INSIGHTS is a monthly publication of BDB LAW to inform, update and provide perspectives to our clients and readers on significant tax-related court decisions and regulatory issuances (includes BIR, SEC, BSP, and various government agencies).

DISCLAIMER: The contents of this Insights are summaries of selected issuances from various government agencies, Court decisions, and articles written by our experts. They are intended for guidance only and as such should not be regarded as a substitute for professional advice.

Copyright © 2021 by Du-Baladad and Associates (BDB Law). All rights reserved. No part of this issue covered by this copyright may be produced and/or used in any form or by any means – graphic, electronic, and mechanical without the written permission of the publisher.

The CTA has jurisdiction over a petition for certiorari to determine whether there is a grave abuse of discretion committed by the BIR.

The Court ruled that the CTA may take cognizance of a petition for certiorari to determine whether there is grave abuse of discretion amounting to lack or excess of jurisdiction committed by the BIR in issuing the another 2007 (2nd LOA) LOA against the taxpayer as well as the subpoena duces tecum considering that a previous investigation of the same taxable year 2007 was already conducted pursuant to the 2007 LOA (1st LOA), and the taxpayer already settled its tax liabilities arising out of said investigation.

However, in the instant case, instead of filing a petition for certiorari under Rule 65 before the CTA to question the interlocutory orders of the BIR, it filed a petition for review, which is obviously a wrong remedy. Nevertheless, in accordance with the liberal spirit pervading the Rules of Court, the Court relaxed the rules and treated the petition for review as petition for certiorari. (Golden Donuts, Inc. vs. Commissioner of Internal Revenue, G.R. No. 252816, February 3, 2021)

Section 229 of the Tax Code is inapplicable to claims for recovery of unutilized Input VAT.

The taxpayer inadvertently not transferred several of its purchases of services on its Input Tax Services account on its Quarterly VAT returns. Thus, the same were not charged to the output tax payable for the quarter. This resulted in the alleged over/erroneously paid output tax for the same quarters. Hence, the taxpayer resorted to filing claims for refund.

In denying the taxpayer’s petition, the Supreme Court ruled that Section 229 of the Tax Code is inapplicable to claims for recovery of unutilized input VAT. Input VAT is not “excessively” collected as contemplated in Section 229 because at the time the input VAT was collected, the amount paid is correct and proper.

Erroneous or wrongful payment includes excessive payment because they all refer to payment of taxes not legally due. However, what the taxpayer claims to be “excess” input VAT in this case does not in fact fall under the category of “erroneous or wrongful payment.” Thus, it is clear, that neither law nor jurisprudence authorized the taxpayer’s claim for refund or issuance of tax credit. (Coca-Cola Bottlers Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 221694, January 19, 2021)

BCDA is a government instrumentality and therefore exempt from payment of docket fees.

BCDA filed via registered mail a Petition for Review with Request for Exemption from Payment of Filing Fees with the CTA involving its claim for refund against the CIR. However, in a letter from the CTA’s Executive Clerk of Court, it informed the BCDA that she was returning the said Petition for Review as it was not deemed filed without the payment of correct legal fees.

The Court ruled the BCDA is a government instrumentality and therefore exempt from payment of docket fees required under Section 21, Rule 141 of the Rules of Court. Thus, it was erroneous for the CTA En Banc to affirm the CTA Second Division’s dismissal of the BCDA’s Petition for Review. That the BCDA belatedly filed the docket fees did not strip the CTA Second Division of jurisdiction as it was exempt from payment in the first place. (Bases Conversion and Development Authority vs. Commissioner of Internal Revenue, G.R. No. 205466, January 11, 2021)

A Letter Notice (LN) is different from a LOA and the issuance of the former does not equate to the issuance of the latter to validate an otherwise void assessment.

The taxpayer assailed the validity of the assessment for want of proof that the CIR or his duly authorized representatives issued a Letter of Authority (LOA) authorizing the revenue officers (ROs) to examine taxpayer's books for 2010.

In ruling for the taxpayer, the Court held that the absence of a LOA is a violation of the taxpayer's right to due process which renders the assessment null and void. Moreover, an LN is different from a LOA and the issuance of the former does not equate to the issuance of the latter to validate an otherwise void assessment. (Yan An Cargo Corporation vs. Commissioner of Internal Revenue, CTA Case No. 9865, June 1, 2021)

Mere intent to import rice, per se, is not a taxable transaction that is subject to tax and customs laws.

Petitioner argued that the taxpayer intended to unload its goods in Philippine customs territory and thus, it intended an importation. For failure of the taxpayer to pay the appropriate customs and duties for said importation, the goods were validly seized and forfeited in favor of the government.

The Court stressed that Freeport Zones such as Subic Special Economic Zone and Subic Bay Freeport Zone are excluded from the Philippine Customs Territory. Thus, mere intent to import rice, per se, is not a taxable transaction that is subject to tax and customs laws. The Court came to the conclusions that the law mandated management and operation of Ecozones as a separate customs territory, separate and distinct from the customs territory, and Customs Territory is comprised of the national territory of the Philippines outside of the proclaimed borders of the Ecozone. (Republic of the Philippines vs. Amira C Foods International DMCC, CTA EB No. 2210, June 3, 2021)

In refund claims, after the claimant has successfully established a prima facie right to the refund by complying with the requirements laid by law, burden is shifted to the opposing party, the BIR, to disprove such claim.

The taxpayer argued that both administrative and judicial claims were timely filed, thus the Court has jurisdiction over the instant Petition. Conversely, the CIR counter-argued that the Court has no jurisdiction over the instant Petition.

In ruling against the CIR, the Court ruled that in refund claims on erroneously paid taxes, both administrative and judicial claims must be filed within the two (2)-year reglementary period. Here, records show that the alleged erroneous multiple payments or remittance by the taxpayer transpired on October 17, 2017. Thus, counting two (2) years from October 17, 2017, the taxpayer had until October 17, 2019, within which to file both its administrative and judicial claims for refund.

Moreover, CIR’s contention that the documents presented by taxpayer do not necessarily prove its claim, as these are susceptible to different interpretations other than a case of multiple payment or multiple remittance and it could be that the second and third payment were for different transaction. Nevertheless, the Court ruled that after the claimant has successfully established a prima facie right to the refund by complying with the requirements laid by law, burden is shifted to the opposing party, the BIR, to disprove such claim. To rule otherwise would be unduly burden the claimant with additional requirements which has no statutory nor jurisprudential basis. (Empress Dental Laboratories, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 10186, June 7, 2021)

In case the taxpayer denies receipt of the assessment notices from the BIR, the latter has the burden to prove by competent evidence that the required notices were actually received by the taxpayer.

The Court En Banc denied the Petition filed by Petitioner for lack of compelling reason to disturb the findings of the Court in Division in the Assailed Decision and Resolution for failure of the Petitioner to prove the actual receipt of the assessment notices by the Respondents.

