed its final
adjusted return.
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G. ONLY NOTICE REQUIRED IN PRIOR LAW;
FAILURE TO PROTEST WITHIN 30 DAYS IS FATAL
of his findings. Section 228 of the 1997 NIRC requiring that the taxpayer
should inform the taxpayer in writing of the law and facts on which the
assessments for deficiency taxes were made is not applicable here. What
228) of the old law prior to amendment by RA 8424, which merely required
was issued and the taxpayer was given the opportunity to discuss the findings
and even prepared worksheets in connection with the findings. The December
10, 1988 reply which stated “[a]s soon as this is explained and clarified in a
whether to pay or protest the assessment” does not qualify as a protest. Hence,
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H. 30-DAY PERIOD TO APPEAL IN CASE OF FAILURE
TO ACT BY CIR WITHIN 180 DAYS FROM
SUBMISSION OF DOCUMENTS IS
JURISDICTIONAL; NEGLIGENCE OF COUNSEL IS
NOT EXCUSABLE; ISSUES CANNOT BE RAISED
FOR THE FIRST TIME ON APPEAL
The CIR failed to act on the disputed assessment within 180 days from
before the CTA. Unfortunately, the petition for review was filed out of time;
i.e., it was filed more than 30 days after the lapse of the 180-day period.
Consequently, it was dismissed by the CTA for late filing. Petitioner did not
After availing the first option, i.e., filing a petition for review which was
however filed out of time, petitioner cannot successfully resort to the second
option, i.e., awaiting the final decision of the Commissioner and appealing the
same to the CTA, on the pretext that there is yet no final decision on the
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I. REQUEST FOR RE-INVESTIGATION NOT
GRANTED DOES NOT TOLL PRESCRIPTIVE
PERIOD; INVALID AND LAPSED WAIVER OF
PRESCRIPTION
Under Section 320 of the 1977 NIRC, the law then applicable, the
period of prescription for assessment and collection is 3 years. The CIR had 3
years from the time he issued assessment notices to BPI on 7 April 1989 or
until 6 April 1992 within which to collect the deficiency DST. However, it
was only on 9 August 2002 that the CIR ordered BPI to pay the deficiency.
For BPI’s protest letters dated 20 April and 8 May 1989 to toll the prescriptive
period for collection, the request for reinvestigation should have been granted.
suspend the prescriptive period is invalid. The CIR himself contends that the
At any rates, more than 8 years elapsed since expiry of the waiver before the
Bank of the Philippine Islands (Formerly Far East Bank and Trust
Company vs. CIR, G.R. No. 174942, March 7, 2008. See also BPI v. CIR,
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J. CTA HAS JURISDICTION ON RMC REVIEW
The CTA, not the Regional Trial Court (RTC), has the jurisdiction to
vehicles through the Subic Free Port in this case), which are considered
Under Section 230 of the old Tax Code, an actual written claim for
refund is required. Amended income tax return filed on June 17, 1997 cannot
be considered as a written claim. Section 204(c) of the 1997 NIRC (RA 8424,
the 1997 Tax Reform Act), provides in pertinent part: “That a return filed
refund”, can only operate prospectively. The new Tax Code became effective
only on January 1, 1998. Tax refunds are in the nature of tax exemptions
which are construed strictissimi juris against the taxpayer and liberally in
favor of the government. CIR vs. BPI, G.R. No. 134062, April 17, 2007.
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L. STATUTORY TAXPAYER IS PROPER PARTY TO
CLAIM FOR REFUND OF INDIRECT TAXES;
INDIRECT TAX EXEMPTION MUST BE CLEARLY
GRANTED; 15-DAY APPEAL PERIOD TO CTA EN
BANC IS JURISDICTIONAL; SERVICE TO
COUNSEL OF RECORD BINDS PETITIONER
shifted the burden of the tax to purchaser Silkair. The CTA Division denied
against the claim since it was not the taxpayer. On September 12, 2005, a new
counsel entered appearance without the withdrawal of the original counsel. Its
September 22, 2005 Resolution of the CTA Division denying its motion for
withdrew its appearance with conformity of petitioner and the new counsel
requested for an official copy of the Resolution. On October 14, 2005, the new
counsel received a copy of the Resolution and requested on October 28, 2005
November 14, 2005. Upon request, another extension until November 24,
2005 was granted and on November 17, 2005, Silkair filed its petition. By
Resolution of May 19, 2006, the CTA En Banc dismissed the petition for
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On petition for certiorari, the Supreme Court affirmed the dismissal,
shown, notice to counsel of record is notice to the client citing Section 26,
Rule 138 of the Rules of Court on the requirements for withdrawal of counsel.
Ruling on the merits, the high tribunal held: The proper party to question, or
seek a refund of, an indirect tax is the statutory taxpayer, the person on whom
the tax is imposed by law and who paid the same even he shifts the burden
based on Section 135 of the NIRC, which exempts from excise tax petroleum
Petron passed on to Silkair the burden of the tax, the additional amount billed
to Silkair for jet fuel is not a tax but part of the purchase price.
