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 © 2020 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 Commissioner of Internal Revenue (CIR)'s mere presentation of Registry Receipt without identifying and authenticating the signatures appearing on the registry receipts was insufficient to prove taxpayer's receipt of the PAN and the FAN

The taxpayer denied receiving the Preliminary Assessment Notice (PAN) and the Final Assessment Notice (FAN) from the CIR. The CIR contends that he had presented competent proof of actual mailing and receipt of the assessment notices.

The Supreme Court (SC) ruled that, in view of the taxpayer's categorical denial of due receipt of the PAN and the FAN, the burden was shifted to the CIR to prove that the mailed assessment notices were indeed received by respondent or by its authorized representative. The CIR's mere presentation of Registry Receipt was insufficient to prove taxpayer's receipt of the PAN and the FAN. The witnesses for the CIR failed to identify and authenticate the signatures appearing on the registry receipts; thus, it cannot be ascertained whether the signatures appearing in the documents were those of taxpayer's authorized representative.

The SC also affirmed the CTA en banc's ruling that the FAN and the assessment notices attached
to it are void for failure to demand payment of the taxes due within a specific period. The last paragraph of the FAN indicates that the CIR would still issue a formal letter of demand and assessment notice should respondent fail to respond to the FAN within the 15 day period given to it to present in writing its side of the case. (CIR vs. T Shuttle Services, Inc., G.R. No. 240729, August 24, 2020)

A Letter of Authority must be served or presented to the taxpayer within 30 days from its date of issue otherwise it becomes null and void.

Taxpayer prays before the CTA the cancellation of BIR’s tax assessment due to an invalid LOA. CTA has held that to determine whether an assessment is lawful and valid, it is necessary that the LOA must not be void. Aside from the validity of the grant of authority, which is either from the Commissioner or its duly authorized representatives, one of the requirements to be valid is that the LOA must be served or presented to the taxpayer within 30 days from its date of issue otherwise it becomes null and void.

Here, the LOA was issued on May 15, 2009. The same should have been served on or before June 14, 2009 to be valid. However, records show that the LOA was served to the Taxpayer only on June 30, 2009 or 46 days after the date of its issuance. Therefore, the LOA, as well as the assessment, is null and void. (Joselito Ranada Laraya vs. Commissioner of Internal Revenue CTA Case No. 8890 dated October 1, 2020)

The withholding agent has locus standi over a claim for refund of erroneously paid taxes.

Taxpayer erroneously withheld from payee/recipient of income payments. Subsequently, it claimed for refund from BIR the said amount withheld. In denying the refund, BIR posited that the Taxpayer is not the proper party to claim for refund.

CTA has resolved that a “person liable for tax” has been held to be a “person subject to tax” and properly considered a “taxpayer”. The terms “liable for tax” and “subject to tax” both connote legal obligation or duty to pay a tax. It is very difficult indeed conceptually impossible to consider a person statutorily “liable for tax” as not “subject to tax”. By any reasonable standard, such person should be regarded as a party in interest or as a person having sufficient legal interest, to bring a suit for refund of taxes he believes were illegally collected from him.

Therefore, the Taxpayer, though merely a withholding agent, has interest to bring a suit for refund of taxes erroneously paid. (Toledo Power Company vs. Commissioner of Internal Revenue CTA Case No. 9465 dated October 2, 2020)

Contractors engaged in mineral agreements with the Philippines do not enjoy exemption from excise tax, the collection thereof is merely deferred.

Taxpayer is a contractor engaged in extracting minerals in the Philippines. BIR assessed the Taxpayer due to non-payment of excise tax. Taxpayer posited that it is exempt from excise tax by virtue of RMC 17-2003. On the other hand, BIR posited that albeit the Taxpayer previously enjoyed tax-exempt status, it is nevertheless no longer exempt from excise tax since recovery period has already lapsed.

CTA has held that there is no law providing exemption to contractors having contract with the government. So much so that the RMC that both parties relied on is void. Accordingly, it is expressly stated that the contractor is liable to pay excise tax, which commences after the contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive.

