Administrative regulations, such as RR No. 17-2012, cannot amend or revoke the law. A mere regulation that “operates to create a rule out of harmony with the statute is a mere nullity” and the law must prevail.

The taxpayer asserts that the pertinent provisions of Revenue Memorandum Circular (RMC) No. 90-2012 and Revenue Regulations (RR) No. 17-2012 are invalid for being contrary to Section 143 of the NIRC of 1997, as amended by Republic Act No. 10351.

The Supreme Court considered RMCs as administrative rulings issued from time to time by the BIR. Granted, the interpretation placed upon statute by executive officers, whose duty to enforce it, is entitled to great respect by the courts, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Meanwhile, administrative regulations, such as RR No. 17-2012, cannot amend or revoke the law. A mere regulation that “operates to create a rule out of harmony with the statute is a mere nullity” and the law must prevail.

Here, the excise tax on liquors is governed by Section 143 of the NIRC of 1997, as amended by Section 3 of RA No. 10351. Clearly, the excise tax shall be P15 per liter in case the net retail price per liter of volume capacity of the fermented liquor is P50.60 or less, otherwise, it should be P20 per liter. To implement the same, the BIR issued RR No. 17-2012 and RMC No. 90-2012.

Upon review, however, the Court finds that certain parts of Annex “A-1” of RMC No. 90-2012 imposed tax rates per liter either by P15.49 or P20.57 regardless of whether the net retail price per liter of volume capacity of the fermented liquor is below or more than P50.60 per liter. This is clearly contrary to provisions of Section 143 of the NIRC.

Considering the foregoing, the BIR has deemed erroneously, excessively and illegally collected excise tax on the Taxpayer. (San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 10223, July 05, 2023)

A FAN must not only indicate the legal and factual bases of the assessment but must also state a clear and categorical demand for payment of the computed tax liabilities within a specific period.

Respondent asserts that the FAN was void for lack of due date. A perusal of the Formal Letter of Demand and Final Assessment Notice (FLD/FAN) issued against the respondent reveals that they failed to demand payment of the taxes due within a specific period. While the BIR demanded payment for the alleged deficiency taxes in the FLD, the period upon which the respondent should pay was not indicated therein.

Interestingly, judicious scrutiny of the FAN reveals that the spaces for the due dates, which indicate when the respondent is required to pay the said deficiency taxes, were conspicuously left blank. Since the FAN did not properly indicate the due dates when deficiency taxes must be paid, no proper demand thereof within a specific period was made.

The Supreme Court has consistently ruled that a FAN without a definite due date for payment is not valid because it negates the demand for payment. In other words, a FAN must not only indicate the legal and factual bases of the assessment but must also state a clear and categorical demand for payment of the computed tax liabilities within a specific period.

Absent of such demand, as in this case, the FAN is fatally infirm. Being a void assessment, the FAN bears no fruit and must be slain at sight. (Commissioner of Internal Revenue vs. Ecotechnovations, Inc., CTA EB No. 2564, July 3, 2023)

To avail of the tax exemption granted under Section 24 (D) (2) of the NIRC of 1997, the taxpayer must notify the CIR, within thirty (30) days from the date of sale or disposition, their intention to avail of the said tax exemption through a prescribed return.

The taxpayer paid capital gains tax totaling P8,835,312.00 and argued that they complied with the essential basic conditions for exemption from payment of capital gains for sale of principal residence set forth under pertinent provisions of law and existing jurisprudencial declarations; and that the capital gains paid by petitioners were erroneously collected by the BIR. However, the BIR contends that the taxpayer is not entitled to a refund and exemption.

The Court held that one of the conditions to be exempt from capital gains tax in the sale, exchange, or other disposition of real property, is that the CIR shall be duly notified by the taxpayer within thirty (30) days from the date of sale or disposition through a prescribed return of his or her intention to avail of the said tax exemption and to execute and submit the required Escrow Agreement.

Here, the present refund claim must be denied for failure of the taxpayer to notify the BIR, through Capital Gains Tax Return (BIR Form No. 1706), of their intention to avail of the capital gains tax pursuant to Section 24(D) of the NIRC of 1997, and for their failure to execute and submit the required Escrow Agreement, as required under Section 3 of RR No. 13-99, as amended by RR No. 14-2000.

There is no indication that the taxpayer fulfilled the condition for the tax exemption to be granted under Section 24 (D)(2) of the NIRC of 1997. (Estelita R. Rodriguez v. Commissioner of Internal Revenue , C.T.A. Case No. 10151, July 20, 2023)

It is the decision or ruling, not the inaction of the Commissioner of Customs, that is appealable to the CTA..

The taxpayer insists that the Court has jurisdiction over the instant case, that it has exclusive appellate jurisdiction to review the inaction of the COC, that respondents took no action on the disputed issues of duty and tax valuations or assessments and the demanded refund, and that the COC's inaction is already a decision by itself. As such, it filed the Petition for Duty and Tax Refund in conformity with Rule 8 of the RRCTA.