The Court cited the Supreme Court case of Estate of the Late Juliana Diez Vda. De Gabriel vs. Commissioner of internal Revenue, where it held that it is a requirement of due process that the taxpayer must actually receive the assessment. Accordingly, the rule is that in case the taxpayer denies receipt of the assessment notices from the BIR, the latter has the burden to prove by competent evidence that the required notices were actually received by the taxpayer. It is also clear that to prove the fact of mailing, it is essential for the petitioner to present the registry receipt issued by the Bureau of Posts or the Registry return card signed by the taxpayer or its authorized representative or at least a certification issued by the Bureau of Posts attesting to the same fact.

Here, Petitioner's evidence miserably failed to satisfactorily prove that respondents actually received the PAN, FLD and Assessment Notices. Hence, the failure of petitioner to prove actual receipt of the assessment notices by respondents leads to the conclusion that no assessment was validly issued. (People of the Philippines vs. Delgado and Delbros, Inc., CTA EB Crim No. 077, June 9, 2021)

Note: (Concurring & Dissenting Opinion by Bacorro-Villena, J.) Concurred with the ponencia denying the Petition for Review but take exception from the ratio relied upon in the ponencia. The ponencia goes further to conclude that, “no assessment was validly issued”. To my mind, such a declaration touching upon the assessment’s validity is improper in criminal cases for tax evasion. Criminal cases for tax evasion must be distinguished from petitions for review of disputed assessments, and it must be clarified that the civil liability deemed instituted with the criminal action is only the civil liability ex delito, and should not be confused with the civil liability arising out of tax assessments.

The term "purchase of domestic petroleum products for use in its domestic operations" could only refer to "goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition," and not to "things imported.".

This is a Petition for Review, filed by the CIR seeking to reverse and set aside the assailed Amended Decision by the CTA Special 3rd Division.

In denying the Petition, the Court held that the taxpayer satisfied all the requisites to be entitled to its refund claim. The Court in Division ruled that the taxpayer was able to prove that its importations of Jet A-1 fuels were not locally available in reasonable quantity.

In the determination of whether there is locally available Jet A-1 fuel in reasonable quantity, quality, or price, Jet A-1 fuel which was imported cannot be possibly included in the computation. After all, if locally available Jet A-1 fuel includes both local production and imports, there will never be an instance when the Jet A-1 fuel available is insufficient to meet the demands of the domestic market. Consumers of Jet A-1 fuel will always import the same to meet their needs if no other Jet A-1 fuel is locally available in reasonable quantity, quality, or price. (Commissioner of Internal Revenue vs. Philippine Airlines, Inc., CTA EB No. 2256, June 9, 2021)

An input tax need not be directly and entirely attributable to the zero-rated sales to be refundable or creditable.

The CIR contended that the taxpayer failed to prove that input taxes sought to be refunded are directly attributable to its alleged zero-rated sales. Consequently, this failure on the part of the taxpayer should result in the denial of its claim for input VAT refund.

In ruling against the CIR, the Court cited Section 112 of the NIRC which provides that the same does not require absolute direct attribution of the purchases (the input VAT of which is subject of a refund/TCC claim) to zero-rated sales. In fact, the said provision allows the allocation of input VAT that cannot be directly attributed to any of the taxpayer's sales (i.e., zero-rated sales, taxable sales or exempt sales).

Thus, on the strength of Section 112 of the NIRC and the previous ruling of the Court, it is not necessary for input taxes to be directly attributable to zero-rated sales so that they can be validly refunded. (Commissioner of Internal Revenue vs. Lepanto Consolidated Mining Company, CTA EB No. 2230, June 14, 2021)

Any VAT-registered person claiming VAT zero-rated direct export sales must present at least three (3) types of documents: a) sales invoice; b) export declaration and bill of lading or airway bill ods; and c) bank credit advice or certificate of bank remittance.

The taxpayer argued that its claim for tax refund should be granted because all the elements necessary for the granting of the tax refund claim are present. It alleged that it has sufficiently established and proven all the requirements before a taxpayer engaged in zero-rated transactions may apply for tax refund or issuance of tax credit certificate for unutilized input VAT. On the other hand, the CIR counter-argued, among others, that the taxpayer's claim for VAT refund/tax credit has no factual and legal basis.

The Court partially granted the Petition. It held that any VAT-registered person claiming VAT zero-rated direct export sales must present at least three (3) types of documents, to wit: a) the sales invoice as proof of sale of goods; b) the export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and c) bank credit advice, certificate of bank remittance or any other document proving payment for the goods in acceptable foreign currency or its equivalent in goods and services. In other words, only export sales supported by these documents shall qualify for VAT zero-rating under Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended.

In this case, some items in the refund claim should be disallowed for being not properly supported by the required documents previously mentioned. As only a portion of taxpayer’s zero-rated is properly substantiated, the substantiated excess unutilized input taxes shall be multiplied to this portion to determine the refundable amount. Hence, the Petition for Review is partially granted. (Axelum Resources Corp. vs. Commissioner of Internal Revenue, CTA. Case No. 9969, June 15,2021)

The term "relevant supporting documents" for purposes of Section 228 of the 1997 NIRC, as amended, refers to the documents necessary to support the legal basis in disputing a tax assessment, as determined by the concerned taxpayer and not by the BIR.

The CIR contended that the Court has no jurisdiction over the Petition for Review because the assessment notices have become final and demandable for failure of the taxpayer to submit all relevant supporting documents within sixty (60) days from filing of the protest.

In ruling against the CIR, the Court held that the term "relevant supporting documents" for purposes of the above-quoted Section 228 of the 1997 NIRC, as amended, refers to the documents necessary to support the legal basis in disputing a tax assessment, as determined by the concerned taxpayer and not by the BIR. The latter can only inform the former to submit additional documents, but the BIR cannot demand what type of supporting documents should be submitted. To rule otherwise would, in effect, place the taxpayer at the mercy of the BIR, which may require the production of documents which said taxpayer may not be able to submit.

Here, the taxpayer attached the supporting documents to its protest letter, i.e., its 1st, 2nd, and 3rd Quarterly VAT Returns and Filing References for the EWT Returns (BIR form 160 1 E), all for taxable year 2009. There is no indication, in the said protest letter, that petitioner intended to submit any other document relative thereto. Thus, the CIR’s argument is bereft of merit. (8196 Convenience Corporation vs. Commissioner of Internal Revenue, CTA Case No. 9818, June 10, 2021)

While PCL does not contain that words “final decision”, the tenor is unmistakeably one that warned the taxpayer to settle or pay his tax liabilities tantamount to a denial of taxpayer’s request for reconsideration.

The taxpayer argued that the Preliminary Collection Letter (PCL) cannot be construed as an FDDA because it uses the word "requested" which is not similar to a demand and that the wordings of the PCL do not state in clear and unequivocal language that such is BIR's duly authorized representative's FDDA.

In ruling against the taxpayer, the Court held that while the subject PCL does not contain the words "final decision", the tenor is unmistakably one that warned the taxpayer to settle or pay his tax liabilities. The "finality" of the BIR's decision can also be inferred from the fact that the taxpayer was similarly warned that his failure to pay the same will result in the accumulation of interest and surcharges.