In this case, the contract between the Taxpayer and the Government provided a period of five years within which the pre-operating expenses and property expenses are recovered. After such period shall the Government share in the net revenues of the operation, including all taxes. Hence, the Taxpayer is not exempt from taxes to begin with. The payment thereof merely were deferred in order for it to recover its investments. (OceanaGold (Philippines), Inc. vs. Commissioner of Internal Revenue CTA Case No. 9289 dated October 7, 2020)

As a rule, Supreme Court decisions forms part of the law and have retroactive effect as of the date such law was originally passed.

Taxpayer was assessed by the BIR due to non-payment of DST anent the former’s advances from related parties. Taxpayer posited that it relied in a BIR issuance specifically stating that a particular taxpayer is not liable to pay DST for its advances to related parties. BIR posited, however, that the Filinvest Case clearly stated that jurisprudential interpretations form part of the law and could retroact from the effectivity date of the law itself.

CTA has held that the Filinvest Case is properly applied, and that the Supreme Court decisions, although not a law, form part of the law as of the date such law was originally passed. It means that jurisprudence may act retroactively from the time the law became effective regardless of its later promulgation. The only exception is when the taxpayer relied in good faith in a previously overturned jurisprudence. Moreover, Section 246 of the NIRC, as amended relates such exception when a general interpretative law was relied in good faith by a taxpayer. Thus, shall be protected by the same general interpretative law even if subsequently overturned.

Here, the Taxpayer cannot be exempted from payment of DST because it did not rely in a general interpretative law. It relied in a BIR Ruling where there was no indication of its name. Therefore, the general rule of the Filinvest Case where the Supreme Court decisions have retroactive effect applies in this case. (San Miguel Paper Packaging Corporation vs. Commissioner of Internal Revenue CTA EB No. 2099 dated October 7, 2020)

The BIR can only inform the taxpayer to submit additional documents, it cannot demand what type of supporting documents should be submitted.

The BIR argues that the CTA has no jurisdiction over the case because the assessment has become final, executory and unappealable due to the taxpayer’s failure to submit the relevant supporting documents within sixty (days) from filing its protest. The taxpayer, on the other hand, argues that the “relevant supporting documents” that must be submitted within sixty (60) days is for the taxpayer to determine and decide on. The taxpayer explains that the BIR can only inform the taxpayer to submit additional documents, but it is without choice as to what specific document should be submitted.

The CTA quoting the Supreme Court ruled that the BIR can only inform the taxpayer to submit additional documents, it cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that the taxpayer cannot submit. Since it is the taxpayer that decides what documents it will submit to support its protest, the argument of the CIR that the assessment has attained finality must be rejected. (Ishida Philippines Tube Co., Inc. v. Commissioner of Internal Revenue, CTA Case No. 9729, October 8, 2020)

Administrative issuances, such as an RMO, have the force and effect of law, and they benefit from the same presumption of validity and constitutionality enjoyed by statues.

The taxpayer argues that the Waivers of the Defense of Prescription Under the Statue of Limitation of the National Internal Revenue Code (“waivers”) executed by it are invalid as they do not contain the nature and the amount of the tax due as required under RMO No. 20-90. It asserts that faithful compliance with the requirements under the said RMO cannot be brushed aside. The CIR, on the other hand, argues that and RMO is just an internal issuance and that it cannot grant any vested right to any taxpayer over any particular work procedure, which is internal to the BIR.

The Court, in disagreeing with the BIR, ruled that the reliance on RMO No. 20-90 is not based on the notion that such BIR issuance is a source of a vested right of the taxpayer, but rather it is because the Court adheres to the principle that administrative issuances, such as the subject RMO, have the force and effect of law; and that they benefit from the same presumption of validity and constitutionality enjoyed by statues. Since the waivers did not contain the nature and the amount of the tax due as required by the RMO, said waivers did not effectively extend the prescriptive period on account of their invalidity. (First Philippine Industrial Corporation v. Commissioner of Internal Revenue CTA Case No. 9000, October 9, 2020)

When the assessment has already attained finality, the Court has no jurisdiction over the assessment, perforce, it should dismiss any appeal disputing the same.