Section 1136 of Customs Modernization and Tariff Act (CMTA) is clear and categorical in stating that it is the ruling and decision of the COC which may be appealed to the Court of Tax Appeals (CTA).

Similarly, Section 3 of Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA) provides that the CTA has Exclusive original over or appellate jurisdiction to review by appeal the Decisions of the Commissioner of Customs.

The inaction referred to in Section 9 of RA No. 9282 must be taken to refer exclusively to the inaction of the Commissioner of Internal Revenue (CIR) on protest in cases of disputed assessments. No similar provision appears in the CMTA, specifically allowing appeals from any inaction of the COC. Section 1136 of CMTA is clear and categorical in stating that it is the ruling and decision of the COC which may be appealed to the CTA.

Here, the CTA may only take cognizance of cases falling within its jurisdiction as enumerated under Section 7 of R.A. 9282, and the alleged inaction of the COC is not one of them. (L.T.J.S. Store, represented by its Owner/Proprietor Mr. Antonio De Jesus Silva vs. Hon. District Collector of Customs, Port of MICP, North Harbor, Port Area Manila; and Hon. Rey Leonardo Guerrero, Commissioner of Customs, South Harbor, Port Area, Manila, (CTA EB No. 2563, CTA Case No. 10557), July 27, 2023)

When after an assessment for deficiency taxes has been instituted by the BIR and a final demand has been made upon the taxpayer to pay its deficiencies on a certain date, the taxpayer fails or refuses to pay regardless without perfecting an appeal. In such cases, the commission of willful failure to pay is already certain since the BIR's demand has already become final, executory, and no longer subject to judicial review.

On 15 January 2020, the Office of the Prosecutor General filed an information before the regional trial court against the accused and its responsible officers (now accused-appellees) for a violation of Section 255, in relation to Section 253 (d) and 256 of the NIRC, as amended for the under remittance of withholding tax on compensation. On October 16, 2020, the accused-appellee filed before the RTC an Omnibus motion praying for the dismissal of the case on the ground that the action had already been prescribed.

The issue is whether the offense charged against the accused-appellees had already been prescribed.

According to plaintiff-appellant, the five (5)- year prescriptive period for the offense, i.e., violation of Section 255, in relation to Sections 253 (d) and 256 of the tax code, as amended, would only begin to run upon the filing of the criminal complaint against accused-appellees on February 15, 2018. Thus, the filing of the information herein case on January 15, 2020, was well within such period.

Accused-appellees, on the other hand, reassert that the 5-year prescription period should have been counted from the expiration of the period of payment which is on February 13, 2014.

Section 281 of the NIRC provides that prescription shall begin to run from the day of the commission for the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceedings for its investigation and punishment.

When after an assessment for deficiency taxes has been instituted by the BIR and a final demand has been made upon the taxpayer to pay its deficiencies on a certain date, the taxpayer fails or refuses to pay regardless without perfecting an appeal. In such case, the commission of willful failure to pay is already certain since the BIR’s demand has already become final, executory and no longer subject to judicial review.

In the case at bar, the FAN demanded that payment be made within 30 days from the date of the FAN or until 12 February 2014.

When the period of payment had lapsed without any payment being made, a perceived offense of tax evasion due to willful failure to pay was apparently committed by accused-appellee SKI and its responsible officers on 13 February 2014. Counting five (5) years from the date of the apparent commission of the said offense, information for the same should have been filed with the RTC by 13 February 2019. Therefore, when the Information was filed on January 15, 2020, the offense charged in the information had already been prescribed pursuant to Section 281 of the NIRC. (People of the Philippines v. SKI Construction Group, Inc., CTA Crim Case No. A-17, July 17, 2023)

The rationale for the mandatory and jurisdictional 120 + 30-day period is that inaction by the respondent within the 120-day period given him to decide a claim for input tax refund is treated as a denial by itself.

On 18 March 2013, taxpayer filed its administrative claim for refund of alleged excess and unutilized input VAT in the total amount of Four Million Five Hundred Thirty-One Thousand Nine Hundred Sixty-Four Pesos and Seventy-Five cents (Php 4,531,964. 75). On 8 November 2018, the taxpayer received a Letter, dated 17 October 2018, from BIR denying its administrative claim for VAT refund. In response, it then filed the instant Petition for Review ("Petition") on 7 December 2018, assailing said denial.

The issue is whether or not the petitioner's judicial claim was filed beyond the prescriptive period as provided in Section 112 (C) of the NIRC, thereby depriving the Court of jurisdiction over the instant case.

