MORE POGOS TO SHUT OPERATIONS IN SUBIC BAY + SENATORS FROWN ON MANDATORY REPORTING OF PHP 1M CASH PURCHASE OF REAL ESTATE + DOLE SAYS TO DISTRIBUTE PHP 13B BAYANIHAN 2 CASH AID TO WORKERS
Other Relevant Tax Updates:
- Supreme Court (SC) Cases Digest
- Court Of Tax Appeals (CTA) Cases Digest
- Tax And Business-Related News [October 24-31]
I. SC CASES DIGEST
- Deficiency tax assessment is void for failure to accord taxpayer due processin their issuance; assessment notices are void for failure to contain a definite period within which to pay taxes due; Preliminary Assessment Notice (PAN) and Formal Assessment Notice (FAN) are not duly served upon and received by taxpayer since the Commissioner Of Internal Revenue (CIR) failed to identify and authenticate signatures on registry receipt for the purpose of ascertaining whether they are taxpayer’s authorized representatives
- Local government units (LGUs)are precluded from availing of the remedy of levy against properties owned by government instrumentalities, whether or not vested with corporate powers; Republic Act (R.A.) no. 7160 exempts real property owned by the republic from Real Property Taxes (RPT) except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person
[DEFICIENCY TAX ASSESSMENT IS VOID FOR FAILURE TO ACCORD TAXPAYER DUE PROCESS IN THEIR ISSUANCE] [ASSESSMENT NOTICES ARE VOID FOR FAILURE TO CONTAIN A DEFINITE PERIOD WITHIN WHICH TO PAY TAXES DUE] [PAN AND FAN ARE NOT DULY SERVED UPON AND RECEIVED BY TAXPAYER SINCE THE CIR FAILED TO IDENTIFY AND AUTHENTICATE SIGNATURES ON REGISTRY RECEIPT FOR THE PURPOSE OF ASCERTAINING WHETHER THEY ARE TAXPAYER’S AUTHORIZED REPRESENTATIVES]
Petitioner CIR filed a Petition on Certiorari seeking to reverse the CTA En Banc’s earlier decision cancelling the assessment issued against the Respondent T Shuttle Services, Inc. Petitioner argued the following to wit: (1) no error or illegality can be ascribed to the assessment as due process was observed; (2) Respondent failed to timely protest against the FAN and to submit supporting documents within 60 days; (3) Respondent is liable for deficiency tax liability; and (4) presumption of the propriety and exactness of tax assessment is in his favor. In ruling, the Supreme Court held that the Petitioner failed to prove that the PAN and the FAN were properly and duly served upon and received by Respondent. As noted, Petitioner failed to identify and authenticate the signatures appearing on registry receipt for the purpose of ascertaining whether such signatures were those of Respondent’s authorized representatives. Hence, it is readily apparent that the Petitioner could not have complied with the requirement of noting the position/designation/ relationship of the recipient, to respondent, the taxpayer. Additionally, alleged deficiency tax assessment is void for failure to accord Respondent due process in their issuance. Besides, even granting that the PAN and the FAN we properly served, assessment notices are still void for failure to contain a definite period within which to pay taxes due. Consequently, Petition was DENIED and the assailed CTA En Banc’s Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. T SHUTTLE SERVICES INC., AUGUST 24, 2020, G.R. NO. 240729]
[LGUS ARE PRECLUDED FROM AVAILING OF THE REMEDY OF LEVY AGAINST PROPERTIES OWNED BY GOVERNMENT INSTRUMENTALITIES, WHETHER OR NOT VESTED WITH CORPORATE POWERS] [R.A. NO. 7160 EXEMPTS REAL PROPERTY OWNED BY THE REPUBLIC FROM RPT EXCEPT WHEN THE BENEFICIAL USE THEREOF HAS BEEN GRANTED, FOR CONSIDERATION OR OTHERWISE, TO A TAXABLE PERSON]
Petitioner Philippine Heart Center filed a Petition for Review on Certiorari assailing the Decision and Resolution of Respondent Local Government of Quezon City. Petitioner reiterated its claim for exemption from RPT pursuant to Presidential Decree 673 and Letter of Instruction 1455. It also argued that charitable institutions are exempt from paying RPT on its properties which are actually, directly and exclusively being used for charitable purposes. In determining whether Petitioner is a government instrumentality, the Court ruled that the Petitioner bears the essential characteristics of a government instrumentality vested with corporate powers, thus, exempt from RPT. Likewise, the properties of Petitioner are properties of public dominion devoted to public use and welfare and, therefore, exempt from RPT and levy, without prejudice to the liability of taxable persons to whom the beneficial use of any of these properties has been granted. Thus, the Petition was GRANTED and RPT assessments and the sale at public auction of the properties, were declared VOID. [PHILIPPINE HEART CENTER VS. THE LOCAL GOVERNMENT OF QUEZON CITY, CITY MAYOR OF QUEZON CITY, CITY TREASURER OF QUEZON CITY AND CITY ASSESSOR OF QUEZON CITY, G.R. NO. 225409, MARCH 11, 2020]
