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.

When one of the parties to the taxable transaction is exempt from the DST, the other party who is not exempt shall be the one directly liable therefor, in which case, the DST shall be paid and remitted by the said non-exempt party.

The International Finance Corporation (IFC) itself and its transactions authorized by the IFC Articles of Agreement, to which the Philippines is a signatory, are indeed exempt from all taxation including necessarily the exemption from the payment of DST. In this connection, the taxpayer claims that IFC's immunity from taxation extends to their Loan Agreement; thus, the taxpayer is entitled to refund the erroneously paid DST.

The Court of Tax Appeals (CTA) ruled that for the instant claim for refund to prosper, the taxpayer must also prove that the subject DST paid is an "erroneous or illegal tax". However, no exhibit or evidence has been offered by the taxpayer to prove that the subject transaction was authorized by the IFC Articles of Agreement. The parties to the Loan Agreement intended or contemplated that all taxes, which include specifically, DST or "stamp taxes" due on the transaction, must be paid by the Borrowers, which include the taxpayer. Thus, if IFC contemplated that the subject transaction fall under the category of a transaction authorized under the IFC Articles of Agreement, which is clearly immune from taxation, the Loan Agreement should not have provided for the stipulation that all taxes, including the DST, shall be payable by the taxpayer (and the other co-borrowers).

The CTA emphasized the liability for the DST rests on the parties to the taxable document. However, when one of the parties to the taxable transaction is exempt from the DST, the other party who is not exempt shall be the one directly liable therefor, in which case, the DST shall be paid and remitted by the said non-exempt party. Thus, the CTA finds that the subject DST paid by the taxpayer is not an "erroneous or illegal tax". (San Carlos Biopower, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9919, November 4, 2020)

Taxpayer must no longer wait for CIR to render a decision before filing an appeal to the CTA after the taxpayer’s administrative claim for input VAT refund is deemed denied.

From the filing of taxpayer's administrative claim on April 30, 2007, the CIR had one hundred twenty (120) days, or until August 28, 2007, within which to render a decision on the said claim. There was no full or partial denial of the claim within the 120-day period but rather, the 120-day period lapsed without a decision or ruling from the CIR. Considering that the CIR did not act on taxpayer's claim on or before August 28, 2007, the taxpayer had thirty (30) days, or until September 27, 2007, within which to file its judicial claim before the CTA. The taxpayer, however, filed its judicial claim on November 9, 2015, or beyond the thirty (30) day period to appeal.

The CTA held that the taxpayer’s judicial claim was filed out of time. It is clear that the 30-day period provided by law should be reckoned from the receipt of CIR's decision/ruling, or after the expiration of the 120-day period from the submission of complete documents, whichever is sooner. Consequently, any judicial claim filed in a period less than or beyond the said 120+30-day periods, is outside the jurisdiction of this Court. (Luzon Hydro Corporation vs. Commissioner of Internal Revenue, CTA Case No. 9187, November 6, 2020)

Note: Under the Train Law, the Commissioner is now given 90 days to decide to deny/grant a refund and any partial or full denial of claim, the taxpayer affected may, within 30 days from the receipt of the denial, appeal the decision with the CTA. The deemed denial provision was no longer explicitly stated under the Train Law.

Absent the Certificate of Endorsement, the Court cannot treat Petitioner’s gross receipts, representing its sales to RE Developer, as subject to VAT zero-rating under the law.

According to the taxpayer, its sales to the RE developer are considered zero-rated sales pursuant to Section 15(G) of Republic Act (RA) No. 9513 the Renewable Energy Act of 2008. The taxpayer alleges that the RE developer registered with the DOE and BOI, and as such its sales thereto are considered zero-rated sales.