Based on the foregoing provisions, a taxpayer applicant must comply with two specific requisites regarding the timeliness of its claim to successfully obtain a tax refund or credit:

1. the refund claim is filed with the BIR within two (2) years after the close of the taxable quarter when the sales were made;
2. the judicial claim is filed with this Court within thirty (30) days from receipt of an adverse decision (i.e., partial or full denial of the administrative claim), or upon the lapse of the period given to the CIR to act on an administrative claim (i. e., one hundred twenty ( 120) days from the filing of such claim) wherein the CIR failed to act on the same within such period (in which case, the claim for refund is deemed denied by the CIR), whichever comes first. This rule is known as the mandatory and jurisdictional 120+30-day period enunciated by the Supreme Court.

The rationale for the mandatory and jurisdictional 120 + 30-day period is that inaction by the respondent within the 120-day period given him to decide a claim for input tax refund is treated as a denial by itself. Hence, there is no need for a taxpayer to wait for an actual denial as its request for input VAT refund has been deemed denied, by express provision of law.

Here, the taxpayer filed its administrative claim for input VAT refund for the fiscal period starting on 1 April 2011 until 31 March 2012 on 18 March 2013. Applying the 120-day waiting period, the BIR had until 16 July 2013 within which to decide said administrative claim for input VAT refund. Considering that the BIR did not act upon said administrative claims within the said 120-day waiting period, the petitioner should have filed its judicial claim before this Court on or before 15 August 2013, which is thirty (30) days from the lapse of the 120-day waiting period. As the petitioner filed the Petition before this Court only on 7 December 2018, the same is markedly belatedly filed for more than five (5) years. (Advanced World System, Inc. v. Commissioner of Internal Revenue, CTA Case No. 9983, June 11, 2023)

The two-year period for the claim for refund is counted from the date of payment to the BIR of the VAT passed on to the petitioner by its suppliers i.e., the filing of its suppliers' VAT return and payment of the VAT due thereon.

Petitioner is exempt from direct and indirect taxes, as it enjoys the privileges afforded by PAGCOR's franchise. To recapitulate, its sales of services are exempt under Section 109(1)(K) of the NIRC of 1997, as amended, and its purchases of goods and services are effectively zero-rated under Section 108(8)(3) of the NIRC of 1997, as amended. Simply put the petitioner's suppliers of goods and services should not have shifted VAT to it, as the sales are effectively zero-rated.

The issue is whether the petitioner was able to timely and properly file its claim for a refund or tax credit.

It is well-settled in our jurisprudence that the following requirements must be complied with to prove a claim for refund or credit of taxes erroneously paid or illegally collected under Sections 204 and 229 of the NIRC of 1997, as amended:

1. That the taxpayer should file a written claim for refund or tax credit with the BIR Commissioner within two years from the date of payment of the tax or penalty;
2. That, if denied or not acted upon within said period, the petition for refund be filed with the CTA within 30 days from receipt of the denial and within said 2-year period from the date of payment of the tax or penalty regardless of any supervening cause, otherwise, the claim for refund shall have prescribed; and,
3. The claim for refund must be a categorical demand for reimbursement.

Unfortunately for the petitioner, it cannot be determined whether it timely filed its claim for refund or tax credit.

Ordinarily, for claims under Section 229, the two-year period will be reckoned from the date of payment of taxes by the statutory taxpayer. However, considering that the petitioner is not the statutory taxpayer, i.e., the petitioner only bore the economic burden of paying taxes, the two-year period is counted from the date of payment to the BIR of the VAT passed on to the petitioner by its suppliers i.e., the filing of its suppliers' VAT return and payment of the VAT due thereon. As the buyer, the petitioner shoulders the VAT and treats it as input VAT.

The records are miserably bereft of any proof of the date of the filing of VAT returns and payment of the VAT purportedly passed on to the petitioner by its suppliers. Hence, this Court cannot determine whether a Petition for Review praying for a refund or credit of erroneously or illegally collected taxes under Section 229 is timely and properly filed. (Melco Resorts Leisure Corporation vs. Commissioner of Internal Revenue, CTA EB 2608, July 11, 2023)

Sec. 148 (e) of the 1997 NIRC, as amended, imposes excise tax on naphtha, regular gasoline, and other similar products of distillation only, and not on the raw materials or ingredients used for their production.

On December 29, 2014 and April 8, 2015, the taxpayer paid the Bureau of Customs (BOC) excise taxes in the total amount of P19,997,028.00 for importing alkylate covered by IEIRD No. 00379406065. On December 15, 2016, taxpayer filed its administrative claim with the BIR for the refund or issuance of tax credit certificate (TCC), representing the erroneously paid excise taxes arising from the aforesaid importation of alkylate.

The issue is whether the Court erred in denying taxpayer's claim for a refund or issuance of a tax credit certificate representing excise taxes erroneously paid for its importation of alkylate. The taxpayer contends that its claim for a tax refund is based on the absence of a law imposing an excise tax on alkylate.