A final demand letter from the BIR, reiterating to the taxpayer the immediate payment of a tax deficiency assessment previously made, is tantamount to a denial of the taxpayer's request for reconsideration. Such letter amounts to an FDDA and is thus appealable to the Court in Division. (Yap vs. Bureau of Internal Revenue, CTA EB No. 2272, June 15, 2021)
 

The document which may be accepted as evidence to prove the fact of withholding, must emanate from the payor itself, and not merely from the payee, and must indicate the name of the payor, the income payment which is the basis of the tax withheld, the amount of the tax withheld and the nature of the tax paid.

This is a Petition for Review filed by the taxpayer against the CIR claiming for refund representing unutilized and excess creditable withholding taxes (CWTs) for taxable year (TY) 2015.

In a claim for refund of excess and unutilized CWTs, the fact of withholding must be established by competent evidence. As held by the Court, the Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) is competent proof to establish the fact that taxes are withheld. It is not necessary for the person who executed and prepared the certificate of creditable tax withheld at source to be presented and to testify personally to prove the authenticity of the certificates. However, other competent proof may be appreciated to establish the fact of withholding. In another CTA decision, it was declared that in claims for excess and unutilized creditable withholding tax, the submission of BIR Forms 2307 is to prove the fact of withholding of the excess creditable withholding tax being claimed for refund, but the information contained in that BIR Form No. 2307 can also be gathered from Withholding Tax Remittance Returns (BIR Form No. 1606). In that case, refund was granted despite non-presentation of BIR Form No. 2307.

It is settled that the document which may be accepted as evidence to prove the fact of withholding, must emanate from the payor itself, and not merely from the payee, and must indicate the name of the payor, the income payment which is the basis of the tax withheld, the amount of the tax withheld and the nature of the tax paid. (Casas+Architects, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 9806, June 17, 2021)

The CIR must ensure not only the FAN's sending but also its receipt by the taxpayer.

The taxpayer alleged that the assessment against it was invalid for the CIR’s failure to prove the former's receipt of the PAN and the FAN. Conversely, the CIR contended that the issuance of WDL is evidence in itself of the previous issuance of the subject notices.

In ruling against the CIR, the Court held that the CIR must ensure not only the FAN's sending but also its receipt by the taxpayer. A final assessment is a notice to the effect that the amount therein stated is due as tax and a demand for payment thereof. This demand for payment signals the time when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies. Thus, it must be sent to and received by the taxpayer, and must demand payment of the taxes described therein within a specific period.

Here, the CIR failed to provide any scintilla of proof that the taxpayer received the subject notices. In his defense, the CIR blamed the delay on the sluggish turn-over of records within his own office. However, the efficiency of the BIR's workflow is not a valid reason for the delay nor a matter fit for the judicial discourse. (Commissioner of Internal Revenue vs. Barrio Fiesta Manufacturing Corporation, CTA EB No. 2186, June 21, 2021)

The right to appeal is neither a natural right nor is it a component of due process. It is a mere statutory privilege and may be exercised only in the manner and in accordance with the provisions of law.

This is a Petition for Review filed by the CIR against the taxpayer before the Court En Banc assailing the Decision of the Court's Special Second Division which cancelled the assessments issued against the taxpayer.

In dismissing the Petition, the Court held that the relief prayed for by the CIR is totally irrelevant to the subject of its appeal. Moreover, the particular assessment referred to in the Prayer is different from the subject assessment in this case as well.

It is well-settled that the right to appeal is neither a natural right nor is it a component of due process. It is a mere statutory privilege and may be exercised only in the manner and in accordance with the provisions of law. An appealing party must strictly comply with the requisites laid down in the Rules of Court. Deviations from the Rules cannot be tolerated. (Commissioner of Internal Revenue vs. Avon Cosmetics, Inc., CTA EB No. 2261, June 22, 2021)

A taxpayer who pays or advances a legally and lawfully due and payable tax to the government is not entitled to recover such tax because the same is neither erroneously nor illegally collect.

This is a Petition for Review filed by the taxpayer seeking a tax refund representing excise taxes prepaid by the taxpayer on internal revenue stamps requisitioned through the BIR’s Internal Revenue Stamp Integrated System (IRSIS), the return of spoiled stamps and bad order consisting of short deliveries, as well as the unapplied balance of the taxpayer’s advance deposit in the IRSIS.

The Court dismissed the Petition because the subject claim for refund was composed of the taxpayer's duly made advance deposits, i.e., voluntarily filed and prepaid by petitioner through eFPS using Excise Tax Return for Tobacco Products (BIR Form No. 2200-T) and the value of spoiled stamps and bad orders credited back by the BIR to petitioner's IRSIS account.

There is erroneous payment of taxes when a taxpayer pays under a mistake of fact, as for the instance in a case where he is not aware of an existing exemption in his favor at the time the payment was made. Alternatively, illegally assessed or collected taxes arise when payments are made under duress or the assessment thereof is rendered by a person who has no power to assess the tax. Accordingly, a taxpayer who pays or advances a legally and lawfully due and payable tax to the government is not entitled to recover such tax because the same is neither erroneously nor illegally collect. (British American Tobacco (Philippines), Limited vs. Commissioner of Internal Revenue, CTA Case No. 9998, June 28, 2021)

There is no violation of the doctrine of exhaustion of administrative remedies as long as the administrative and judicial claims for refund were filed within the two-year reglementary period.

The CIR alleged that the taxpayer failed to exhaust administrative remedies before elevating the case to the Court. Accordingly, pending closure of their investigation of the taxpayer's claim, no grant of refund may be given to the taxpayer based on the filed claim.

In partially granting the Petition, the Court held that as long as the administrative and judicial claims for refund were filed within the two-year reglementary period, there is no violation of the doctrine of exhaustion of administrative remedies, even if the taxpayer-claimant did not wait for the action of the CIR on its refund claim before filing its judicial claim with this Court.

Here, there is no showing that the CIR ever acted upon the taxpayer’s administrative claim for refund from the time it was filed on April 26, 2017 up to the filing of its judicial claim on April 10, 2018. Considering that the two-year prescriptive period was about to end, the taxpayer properly elevated its judicial claim within the said two-year prescriptive period under Section 229 of the NIRC of 1997, as amended.

(Merck Sharp & Dohme (I.A.) LLC – Philippine Branch vs. Commissioner of Internal Revenue, CTA Case No. 9803, June 25, 2021)

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ITAD BIR Ruling No. 023-21, June 7, 2021

Under RMC 8-2017, Japanese companies may seek reimbursement from the executing government agencies of the Philippines for the 12% VAT paid in connection with the OECF-funded project.

Contrary to the provision of RMC No. 45-2015, RMC No. 8-2017 now states that the VAT-registered suppliers and subcontractors of Japanese companies involved in Japanese Overseas Economic Cooperation Fund (OECF)-funded projects shall bill and pass on the 12% VAT to these Japanese companies, which in turn, shall include in there billing and pass on the 12% VAT to the concerned executing agencies of the Republic of the Philippines, DPWH in this case.

In other words, the Japanese companies are allowed to bill, and seek reimbursement from the executing government agency for the 12% VAT paid in connection with the OECF-funded project and not only the 5% VAT.