II.CTA CASES DIGEST
- Defective waivermay result in extension of CIR’s period to assess when factual circumstances display that parties are in pari delicto; failure to file administrative protest within 30 days from receipt of Formal Assessment Notice (FAN) will render it final and executory; date of issuance of fan shall also be considered as the date of receipt when it failed to present contrary evidence as to when it was actually received
- Proof of actual remittance is not a condition to claim for a refund of unutilized tax credits; the withholding agent’s receipt of the tax withheldis tantamount to the BIR’s receipt thereof
- Requisites on input VAT refund by a manning company
- FILINVEST caseand the subsequent circular on the imposition of Documentary Stamp Tax (DST) may be applied retroactively because prospective effect applies only to decisions issued by the supreme court-enunciating doctrines
[DEFECTIVE WAIVER MAY RESULT IN EXTENSION OF CIR’S PERIOD TO ASSESS WHEN FACTUAL CIRCUMSTANCES DISPLAY THAT PARTIES ARE IN PARI DELICTO] [FAILURE TO FILE ADMINISTRATIVE PROTEST WITHIN 30 DAYS FROM RECEIPT OF FAN WILL RENDER IT FINAL AND EXECUTORY] [DATE OF ISSUANCE OF FAN SHALL ALSO BE CONSIDERED AS THE DATE OF RECEIPT WHEN IT FAILED TO PRESENT CONTRARY EVIDENCE AS TO WHEN IT WAS ACTUALLY RECEIVED]
Petitioner M. Tech Products Philippines, Inc. filed a Petition for Review seeking to reverse the Court 1st Division’s earlier decision holding it liable to the assessment issued by the Respondent CIR. Petitioner argued that the protest has been filed on time, hence, the Court has jurisdiction over the case. Likewise, the waiver of prescriptive period executed was defective and confirms that the period of limitation is only three (3) years from the time of the filing of tax returns. In ruling, the Court ruled that the waiver executed resulted in the extension of the period to assess since both parties are estopped from questioning the validity of the subject waiver because they performed contributory acts in the invalidity thereof. Moreover, Petitioner failed to file the protest within the 30-day period from the receipt of FAN. BIR records show that the FAN dated December 18, 2014 was received on the same day by Petitioner considering that Petitioner did not present contrary evidence as to when it actually received the said FAN, except as that stated in the BIR Records. Protest on the FAN was only made April 1, 2015, which is beyond the 30-day period after receipt of FAN within which protest may be filed. Thus, the Petition was DENIED and the earlier decision was AFFIRMED. [M. TECH PRODUCTS PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, OCTOBER 21, 2020, CTA EN BANC CASE NO. 2114]
[PROOF OF ACTUAL REMITTANCE IS NOT A CONDITION TO CLAIM FOR A REFUND OF UNUTILIZED TAX CREDITS] [THE WITHHOLDING AGENT’S RECEIPT OF THE TAX WITHHELD IS TANTAMOUNT TO THE BIR’S RECEIPT THEREOF]
Petitioner CIR filed a Petition for Review seeking to reverse the CTA 1st Division’s decision partially granting the refund or issuance of Tax Credit Certificate (TCC) in favor of Respondent Ayala Corporation. Petitioner insisted that proof of actual remittance of the withholding taxes is required for the claim for refund to prosper. In ruling, the Court held that the withholding agent’s receipt of the tax withheld is tantamount to the BIR’s receipt thereof. Any failure on the part of the withholding agent to remit the amount withheld to the BIR is a breach on the part of the agent and not by the taxpayer. Respondent’s presentation of its Summary Alphalist of Withholding Taxes and the relevant Certificates of Creditable Tax withheld at Source (BIR Form No. 2307), which are generally provided by the withholding agents as proof of tax withheld were sufficient to establish the fact of withholding. Thus, Respondent should no longer be burdened to show proof of actual remittance in its claim. Consequently, the Petition was DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. AYALA CORPORATION, CTA EN BANC CASE NO. 2118, OCTOBER 14, 2020]