For BIR, alkylate, allegedly a product of distillation similar to naphtha, is subject to excise tax under Section 148(e) of the NIRC of 1997, as amended. As the Court in Division found in the assailed Decision of September 16, 2021, alkylate is still a distillation product. This is simply because while alkylate is not directly produced through the process of distillation but by alkylation, the raw materials, namely, olefins and isobutane, are products.

In the very recent case of Petron Corporation v. Commissioner of Internal Revenue (Petron), the Supreme Court categorically declared that alkylate does not fall under the category of "other similar products of distillation" and hence, is not subject to excise tax. Thus, it is incorrect to say that both raw materials utilized to produce alkylate are products of distillation, much more to declare alkylate as a product of distillation simply because its raw materials are produced through distillation.

To be sure, Sec. 148 (e) of the 1997 NIRC, as amended, imposes excise tax on naphtha, regular gasoline, and other similar products of distillation only, and not on the raw materials or ingredients used for their production. Consequently, the payment of excise taxes by taxpayers upon its importation of alkylate is deemed illegal and erroneous in the absence of a specific provision of law that distinctly and categorically imposes tax thereon. (Petron Corporation vs. Commissioner of Internal Revenue, CTA EB No. 2615, July 7, 2023)

The statute of limitations applies to withholding tax assessments.

On 03 December 2010, the taxpayer received a Preliminary Assessment Notice (PAN) with Details of Discrepancies", both dated 26 November 2010, assessing the taxpayer with deficiency EWT and WTC for TY 2007 in the amount of P898,772-43 and P2,246,795.07, respectively, or for an aggregate amount of P3,145,567. On 04 January 2011, the taxpayer filed a reply to the PAN dated 29 December 2010 contesting the assessment and claiming that the right of the government to assess had already been prescribed.

The issue in this case is whether the right of the Commissioner of Internal Revenue to assess taxpayers has been prescribed. The taxpayer posits that since the FAN was issued only on 14 January 2011, the assessment periods for EWT and WTC for the months of January to November have already been prescribed. On the other hand, BIR contends that: (1) the statute of limitations under Section 203 of the NIRC, as amended, does not apply to withholding tax assessments owing to their nature as a penalty instead of being internal revenue taxes; and, (2) the instant case falls under Section 222, thus, the extraordinary prescriptive period of 10 years from the discovery of falsity, fraud or omission governs.

The Court held that it is true that withholding tax is a method of collecting tax in advance and that a withholding tax on income necessarily implies that the amount of tax withheld comes from the income earned by the taxpayer/payee. Nonetheless, the Court does not agree with the CIR that withholding tax assessments are merely an imposition of a penalty on the withholding agent, and thus, outside the coverage of Section 203 of the NIRC.

Withholding taxes do not cease to become income taxes just because it is collected and paid by the withholding agent. Thus, withholding tax assessments such as EWT and WTC clearly contemplate deficiency internal revenue taxes. Thus, the statute of limitations applies to withholding tax assessments. (Zenorex Marketing Corporation vs. Commissioner of Internal Revenue, CTA Case No. 10175, July 10, 2023)

It is imperative upon the taxpayer to prove, on the strength of its own evidence, that its sales are zero-rated or effectively zero-rated.

The taxpayer filed its Amended Quarterly VAT Return for the 3rd quarter of TY 2018. It reported zero-rated sales and purchases of goods and services with input VAT. It subsequently filed a claim for refund of its excess or unutilized creditable input VAT for the said 3rd quarter of TY 2018. However, the BIR denied its claim for refund for its failure to submit the complete documentary requirements to support its application for refund. Hence, it filed a Petition for Review before the Court of Tax Appeals.

The claim for refund of excess and unutilized input VAT is governed by Section 112 of the NIRC of 1997, as amended. It reiterates the requisites as follows: (1) that the claim for refund was filed within the prescriptive period; (2) that taxpayer is VAT-registered; (3) that there must be zero-rated or effectively zero-rated sales; (4) that input taxes were incurred or paid; (5) that such input taxes are attributable to zero-rated or effectively zero-rated sales; and (6) that the input taxes have been applied against the output tax. Here, the taxpayer claims that its goods and services were sold to PSC, a Philippine Economic Zone Authority (PEZA)-registered enterprise, and that its transactions with its client are zero-rated. However, it was unable to prove that its sales were zero-rated or effectively zero-rated.

Hence, the Court ruled that the taxpayer’s bare assertion, without any documentary evidence, is not sufficient to prove that PSC is indeed a PEZA-registered export enterprise. (Sankyu-ATS Consortium-B v. Commissioner of Internal Revenue, CTA Case No. 10471, August 01, 2023)

The right of the taxpayer to answer the PAN carries with it the correlative duty on the part of the CIR to consider the response thereto; and the issuance of the FAN without even hearing the side of the taxpayer is anathema to the cardinal principles of due process.