It also bears stressing that RA No. 10963 or the TRAIN law amended Section 114(C) of the Tax Code. The national government, or any of its political subdivisions, instrumentalities, and agencies, including GOCCs shall no longer impose the 5% final withholding VAT on payments for purchase of goods and services from OECF-funded projects. But the government or its agencies shall still assume the payment of VAT shouldered or paid by the Japanese companies.

ITAD BIR Ruling No. 025-21, June 8, 2021

Where the income earner is a resident of a country with which the Philippines has an existing and effective tax treaty, the relevant provisions of the said treaty governs the taxability of income derived by a resident of one or both of the contracting sates.

The place where the services were actually rendered, not the residence of the income recipient, determines the source of income for personal services. In a case, the Court ruled that the “source of income” relates to the property, activity or service that produced the income.

However, in cases where the income earner is a resident of a country with which the Philippines has an existing and effective tax treaty, the relevant provisions of the said treaty governs the taxability of income derived by a resident of one or both of the contracting states pursuant to the principle of pacta sunt servanda, which requires the parties to a treaty to keep their agreement therein in good faith.

In this case, the income recipient is a tax resident of Singapore, a country where the Philippines has an existing treaty. Under Article 14 of the Philippines-Singapore tax treaty, although services are performed in the state of source, the state of residence would still remain its taxing rights over the remuneration or income for personal services derived by its resident, provided all of the following conditions are satisfied:

(1) The recipient is present in the state of source for a period or periods not exceeding the aggregate 183 days in the calendar year concerned;
(2) The remuneration or income is paid by, or on behalf of, a person who is a resident of the first-mentioned state; and
(3) The remuneration or income is not borne directly by a permanent establishment which that person has in the state of source.

ITAD BIR Ruling No. 027-21, June 8, 2021

Under Philippine-Thailand tax treaty, the profits derived by an enterprise of Thailand in the Philippines may be taxed in the Philippines if the profits are attributable to a permanent establishment in the latter.

Under Article 7 of Philippine-Thailand tax treaty, the profits derived by an enterprise of Thailand in the Philippines may be taxed in the latter if the profits are attributable to a permanent establishment which the enterprise has in the Philippines.

Under Article 5, a permanent establishment means a fixed place of business through which the business of an enterprise is wholly or partly carried on, and includes especially, a place of management, a branch, an office, a factory, and a workshop. In the case of furnishing of services, an enterprise is deemed to have a permanent establishment if it furnishes services in the Philippines, through employees or other personnel thereof, for a period or periods aggregating more than 183 days.

In this case, Prosoft, a resident of Thailand, is not engaged in trade or business in the Philippines and does not have a permanent establishment in the Philippines. As represented, it rendered all services online and outside the Philippines. Thus, the service fee paid by Suzuki Philippines, a domestic corporation to Prosoft, for such services shall be exempt from Philippine income tax. Moreover, the same fee is exempt from VAT following the cross-border or destination principle of the VAT system.

ITAD BIR Ruling No. 029-21, June 8, 2021

If the country of residence of the NRFC did not impose tax on dividends it received from the Philippines, the tax sparing credit condition is satisfied.

In CIR vs. Wander case, the Supreme Court held that if the country of residence of the NRFC did not impose tax on dividends it received from the Philippines, the tax sparing credit condition is satisfied.

Accordingly, since Target Value is an NRFC, and its country of residence, the Cayman Islands, did not impose any tax on the dividends it received from Cosco, a domestic corporation, pursuant to Section 6 of the amended Tax Concessions Law of the Cayman Islands as confirmed by the Governor in Cabinet, the subject dividends are, therefore, subject to income tax rate of 15% pursuant to Section 28(B)(5)(b) of the Tax Code.

DA-ITAD BIR Ruling No. 012-21, June 7, 2021

Applying the principle of reciprocity, the Embassy of the USA and its personnel are exempt from VAT and ad valorem tax on their local purchase of motor vehicles.

Article 34 of the Vienna Convention on Diplomatic Relations states that the exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT and ad valorem taxes.

However, applying the principle of reciprocity, the BIR may confirm VAT and ad valorem tax exemption to the Embassy of the USA and/or its personnel on their local purchase of motor vehicles since it appears from DFA VAT matrix dated March 2, 2021 that the Government of USA allows similar exemption to the Philippine Embassy and/or its personnel.

In view thereof, the local sale of one unit of 2020 Ford Everest, for personal use of the Fleet Postal Officer of the Embassy of the USA, being an exempt entity, shall be subject to VAT at 0% rate pursuant to Section 106(A)(2)(b) of the Tax Code, as amended. And is likewise exempt from ad valorem tax pursuant to Section 9 of RR No. 25-2003.

DA-ITAD BIR Ruling No. 014-21, June 7, 2021

Applying the principle of reciprocity, the Embassy of the Republic of Indonesia and its personnel are exempt from VAT and ad valorem tax on their local purchase of motor vehicles.

Article 34 of the Vienna Convention on Diplomatic Relations states that the exemption privilege of an Embassy and its diplomatic agents does not include exemption from VAT and ad valorem taxes.

However, applying the principle of reciprocity, the BIR may confirm VAT and ad valorem tax exemption to the Embassy of the Republic of Indonesia and/or its personnel on their local purchase of motor vehicles since it appears from DFA VAT matrix dated March 2, 2021 that the Government of Indonesia allows similar exemption to the Philippine Embassy and/or its personnel in Indonesia.

In view thereof, the local sale of one unit of 2020 Toyota Prado, for personal use of the Army Attaché of the Embassy of the Republic of Indonesia, being an exempt entity, shall be subject to VAT at 0% rate pursuant to Section 106(A)(2)(b) of the Tax Code, as amended. And is likewise exempt from ad valorem tax pursuant to Section 9 of RR No. 25-2003.

RR No. 8-2021, June 11, 2021

This amends certain provisions of RR No. 4-2021, which implemented the VAT and Percentage Tax provisions under RA No. 11534 (CREATE Act).

This amends certain provisions of Revenue Regulations (RR) No. 4-2021, which implemented the Value-Added Tax (VAT) and Percentage Tax provisions under Republic Act (RA) No. 11534 (Corporate Recovery and Tax Incentives for Enterprises [CREATE] Act). Section 2, sub-section 4.109-1(B)(p)(4) of RR No. 4-2021 is amended to include the adjusted amount of not more than ₱3,199,200.00 selling price for sale of house and lot, and other residential dwellings in order to qualify for VAT exemption.

The importation of Covid 19-related equipment, materials, drugs and vaccines under Section 2, sub-section 4.109-1(B)(p)(bb) of RR No. 4-2021 shall not be subject to the issuance of the Authority to Release Imported Goods (ATRIG) under Revenue Memorandum Order (RMO) No. 35-2002, as amended, and may be released by the Bureau of Customs (BOC) without the need of an ATRIG.

Excess Percentage Tax payments as a result of the decrease of tax rate from 3% to 1% starting July 1, 2020 until the effectivity of RR No. 4-2021 may be carried forward to the succeeding taxable quarters. This carry-over portion is intended for Percentage Taxpayers who are regularly filing the returns and are expected to have overpaid taxes as a result of the retroactive application of the CREATE. Tax refund, however, is still allowed in the event that the taxpayer shifted from non-VAT to VAT-registered status, or the taxpayer has opted to avail of the eight percent (8%) Income Tax rate at the beginning of TY 2021.