The BIR served the Formal Letter of Demand (FLD) and/or Final Assessment Notice (FAN) on the taxpayer's old address. The taxpayer failed to notify the BIR of its change of business address. The CTA, however, still assumed jurisdiction over the case and proceeded to void the assessment since there was no due date to pay the assessed amount; that is, after a cursory reading of the FLD/FAN. The BIR argues that the assessment notices that the Court relied on were photocopies and may not have reflected the true and actual content of the originally issued assessment notices.

The Court reconsidered its Decision since the FLD appears to carry a due date from which the taxpayer must pay the deficiency tax liabilities. Since the BIR’s service of the FLD/FAN is binding for purposes of the period within which to reply, the taxpayer's filing of protest with request for reinvestigation over a year from its receipt of the FLD was already beyond the 30-day prescriptive period provided under Section 228 of the Tax Code of 1997. The failure to file a timely protest makes the assessment final, demandable and unappealable. Thus, the taxpayer has lost its right to contest the assessment before the Court. (Citiaire Industrial Services Corporation vs. CIR, CTA Case No. 9713, October 14, 2020)

The perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional.

The CIR moves for reconsideration of the assailed Decision which he claims he received the on July 15, 2020. However, a perusal of the records, particularly the Notice of Decision, shows that the CIR received the assailed Decision on July 14, 2020. The CIR posted his MR only on July 30, 2020, or one (1) day late.

The CTA ruled that although appeal is an essential part of our judicial process, the right thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus, the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal will render the judgment final and executory. (Autostrada Motore, Inc. vs. CIR, CTA Case No. 9624, October 15, 2020)

Nothing in the law and jurisprudence would suggest that the arraignment of a corporation is a condition sine qua non for the Court to acquire jurisdiction over the accused corporation.

The taxpayer contends that the Decision of the CTA in Division is null and void for failure to arraign the accused corporation. The taxpayer also alleges that there is newly discovered evidence, which shows that the BIR initially acknowledged that the sources of money for the acquisition of bus units did not come from unreported revenue.

The CTA En Banc ruled that the requirement that a corporation be charged and prosecuted for a crime, only means that a suit must be brought against the corporation in court, or that a criminal suit be brought against the corporation, by indictment or information. The taxpayer failed to point out any law, jurisprudence, rules, and regulations that would require the arraignment of a corporation.

The CTA also noted that the subject document constitutes "forgotten" evidence, or evidence already in existence or available before or during a trial. The presentation of forgotten evidence is disallowed, because it results in a piecemeal presentation of evidence, and only serves to delay the proceedings. (Kingsam Express Incorporation and Samuel S. Santos vs. People of the Philippines, CTA EB Crim. No. 054, October 16, 2020)

There is nothing in the law that requires submission of the complete documents enumerated in RMO No. 53-98 and RR No. 2-26 before being entitled to a refund.

The CIR claims that the taxpayer must clearly show in its tax return that the income from which the withholding tax was withheld formed part of its gross income. Thus, the CIR insists that by failing to provide supporting documents that would show the income was indeed declared in the Annual Income Tax Return (AITR), there is no direct linkage between the CWT and the income
as reflected in the AITR.

The CTA ruled that that there is nothing in the law that requires submission of the complete documents enumerated in the “Checklist of Documents to be Submitted by a Taxpayer upon Audit of his Tax Liabilities” under RMO No. 53-98 before being entitled to a refund. There is also nothing in RR No. 2-06 that states that the mandatory attachments (i.e. Summary of Alphalist of Withholding Agents of Income Payments Subjected to Tax Withheld at Source (SAWT) to Tax Returns with claimed Tax Credits due to Creditable Tax Withheld At Source and the Monthly Alphalist of Payees (MAP) whose Income Received have been subjected to Withholding Tax to the Withholding Tax Remittance Return Filed by the Withholding Agent/Payor of Income Payments) are required to be submitted in order to grant a refund or credit. (Tullett Prebon Philippines, Inc. vs. CIR, CTA Case No. 9804, October 20, 2020)

An amended decision is a different decision, and thus, is a proper subject of a motion for reconsideration before an appeal to the CTA En Banc can be filed.

