May 15, 1985

REVENUE MEMORANDUM CIRCULAR NO. 13-85

Subject : Publishing Executive Order No. 1026, amending

Section 78 of the National Internal Revenue Code of
1977, to require dissolving corporations to file information
returns and secure tax clearance from the Commissioner of
Internal Revenue, and providing adequate penalties for
violation thereof .

To : All Internal Revenue Officers and Others Concerned.

For the information and guidance of all concerned, published hereunder is

the full text of Executive Order No. 1026:

"EXECUTIVE ORDER NO. 1026

AMENDING SECTION 78 OF THE NATIONAL INTERNAL REVENUE

CODE OF 1977, TO REQUIRE DISSOLVING CORPORATIONS TO
FILE INFORMATION RETURNS AND SECURE TAX CLEARANCE
FROM THE COMMISSIONER OF INTERNAL REVENUE, AND
PROVIDING ADEQUATE PENALTIES FOR VIOLATION THEREOF. acd

WHEREAS, corporations, particularly those with unpaid tax

liabilities to the Government dissolve without prior notice to the Bureau of
Internal Revenue, to the detriment of tax collection;

WHEREAS, the requirement under existing law making it obligatory

for said corporations to notify the Commissioner of Internal Revenue of
corporate dissolution is inadequate for aside from the imposition of
relatively light penalties in case of violation, no BIR tax clearance as a
prerequisite to dissolution is prescribed;

WHEREAS, in order to remedy this defect and thus insure adequate

collection of taxes amendment of the aforecited provision of the Internal
Revenue Code is necessary.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of

the Philippines, by virtue of the powers vested in me under Sec. 290-B
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 of the National Internal Revenue Code, as amended, do hereby order as
follows: cdt

Sec. 1. Section 78 of the National Internal Revenue Code, as

amended, is hereby amended to read as follows:

"Sec. 78. Return of corporation contemplating

dissolution. — Every corporation shall, within thirty days
after the adoption by the corporation of a resolution or plan
for the dissolution of the corporation or for the liquidation
of the whole or any part of its capital stock, including
corporations which have been notified of possible
involuntary dissolution by the Securities and Exchange
Commission, render a correct return to the Commissioner
of Internal Revenue, verified under oath, setting forth the
terms of such resolution or plan and such other information
as the Minister of Finance shall, by regulations, prescribe.
The dissolving corporation prior to the issuance of the
Certificate of Dissolution by the Securities and Exchange
Commission shall secure a certificate of tax clearance from
the Bureau of Internal Revenue which certificate shall be
submitted to the Securities and Exchange Commission.

Failure to render the return and secure the certificate

of tax clearance as above-mentioned shall subject the
officer(s) of the corporation required by law to file the
return under Section 46(a) of this Code, to a fine of not
less than Five Thousand pesos or imprisonment of not less
than two years and shall make them liable for all
outstanding or unpaid tax liabilities of the dissolving
corporation."

Sec. 2. The Minister of Finance shall issue such rules and

regulations as are necessary to implement the provisions of this Act. cdtai

Sec. 3. Rules and Regulations. — All Acts, Executive Orders,

rules and regulations or parts thereof which are inconsistent with the
provisions of this Act are hereby repealed or amended accordingly.

Sec. 4. Effectivity. — This Order shall take effect upon its

approval.

DONE in the City of Manila, this 14th day of May in the year of Our
Lord, nineteen hundred and eighty-five.

(SGD.) FERDINAND E. MARCOS

President of the Philippines

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 By the President:

(SGD.) JUAN C. TUVERA

Presidential Executive Assistant"

Salient Features of Executive Order No. 1026.

1. The requirement on the filing of an information return relative to
corporate dissolution, and the tax clearance certificate, applies not only to
voluntary dissolution but even to corporations notified by the Securities &
Exchange Commission of involuntary dissolution.

Previous to the amendment, only voluntary corporate dissolutions were

covered.

2. The tax clearance certificate from the Bureau of Internal Revenue is

now required for submission to the SEC. cd i

Formerly, only the information return was necessary.

3. For failure to comply with the abovementioned requirement, the
penalty is a fine of not less than P5,000 or imprisonment of not less than two (2)
years.
Furthermore, the corporate officials under obligation to comply as
aforementioned shall be personally liable for all outstanding or unpaid tax
liabilities of the dissolving corporation.

Also, inasmuch as Section 78 before the amendment contained no specific

penalty for violation, the penalty in Sec. 337 was made applicable, consisting
only of a fine not over P300 or imprisonment of six months. cd

Moreover, the corporate officials responsible for the violation were not
made personally liable for any unpaid corporate tax.
4. The Order took effect on May 14, 1985. Hence, all corporate
dissolutions taking place on or after said date shall be governed by the new
requirement.
All internal revenue officials, employees and others concerned are hereby
enjoined to give this Revenue Memorandum Circular the widest publicity possible.
aisa dc

RUBEN B. ANCHETA
Acting Commissioner

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Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia 2016 4