RR No. 10-2021, June 17, 2021

This amends pertinent provisions of Section 10 under RR No. 20-2018 relative to the outright exemption granted to the exportation of Sweetened Beverages products.

This amends pertinent provisions of Section 10 under Revenue Regulations No. 20-2018 relative to the outright exemption granted to the exportation of Sweetened Beverages products, as follows:

SECTION 10. IMPOSITION OF EXCISE TAX ON REMOVAL OF SWEETENED BEVERAGES PRODUCTS FOR EXPORT.

Removal of Sweetened Beverages products intended for export shall be subject to the payment of the Excise Tax by the manufacturer due on every removal thereof from the place of production. After payment of the tax, the manufacturers at its option may file a claim for excise tax credit/refund pursuant to Sections 204 and 229 of the NIRC; or may avail of a claim for product replenishment scheme in accordance to the prescribed provisions under Sec. 6 of Revenue Regulations No. 3-2008 dated January 22, 2008, subject to the following terms and conditions:

a. A permit shall be per shipment secured from the BIR Office where the manufacturer is registered or required to be registered as an excise taxpayer before the product is removed from the place of production;
b. The products removed from the place of production shall be directly transported, loaded aboard the international shipping vessel or carrier, and shipped directly to the foreign country of destination without returning to the Philippines;
c. Proof of exportation such as, but not limited to, the documents enumerated below, shall be submitted within thirty (30) days from the date of actual date of exportation. However, the concerned BIR Office may, upon written request by the taxpayer-exporter, grant a maximum of 30 days, one-time extension for the submission of such documents for meritorious reasons.

i. Export Entry Declaration duly filed with the Bureau of Customs
ii. Commercial Invoice
iii. Packing list
iv. Bill of Lading
v. Cargo Manifest, if applicable
vi. Inward bank remittance in foreign currency acceptable to the BSP
vii. Any document showing proof that the products exported have actually arrived and unloaded in the foreign port of destination
viii. Other necessary documents as may be reasonably required; and

d. The prescribed phrase "EXPORTED FROM THE PHILIPPINES" is printed on each label that is attached/affixed on the primary container in a recognizable and readable manner.

Failure to submit proof of exportation within the prescribed period shall be construed as non-exportation of the particular articles; and therefore, the same shall be subjected to the corresponding applicable tax, inclusive of penalties. Relative thereto, subsequent issuance of export permits shall not be allowed unless the assessed applicable tax due on such unliquidated export, including the applicable penalties, shall have been paid. For this purpose, proof of payment of the aforesaid assessment shall accompany the subsequent application permit.

RR No. 12-2021, June 23, 2021

This prescribes the policies and guidelines on the utilization of the Tax Payment Certificate issued by the DTI-BOI evidencing the availment of the fiscal support for the eligible and registered participants of the Comprehensive Automotive Resurgence Strategy (CARS) Program under EO No. 182, Series of 2015.

This prescribes the policies and guidelines on the utilization of the Tax Payment Certificate (TPC) issued by the DTI-BOI evidencing the availment of the fiscal support for the eligible and registered participants of the Comprehensive Automotive Resurgence Strategy (CARS) Program under Executive Order (EO) No. 182, Series of 2015.

The Regulations shall apply to the Participating Car Makers (PCMs) and Participating Part Makers (PPMs) registered under the CARS Program who applied and were issued TPCs by the DTI-BOI to pay exclusively the following tax obligations, excluding any type of Withholding Taxes, incurred in the course of their operations:

a. Excise Tax;
b. Income Tax; and
c. Value-Added Tax

The total fiscal support for the CARS Program shall be divided into 2 categories,
namely:

a. Fixed Investment Support (FIS) – shall not exceed 40% of the total fiscal support, provided that in case of Parts and Shared Testing Facility, the FIS shall not exceed 40% of the capital expenditure for tooling and equipment to manufacture the parts, including training costs for the start-up operation for the use thereof; and
b. Production Volume Incentive (PVI) – shall not exceed 60% of the total fiscal support.

The availment of the fiscal support by the eligible and registered participants shall be evidenced by a TPC, which is non-transferrable. The BIR shall recognize and accept valid TPCs issued by the DTI-BOI as tax payment only upon verification and validation against their records, as well as online validation thru the Participating Car Maker Incentive Account (PCMIA) set up by the DTI-BOI.

The amount of the TPC shall be indicated in the tax return as deduction from the tax due. The accomplished tax return shall be filed using eFPS or eBIRForms Package, as the case may be. In case the tax due is more than the amount of the TPC, the tax still due shall be paid using the available modes of payment of the BIR. The printed hard copies of the tax returns, together with the copy/ies of the TPC and the other prescribed attachments, shall be submitted to the RDO/LTDO/LT Documents and Quality Assurance Division (LTDQAD) where the registered participants are duly registered.

In case the amount of TPC exceeds the tax due, net of the creditable taxes, the excess shall not be considered or treated as a refundable amount.

Eligible and registered participants under the CARS Program shall not be allowed to register their activity under any other program granting incentives as a condition for TPC availment.

AFSs and ITRs shall be submitted on or before May 15 of each year or 1 month from the last day of filing of Income Tax Returns to the BIR.

RMC No. 71-2021, June 1, 2021

This announces the nationwide availability of the Online Survey Form under the Client Support Service.

The Online Survey Form can be accessed by taxpayers availing the BIR’s frontline services through any of the following ways:

a. Answer the Online Survey Form using the designated personal computer in the eLounge area; and
b. Scan the Quick Response (QR) code available at each counter using mobile phone to answer the feedback questions.

However, the manual survey forms shall still be available in cases where taxpayers opted to use such.

RMC No. 73-2021, June 3, 2021

This announces the availability of the New Business Registration (NewBizReg) Portal.

This announces the availability of the New Business Registration (NewBizReg) Portal.

The NewBizReg Portal is a gateway in the electronic submission of application for registration through e-mail, which is available to individual and non-individual business taxpayers (Head Office and Branches).

Taxpayers who will apply for business registration through the NewBizReg Portal must answer the "Tax Type Questionnaire" (Annex A) and submit the same as an attachment to the e-mail. The accomplished Tax Type Questionnaire will be the basis of the BIR’s registration officers/frontliners in determining the tax types which the taxpayer will be liable to.

In case there will be changes or error/s on the tax type registration, the registration officer shall update the records and issue the Certificate of Registration (COR) of the concerned taxpayer.

RMC No. 75-2021, June 7, 2021

This prescribes the standard policy and guidelines on the use of BIR Form No. 0605 for Excise Tax purposes.

This prescribes the standard policy and guidelines on the use of BIR Form No. 0605 for Excise Tax purposes. All concerned are advised on the proper filling up of the said form as indicated below.

a. Excise taxpayers making advance payment for export products availing the Product Replenishment Scheme should tick the "Tax Deposit/Advance Payment" box under the Voluntary Payment of the Manner of Payment (Field No. 17) of BIR Form No. 0605.
b. Excise taxpayers under the Non-Essential Services for Cosmetic Procedures should use BIR Form 2200-C.
c. Excise taxpayers using BIR Form 0605 paying Deficiency Tax should tick the “Preliminary/Final Assessment/Deficiency Tax” box under the Per Audit/ Delinquent Account under Manner of Payment (Field No. 17) of BIR Form No. 0605.
d. Payments for Administrative Penalties must tick the "Others (Specify)" box under the Voluntary Payment of the Manner of Payment (Field No. 17) of BIR Form No 0605 and indicate in the box provided “Administrative Penalties”.