Silkair (Singapore) PTE, Ltd. vs. CIR, G.R. No. 173594, Feb. 6, 2008.
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M. SAVINGS DEPOSIT WITH TIME DEPOSIT
FEATURES SUBJECT TO DST; SUBSTANCE OVER
FORM
Special savings deposit, which provide for a higher interest rate when
the deposit is not withdrawn within the required fixed period but earn interest
are subject to DST on time deposits under Section 180 of the NIRC, as
term and the reduction of interest rates in case of pre-termination are essential
features of a time deposit. While tax avoidance schemes and arrangements are
just taxes. To claim that time deposits evidenced by passbooks should not be
does not mean that time deposits for which passbooks were issued were
exempt from payment of DST. If at all, the further amendment was intended
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“cloak” its time deposits as regular savings deposits, as reflected during the
2007. See also Banco de Oro Universal Bank vs. CIR, G.R. No. 173602,
and to give tax evaders who wish to relent a chance to start with a clean slate.
law mandates that a tax amnesty compliant applicant shall be exempt from the
Metropolitan Bank and Trust Company vs. CIR, CTA EB No. 269,
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O. HEALTH MAINTENANCE ORGANIZATION (HMO)
NOT ACTUALLY PROVIDING MEDICAL AND/OR
HOSPITAL SERVICES IS SUBJECT TO VAT; NON-
RETROACTIVITY OF BIR RULINGS
provide medical and/or hospital services, but merely arranges for the same, is
not VAT-exempt under Sec. 103, NIRC, but the taxpayer is not subject for
years 1996 and 1997, relying on good faith on VAT Ruling No. 231-88, June
CIR vs. Philippine Health Care Providers, Inc., G.R. No. 168129,
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BIR rule or regulation requiring that the BIR authority to print be reflected or
indicated in the taxpayer’s sales invoices. Based on Secs. 113, 237 and 238 of
followed by its TIN-V; (2) the total amount which the purchaser pays or is
obligated to pay to the seller with the indication that such amount includes the
VAT; (3) date of the transaction; (4) quantity of merchandise; (5) unit cost;
(6) business style, if any, and address of the purchases, customer or client in
regardless of the amount, where the sale or transfer is made by a person liable
to VAT to another person also liable to VAT, or where the receipt is issued to
(7) and (8) do not apply to the taxpayer’s export sales since the purchasers of
its goods are foreign entities, which are, logically, not VAT-registered or
RMC 42-2003, issued on July 15, 2003 and providing for disallowance
for failure to comply with invoicing requirements, does not apply. Principal
ground for disallowance of the claim is the failure to reflect or indicate in the
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regulations. Moreover, the claim was filed on May 18, 1999. Hence, the
Intel Technology Philippines, Inc. vs. CIR, G.R. No. 166732, April 27,
2007.
requirements under CTA Circular No. 1-95. as amended by CTA Circular No.
10-97 (now Section 5, Rule 12 and Sections 1-5, Rule 13 of the Revised Rules
of the Court of Tax Appeals). CPA summary report and certification are not
145526, March 16, 2007; G.R. Nos. 141104 & 148763, June 8, 2007; G.R.
No. 146221, September 25, 2007; G.R. No. 159490, February 18, 2008.
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R. LOCAL BUSINESS TAX ON CONTRACTORS
SHOULD BE BASED ON GROSS RECEIPTS,
ACTUAL OR CONSTRUCTIVE
facilities/system. It was assessed deficiency business taxes for the years 1998-
2001 based on prior year’s gross revenues per its audited financial statements.
The Supreme Court sustained the taxpayer’s position and ruled that as a
the money consideration or its equivalent is placed at the control of the person
who rendered the service without restrictions by the payor. In contrast, gross
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S. “OVER-THE-COUNTER” SALE OF STOCK IS SUBJECT
TO CAPITAL GAINS TAX, NOT STOCK TRANSACTION
TAX; BASIS
Taxpayer was found to have bought for P98,000,000 and then sold
Philippines, Inc. The CTA upheld the assessment against petitioner for
deficiency capital gains tax (CGT) and documentary stamp tax (DST). “Over-
shares of stock listed with the Philippine Stock Exchange that are not effected
on the trading floor, but only through the equity trading facility of the
gains tax of 5% on the first P100,000 net capital gains realized and 10% on
the excess of P100,000 net capital gains realized based on the highest closing
price on the day when the shares are sold or transferred less cost determined
on the basis of the first-in first-out (FIFO) method since the stock cannot
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T. NO CRIMINAL OR CIVIL LIABILITY DUE TO LACK OF
VALID NOTICE OF ASSESSMENT
The BIR failed to prove receipt of the assessment notices, both the
deficiency income tax and value-added tax liabilities. Lack of due process
Ernesto S. Mallari vs. People of the Philippines, CTA E.B. Crim. Case
items are part of “hospital service” and thus, exempt from VAT under
Professional Services, Inc. vs. CIR, CTA Case No. 7381, March
17, 2008
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V. CINEMA TICKET SALES ARE VAT EXEMPT AND
EXEMPT FROM AMUSEMENT TAX UNDER THE
NIRC; FAILURE TO COMPLY WITH DUE NOTICE
REQUIREMENT UNDER RMC
amusement tax, not to VAT or any other business tax. Moreover, House
Resolution No. 975 supports the finding that such sales are exempt from VAT.