The taxpayer submits that the revisions made in the CTA Division’s Amended Decision were revisions on the civil aspect of the case and not on the alleged errors set forth by the taxpayer as to his conviction as compared to the Asiatrust case, relied upon by the CTA En Banc in denying the taxpayer’s Petition for Review. In the Asiatrust case, the assignment of errors alleged in the MR are factual matters which were taken by the court for reconsideration resulting to an amended decision. Thus, there is no need to file an MR of the CTA Division’s Amended Decision.

The CTA En Banc ruled that an appeal to the CTA En Banc must be preceded by the filing of a timely motion for reconsideration or new trial with the CTA Division. An amended decision is a different decision, and thus, is a proper subject of a motion for reconsideration. (Benedicto P. Caguimbal vs. CIR, CTA EB Crim. No. 065, October 21, 2020)

So long as the process of distillation is employed, whether directly or indirectly, the resulting product thereon may fall within the ambit of "other similar products of distillation", subject to excise tax under Section 148(e) of the Tax Code of 1997.

Taxpayer mainly argues that the products subject to excise tax under Section 148 of the Tax Code of 1997 are limited to fractions or distillation products primarily derived from distillation of crude oil; and thus, the subject alkylate which is not produced by the primary distillation of crude oil, but by the primary process of alkylation, should not be included in the category of "other similar products of distillation."

The CTA ruled that Sections 129, 131, and 148 (e) of the Tax Code of 1997 clearly state that excise tax shall attach, inter alia, to mineral oils or motor fuels like naphtha, regular gasoline and other similar products of distillation, as soon as they come into existence. A closer look at the provisions of Section 148 readily shows that the word "distillation" is only found in the phrase "other similar products of distillation". There is nothing therein that suggests that distillation should be the primary or direct process through which the product is formed in order to fall within the scope of the proviso. The absence of such qualification leads to the conclusion that so long as the process of distillation is employed, whether directly or indirectly, the resulting product thereon may fall within the ambit of "other similar products of distillation". Where the law does not distinguish, the Court should not distinguish. (Petron Corporation vs. CIR, Commissioner of Customs and Collector of Customs, CTA Case No. 8544, October 21, 2020)

RR No. 26-2020, October 6, 2020
This implements Section 4 (zzz) of RA 11494 relative to donations of identified equipment for use in public schools..

This revenue regulation covers all donations of personal computers, laptops, tablets, or similar equipment (i.e. mobile phone, printer) for use in teaching and learning in public schools starting from the effectivity of the said Act on September 15, 2020 up to December 19, 2020.

Donor/s of said equipment shall be entitled to the following tax incentives:

a. Deduction from the gross income of the amount of contribution/donation subject to limitations, conditions and rules set forth in Section 34 (H) of the Tax Code and to the following conditions:

i. That the Deed of Donation shall indicate in detail the items donated, its quantity/number and the amount/value of the donation;
ii. That the deduction shall be availed of in the taxable year in which the expenses have been paid or incurred;
iii. That the taxpayer can substantiate the deduction with sufficient evidence, such as sales invoice/s, delivery receipt and other adequate records –

• The amount of expenses being claimed as deduction;
• Proof or acknowledgement of receipt of the contributed/donated property by the recipient public school.

b. Exemption from the payment of Donor’s Tax pursuant to Sections 101 (A) (2) and (B) (2) of the Tax Code.

c. In case of foreign donation, the importation of personal computers, laptops, tablets, or similar equipment by the DEPED, CHED, or TESDA, shall be EXEMPT from VAT; provided, that if the importer/consignee is other than the abovementioned agencies, in order for the imported articles to be exempt from VAT, the importer should present a Deed of Donation duly accepted by the abovementioned agencies.

d. In the case of local donation where the personal computers, laptops, tablets, or similar equipment are originally intended for sale or for use in the course of business by the donor, the same shall not be treated as transaction deemed sale subject to VAT under Section 106 (B) (l) of the Tax Code. Furthermore, any input tax VAT attributable to the purchase of donated personal computers, laptops, tablets, or similar equipment not previously claimed as input tax shall be creditable against any output tax

RR No. 28-2020, October 15, 2020
This implements the tax exemption provisions under Section 4 (cc) and Section 18 of RA No. 11494 on the incentives for the manufacture or importation of certain equipment, supplies or goods.