The Court ruled that the taxpayer failed to establish that its sales transaction with the RE developer are subject to zero-rated VAT. Based on the law, RE developers shall be entitled to zero-rated VAT on its purchases of local supply of goods, properties and services needed for the development, construction and installation of its plant facilities. It is likewise provided that the services performed by subcontractors and/or contractors in the exploration and development of RE sources up to its conversion into power is subject to zero percent VAT. However, for purposes of availment of the zero percent VAT on these transactions, the following documents must be secured: (1) Certificate of Registration issued by the DOE; (2) Registration with BOI; and (3) Certificate of Endorsement issued by the DOE, on a per transaction basis. Here, the taxpayer failed to present the requisite Certificate of Endorsement issued to the RE developer by the DOE, on a per transaction basis. Hence, the denial of the claim for a credit/refund of input VAT. (Vestas Services Philippines vs. Commissioner of Internal Revenue, CTA Case No. 9544, November 11, 2020).

A Revenue District Officer has no power or authority to issue an LOA, much less to effect any modification or amendment to the previously issued LOA by the Regional Director.

The authority to conduct an examination and assessment of taxpayer's books of accounts emanated from a LOA issued by the Regional Director. The said LOA authorized the first revenue officer (RO) to examine taxpayer's books of accounts and other accounting records. The first RO's Memorandum led to the issuance of the PAN and FAN. Taxpayer protested the FAN after which it received an undated letter from the BIR informing it that the tax audit investigation was re-assigned to the second RO through a Memorandum issued by the Revenue District Officer (RDO). The second RO proceeded with the reinvestigation of taxpayer's tax case and, thereafter, prepared a Memorandum Report which became the basis for the issuance of the FDDA.

The CTA held that the subject assessments are void for having been issued pursuant to audit examination conducted by an RO other than those specifically named under the LOA. The second RO’s authority to examine or conduct a reinvestigation of taxpayer's tax liabilities was based on the Memorandum of Assignment issued by Revenue District Officer, who has no power or authority to issue an LOA, much less to effect any modification or amendment to the previously issued LOA by the Regional Director. (Titanium Corporation vs. Commissioner of Internal Revenue, CTA Case No. 9644, November 11, 2020)

The prescriptive period to assess under the 1997 NIRC, as amended, applies to withholding tax assessments.

Respondent received a LOA from the BIR for the examination of its books for the taxable year 2009. Three waivers were subsequently executed during the time that respondent is under audit. NIC and PAN were received and replied to by respondent. On February 21, 2014, it received a copy of FLD/FAN finding it liable for deficiency taxes, which was timely protested. The BIR issued thereafter an FDDA, finding that respondent is liable for deficiency taxes.

Respondent then filed a Petition for Review. The Court in Division partially granted the petition, finding that part of the assessment has already prescribed, specifically on the withholding tax. CIR argued in the En Banc that assessment for withholding taxes is imprescriptible because what is being collected from the withholding agent is not the income tax, but it is only made liable for breaching its duty to remit the tax withheld. What is being collected is the penalty for failure to perform its duty. The Court En Banc finds the contention of CIR to be without merit as this has already been settled by the Supreme Court that a withholding tax assessment is not merely an imposition of penalty on the withholding agent, but rather, it falls squarely within the purview of Section 203 of the 1997 NIRC, as amended.

Thus, the assessment for withholding taxes has prescribed. (Commissioner of Internal Revenue vs. Commissioner of Internal Revenue, CTA EB No. 1700, CTA Case No. 9041, February 28, 2019)

Evidence not previously offered, can be admitted if the following requirements are fulfilled: 1) the evidence must have been duly identified by testimony duly recorded; and 2) the evidence must have been incorporated in the records of the case.

Taxpayer is assessed by the BIR for alleged deficiency income tax and VAT for taxable year 2010. It requested for reinvestigation, but BIR issued an FLD and
Assessment Notices. Taxpayer then filed its written protest to the FLD on September 2, 2014. The BIR issued on March 24, 2015 its FDDA, maintaining the assessment for taxpayer’s failure to submit the relevant supporting documents, and the case will be forwarded to the Collection Division. Taxpayer then received a Preliminary Collection Letter (“PCL”), but it insisted to file its protest. On September 22, 2015, it received a letter from the BIR denying its protest and the assessment has become final.