All other Excise Tax payments on domestic removals of excisable articles shall use their corresponding Excise Tax returns (BIR Form 2200 series).

RMC No. 77-2021, June 15, 2021

This clarifies certain provisions of Revenue Memorandum Order No. 14-2021.

This clarifies certain provisions of Revenue Memorandum Order (RMO) No. 14-2021.

• Only persons, natural or juridical, who are residents of one or both of the Contracting States may avail of treaty benefits. To establish the fact of residency in a contracting state, the nonresident income recipient should submit a Tax Residency Certificate (TRC) duly issued by the tax authority of the country of residence. Failure to submit the same would result in the denial of the nonresident's claim.

• Pursuant to Revenue Administrative Order No. 1-2019, the International Tax Affairs Division (ITAD) of the Bureau of Internal Revenue (BIR) has the original jurisdiction over matters involving the application and interpretation of tax treaties. Therefore, rulings involving the application and interpretation of tax treaties should originate from the ITAD.

• If the nonresident submitted to the income payor a TRC and the appropriate BIR Form No. 0901 prior to the payment of income, the income payor may apply the provisions of the applicable treaty in the withholding of taxes; provided that all the conditions for the availment thereof, other than residency, have been satisfied. Otherwise, the regular rates imposed under the Tax Code should be applied.

• When an item of income was subjected to taxation in accordance with the provisions of the relevant tax treaty, the withholding agent/income payor shall file with ITAD a request for confirmation that the tax treatment of such income was proper.

• If the treaty rate was applied on the nonresident's income, the income payor (domestic or foreign), should be the one to file the request for confirmation with the ITAD. The income payor is not prevented, however, from authorizing the nonresident or any other person to file such request for and on its behalf, provided that the latter is equipped with a Special Power of Attorney (SPA).

• Depending on the type of income, the request for confirmation with complete documentary requirements shall be filed by the withholding agent, domestic or foreign, on or before the dates prescribed below:

• For long-term contracts involving the payment of interests and royalties and other types of income where the condition for entitlement to treaty benefits is not dependent on time threshold, the annual updating is not mandatory. In this case, the BIR will issue a one-time certification that is presumably valid for the whole duration of the contract so long as there is no relevant and significant change in the facts or circumstances upon which the ruling was based (e.g. change in the country of residence, the recipient of the income or the beneficial owner of the income, or the legal basis).

• On the other hand, in the case of long-term contract of services where the existence of a Permanent Establishment (PE) in the Philippines is dependent on time threshold (e.g. days of physical presence of the nonresident company's employees in the Philippines within a twelvemonth period or calendar year or taxable year), the annual updating is mandatory. For contract of services, the COE shall be limited to a particular period of engagement.

• Applications with incomplete documents will no longer be accepted, given the limited storage of ITAD. In case an application with incomplete documents was inadvertently accepted, the filer shall be duly notified of the result of evaluation and the docket shall be returned immediately to said filer.

• There will be no automatic denial for failure of the filer to file the RFC within the prescribed period. Denials will purely be based on the merits of the case, i.e., whether or not the nonresident has established and proved their entitlement to treaty benefit. However, the penalty for late filing shall be imposed (Section 13 of RMO No. 14-2021). In meritorious cases, the nonresident or withholding agent may be

• granted an extension within which to submit the required documents but in no case shall it exceed thirty (30) days.

• All taxpayers with pending TTRAs will still receive a "Final Notice to Submit Additional Documents" despite receiving a notice prior to the effectivity of the new RMO, and will be given three (3) months from receipt thereof to submit the required documents. Those who have been notified that their applications have been archived will no longer receive a Final Notice but are obliged to submit the required documents indicated in the previous notice/s within four (4) months from the effectivity of the new RMO.

• If the RFC or TTRA is approved, the BIR will issue a COE instead of the usual BIR Ruling. For TTRAs relating to interests, dividends, and royalties, which were filed prior to the effectivity of RMO No. 8-2017, the BIR may still issue a Compliance Check Report.

If the nonresident has income payments subjected to treaty rates in 2020 and prior years but no TTRA or Certificate of Residence for Tax Treaty Relief (CORTT) Form was filed therefor, the withholding agent has until the last working day of 2021 to file an RFC with complete documentary requirements. Failure to file the same within the prescribed deadline would be subject to the provisions of Sections 250 and 255 of the Tax Code. A penalty of ₱1,000 per failure to file a CORTT Form for dividends, interests and royalties paid after the effectivity of RMO No. 8-2017 until December 31, 2020 shall, however, be imposed to be fair with the taxpayers who previously complied with the provisions of such RMO.

RMC No. 79-2021, June 28, 2021

This circularizes the PSA Advisory dated May 19, 2021 with subject “Philippine Identification (PhilID) Cards as the Official Proof of Identity for Transactions with Government and Private Entities”.

This circularizes the Philippine Statistics Authority (PSA) Advisory with subject “Philippine Identification (PhilID) Cards as the Official Proof of Identity for Transactions with Government and Private Entities”.

Under Republic Act No. 11055 (Philippine Identification System Act), the PhilID card, issued by the PSA, shall serve as the official government-issued identification document of cardholders in dealing with all National Government Agencies (NGAs), Local Government Units (LGUs), Government-Owned or -Controlled Corporations (GOCCs), Government Financial Institutions (GFIs), State Universities and Colleges (SUCs), and all private sector entities. As such, the PhillD card shall be accepted as sufficient proof of identity, without the need to present any other identification documents.

The Act penalizes any person or entity who without just and sufficient cause refuses to accept, acknowledge and/or recognize the PhillD card as the only official identification of the holder/possessor with a fine in the amount of Five Hundred Thousand Pesos (₱500,000.00). Finally, if the violation is committed by government official or employee, the penalty shall include perpetual absolute disqualification from holding any public office or employment in the government, including any GOCCs, and their subsidiaries.

RMO No. 18-2021, June 2, 2021

This prescribes the BIR Operational Key Performance Indicators (KPIs) for CY 2021 for the Revenue Regions (RRs), Revenue District Offices (RDOs) and Large Taxpayers Service (LTS).

The concerned Assistant Commissioners, as Measures Owners, shall monitor, review and evaluate their respective Operational KPIs against their goals/targets to assess the performance of the concerned offices. There are seventeen (17) Operational KPIs whose details are specified in Annex A of the Order.

The Operational KPIs shall be included as measures in the Office Performance Commitment and Review (OPCR) Form as well as in the Office Index of Success Indicators of the RRs, RDs, RDOs, LTs, LTNOADs, LTDs Cebu and Davao, ELTFOD, LTVATAU, LTCED, LTDPQAD, ELTRD and LTAD in relation to the Strategic Performance Management System.