REQUISITES ON INPUT VAT REFUND BY A MANNING COMPANY
Petitioner Carmen Copper Corporation filed a Petition for Review seeking refund or issuance of Tax Credit Certificate (TCC) of unutilized input VAT attributable to its zero-rated sales on purchases of goods and services, and importation of goods, for the 4th quarter of 2014 in the amount of Php 21,962,748.77. Petitioner argued that it is entitled to refund for it has complied with the requisites, to wit: (1) that it is a VAT-registered taxpayer and is engaged in zero-rated sales; (2) that the input taxes were due or paid and were not transitional input taxes; (3) that the input taxes have not been applied against output taxes during and in the succeeding quarters; (4) that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales; (5) that the acceptable foreign currency exchange proceeds from Petitioner’s export sales have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (6) that the input taxes which cannot be directly and entirely attributable to any of the zero-rated or effectively zero-rated sales and taxable or exempt sales shall be proportionately allocated on the basis of sales volume; and (7) that the claim is filed within two (2) years after the close of the taxable quarter when such sales were made. In ruling, the Court noted that the Petitioner is compliant with the foregoing requisites except that not the whole amount of direct exportations is qualified for refund. As further verified, only input VAT of Php 8,481,620.92 is attributable to valid zero-rated sales. Since the Respondent Commissioner of Internal Revenue (CIR) already issued TCC in the amount of Php 429,455.27, the same shall be offset against the refundable input VAT of Php 8,481,620.92. Thus, the Court PARTIALLY GRANTED the Petition, ordering the Respondent to refund or issue TCC in favor of the Petitioner at a reduced amount. [CARMEN COPPER CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9592, OCTOBER 1, 2020]
FILINVEST CASE AND THE SUBSEQUENT CIRCULAR ON THE IMPOSITION OF DST MAY BE APPLIED RETROACTIVELY BECAUSE PROSPECTIVE EFFECT APPLIES ONLY TO DECISIONS ISSUED BY THE SUPREME COURT-ENUNCIATING DOCTRINES
Both Liberty Telecom Holdings, Inc. (Liberty) and the CIR both filed a Petition for Review seeking to reverse the CTA Division’s earlier decision denying the claim of refund of Liberty on basic DST assessment and cancelling the penalties imposed by CIR. The assessment stemmed from the CIR’s DST imposition on advances to affiliates as reflected in the 2009 Notes to Financial Statements. It is the claim of Liberty that DST is not supposed to be paid because there was no document executed and that it relied on prevailing court decisions and rulings of the BIR that board resolutions and inter-office memos evidencing intercompany advances cannot be categorized as loan agreements subject to DST. Likewise, the Supreme Court decision in Filinvest, which effectively reversed previous court decisions and rulings of the BIR, should not be applied to transactions or documents issued prior to its promulgation. On the other hand, the CIR is praying that the decision of the CTA Division on cancellation of penalties be reversed arguing that the existence of physical documents is not indispensable before DST can be imposed. In ruling, the Court held that the Filinvest case and the subsequent circular issued may be applied retroactively because prospective effect applies only to decisions issued by the Supreme Court enunciating doctrines. Article 8 of the Civil Code provides that judicial decisions or interpretation of the laws or the Constitution shall form part of the legal system of the Philippines. At the time that advances to affiliates were reflected in the 2009 Notes to Financial Statements, there was already a provision under the Tax Code and Revenue Regulations (i.e. Section 179, RR 9-94) which imposes DST even in the absence of debt instrument, as long as the transactions are established. DST, being an excise tax, is imposed on the transaction rather than on the document. Thus, the claim for refund on the basic DST filed by Liberty was DENIED. Nevertheless, Liberty’s reliance on prior rulings and interpretations showed good faith, hence, the Petition filed by CIR was also DENIED. [LIBERTY TELECOM HOLDINGS, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO’S. 2035 AND 2041, SEPTEMBER 24, 2020]