The CTA in Division denied the Petition for Review for lack of jurisdiction, as it was filed out of time. The CTA En Banc affirmed the denial, because Taxpayer received the FDDA on April 6, 2015. It then had until May 6, 2015 within which to appeal. This can be seen from the letter protest sent by C.M. Ilagan & Associates, stating that the receipt of the FDDA by the taxpayer was on April 6, 2015.

Admittedly, the undated protest was not formally offered in evidence. While it is true that as a general rule, the Court shall not consider any evidence not formally offered, the same admits of an exception. The instant case clearly falls within the exception. Although the undated protest was not attached to the Judicial Affidavit of the Revenue Officer, the same was still presented in Court during the re-cross examination, and the RO identified the same and such testimony forms part of the records of the case. (Loadstar International Shipping, Inc. vs. Commissioner of Internal Revenue, CTA EB No. 2011, CTA Case No. 9176, November 11, 2020)

The subject tax assessment arising from the investigation, audit, and recommendation of a Revenue Officer whose authority stems only from a Memorandum of Assignment, and not Letter of Authority, is consequently void.

The taxpayer is being assessed by the BIR for alleged deficiency taxes for the taxable year 2009. It received the PAN and FLD/FAN, which it timely protested. On September 4, 2014, an FDDA was issued against the taxpayer. It then filed a request for reconsideration. On January 10, 2018, the CIR issued the assailed Final Decision, denying the request for reconsideration treating it as a pro forma appeal. On February 26, 2018, the taxpayer filed the Petition for Review praying for the cancellation of the assessment.

The CTA ruled on the basis of the issue of the authority of the revenue officers who conducted the audit even if this was not raised by both parties. It was found that the RO who continued the audit and reinvestigation of the taxpayer was not validly authorized to examine the latter’s books of accounts and other tax records. ROs are required to be specifically authorized by a valid LOA. In this case, the RO was tasked to conduct the investigation pursuant to a MOA only. Considering that the RO who audited the taxpayer’s case was not properly clothed with a requisite LOA, the subject assessment arising from her investigation, audit, and recommendation are consequently void.

Further, as the amount stated in the FLD remains indefinite, the subject tax assessment is void for failing to set and fix the date due, as required by law. (Robbie Stylographic and Development Corporation vs. Commissioner of Internal Revenue, CTA Case No. 9774, November 17, 2020)

The BOC can no longer require the issuance of Import Permit (IP) from the NFA for importations of white rice after the expiration of special treatment imposed by the WTO; however, this is still required for imports made before its expiration.

The Company is a domestic corporation engaged in the importation of rice. In 2016, it was granted an Import Permit (IP) by the National Food Authority covering 7,200 MT of Thai White Rice. After the shipment arrived, the Port Operations discovered that there was an excess 603.15 MT of white rice which is not covered by an IP. Hence, the Company was assessed customs duties with a 30% fine equivalent to the shipment's landed cost. Thereafter, the BOC issued a Decision dated January 29,2018 forfeiting the excess white rice in favor of the government.

The Company argues that the importation of white rice was no longer regulated when the assailed Decision was rendered by the BOC due to the expiration of the special treatment on white rice by the World Trade Organization (WTO) to the Philippines on June 30,2017. On the other hand, the BOC alleges that the taxpayer illegally imported the white rice since the IP from the NFA is necessary.

The Court ruled that the NFA still had the authority to grant IP during the time of the importation of the excess 603.15 MT of white rice since the WTO agreement was still in effect at that time. However, the Court took note of the findings of the Collector that the Company was not aware of the excess quantity that has been shipped. Moreover, there was absence of fraud due to the fact that the taxpayer had paid all the dues covering total importation of 9,250 MT of white rice in advance. (Progressive Grains Milling Corp. vs. Commissioner of Customs, CTA Case No. 9847, November 18, 2020)

The Court is not bound by the findings of the independent CPA. It is free to adopt or disregard the independent CPA’s findings after making its own verification and evaluation of the evidence on record.