On December 19, 2016, the taxpayer received the PAN assessing it for deficiency income tax, VAT, EWT, DST, and IAET for TY 2013. On January 3, 2017, the taxpayer filed its reply against the PAN. In its reply, the taxpayer addressed the findings of the BIR per line item as stated in the PAN, except for the assessed basic DST. On January 5, 2017, just two (2) days after the taxpayer filed its reply, the CIR issued the subject FAN and Assessment Notices which contained the very same issues and the same amount of deficiency taxes stated in the PAN, apart from the computation of interests and the addition of compromise penalty.

The Court ruled that due process requires the CIR to consider the defenses and evidence submitted by the taxpayer and to render a decision based on these submissions. Failure to adhere to these requirements constitutes a denial of due process and taints the administrative proceedings with invalidity. Thus, issuance of a FAN, without consideration and evaluation of the defenses contained in a taxpayer's reply to a PAN, constitutes a violation of the taxpayer's right to due process which renders the assessment void. Here, the Details of Discrepancy attached to the FAN and Assessment Notices in this case did not even comment or address the defenses and documents submitted by the taxpayer. Thus, the taxpayer was left unaware of how the CIR appreciated the explanations or defenses raised in connection with the assessments. Thus, the FAN issued against the taxpayer was declared void by the CTA. (Dizon Farm Produce, Inc., v. Commissioner of Internal Revenue, CTA EB No. 2516, August 1, 2023)

In cases of purely legal questions, the taxpayer is not required to exhaust the administrative remedies, even assuming that such remedies exist.

The taxpayer is the owner of a number of real properties located in Kaychanarianan, Basco, Batanes. In April 2019, the taxpayer, through its Legal Affairs Department, received a Notice of Real Property Tax Delinquency B (Notice) informing it of the real property tax (RPT) deficiencies on the subject properties. In the said Notice, the taxpayer was given fifteen (15) days from receipt thereof to pay the said RPT deficiencies. On June 3, 2019, the taxpayer filed a Petition for Prohibition (with application for Temporary Restraining Order and/or Issuance of Writ of Preliminary Injunction) (Petition for Prohibition) with the RTC. In the said Petition for Prohibition, the taxpayer questioned the LGU's authority to impose and collect RPT. It argued that it is a government instrumentality, hence, exempt from the payment of RPT.

In its Order on November 18, 2019, the RTC denied due course to the taxpayer’s Petition for Prohibition for being filed out of time. The RTC further found that the taxpayer failed to exhaust administrative remedies by seeking judicial relief when there were other speedy and adequate remedies still available to it.

The Court ruled, citing the Supreme Court’s decision in the case of Light Rail Transit Authority v. City of Pasay (LRTA), that a petition under Rule 65 of the Rules of Court, as amended, may be availed of to challenge the jurisdiction of an LGU in levying RPT on the taxpayer’s (LRTA's) properties on the ground that it is not a GOCC and such being a purely legal question, the doctrine of exhaustion of administrative remedies is unavailing. Here, the issues involved are purely legal issues. It is evident that from the outset, LRTA primarily intended to question the authority of the tax assessor to impose tax assessments on its property, and the authority of the treasurer to collect said tax, as LRTA claims to be a non-taxable entity. This can be seen when the LRTA deliberately chose to file the remedies of certiorari, prohibition, and mandamus, instead of just filing a protest to contest the amounts in the assessment. Clearly, the doctrine of the exhaustion of the administrative remedy is not applicable. (National Food Authority v. Provincial Government of Batanes, CTA AC No. 244, August 2, 2023)

CTA has undoubted jurisdiction to pass upon the constitutionality or validity of a tax law, regulation, or administrative issuance when raised by the taxpayer as a direct challenge or as a defense in disputing or contesting an assessment or claiming a refund.

The taxpayer filed an administrative claim for refund of the alleged overpayment of excise taxes erroneously, illegally, excessively, and/or wrongfully assessed on and collected on the removals of its various products for the period from January 1, 2017 to December 31, 2017. The case was later on elevated to the CTA.

The CIR submits that the Court in Division erred in assuming jurisdiction over this case. Citing Section 7 of Republic Act (RA) No. 1125, as amended by RA No. 9282, and Section 3, Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA), he insists that the Court in Division does not have jurisdiction over the nullification of the P20.57 per liter excise tax rate specified in Revenue Memorandum Circular (RMC) No. 90-201221 and the assailed provision in Revenue Regulations (RR) No. 17-2012.22. The CIR explains that RMC No. 90-2012 and RR No. 17-2012 were issued in accordance with his rule-making or quasi-legislative power to interpret tax laws under Section 4 of the National Internal Revenue Code (NIRC) of 1997, as amended. Hence, the said issuances are appealable to the Secretary of Finance (SOF).