The importation from June 25, 2020 to December 19, 2020 of the goods enumerated in the Regulations and identified as critical products, essential goods, equipment or supplies needed to contain and mitigate COVID-19, subject to the limitations and restrictions specified in the Regulations, shall be exempted from VAT, excise tax and other fees.

a. The taxpayer availing of the exemption must present a certification from the DTI that the equipment and supplies being imported are not locally available or of insufficient quality and preference.
b. The importation hereof shall not be subject to the issuance of ATRIG.
c. Donations of said imported articles to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit or to any political subdivision of the government are exempt from Donor's Tax and subject to the ordinary rules of deductibility under existing rules and issuances.

The grant of exemption for the importation of goods enumerated in the Regulations is deemed to be in effect beginning June 25, 2020. The VAT on all covered and qualified shipments/ importations that may have been paid from June 25, 2020 up to September 14, 2020 shall be refunded pursuant to Section 204(C) of the Tax Code, in accordance with the existing procedures for refund of VAT on importation, provided that the input tax on the imported items have not been reported and claimed as input tax credit in the monthly and/or quarterly VAT returns. The same shall not be allowed as input tax credit pursuant to Section 110 of the Tax Code for purposes of computing the VAT payable of the concerned taxpayer/s for the said period.

Inputs, raw materials and equipment necessary for the manufacture of essential goods of medical grade related to containment and mitigation of COVID-19, as determined by Food and Drug Administration — Department of Health (FDA-DOH), whether locally sourced or imported by the registered manufacturer, shall be exempt from VAT.

The sale of finished goods/products, whether locally-manufactured or imported, is subject to VAT. The sale of inputs, raw materials and equipment to a non-holder of "License to Operate" issued by the FDA-DOH is likewise subject to VAT.

RR No. 30-2020, October 30, 2020
This prescribes the rules and regulations to implement Section 11(f) and (g) of RA No. 11494 on the taxes derived from gaming and non-gaming operations as other sources of funding for the subsidy, stimulus measures and other measures to address the COVID-19 pandemic.

The prescribed rules and regulations are as follows:

a. Franchise Tax at the rate of five percent (5%) imposed on the gross bets or turnovers, or the agreed pre-determined minimum monthly revenues from gaming operations, whichever is higher, earned by offshore gaming licensees, including gaming operators, gaming agent, service providers and gaming support providers.

b. Income Tax, VAT, and other applicable taxes imposed on income from non-gaming operations earned by offshore gaming licensees, including gaming operators, gaming agent, service providers and gaming support providers.

PAGCOR and/or the company chosen as its third-party intermediary/audit platform shall furnish the BIR with the following information:

a. Gross bets or turnovers earned by offshore gaming licensees, including gaming operators, gaming agent, service providers and gaming support providers;

b. Minimum Guarantee Fee or the minimum amount of regulatory fees paid by offshore gaming licensees, including gaming operators, gaming agent, service providers and gaming support providers per month; and

c. Other relevant data.

Non-payment, underpayment and/or payment of taxes computed not in accordance with the prevailing official exchange rate at the time of payment by offshore gaming licensees, operators, agents, service providers and support providers shall be considered as fraudulent acts and subject to incremental penalties under Sections 248(B), 249(B), 253 and 255 of the NIRC of 1997, as amended.

The BIR shall implement closure orders against offshore gaming licensees or operators, gaming agents, and service or support providers that fail to pay the taxes due as enumerated under Section 3 and/or committed any of the fraudulent acts in Section 5 of the Regulations, and such erring entities shall cease to operate.

After two years or upon determination that the threat of COVID-19 has been successfully contained or abated, whichever comes first, the revenues derived from franchise taxes on gross bets or turnovers and income from non-gaming operations, shall continue to be collected and shall accrue to the General Fund of the Government.

RMO No. 39-2020, October 26, 2020
This prescribes the policies, guidelines and procedures in the processing of applications for the VAPP pursuant to RR No. 21-2020.

The prescribed guidelines and procedures are as follows:

• The LTAD, LTDs, or RDOs shall receive and process the applications of taxpayers for availment of VAPP starting from the effectivity of RR No. 21-2020.