III. TAX AND BUSINESS-RELATED NEWS [OCTOBER 24-31]
- Gov’t wants more investments in renewable energy
- More taxpayers settled dues online amid pandemic
- PDIC urges clients of closed Rural Bank of Maigo to file deposit insurance claims until Nov. 13
- SSS says first batch of November 2020 pensions via PESONet released
- More POGOs to shut operations in Subic Bay: official
- DOLE says to distribute P13 billion Bayanihan 2 cash aid to workers
- Majority of Pinoys prefer digital IDs – survey
- Senators frown on mandatory reporting of P1-M cash purchase of real estate
- DOT urges tourism MSMEs to avail COVID-19 loan program
- DOF bucks amendments to oil tax laws
Gov’t wants more investments in renewable energy [Philippine Daily Inquirer, October 31, 2020]
The Philippines wants to entice more “green” energy investments as it aims to bounce back from the pandemic-induced recession while fighting climate risks and enhancing disaster resilience, President Duterte’s chief economic manager said.
More taxpayers settled dues online amid pandemic [Philippine Daily Inquirer, October 30, 2020]
More taxpayers settled their dues online amid COVID-19 quarantine controls that imposed social distancing while also opening up more digital payment channels, the Department of Finance (DOF) said.
PDIC urges clients of closed Rural Bank of Maigo to file deposit insurance claims until Nov. 13 [ABS-CBN News, October 30, 2020]
Depositors of the closed Rural Bank of Maigo Inc in Lanao Del Norte have until November 13 to file for deposit insurance claims, the Philippine Deposit Insurance Corp said Friday.
SSS says first batch of November 2020 pensions via PESONet released [ABS-CBN News, October 30, 2020]
The Social Security System said it would credit the first batch of November pensions on Oct. 30, Friday via its new disbursement method using the Philippine Electronic Fund Transfer System and Operations Network (PESONet) and other “checkless” channels.
More POGOs to shut operations in Subic Bay: official [ABS-CBN News, October 30, 2020]
More Chinese-operated gambling hubs are “winding down” their operations in Subic Bay in Olongapo City, north of the capital, an official said Friday.
DOLE says to distribute P13 billion Bayanihan 2 cash aid to workers [ABS-CBN News, October 30, 2020]
The Department of Labor and Employment said Friday it would distribute P13 billion in cash aid to workers grappling with the coronavirus pandemic.
Majority of Pinoys prefer digital IDs – survey [Manila Bulletin, October 28, 2020]
Majority of Filipinos prefer digital IDs a secure way for authentication as most companies and business transactions are being done digitally not just for this time of pandemic, but as the way forward.
Senators frown on mandatory reporting of P1-M cash purchase of real estate [Philippine Daily Inquirer, October 28, 2020]
Senators on Wednesday frowned on a proposal that would require the mandatory reporting of a person buying a P1 million real estate in cold cash.
DOT urges tourism MSMEs to avail COVID-19 loan program [Philipine Daily Inquirer, October 28, 2020]
Tourism Secretary Bernadette Romulo-Puyat on Wednesday encouraged micro, small, and medium enterprises (MSMEs) to avail themselves of the CARES for Tourism Rehabilitation of Enterprises and Livelihood (CARES for TRAVEL) Program to help their business and their workers during the on-going pandemic.
DOF bucks amendments to oil tax laws [Manila Bulletin, October 28, 2020]
Amid the tax predicaments raised by Petron on its refining business, the Department of Finance (DOF) indicated that it is not amenable to proposed tweaks in the country’s tax laws as applied to the supply chain of the downstream oil sector.
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