Substituted service can only be resorted to when the party is not present at the registered or known address.

This is a Petition requesting to declare as null and void, and to set aside, the WOG and Assessment Notices issued by BIR. The taxpayer alleges non-receipt of the PAN, FLD /FAN subject of the WOG and WDL.

The BIR claims in its Answer that the RO initially served the PAN by personal service, but since no one was found in the taxpayer’s office, she resorted to serving the same by substituted service through a barangay official.

The Court ruled in favor of the taxpayer. Substituted service can only be resorted to when the party is not present at the registered or known address. The server, who is the RO assigned to the case or any BIR employee duly authorized for the purpose, shall also prepare a written report in triplicate copies, which shall be under oath, setting forth the manner, place and date of service, the name of the person/barangay official/professional courier service company who received the same and such other relevant information.

Here, nowhere can it be seen from the evidence presented by the BIR that the said PAN was actually served by substituted service to and received by the barangay official indicated in the Acknowledgment Receipt and written report. Neither did the BIR's witnesses identify and authenticate the signature of the barangay official, and witnesses indicated in the Acknowledgment Receipt. Consequently, given that the assessment notices are void, the issuance of the WDL and WOG are likewise invalid and devoid of any legal foundation. (Regus PLT Centre, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10778, March 11, 2025)

All products categorized as toilet waters are subject to excise tax, regardless of their price or market reach.

This is a Petition filed by the taxpayer for administrative claim for refund of its alleged erroneously paid excise taxes and VAT on excise taxes with the BIR. The taxpayer argues that its splash cologne/cologne products are not "non-essential goods" subject to excise tax since they are basic and common commodities not intended solely for personal adornment or embellishment.

The Court upheld the denial of the claim for refund. It held that the NIRC imposes excise tax on toilet waters without any price-based qualifications. Therefore, all products categorized as toilet waters are subject to excise tax, regardless of their price or market reach. Moreover, the term "non-essential goods," as commonly understood, refers to the functionality of the products rather than their market value.

Here, following the valid and binding interpretation made by the CIR in RMC No. 17-02, cologne products/splash colognes are considered "toilet waters", which are non-essential goods subject to the excise tax. (Green Cross, Inc. v. Commissioner of Internal Revenue, CTA EB No. 2912, March 3, 2025)

Requests for reinvestigation must specify the newly discovered or additional evidence the taxpayer intends to present.

This is an appeal on the assessment issued by the BIR against the taxpayer for deficiency taxes. The BIR then issued the FLD and FAN, and the taxpayer filed its protest letter of even date against the FLD/FAN requesting for a reinvestigation, and the cancellation or setting aside of the said FLD/FAN. Subsequently, the taxpayer received the assailed FDDA and elevated the case to the CTA. The BIR argues that this Court has no jurisdiction over the Petition, and that the assessment has already become final, executory, and demandable

The Court denied the petition as it lacked jurisdiction to entertain the same. Requests for reinvestigation must specify the newly discovered or additional evidence the taxpayer intends to present. This is the logical outcome relevant to said requests, since by their nature, the plea for re-evaluation of the assessment is on the basis of the said evidence.

A review of the records shows that the taxpayer was only able to establish that it timely filed a protest stating therein that it is a request for reinvestigation. As such, the taxpayer has 60 days from the said date of filing to submit all relevant supporting documents. However, the taxpayer failed to show that it did so. Such being the case, the subject tax assessments, as embodied in the FLD/FAN, have already become final. (Suburbia Automotive Ventures, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10128, March 3, 2025)

The taxpayer could not avoid deficiency tax liability based solely on the technical issue of an invalid waiver, where the flaws were patent on the face of all three waivers and not questioned

The taxpayer sought to cancel and set aside the Final Decision on Disputed Assessment issued against it by the BIR. It questioned the assessment on the ground that: (i) the waivers executed to waive prescription were defective and invalid; (ii) that the CIR deprived the taxpayer of due process rights in failing in his duty to give reason; (iii) and that the FAN/FLD was served after the due date indicated therein. The CIR argues that the waivers are valid, and they upheld the taxpayer’s due process rights.

The Court held the waivers to be valid, thus tolling the prescription. The taxpayer could not avoid deficiency tax liability based solely on the technical issue of an invalid waiver, where the flaws were patent on the face of all three waivers and not questioned. If the taxpayer earnestly took exception to the general scope of the waivers, it should have refused to sign these documents from the very beginning.