• The TWG shall be responsible in receiving and processing the VAPP applications, including the issuance of Certificate of Availment, in case of full compliance, or Denial Letter in cases where the VAPP availment is disapproved based on the grounds provided under Sections 3, 7 and 8 of RR No. 21-2020.

• The Assistant Chief, LT Office/Assistant RDO shall review the VAPP application within five (5) working days from receipt of the docket, and recommend for its approval/disapproval by the Chief, LT Office/RDO.

• If approved, the Chief, LT Office/RDO shall issue a Certificate of Availment (CA) within three (3) working days from approval of the application.

• In case of denial of the application due to failure of the taxpayer to act on the aforesaid notification or in case of invalid availments or falsified information, the Chief, LT Office/RDO shall issue a Denial Letter within 3 working days from disapproval of the application.

• Based on the list of VAPP availments provided by the TWG, the Chief, LT Office/RDO shall suspend the conduct of the audit of taxpayer whose availment is under evaluation. The TWG shall coordinate with the Chief, Assessment Section (CAS) regarding the approved/denied availments. The audit shall resume if the availment has been found invalid.

• If the taxpayer’s availment has been determined to be valid and after issuance of the CA, the CAS shall recommend to the Chief, LT Office/RDO to withdraw and cancel the issued LA, TVN, NIC, or ND for pending cases.

• The ACIR, LTS/Regional Director shall issue the ATCA for FAN covered by the approved VAPP availments with duly issued CAs within ten (10) working days from receipt of the Monthly Report on Certificates of Availment/ Denial Letters issued from the Chief, LT Office/RDO.

RMC No. 110-2020, October 6, 2020
This clarifies the proper modes of service of an electronic Letter of Authority (“eLA").

This circular provides the proper modes of service of an eLA.

The eLA shall be served to the taxpayer through personal service by delivering personally a copy of the eLA at his registered or known address or wherever he may be found. Personal or substituted service of the eLA shall be effected by the RO assigned to the case. However, such service may also be made by any BIR employee duly authorized for the purpose.

In case personal service is not possible, the eLA shall be served either by substituted service or by mail. However, substituted service can only be resorted to when the party is not present at the registered or known address.

Personal service is complete upon actual delivery of the eLA to the taxpayer or his representative. Service by registered mail is complete upon actual receipt by the taxpayer or after five (5) days from the date of receipt of the first notice of the postmaster, whichever date is earlier. Service by ordinary mail is complete upon the expiration of ten (10) days after mailing.

Service to the tax agent/practitioner, who is appointed or authorized by the taxpayer in accordance with existing revenue issuances, shall be deemed service to the taxpayer.

RMC No. 113-2020, October 20, 2020
This publishes the full text of the letter from the Department of Finance (“DOF”) to amend the effectivity date of RA No. 11467, as circularized under Revenue Memorandum Circular (“RMC”) No. 65-2020.

Per RMC No. 65-2020, the effectivity of RA No. 11467 is January 27, 2020.

It was clarified that that the said Act was made effective upon its complete publication in the website of the Official Gazette. Thus, RA No. 11467 became effective beginning January 23, 2020

SEC Memorandum Circular No. 27 s. 2020
This provides for the Guidelines for the Conversion of Corporations Either to One Person Corporation or to Ordinary Stock Corporation

Ordinary Stock Corporation (OSC) to One Person Corporation (OPC)

A natural person of legal age, a trust, or an estate who acquired all of the outstanding capital stocks of an OSC, may apply for its conversion into an OPC upon submission of the following documentary requirements, which shall be processed as an Amendment of the Articles of Incorporation:

1. Cover sheet;
2. Signed Application for Conversion by the single stockholder and countersigned by the corporate secretary;
3. Original or CTC of the document/s effecting the transfer/s of full title/ownership of shares;
4. Certificate Authorizing Registration or tax clearance from the BIR;
5. Notarized Secretary’s Certificate of No Intra-corporate Dispute;
6. Articles of Incorporation of an OPC
7. Letter of acceptance of appointment by Nominee and Alternate Nominee;
8. Self-appointed Treasurer’s Bond, if applicable;
9. Name reservation;
10. Monitoring clearance from Compliance Monitoring Division (CMD) of the Company Registration and Monitoring Department (CRMD), whichever is applicable;
11. Endorsement clearance from appropriate government agencies, if applicable;
12. Undertaking to Change Corporate Name, if not yet included in the Articles of Incorporation; and
13. Undertaking to Assume All Liabilities of the OCS, if noy yet included in the Articles of Incorporation.