The Company filed an administrative claim for refund or issuance of TCC for its alleged excess and unutilized CWT for 2013. During trial, the Company presented its finance manager and independent CPA in order to establish that the income from which the CWTs are subject of its refund claim were reported as part of the Company's gross income. The Company contends that the evidence it submitted, specifically Annex 3 of the Amended CPA Report, clearly shows that the income payments related to the claimed CWTs, particularly the billing invoice and official receipt numbers, were traced to Company's general ledger.

The CTA ruled that under Section 3 of Rule 13 of the RRCTA, as amended, the findings of the independent CPA is not conclusive upon the Courts. The Court is not bound by the findings of the independent CPA. The Court is free to either completely or partially adopt or disregard, the findings of the independent CPA, after making its own verification and evaluation of the evidence on record. (Tullett Prebon (Philippines), Inc. vs. Commissioner of Internal Revenue, CTA EB No. 2143 (CTA Case No. 9320), November 18,2020) 

An LN is entirely different and serves as different purpose than an LOA. An LN will not suffice to give a valid authority to the Revenue Officers.

The Company filed its VAT Return for taxable year 2008. Without receiving a Letter of Authority, the Company subsequently received an undated Letter Notice on 2010, in which the BIR subsequently issued a PAN, FLD with an Assessment Notice, and FDDA.

CIR argues that the authority to conduct the tax audit of the Company’s deficiency taxes emanates from the power of the CIR under Sec (A) of the Tax Code, in relation to RMO 40-2003 and RMO 55-2010. Hence, the issuance of LOA is not necessary under the RELIEF system of BIR.

The CTA ruled that the revenue officers were not duly authorized to conduct the audit investigation, hence the resulting tax assessments are void. Before an examination of the taxpayer may be done, it is a legal requirement that there must first be an LOA issued to the concerned revenue examiners, unless the CIR himself or his duly authorized representative will conduct such an examination. The issuance of a Letter Notice is not sufficient since it serves a different purpose than an LOA. In this case, there is no indication that an LOA was issued by the CIR to the Company. The BIR came up with the subject tax assessments only on the basis of the Letter Notice. Thus, the subject VAT assessment is void. (Commissioner of Internal Revenue vs. Lapanday Holdings Corporation, CTA EB No. 1888 (CTA Case No. 8932), November 18,2020)

Mere citing of the wrong provision in the NIRC, as well as failure to specify the kind and amount of tax does not automatically make the waiver void.

The Company received a Letter of Authority regarding the examination of its books and accounts for the calendar year 2005. Meanwhile, the Company executed three (3) Waivers for the Defence of Prescription, however, it subsequently assailed its validity due to the following defects: (1) The waiver failed to specify the kind and amount of taxes covered, (2) The waiver's erroneous reference to the Tax Code provision on prescriptive period amounts to a material deviation from the prescribed form of waiver under RDAO No. 05-01, and (3) The Company was not furnished a duly notarized and accepted copy by the BIR.

The Court ruled that the issued waivers were not defective. The Court reiterated the proper procedure for the proper execution of a waiver under RMO No. 20-90 and RDAO No. 05-01, to wit: (1) The waiver must be in the proper form prescribed by RMO 20-90; (2) The waiver must be signed by the taxpayer himself or his duly authorized representative; (3) The waiver should be duly notarized; (4) The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver; (5) Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed; and (6) The waiver must be executed in three copies, the original copy to be attached to the docket of the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver.

The facts in this case show that there was proper compliance for the issuance of a valid waiver. Merely citing the wrong provision of the NIRC of 1997, as amended, and failure to specify the kind and amount of tax would not readily result in the nullification of the waivers. (UPS-Delbros Transport, Inc. vs. Commissioner of Internal Revenue, CTA EB No. 2026 (CTA Case No. 9063), November 19,2020)

Actions for tax refund or credit are in the nature of a claim for exemption, hence the burden is on the taxpayer to show that he has strictly complied with the conditions for the tax refund or credit.

The taxpayer is a special purpose trust with a special purpose vehicle status under RA No. 9267. The taxpayer filed a claim for tax refund of the final withholding taxes paid on the interest income from its asset-backed securities (ABS). The taxpayer claims that the interest earned by the holders of its notes, being income from low cost and socialized housing-related ABS, is exempt from income and withholding tax under Sec. 33 of RA 9267. However, the CIR claims that the taxpayer is not entitled to refund since it has no legal personality to file the same, and it failed to prove its entitlement thereto.