Citing the Supreme Court’s decision in Banco De Oro et al. vs. Republic of the Philippines, et al. (Banco De Oro), the Court ruled that the CTA has undoubted jurisdiction to pass upon the constitutionality or validity of a tax law, regulation, or administrative issuance when raised by the taxpayer as a direct challenge or as a defense in disputing or contesting an assessment or claiming a refund. (Commissioner of Internal Revenue vs. San Miguel Brewery, CTA EB. No. 2625, August 2, 2023)

DST on the sale and conveyance of real property as prescribed in Section 196 of the NIRC, as amended, accrues upon the transfer of ownership over the property sold through the execution of a contract of sale or deed of absolute sale.

The taxpayers entered into separate notarized Deeds of Absolute Sale involving parcels of land. In order to secure the Certificate Authorizing Registration (CAR) and the Tax Clearance Certificate (TCC) from the BIR, the taxpayers proceeded to the Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) due on the sale transactions. However, before affecting the transfer of the titles over the real properties in favor of the taxpayer, the seller and the buyer-taxpayer mutually agreed to rescind, revoke and cancel the aforesaid sale transactions, as evidenced by the two (2) “Revocation/Cancellation of Deed of Absolute Sale”. With this, the buyer-taxpayer filed a Letter-Application for Refund with the BIR for the CGT and DST. However, it was denied by the BIR.

The CTA Second Division partially granted the application for refund of the taxpayers. As to CGT, it held that the buyer-taxpayer is entitled to the refund of erroneously paid CGT. Settled is the rule that three (3) elements must concur in order to impose a tax on income: (a) there must be gain or profit; (b) that the gain or profit is realized or received, actually or constructively; and (c)it is not exempted by law or treaty from income tax. Thus, as regards the first and second requisites, since no income was realized or received, whether actual or constructive, from the revoked sale transaction involving taxpayer’s real properties, no CGT on the said mutually rescinded sale.

However, as to DST, the taxpayer was not entitled to the refund of its DST payments. Sec. 196 of the NIRC, as amended, provides that DST on the sale and conveyance of real property accrues upon the transfer of ownership in the absence of stipulation to the contrary. DST must be paid upon the issuance of the instrument evidencing the transfer or conveyance of real property, irrespective of whether the contract that gave rise to it is rescissible, void, voidable, or unenforceable. This is so precisely because DST is an excise tax imposed on the privilege to transfer or convey a real property through the execution of a Contract of Sale or a Deed of Absolute Sale and not upon the transfer or conveyance itself. Accordingly, the subsequent mutual cancellation or revocation of the instrument embodying the transaction to which the DST liability attaches does not have the effect of canceling such liability.

Therefore, the buyer-taxpayer is entitled to claim for a tax refund on its CGT but not with the DST. (Great Landho, Inc. TT&T Development, Inc., and Tama Propertics, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10184, August 4, 2023)

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical assistance agreement contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive as provided under Section 81 of RA No. 7942, otherwise known as the “Philippine Mining Act of 1995”.

The taxpayer received BIR’s Final Decision on Disputed Assessment (FDDA) assessing it for deficiency taxes, surcharge, and interest. BIR assessed the taxpayer for Excise Tax (ET) covering TY 2013 because of its sale of dire gold and metal concentrates are subject to 2% ET, pursuant to Section 151(A)(2) of the 1997 NIRC, as amended, and RMC No. 17-2013. It paid the foregoing deficiency tax assessments, save for the Excise Tax assessment. It argued that it is exempt from excise tax from the date of approval of its Mining Project Feasibility Study up to the end of the recovery period pursuant to the Financial or Technical Assistance Agreement (FTAA), Section 81 of RA 7982, otherwise known as the “Philippine Mining Act of 1995,” and Section 236 of DENR Administrative Order No. 95-23. It adds that BIR Ruling No. 10-2007 confirmed its excise tax exemption during the recovery period.

The Court held that Section 84 of the NIRC provides those mineral products of a concerned contractor, under an FTAA with the government, is subject to ET under Section 151 of the NIRC, as amended. By way of exception, Section 81 of RA No. 7942 provides that the government’s share, including said ET, may not be collected by the latter from an FTAA contractor, if it has not fully recovered its pre-operating expenses, exploration, and development expenditures. Section 7 of DAO No. 12-2007, provides that the recovery period, or the period within which the government may not collect its share, including the ET, is a maximum period of five (5) years, counted from the date of commencement of commercial production, or the date when the aggregate of the Net Cash Flows from the Mining Operations is equal to the aggregate of its Pre-Operating Expenses, whichever comes first. Since the date of commencement of commercial operation started on October 11, 2005, or the date of MGB approved taxpayer’s partial feasibility study, counting five (5) years therefrom, then the recovery period ended on October 11, 2010.

Considering that there is no legal impediment for the BIR to assess taxpayer ET covering TY 2013, taxpayer is liable to pay Excise Tax covering TY 2013. (Oceanagold, Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 9736, August 10, 2023)

The inaction of the COC involving liability for customs duties, fees, or other money charges is not one of the subject matters upon which the CTA exercises jurisdiction.