The Accomplishment Report and Evaluation Report shall be prepared every 1st Semester (January to June) and annually based on the cumulative accomplishment from January to December.

RMO No. 20-2021, June 17, 2021

This amends RMO No. 31-2020 relative to the giving of points to the Revenue District Offices (RDOs) on their conduct of tax information dissemination activities under the Taxpayer Awareness Program (TAP).

In the reporting of accomplishments on the Taxpayer Awareness Program (TAP), the giving of Points per tax information dissemination activity was amended as follows for the following activities:

• Posting of tax information materials in social media (Facebook, YouTube, etc.)
• Conduct of Tax Quiz and other special events to promote tax awareness
• Implementation of new/innovative idea on tax information dissemination/ delivery of taxpayer service

In relation to the preparation of the semestral/annual TAP Accomplishment Reports, the Client Support Section (CSS) Chiefs and Client Support Unit (CSU) Heads should pay attention to the following:

a. Presentation of Accomplishments
b. Content of the Accomplishment Report
c. Accuracy of Information Reported

The provisions reiterated in Section III of RMO No. 31-2020, with the exception of the amended portions in Section III.3 thereof (pertaining to posting of tax information materials in social media; conduct of Tax Quiz and other special events; and implementation of other new/innovative idea on tax information dissemination/delivery of taxpayer service) still remain the same and shall be strictly observed in the preparation and submission of the TAP Accomplishment Reports.

Securities Laws are by nature special laws, and acts or omissions that violate their provisions are considered mala prohibita which is a punishable offense.

Considering that Trading Participants play an essential and critical role in these markets, the Commission has established, approved and implemented rules and regulations requiring them to act in a manner that is protective of the interests of their customers, the investing public, and other market participants. These rules, along with rules promulgated by the self-regulatory organizations (SROs) which include the Appellee CMIC, seek to ensure that Trading Participants operate, inter alia, in a financially sound manner, maintain adequate custody of customer assets, and refrain from deceptive and manipulative practices.

Given this, the SEC En Banc hold that the imposition of penalty for violation of the CMIC Rules in relation to the Implementing Guidelines is warranted based on the established rule that admissions are conclusive upon the party. An act or omission that violates law, rule or regulation can never become valid even if repeatedly practiced or done over a considerable period of time. Moreover, as discussed and emphasized earlier, the Securities Laws are by nature special laws, and acts or omissions that violate their provisions are considered mala prohibita which is a punishable offense.

The Know Your Customer (“KYC”) guidelines which have been incorporated and adopted in the CMIC Rules was intended to ensure that securities transactions are not used for money laundering, terrorist financing, drug trafficking, and other illegal acts. The KYC rules and guidelines are thus specifically intended (a) to deter criminals posing as legitimate customers who would use financial institutions as tools to launder proceeds from their illicit activities, (b) to unmask or reveal the illicit nature of a customer’s business, and (c) to obtain and store information of a customer in a database that will indicate/show when transactions are inconsistent with customer’s normal business transactions or financial capacity. From this perspective, it is clear that the responsibility of Trading Participants in relation to KYC rules and guidelines is intended to be continuing and regular to ensure that client information is updated and current. Know Your Customer is not just for the benefit of the Trading Participant. The KYC Rule is in place to prevent money laundering and other illegal acts. (Ventures Securities, Inc. vs. Capital Markets Integrity Corporation, SEC En Banc Case No. 01-21-481, Series of 2021, June 15, 2021)

Respondent violated the provisions of the SRC and 2015 SRC Rules. Respondent’s acts and deeds show that he participated in the fraudulent scheme of transferring shares securities owned by other client of R&L to his account in Venture Securities.

Respondent cannot feign ignorance that he has no knowledge on the unauthorized securities transactions of his account as he himself admitted that he received commission money from the transactions. Those facts are suspicious in itself, and should have alerted him that there are irregular transactions pertaining to his account. His claim of ignorance is unnatural to be believable and contrary to human experience. In this situation, the more natural thing for him to do after knowing that he will receive checks amounting to millions of pesos is to conduct an actual inquiry and verification of the circumstances of the issuance of checks or to refuse to receive them. Instead of doing these, he even asks for a higher amount of commission.

It is clear that Respondent violated Section 26 in relation to Section 54 of the SRC and the 2015 SRC Rules. Respondent’s acts and deeds show that he participated in the fraudulent scheme of transferring shares securities owned by other client of R&L to his account in Venture Securities. (In the matter of: R&L Investments, Inc. vs. Julieto C. Sulapas, SEC MSRD Case No. MSRD-MID-2020-3, June 11, 2021)

As registered persons, it is the obligation of R&L, Joseph Lee, Jonathan Lee and Lucy Linda Lee to act honestly, fairly and in the best interest of their clients in conducting their business.

As registered persons, it is the obligation of R&L, Joseph Lee, Jonathan Lee and Lucy Linda Lee to act honestly, fairly and in the best interest of their clients in conducting their business. A reading of the provisions of the Information About Clients Rule would show that the same pertains to the KYC Rule. The application of the KYC Rule is a continuing requirement (1) from the time client opens an account with a broker dealer and (2) everytime the client would trade.

Under the Rule on Supervision, R&L is required to ensure that Jonathan Lee possesses sufficient training and experience in securities regulation matters and an understanding of the securities activities of the firm enabling them to effectively execute their duties. The fact that Marlo Moron can perform the above-mentioned functions only highlights Jonathan Lee’s failure to supervise the activities of the Company. In view of the foregoing, the Commission find the Respondents to have violated Rule 30.2.6.1 of the 2015 SRC IRR.

The Commission cannot tolerate and ignore any act or omission on the part of those involved in the capital market which would violate the norm set by the securities law especially on the transactions and responsibilities of Broker Dealers and that would diminish or even just tend to diminish the faith of the investors on the integrity of the capital market. Likewise, the practice of installing undiscerning persons in entities involved in the capital market cannot be tolerated, let alone allowed to be perpetuate. This must be curbed by holding accountable those who consciously and willfully commit wrongful acts in the performance of their duties as officers, registered persons or employees. The Respondents must be reminded that transactions involving securities affect the general public and the national economy. (In the matter of: R&L Investments, Inc. – R&L Investments, Inc., Joseph Lee (President), Lucy Linda Lee (Nominee and Salesman) and Jonathan Lee (Associated Person),), SEC MSRD Case No. MSRD-MID-2020-1, June 11, 2021)

SEC-OGC Opinion No. 21-07 – Re: Engaging in Mass Media and Advertising Activities thru the Offering of Space on Assets (Moving Structures), May 10, 2021

A domestic corporation wholly owned by Filipino citizens is legally allowed to engage in advertising and mass media activities.

This is a request for opinion whether Metro Promo Concepts Corporation, a corporation wholly-owned by Filipino citizens, may engaged business of providing its clients with marketing services that include advertising, promotions, and mass media. It is previously engaged in the business of sale of general merchandise, goods, wares, commodities of all kinds and description.