Nevertheless, the assessment is still cancelled for violation of the taxpayer’s due process rights. Verily, the BIR is authorized to make an assessment based on third party information, but it does not excuse the BIR to provide the factual and legal bases of the assessment and to include the disclosure of the source document/record and provision of the details thereof to allow the taxpayer to effectively address the findings. For failure to do so, the taxpayer was deprived of due process. (DMCI Mining Masbate Power Corporation vs. Commissioner of Internal Revenue, CTA Case No. 10424, March 13, 2025)

RMC No. 20-2025, March 20, 2025 – This clarifies certain policies, guidelines, and procedures relative to the processing and issuance of Tax Clearance Certificate for Final Settlement of Government Contracts.

The Tax Clearance Certificate for Final Settlement of Government Contracts shall be required and issued only for government contracts which involve the procurement of goods, consulting services, and infrastructure projects done through public bidding process pursuant to the “Government Procurement Reform Act,” as amended. Procurement involving small purchases is not required to secure the same.

Moreover, it shall be presented only prior to the final settlement of the government contracts with its suppliers on a per contract basis to ensure complete and timely payment and remittance of taxes.

A Tax Clearance Certificate for General Purposes, specifically for collection purposes, shall no longer be required from the contractor.

RR No. 13-2025, March 31, 2025
This provides for the consolidated provisions to simplify and streamline the procedures and requirements relative to the availment of the tax exemptions and incentives granted to participating private entities under RA No. 8525 or the “Adopt-a-School Act of 1998”, RA No. 12063 or the “Enterprise-Based Education and Training (EBET) Framework Act”, and the Tax Code.

REGISTERED EXPORT AND DOMESTIC ENTERPRISES

Incentives:

• Fifty percent (50%) additional deduction on the labor expense incurred in the taxable year.

      Note: The said additional deduction on the labor expense shall not include salaries, wages, benefits, and other personnel costs incurred for managerial, administrative, indirect labor, and support services.

• One Hundred percent (100%) additional deduction on training expense increased in the taxable year.

      Note: The additional training expense shall only apply to trainings, as approved by the Strategic Investment Priority Plan, given to the Filipino employees engaged directly in the registered business enterprise’s production of goods and services

Conditions Sine Qua Non in availment of Incentives:

• None

Documentary Proof:

• ITR with attached Certification from the DepED or CHED or TESDA;
• Sworn Declaration issued by applicant or its authorized officer as to the amount of the expenses being deducted and that the applicant has the requisite qualifications to avail of the incentives; and Invoices and other supporting documents to support the expenses.

ADOPTING PRIVATE ENTITIES [1]

Incentives:

• Deductions from the gross income of the amount of contribution/donation that were actually, directly, and exclusively incurred for the program;
• An Additional Fifty (50%) deduction of such contribution/donation, subject to certain conditions
• Exemption from Donor’s Tax

Conditions Sine Qua Non in availment of Incentives:

• The deduction shall be availed of in the taxable year in which the expenses have been paid or incurred; and
• The direct connection or relation of the expenses to the Adopting Private Entity’s participation in the Adopt-a-School Program.

Documentary Proof:

• Official invoice and other adequate records to substantiate the amount of expenses being claimed as deduction;
• List of projects and/or activities undertaken and the cost of each undertaking;
• Proof of acknowledgment or receipt of the contributed/donated property by the recipient public school;
• Duly notarized/approved agreement between the Adopting Private Entity and Public School;
• Duly Notarized Deed of Donation and Acceptance; and
• Sworn Declaration

TECHNICAL -VOCATIONAL INSTITUTIONS IMPLEMENTING A REGISTERED ENTERPRISE-BASED EDUCATION AND TRAINING (EBET) FRAMEWORK UNDER RA NO. 12063

Incentives:

• Fifty (50%) additional deduction of actual training expenses from the effectivity of RA No. 12063 up to December 31, 2027

Note: Starting January 1, 2028, the additional deduction shall increase to seventy-five (75%) of the actual training expense: Provided further, that such deduction shall not exceed five (5%) of their total direct labor expenses, or P25,000,000 a year, whichever is lower.

• Exemption from Donor’s tax; and
• Deduction of donation from the gross income of the donor

Conditions Sine Qua Non in availment of Incentives:

• The entity shall secure the proper certification from the TESDA

Documentary Proof:

• ITR with attached Certification from TESDA;
• Sworn Declaration issued by the authorized officer of the enterprise as to the amount of expense being deducted and that the enterprise has the requisite qualification to avail of the incentives; and
• Official invoices and other supporting documents
• Donor’s tax return and ITR;
• Original or Certified True Copy (CTC) of duly notarized Deed of Donation and Acceptance;
• Original or CTC of Certification from TESDA that the donation, contribution, bequests, subsidies, or financial aid are actually, directly, and exclusively used for the conduct of a registered EBET Program; and
• Official invoices and other supporting documents

[1] Refers to aid/help/contribution provided by an Adopting Private Entity to public school

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