The date of the issuance of the Certificate of Filing Amended Articles of Incorporation shall be deemed as the date of approval of the conversion, and shall bear and retain the corporation’s original SEC Registration Number. The name of the corporation shall include an “OPC” suffix in order to reflect its nature.

The OPC converted from OCS shall succeed the latter and be legally responsible for all the latter’s outstanding liabilities as of date of approval of the conversion.

One Person Corporation (OPC) to Ordinary Stock Corporation (OSC)

When the shares in an OPC ceases to be held solely by a single stockholder, the OPC may be converted into an OSC after due notice to the Commission, and after compliance with all the requirements for a stock corporation, after evaluation of the following documentary requirements:

1. Cover sheet;
2. Signed Notice of Conversion of an OPC into OSC, by all holders of shares of the outstanding capital stock, countersigned by the corporate secretary;
3. Original or CTC of the document/s effecting the transfer of full title/ownership of shares;
4. Certificate Authorizing Registration or tax clearance from the BIR;
5. Articles of incorporation and By-laws of an OSC filed in accordance with the requirements provided under Section 14 of the RCC;
6. Name reservation;
7. Monitoring clearance from other relevant department of the SEC or from the CMD of CRMD, whichever is applicable;
8. Endorsement clearance from appropriate government agencies, if applicable;
9. Undertaking to Change Corporate Name, if not yet included in the Articles of Incorporation; and
10. Undertaking to Assume All Liabilities of the OPC, if not yet included in the Articles of Incorporation.

The Notice of Conversion of OPC to OSC shall be filed with the Commission within sixty (60) days from such transfer/s of shares. The date of transfer of shares shall be deemed to be the date that the corresponding Certificate Authorizing Registration or tax clearance issued by the BIR.

Notice of Conversion filed beyond the 60 days from the transfer of shares may still be approved for conversion but subject to prior payment of penalty if found liable for violation of Section 132, in relation to Section 158 of the RCC.

The AOI of the OPC shall be deemed superseded upon issuance of the SEC of the Certificate of Filing of Amended AOI and By-laws. The date of the issuance of the Certificate of Filing Amended AOI and By-laws shall be deemed as the date of approval of the conversion. It shall retain the corporation’s original SEC Registration Number, and the suffix “OPC” shall be removed from its corporate name.

Common Provisions to Both Kinds of Conversion

In the AOI of the converted corporation, the signatory/ies thereto must clearly state that they voluntarily agreed to the conversion.

By reason of the nature of these corporations, the conversion from an OSC to OPC is optional, while the conversion from OPC to OSC is mandatory, unless when winding-up and dissolution is appropriate.

Processing of applications for conversion, and opposition or dispute arising from the conversion on the ground of fraud in procurement thereof, shall be commenced before the CMRD.

BSP Circular No. 1099, October 6, 2020
This provides the Cash Service Alliance (CSA) general guidelines.

This Circular amends the Manual of Regulations for Banks for the adoption of the CSA general guidelines. The CSA General Guidelines is issued to formalize the direct exchange of fit currency among banks, and to serve as a general reference guide that participating banks shall adopt in drafting their bilateral agreements.

Banks with intention to deposit fit currency or withdraw from the Bangko Sentral CD shall utilize the CSA System to provide information on their available fit currency or to place fit currency orders. The CSA transaction will take precedence over direct deposit to or withdrawn from the Bangko Sentral CD.

BSP Circular Letter Nos. 2020-051
October 27, 2020
This provides the operational relief measures covering fees under the Manual of Regulations on Foreign Exchange Transactions (FX Manual), as amended.

Applicable fees to be paid by importers for Documents Against Acceptance (D/A) or Open Account (O/A) importations reported beyond the prescribed period under item 2.b of Appendix 6 of the FX Manual shall be waived during the period covered by Circular No. 1080 and up to one (1) month thereafter.