The Court ruled that the taxpayer, as a withholding agent, has the legal personality to file the claim for refund since he is considered a ‘taxpayer’ under the NIRC. He is also considered as an agent of the taxpayer whose taxes were withheld, hence, his authority to file the return also includes the authority to file a claim for refund.

As to the taxability of the income derived by the ABS, the taxpayer failed to prove its entitlement to the tax exemption. A careful examination of the taxpayer’s evidence reveals that it miserably failed to prove that the subject ABS was issued pursuant to a plan of securitization as approved by the SEC. In fact, the supposed plan of securitization was never presented in court. Neither is there any indication that a securitization took place. Such being the case, this Court cannot treat the subject ABS as not falling under the term "deposit substitutes", pursuant to Section 31 of RA No. 9267. Moreover, even assuming that the said ABS should not be considered as deposit substitutes under the same provision, there is likewise no indication that the yield/s from the same ABS is/are held by tax-exempt investors. Thus, the exemption from the 20% final withholding tax cannot be applied. (Bahay Bonds 2 Special Purpose Trust vs. Commissioner of Internal Revenue, CTA Case No. 9916, November 9,2020)

Assessments must contain factual basis in order to be valid.

The Cooperative was assessed for deficiency VAT regarding the sale of its refined sugar in 2006. The BIR issued an amended FLD/FAN on December 9,2010, however, the Cooperative failed to file its protest within the required period. The Cooperative contends that it was exempt from paying internal revenue taxes since it is an agricultural cooperative entitled to VAT exemption.
The Court ruled that the Cooperative is not liable for deficiency taxes. A perusal of the records show that the assessment against the Cooperative lacks factual basis. The assessment is based on alleged "BIR data" stating that the Cooperative withdrew 232,533.36 LKG of refined sugar for taxable year 2006. However, the BIR did not attach nor show any breakdown of this alleged 232,533.36 LKG of refined sugar. Neither did it explain how it computed this total amount. Absent sufficient evidence to support the assessment, the presumption of correctness of assessment no longer applies. There being no factual or supporting evidence, the assessments must be cancelled.

The Court took note of the procedural lapse of the Cooperative. Its failure to timely file its protest rendered the subject assessment final, executory and demandable. However, in the instant case, the BIR’s right to collect has already prescribed. The Amended FLD/FAN having been mailed on December 22, 2010; the BIR has 3 years from such date within which to collect the said assessed deficiency VAT. The Warrant of Distraint and/or Levy, and Warrant of Garnishment in 2018 were issued beyond the period to collect, as provided by law, thus rendering the same prescribed. (ANAPI Multi-Purpose Cooperative vs. Commissioner of Internal Revenue, CTA Case No. 9787, November 16, 2020)

VAT invoices and/or VAT receipts from purchase of goods, properties and services are necessary to establish the payment of VAT for purposes of tax refund.

The Corporation is a GOCC engaged in sales transactions with government entities. Claiming that it committed a mistake in utilizing the actual input VAT attributable to its sales to the government instead of applying the provision on RR 16-05, it filed an administrative claim for refund and presented its schedule of Input VAT. However, the CIR denied the Corporation’s claim stating that the taxes paid are presumed to have been made in accordance with the law, and its claim for refund is not properly substantiated by proper documents, such as sales invoices, official receipts, and others, pursuant to the regulations.

The Court ruled that the Corporation is not entitled to refund since the records of the case shows that petitioner did not adduce proof on the actual input VAT declared in its VAT Returns. The necessary documents to prove the actual Input VAT incurred by Corporation are the VAT invoices and/or VAT receipts emanating from its purchases of goods, properties and services during the taxable period. Without proof on the actual input VAT incurred by the Corporation, there is no way for the Court to determine if an actual overpayment of VAT occurred in the case at bar arising from the Corporation’s failure to utilize the standard input VAT of 7% on its sales to the government. (National Development Company vs. Commissioner of Internal Revenue, CTA Case No. 9633, November 26,2020.)