provided under C.A. No. 466 can no longer be found in the NIRC. While it is
true that the Local Tax Code, which transferred to provincial government
which included the phrase “to the exclusion of the national or municipal
such phrase, such removal does not empower the National Government or the
municipal government to levy and collect taxes on the gross receipts from
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RMC 28-2001 entitled “Taxability of Movie/Cinema House Operators
for VAT Purposes” failed to comply with notice, hearing and publication
SM Prime Holdings, Inc. vs. CIR, CTA Case No. 7347, March 17,
2008. See Ayala Land, Inc. vs. CIR, CTA Case No. 7261, April 17, 2008;
vs. CIR, CTA Case Nos. 7079, 7085, 7111 and 7272, September 22, 2006.
export sales. Hence, such PEZA-registered enterprise may not claim for VAT
input taxes
zero-rated sales beginning the effectivity of RMC 74-99 dated October 15,
1999. Pursuant to RMC 42-03, its recourse is to seek reimbursement from its
suppliers.
Coral Bay Nickel Corporation vs. CIR, CTA Case No. 7022, March
10, 2008.
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X. ASSESSMENT CANCELLED DUE TO FAILURE TO
PRESENT THIRD PARTY INFORMATION
commission income and undeclared service and repairs income for the years
2001 and 2002 were cancelled due to failure to present third party
information, which was the basis thereof. BIR, which was declared in default,
the NIRC to obtain the best evidence. Assessment must be based on actual
facts.
Wintelecom, Inc. vs. CIR, CTA Case No. 7056, February 20, 2008
12, 2007, 3rd Div., reversing the decision of the CA affirming the CTA on this
point, the high court disallowed the deduction of legal and auditing expenses
billed in the year 1986 for work rendered by a law firm in 1984 and 1985 and
for auditing services rendered by an auditing firm in the year 1985 pursuant to
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the “all events test” used for purposes of determining recognition of income
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The propriety of an accrual must be judged by the facts
that a taxpayer knew, or could reasonably be expected to
have known, at the closing of its books for the taxable year.
Accrual method of accounting presents largely a question of
fact; such that the taxpayer bears the burden of proof of
establishing the accrual of an item of income or deduction.
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retainer fees charged by the firm as well as the compensation for
its legal services. The failure to determine the exact amount of
the expense during the taxable year when they could have been
claimed as deductions cannot thus be attributed solely to the
delayed billing of these liabilities by the firm. For one, ICC, in
the exercise of due diligence could have inquired into the amount
of their obligation to the firm, especially so that it is using the
accrual method of accounting. For another, it could have
reasonably determined the amount of legal and retainer fees
owing to its familiarity with the rates charged by their long time
legal consultant.
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In the same vein, the professional fees of SGV & Co. for
auditing the financial statements of ICC for the year 1985 cannot
be validly claimed as expense deductions in 1986. This is so
because ICC failed to present evidence showing that even with
only “reasonable accuracy,” as the standard to ascertain its
liability to SGV & Co. in the year 1985, it cannot determine the
professional fees which said company would charge for its
services.
to redundancy (cause beyond the control of employee) was denied by the BIR
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and the CTA for failure to show proof of payment of separation and
receipts and quitclaims were only recently found and counsel relied on the
that cash salary vouchers of rank and file employees, unlike those of
CTA denied the motion. PLDT appealed to CA, which denied its petition and
certiorari.
for refund of each separated employee to show that each employee did reflect
in his return the income upon which any creditable tax is required to be
withhold. It must prove that the employees received the income payments as
part of gross income and the fact of withholding. As held by the CTA, PLDT
receipts, the cash receipt vouchers being unsigned. Its submitted documents
were insufficient to show that the tax withheld from the separated employees
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While the independent auditor certified that it had been able to trace
to be introduced. And the grant or denial of a new trial is, generally speaking,
addressed to the sound discretion of the court which cannot be interfered with
unless a clear abuse thereof is shown. PLDT has not shown such abuse.
No affidavits were attached to the motion for new trial. Also, the
receipts, releases, and quitclaims were not authenticated. They were not
or about two (2) years before the filing of the CTA petition. None of the
responsible officers executed an affidavit explaining why the same (a) were
not notarized on or about December 28, 1995; (b) whether the said deeds were
turned over to its counsel when it filed the petition; and (c) why it failed to
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Moreover, the alleged “newly discovered evidence” does not suffice, as
PLDT would still have to prove that the redundant employees declared the
separation pay as part of their gross income. Also, the fact of withholding
must be established by a copy of the statement duly issued by the payor to the
payee showing the amount paid and the amount of tax withheld therefrom.
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