On June 25, 2021, the taxpayer filed a Petition for Duty and Tax Refund with the Court in Division. It alleged in the said petition that it had filed a protest which was received by the Bureau of Customs (BOC) on March 4, 2021. However, the Honorable District Collector of Customs (COC) has not acted on such protest. Thus, the filing of the Petition for Duty and Tax Refund.

The CTA ruled that it has no jurisdiction over the taxpayer’s Petition. Under Section 9 of Republic Act (RA) No. 9282, the CTA in Division shall exercise exclusive original jurisdiction to review by appeal decisions of the COC in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the BOC. In the present case, however, an examination of the allegations in the Petition shows that the COC has yet to render a decision on the taxpayer’s Protest and Appeal for Duty and Tax Refund filed on March 26, 2021. The filing of the Petition is premised on the alleged inaction of the COC involving liability for customs duties, fees or other money charges is not one of the subject matters upon which the CTA exercises jurisdiction. Thus, the Court lacks jurisdiction over the subject matter of the Petition. (Goldmine Rice Marketing vs. Honorable District Collector of Customs, CTA EB No. 2617, August 14, 2023)

The issuance of a second LOA covering the same TY is not absolutely barred under the tax laws.

The taxpayer argued that the BIR gravely abused its exercise of discretion since under Section 235 of the NIRC of 1997, as amended, an inspection of the books of accounts and other related accounting records of a taxpayer shall be made only once in a taxable year. However, in its case, both the LOA 20008 and the Run After Tax Evader or RATE LOA pertain to the same TY 2007. Hence, the subsequent RATE LOA has already been issued in violation of Section 235. It also averred that BIR’s right to assess its books of accounts for TY 2007 has already been prescribed pursuant to Section 203 of the same law.

The Court held that there was no grave abuse of discretion on the part of the BIR. It bears noting that our tax laws do not absolutely bar the issuance of a second LOA covering the same TY as can be gleaned from Section 235 of the NIRC of 1997, as amended, RMO No. 27-2010, and in the case of CIR v. Hon. Raul M. Gonzales, et.al. (2010), to wit: “xxx that for income tax purposes, such examination and inspection shall be made only once in a taxable year, except in the following cases: (a) fraud, irregularity or mistakes, as determined by the Commissioner.xxx” As such, based on the records of the case, the BIR anchored the issuance of the RATE LOA for the TY 2007 on the finding of prima facie evidence of fraud as evinced by the Memorandum recommended by the chief of BIR’s NID to CIR, which is one of the exceptions under Section 235 of the NIRC of 1997, as amended. This alone is sufficient reason for the Court to deny the taxpayer's claim that BIR committed grave abuse of discretion in issuing another LOA for the same TY. (Golden Donuts, Inc. v. CIR, CTA Case No. 9676, August 30, 2023)

RR No. 8-2023
July 25, 2023
This clarifies the information that shall appear in the official receipts/sales invoices on purchases of SCs and PWDs through online or mobile applications, in relation to RR.

The signature of the Senior Citizens (SCs)/ Persons With Disabilities (PWDs) shall not be required for qualified purchases made by SCs/PWDs online or through mobile applications. Nonetheless, the SC/PWD Identification Card number should still be provided by the SC/PWD when purchasing through online or mobile platforms, and the rules on entitlement to the benefits of the SC/PWD and to the tax deduction, pursuant to RR No. 7-2010, as amended; RR No. 5-2017, as amended; JMC No. 01 s2022; and to future issuances pertaining to SC/PWD purchases through online or mobile applications, shall be strictly followed.

RMO No. 26-2023
July 18, 2023
This prescribes the policies, guidelines, and procedures in the processing of requests for corporate information, including beneficial ownership information, with the SEC.

The BIR and SEC entered into a Data Sharing Agreement (DSA) pursuant to Republic Act (RA) No. 10173 or the Data Privacy Act of 2012, as implemented by NPC Circular 16-02- dated October 10, 2016. The DSA enhances and streamlines the access of the BIR to corporate information, including beneficial ownership information, by allowing on-site and online access, as well as off-site access, to relevant reportorial documents submitted by all corporations to the SEC.

A beneficial owner of a corporation is the natural person who ultimately owns or controls the corporation or exercises ultimate effective control over the corporation. Disclosing beneficial ownership information is required to prevent the use of corporations for money laundering, terrorist financing, tax evasion, and other illicit activities, among other purposes. Tax evasion and money laundering commonly create secrecy by layering of ownership through opaque legal structures or other legal vehicles to conceal the true ownership of activities and assets.

The purpose of having access to beneficial ownership, the BIR will be able to know the true ownership of activities and assets and, thus, allow fair taxation and just enforcement of tax laws. The availability of beneficial ownership for tax purposes also complies with the international tax transparency standards set by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes or the Global Forum where the Philippines is a member.