Considering that MPC will offer a complete package of marketing services that includes conducting market research, creating marketing plan, conceptualizing, proposing brand/campaign ambassadors, story board, installation of campaign materials, providing social media direction, offering various tools and media of dissemination and the actual execution of campaign/project, as well as offers or leases spaces in moving vehicles or assets, MPC clearly performs the functions of an advertising and mass media agency, and is therefore engaged in nationalized activities. Consequently, MPC is subject to foreign ownership restrictions on mass media and advertising entities under Items 1 and 2, respectively, of Section 11,Article XVI of the 1987 Constitution, the Foreign Investment Act and Executive Order(EO)No. 657, and other pertinent laws. Thus, since MPC is a domestic corporation wholly owned by Filipino citizens, as disclosed in the letter, then the Commission confirms the position that MPC is legally allowed to engage in advertising and mass media activities.

BSP Circular Letter CL-2021-044,
June 1, 2021

Disseminates the AMLC’s Study on the 2021 Suspicious Transaction Report (STR) Quality Review covering STRs filed by covered persons from 2017 to 2020.

This disseminates the AMLC’s Study on the 2021 Suspicious Transaction Report (STR) Quality Review covering STRs filed by covered persons from 2017 to 2020.

The study highlighted, among others, the following data quality and system issues:

1. Potential Over Usage of Suspicious Indicators (SI) 6 for Defensive Reporting
2. Continuous Misreporting of Fraud Schemes and Activities

In view of the foregoing, BSP-Supervised Financial Institutions (BSFIs) are reminded to further enhance their suspicious transaction reporting process and ensure proper filing of STRs using the appropriate suspicious indicator or predicate crimes, in accordance with the AMLC Registration and Reporting Guidelines (ARRG).

BSP Memorandum No. M-2021-034,
June 4, 2021

This provides the Guidelines for Obtaining a Certificate of Eligibility (COE) under Republic Act (RA) No. 11523.

This provides the Guidelines for Obtaining a Certificate of Eligibility (COE) under Republic Act (RA) No. 11523, otherwise known as the Financial Institutions Strategic Transfer (FIST) Act.

The Monetary Board approved the following guidelines for BSFIs that intend to obtain COE for purpose of availing of the tax exemptions and privileges for the sale/transfer of non-performing asset/s (NPA) to a FIST corporation (FISTC) or to an individual, or for transactions involving dacion en pago by the borrower or by a third party on behalf of a borrower to a BSFI pursuant to the provisions of Section 386 of the Manual of Regulations for Banks (MORB) and Sections 363-Q/307-N of the Manual of Regulations for Non-Bank Financial Institutions, which implement the provisions of the Republic Act (R.A.) No. 11523 or the FIST Act and its Implementing Rules and Regulations (IRR).

1. The COE refers to the certificate issued by the Bangko Sentral ng Pilipinas (BSP) as to the eligibility of the NPAs [i.e., non-performing loans (NPL) and real and other properties acquired (ROPA)] of BSFIs for purposes of availing of the tax exemptions and privileges, pursuant to the provisions of the FIST Act and its IRR. As stated under Rule 25 of the IRR, only assets that have become non-performing on or before 31 December 2022 will be issued a COE.
2. The transactions, which pertain to Rule 15.1 (1) to (6) of the IRR, shall be issued a COE to be entitled to tax exemptions and fee privileges:
3. The BSP will act on applications for COE issuance that are received on or before 24 February 2023, provided that the transaction must have occurred and the Deed of Transfer/Dacion or equivalent documents have been duly executed by the parties and notarized within the two-year period from the effectivity of the FIST Act, i.e., 18 February 2021 to 18 February 2023

BSP Memorandum No. M-2021-036,
June 28, 2021

provides the Guidelines on the Submission of Reports/ Documents and Communications through BSP Financial Supervision Sector (FSS) Mall-in Account.

This provides the Guidelines on the Submission of Reports/ Documents and Communications through BSP Financial Supervision Sector (FSS) Mall-in Account.

Effective 05 July 2021, all reports, documents, and communications to the BSP FSS, including general correspondences and other documents shall be transmitted electronically to the email address: This email address is being protected from spambots. You need JavaScript enabled to view it..

The BSFIs, through its Compliance Officers, are expected to ensure that the reports/correspondences to FSS are submitted to proper communication channels (i.e., specific FSS Department/Office email addresses or via the FSS mail-in account).

Failure to use the prescribed subject line format will result in the failure of delivery of the email to the intended recipient. For reports, it may be considered non-compliance with the BSP reporting standards and may be subject to applicable sanctions under existing BSP regulations.

BSP Memorandum No. M-2021-038,
June 30, 2021

An Advisory on the Organization Changes in the Regional Operations Sub-Sector (ROSS).

This is an Advisory on the Organization Changes in the Regional Operations Sub-Sector (ROSS).

The Monetary approved, among others, the implementation of the reorganization of the Bangko Sentral ng Pilipinas (BSP). Subsequently, BSP Implementing Order No. 35 dated June 7, 2021 provided the guidelines to operationalize the structural, non-structural and staffing changes in ROSS, which was renamed and shall be prospectively referred to as Regional Operations (RO).

Under the RO are five (5) Regional Offices and twenty (20) branches, which are strategically located throughout the Philippines. Among the five (5) Regional Offices are the BSP Greater Manila Regional Office (BSP GMRO) and the BSP South Luzon Regional Office (BSP SLRO). The BSP GMRO, previously known as Cash Department, shall service the deposit and withdrawal transactions of AABs in the Greater Manila Area and other assigned areas. On the other hand, the BSP SLRO, a newly-created Regional Office, shall provide administrative oversight to South Luzon branches, including centralization of its regional economic and financial learning functions.

IC Circular Letter
CL-2021-40 dated June 9, 2021

This provides for the increased capacity of the Online Agent’s Computerized Examinations (Online ACE).

ln order to accommodate more examinees in the lnsurance Agent's Qualifying
Examinations through the Online Agent's Computerized Examinations (Online ACE) System, ltem lll “Online ACE Examination Schedules” is hereby amended.

The Online ACE can accommodate 50 examinees per batch with a total of three (3) batches per day. Each batch is divided into two (2) examination rooms. namely Room A and B. Each examination room can accommodate 25 examinees. Rooms A and B will be conducted simultaneously in online examination rooms. Once the slots in a scheduled batch have already been taken. It shall no longer be available on the system.

Unless otherwise directed, availability of ACE conducted examinations shall be governed as follows:

IC Circular Letter
CL-2021-42 dated June 29, 2021

This is a directive to take all precautionary measures against recent spate of cyberattacks.

All entities under the regulatory control and supervision of this Commission are
respectively hereby:

• Warned of the current alarming cyberattacks on entities engaged in financial services;
• Directed to take all precautions to mitigate the risk of such cyberattacks and related risks, which includes, but are not limited to, upgrading their cybersecurity measures and further training its information and communications technology (lCT) personnel; and
• Directed anew to promptly and strictly comply with the provisions of the Data Privacy Act of 2012, insofar as applicable, particularly as regards the following areas of compliance, viz: (1) Registration with the NPC as a PIC and/or PIP; (2) Appointment of a DPO; (3) Conduct of a Privacy lmpact Assessment; (4) Creation of a Privacy Manual; (5) implementation of Privacy and Data Protection Measures; and (6) Exercise of Data Breach Reporting Procedures.