The BIR is duty bound to wait for the expiration of fifteen (15) days from the date of receipt of the PAN before issuing the FLD and FAN.

The Cooperative was assessed for deficiency taxes for its calendar year 2006. The BIR subsequently issued the PAN on April 7, 2010, and on the following day (April 8, 2010), it issued the FLD and FAN. All of these were simultaneously received by the Cooperative on April 21, 2010. Now, the Cooperative assailed the assessment, however, the BIR contends that the tax assessments already became final and executory for failure of the Cooperative to file its protest to the PAN and FLD within the period provided under Sec. 228 of the Tax Code.

The Court ruled that the assessment is void since the BIR failed to comply with due process requirements in its issuance. Part of the due process in the issuance of deficiency tax assessment is that the taxpayer shall have fifteen (15) days from receipt of the PAN to respond thereto, and only after it fails to do so within such period, will it be considered in default and an assessment notice will be issued. In other words, the CIR or his duly authorized representative is duty bound to wait for the expiration of fifteen (15) days from the date of receipt of the PAN before issuing the FLD and FAN. (Digos Market Vendors Multi-Purpose Cooperative (DIMAVEMC) vs. Commissioner of Internal Revenue, CTA Case No. 9131, November 16,2020)

PAGCOR’s income from junket gaming operations is subject to corporate income tax.

The Company and PAGCOR entered into a Junket Agreement providing the company a Grant of Authority to conduct junket gaming operations at PAGCOR’s casino. Thereafter, the Company filed an administrative claim for refund for the erroneously paid corporate income tax on its e-junket gaming revenues for the taxable year 2015. The Company contends that the tax exemption under Section 13 (2) of PD 1869, which exempts PAGCOR from any kind or form of tax or fees, charges or levies of whatever nature, except for a five percent (5%) franchise tax, extends to persons with whom PAGCOR has contractual relationship with gaming operations. Since the Junket Agreement with PAGCOR licensed the Company to conduct junket gaming operations in PAGCOR’s casino, the said tax exemption should inure to the benefit of the Company.

The Court ruled that PAGCOR's income from junket gaming operations is subject to corporate income tax. The Court reiterated the Supreme Court’s previous ruling that PAGCOR’s income from gaming operations is subject only to 5% franchise tax, while its income from other related services, such as income from junket operation, is subject to corporate income tax. PAGCOR's contractees and licensees shall likewise pay corporate income tax for income derived from such "other related services", including income from junket operations. Section 14(5) of P.D. No. 1869 is clear in stating that any income that may be realized from these related services shall not be included as part of the income for the purpose of applying the franchise tax, but the same shall be considered as a separate income and shall be subject to income tax. (Prime Investment Korea Inc. vs. Commissioner of Internal Revenue, CTA Case No. 9814, November 19,2020.)

BIR REVENUE MEMORANDUM CIRCULAR 117–2020, November 5, 2020

Consolidates the weekly Price of Sugar at Millsite issued by the Sugar Regulatory Administration (“SRA”) for the month of September pursuant to Revenue Regulations (“RR”) No. 13-2015. The consolidated schedule shall be used for the purpose of imposing the one percent (1%) expanded withholding tax on sugar prescribed under RR No. 2-98, as amended by RR No. 11-2014

BIR REVENUE MEMORANDUM CIRCULAR NO. 119-2020, November 9, 2020

This notifies the public that five sets of BIR Form No. 2524 – Revenue Official Receipt were reported lost. The lost sets bear the following Serial Numbers:

1. ROR201301569000;
2. ROR201302523147;
3. ROR201302523148;
4. ROR201302523149; and
5. ROR201302523150;

All official transactions wherein the abovementioned forms are used are considered invalid.