RMC No. 75-2023
July 5, 2023
This extends the deadline for the replacement of the ‘Ask for Receipt Notice’ with Notice to Issue Receipt/invoice under RMO No. 43-2022.

In relation to Revenue Regulations (RR) No. 10-2019 and Revenue Memorandum Order (RMO) No. 43-2022, all business taxpayers were mandated to exhibit at their place of business the new BIR Notice to the Public or Notice to issue Receipt/Invoice (NIRI). The Bureau informed the taxpayers to replace their old “Ask for Receipt” Notice with the new NIRI until June 30, 2023. While the deadline was already set, several inquiries are being received from business taxpayers asking if there is an extension on the replacement of Ask for Receipt Notice (ARN) with Notice to Issue Receipts / Invoice (NIRI).

In this regard, this Circular is issued to extend the deadline for securing the new NIRI on or before September 30, 2023. To secure the NIRI, the taxpayer shall fill out S1905-Registration Update Sheet to indicate/update the designated official email address which will be used by the Bureau as an additional manner in serving BIR orders, notices, letters, communications, and other processes to the taxpayers.

Business taxpayers who failed to renew on or before September 30, 2023, shall be imposed a penalty of a fine of not more than Php 1,000 pursuant to Section 275 of the Tax Code, as amended. Taxpaying public may report business establishments that do not have the NIRI posted thru eComplaint OTHERS or Chatbot “Revie” at www.bir.gov.ph.

RMC No. 77-2023
July 18, 2023
This notifies the loss of one (1) set of unused/unissued BIR Form No. 0535 Taxpayer Information Sheet.

This notice is hereby given of the loss of one (1) set of unused/unissued BIR Form No. 0535-Taxpayer Information Sheet, with serial number TIS202000129735.

The abovementioned form was reported as lost by a Revenue Officer II, Revenue District Office No. 3, Revenue Region No. 1, Calasiao, Pangasinan, and has consequently been canceled. All official transactions involving the use of said form is therefore considered INVALID.

Internal Revenue officials, employees, and others concerned are requested to promptly notify this Office in the event that the aforesaid form is found and to take the necessary measures to prevent the improper or fraudulent disposition or use of the same.

RDAO NO. 12-2023
July 25,2023
This designates the Assistant Commissioner of Client Support Service as Officer-In-Charge of the Operations Group and gives her the authority to sign several documents specified in the Order in view of the approved leave of absence of OIC-Deputy Commissioner of Operations Group.

In view of the approved leave of absence of the OIC Deputy Commissioner -Operations Group from July 21,24 and 25, 2023, and in order not to disrupt the operations of her Office, as the exigencies of the service so requiring, Assistant Commissioner of Client Support Service is hereby designated as Officer-in-Charge of the Operations Group, giving her the authority to sign the following documents:

1. Tax Debit Memorandum (TDM) as utilization of Tax Credit Certificate (TCCs)
2. Approval/Denial of Revalidation of TCCs
3. Approval/Denial of Cash Conversion of TCCs
4. Approval/Denial of VAT Refunds within the jurisdiction of ODCIR Operations Group
5. Endorsement to the Bureau of Customer (BOC) of VAT TCCs/Refund claims from Importation
6. Issuance/Lifting of Closure Orders
7. Approval/Denial for Issuance of Mission Order pursuant to RMO No. 40-2022
8. Other documents being issued and signed by the Deputy Commissioner for Operations Group in the ordinary course of operation.

This Order shall take effect on July 21, 2023 and shall be automatically revoked upon the return of the OIC Deputy Commissioner for official duty.

RMC No. 83-2023,
August 1, 2023
This circularizes RA No. 11956, amending Republic Act No. 11213 otherwise known as the “Tax Amnesty Act” extending the period of availment of the estate tax amnesty until June 14, 2025.

As provided in Section 8 of RA 11213, as amended by RA No. 11569, estates covered by the Estate Tax Amnesty, including the payment of the estate amnesty tax shall be immune from the payment of all estate taxes, as well as any increments and additions thereto, arising from the failure to pay any and all estate taxes for the period ending May 31, 2022 and prior years, and from all appurtenant civil, criminal, and administrative cases and penalties under the Tax Code.

Moreover, payment by installment shall be allowed within two (2) years from the statutory date for its payment without civil penalties and interests.

RMO 28-2023,
August 10, 2023
This clarifies the existing policies in the issuance of TVNs pursuant to RMO No. 23-2023.

Tax Verification Notice (TVN) shall be issued by the herein indicated Revenue Officials to authorize the verification of VAT credit/refund claims filed under Sections 112, 204 (C), and 229 of the Tax Code, as amended.

BSP Memorandum No. M-2023-023,
August 18, 2023

This revises the timeline of the Implementation of the International Transaction Reporting System (ITRS).

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.

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