BSP Memorandum No. 2020-081
October 22, 2020
This Memorandum provides the conduct of Off-site credit verification as an alternative to On-site credit verification relative to availments in the Bangko sentral ng Pilipinas' (BSP) Rediscount Facility.

Under this alternative, On-site Credit Verification activities will be conducted remotely by requiring banks to submit scanned copies of collateral documents through electronic mail (email) or present them on BSP-organized virtual meetings via Microsoft Office (MS)Teams or other similar platform accessible to the bank. The guidelines on the documentary requirements and procedures relative to the implementation of the Off-site Credit Verification are also provided in the memorandum.

IC Circular Letter
CL-2020-95,
October 1, 2020
This provides the guidelines in the interpretation and application of Section 4(uu) of RA 11494, otherwise known as the “Bayanihan to Recover as One Act”

The following information are clarified under the said circular:

1. Insurance companies, mutual benefit associations, and pre-need companies shall implement a one-time sixty (60)-day grace period for each payment of premiums and installments falling due from the effectivity of RA 11494 until 31 December 2020.

2. Automatic debit/charge arrangements shall continue provided that an “Opt-Out Offer” shall be communicated to life insurance policyholders and pre-need planholders.

3. Non-application of interests on interests, penalties, fees, or other charges during the one-time sixty (60)-day period.

4. Non-waiver of provisions of RA No. 11494 for premiums and/or installments falling due from the effectivity of RA 11494 until 31 December 2020.

5. A longer grace period may be agreed upon but it must be in writing.

6. Policy loans are excluded from the purview of Section 4(uu) of RA 11494.

IC Circular Letter
CL-2020-96-A,
October 8, 2020
This provides the amended framework for Passenger Personal Accident Insurance (PPAI) for public utility vehicles.

The amendment clarified that insurance pool should have at least twelve (12) member insurance companies, to wit:

“1. Recognition of Pool/s. - Insurance companies shall participate in the program through an insurance pool with a mandatory requirement of one (1) lead insurance company and at least twelve (12) member insurance companies. Each pool shall have a duly appointed Management Company duly licensed as a General Agent by this Commission that shall handle the day to day operations of the pool in order to ensure the fiscal stability and viability of the program and particularly, to be able to respond to claims quickly and effectively.”

IC Circular Letter
CL-2020-101,
October 16, 2020
This provides the Guidelines on the Use of Videoconferencing for the Conduct of Mediation/Conciliation Conferences and Other ADR Proceedings Before the PAMD.

The PAMD is hereby authorized to conduct mediation/conciliation conferences and other ADR proceedings through the use of videoconferencing during this period of public health emergency. PAMD is hereby provided with software licenses for CISCO WEBEX MEETINGS to host the videoconference proceedings. No other platforms or software shall be used for the videoconference proceedings.

IC Circular Letter
CL-2020-103,
October 30, 2020
This provides the amendment to Section 1 of Circular Letter No. 2020-60 dated 15 May 2020 on “Regulatory Relief on Net Worth Requirements and Guidelines on the Implementation of Amended Risk-Based Capital (RBC2) Framework for Calendar Year 2020”.

The amendment removed the relief from the quarterly compliance of the networth requirements of ₱900,000, to wit:

"1. All insurance companies already compliant with the net worth requirements as of 31 December 2019 under Section 194 of the Insurance Code of the Philippines, as amended by Republic Act No. 10607, that are adversely affected by the crisis are required to comply with CL No. 2016-68 (Amended Risk-Based Capital Framework) and Revised Regulatory Intervention (RBC ratio)”

IC Legal Opinion
LO-2020-14,
October 19, 2020
This provides that Insurance Commission may refrain from rendering opinion on matters which will necessitate the examination or review of the acts and rulings of another government agency.

The Insurance Commission opined that it must be emphasized that while the GSIS is in the business of insurance, it is not regulated by the Insurance Commission and it does not operate by virtue of Section 193 of Republic Act No. 10607 or the Amended Insurance Code. Instead, the GSIS has its own charter and its governing law is Republic Act No. 829'1 or the Revised Government Service Insurance Act of 1997. As such, the relevant laws, rules, and regulations governing the policies issued by insurance companies do not apply to those issued by the GSIS.