BIR REVENUE MEMORANDUM CIRCULAR 121–2020, November 17, 2020

Announces the pilot implementation of Online Application for Tax Clearance for Bidding Purposes and Tax Compliance Verification Certificate (eTCBP/TCVC). This additional option is available to taxpayers registered with RR4-Pampanga, 7A-Quezon City, 7B-East NCR, Large Taxpayers Service (LTS) except Large Taxpayers District Office (LTDO) Cebu and Davao; and to Non-Resident Foreign Corporation and Non-Resident Alien Not Engaged in Trade or Business. The circular also provides for the policy and procedure in using said eTCBP/TCVC.

BIR REVENUE MEMORANDUM ORDER NO. 40-2020, November 23, 2020

Provides the revised guidelines and procedures in the processing and issuance of clearances in the National Office and Regional/District Offices to more efficiently reflect the regular movement of revenue officials and employees due to promotion, reassignment, leave of absence, retirement, resignation, death or transfer/secondment to other government agencies/instrumentalities/offices within the BIR, and other modes of separation.

SEC-OGC Opinion No. 20-02, November 3, 2020

Corporations existing prior to, and which continues to exist after the effectivity of the RCC, are ipso jure granted perpetual existence without any further action on their part. Given this, the Articles of Incorporation of all corporations who satisfies the requirements under Section 11 of the RCC and MC 22 Series of 2020 are deemed amended to the effect that their corporate term is now perpetual. A positive act on the part of corporations is only required if they intend to limit their corporate term to a certain period.

SEC Memorandum Circular No. 30, Series of 2020, October 13, 2020

The Commission issued this Memorandum Circular on the Revision of the General Information Sheet (“GIS”) of Foreign Corporations Include Beneficial Ownership Information.

All SEC registered foreign corporations are required to disclose their beneficial owners in the GIS. For this purpose, the GIS to be submitted by such foreign corporations is hereby revised to include information on their beneficial owners as provided for and defined in SEC Memorandum Circular No. 15, Series of 2019.

SEC Memorandum Circular No. 32, Series of 2020, November 17, 2020

The Commission, in its En Banc meeting, in consideration of the government’s initiative to provide relief to industries impacted by the COVID-19 pandemic, approved the adoption of an industry-specific framework, to be referred to as the PFRS, as modified by the application of the financial reporting reliefs issued by the BSP and approved by the SEC. Accordingly, BSFIs have the option to prepare their financial statements using said industry-specific framework or full PFRS for the duration and terms allowed by the BSP.

BSFIs, which opt to adopt the industry-specific framework, should specify in the “Basis of Preparation of the Financial Statements” section of the financial statements the reliefs availed of and indicate that the availment thereof covers only current-year transactions.

Entities have the option to take either the full retrospective or the modified retrospective approach in doing the above adjustments when it reverts to full PFRS after the period of relief.

The PFRS, as modified by the application of the financial reporting reliefs issued by the BSP and approved by the SEC, shall form part of the applicable financial

reporting framework for the purpose of preparing and filing general-purpose financial statements with the Commission pursuant to the Revised SRC Rule 68.

SEC Notice, November 9, 2020

Notice to All Lending Companies and Financing Companies.

The Securities and Exchange Commission (“SEC”) is conducting a risk assessment of the Lending Companies and Financing Companies Sector to identify, assess and understand money laundering and terrorist financing (“ML/TF”) risks to which the sector is exposed and to implement the most appropriate mitigation measures.

All lending companies and financing companies are enjoined to accomplish a Survey Questionnaire to assist the SEC in the conduct of the said AML/CFT Sectoral Risk Assessment.

The Survey Questionnaire shall be accomplished and submitted online on or before 16 November 2020, 5:00PM. Said Questionnaire may be accessed through the following link:

https://forms.gle/qiwVE4RZFTZh5mYN7

BSP CIRCULAR LETTER NO. CL-2020-055, November 16, 2020

Implements the use of 11-digit enterprise-wide bank code as part of the number of the Bangko Sentral ng Pilipinas (BSP)-prescribed Certificate of Inward Remittance (CIR) of Foreign Exchange (FX) Form issued by Authorized Agent Banks (AABs). The CIR number format is composed of the year of issuance, the series number and the enterprise-wide bank code (11-digits), respectively. The 11-digits enterprise wide bank code has a “2-4-2-3” composition. The first two (2) digits pertain to the bank kind, the next four (4) digits to entity, the next two (2) digits to bank type, and the last three (3) digits to the branch code of the bank.

