Filipinas Synthetic Fiber Corp vs. C.A
Filipinas Synthetic Fiber Corp vs. C.A
Filipinas Synthetic Fiber Corp vs. C.A
Facts: Filipinas
Issue: Whether the liability to withhold tax at source on income payments to non-
resident foreign corporation arises upon remittance of the amounts due to the foreign
creditors,
or
upon
accrual
thereof
Held: The Supreme Court held that since Sec. 53, NIRC (now, Sec. 57 of 1997 NIRC)
in relation to Sec. 54 (now Sec. 58) is silent as to when the duty to withhold arises, it is
necessary to look into the nature of the accrual method of accounting, which was used
by therein petitioner corporation. Inasmuch as under the accrual basis, income is
reportable when all the events have occurred to fix taxpayers right to receive the
income and the amounts can be determined with reasonable accuracy, hence, it is the
right to receive income, and not the actual receipt thereof, that determines when the
amount is includible in gross income. Thus, the duty of the withholding agent to
withhold the corresponding tax arises at the time of such accrual. The withholding
agent/corporation is then obliged to remit the tax to the Government since it already
and properly belongs to the Government. If a withholding agent who is personally liable
for income tax withheld at source fails to pay said withholding tax, an assessment for
said deficiency withholding tax would, therefore, be legal and proper.