IC Legal Opinion No. 2020-15, November 16, 2020

The funds for these programs were derived and allocated from a certain portion of ASA's income from its microfinance operations. ln sum, these programs do not fall within the purview of a contract of insurance. Neither can this Commission consider ASA as a Health Maintenance Organization (“HIMO”) nor can this Commission consider ASA's programs as Pre- Need Plans since these programs do not have any form of premium attached to it.

The aforementioned programs are ASA's initiatives to ease the financial difficulties of its borrower-clients in times of their pressing needs and that it is part of ASA's Corporate Social Responsibility. Both of these programs have no form of premium attached to it.

ln applying the afore-cited legal provisions and jurisprudence on the matter, this Commission is of the opinion that there is no undertaking and indemnity to speak of considering that these programs are part of ASA's CIient's Assistance Program, a program similar to the tenor of a Corporate Social Responsibility activities being done by various juridical entities. The purpose of the assistances is to ease the burden of borrowers and their families in difficult times. The title of these activities may vary or change time to time depending upon the context and situation of ASA. To reiterate, the funds for these programs were derived and allocated from a certain portion of ASA's income from its microfinance operations. ln sum, these programs do not fall within the purview of a contract of insurance.

We also opine that it is immaterial if the various amounts being extended by ASA to its borrowers/clients and their designated nominees are fixed and categorized with different requirements. What is more controlling is that the various amounts in these programs are dependent or contingent on the financial capability of ASA to actually give the various amounts, thereby making it gratuitous and still voluntary in nature.

Neither can this Commission consider ASA as a Health Maintenance Organization (“HMO”) nor can this Commission consider ASA's programs as Pre-Need Plans since these programs do not have any form of premium attached to it, as primarily required in Section 2 of Executive Order No. 192, Series of 2015 and Section (b) of Republic Act No. 9829.

IC Circular Letter No. 2020-104, November 2, 2020

Dissemination of AMLC Regulatory Issuance No. 4, Series of 2020, on Freeze Order for Potential Target Matches under the United Nations Security Council Consolidated Lists (Targeted Financial Sanctions)

Attached herewith is a copy of the Anti-Money Laundering Council (“AMLC”)
Regulatory Issuance (“ARI”) No. 4, Series of 2020, on Freeze Order for Potential
Target Matches under the United Nations Security Council Consolidated Lists
(Targeted Financial Sanctions).

IC Circular Letter No. 2020-106, November 4, 2020

The following Guidelines Strengthening Typhoon "Rolly"-Related Claims Management Policies are hereby adopted and promulgated.

1. Strengthening of Typhoon "Rolly"-Related Claims Management Policies. — All insurance and reinsurance companies, MBAs, pre-need companies and HMOs are enjoined to adopt and implement claims management policies relative to the processing and/or payment of claims that are related to Super Typhoon "Rolly" with the following objectives, to wit:

a. Relaxation and streamlining of existing company procedures and mechanisms that will facilitate immediate processing and/or payment of claims related to Super Typhoon "Rolly";
b. Relaxation of the notice of claim period and the period for completion of claim requirements; and
c. Enhancement of services that will improve overall customer claims experience.

IC Circular Letter No. 2020-108, November 10, 2020

Provides the Circular Letter No. 2020-96, as amended by Circular Letter No. 2020-96A or the "Framework for Passenger Personal Accident Insurance for Public Utility Vehicles" is hereby further amended, to wit:

1. Section 1(2) of CL No. 2020-96A on the requirement regarding management companies is hereby amended to read as follows:

“Management Company. - The Management Company of the insurance pool must be duly licensed by this Commission, must have a minimum track-record of five (5) years as a Management Company, must have a minimum Paid-up capitalization of Twenty Million Pesos (Php20,000,000.00), duly registered with the Securities and Exchange Commission and other qualifications as may be determined appropriate in subsequent directive/s.”