DOF HALTS FRANCHISE TAX ON POGO TO COMPLY WITH SUPREME COURT RULING + SOTTO FILES FRESH BILL RENEWING ABS-CBN FRANCHISE + NON-LIFE INSURERS SEEK TAX REMEDIES AMID VIRUS BURDEN
Other Relevant Tax Updates:
- Court of Tax Appeals (CTA) Cases Digest
- Bureau of Internal Revenue (BIR) Clarifies 5-Year Net-Operating Loss Carry-Over (NOLCO) Entitlement of Fiscal Taxpayers Under Bayanihan 2
- BIR Clarifies the Guidelines on the Utilization of 5% Tax Credit Under Personal Equity Retirement Account (PERA) Act Of 2008
- Tax and Business-Related News [December 26-January 7]
!. CTA CASES DIGEST
- Onus Probandi to establish the existence of fraud is with the Bureau of Customs (BOC) which ordered the forfeiture of the imported goods; BOC cannot forfeit shipment in favor of the government in the absence of fraud
- Interests and yields of asset-backed securities covered by the guaranty of home guaranty corporationissued by a special purpose trust are exempt from tax
- Dismissal of case due to non-acquisition of jurisdiction for failure to protest;substituted service can be resorted to when the party is not present at the registered or known address; if a procedure is not required to be observed, no right can be derived by any party to invoke the same
- Claimant has the burden of proof to establish the factual basis of his claims for tax credit or refund
- As a general rule, the 30-day period to appealis both mandatory and jurisdictional; Lascona case period is different since it is for assessment
- Civil liability deemed instituted with the criminal actionis only civil liability ex delicto; civil liability ex delicto cannot be awarded in the absence of act or omission punishable by law; commencement of the period to file protest is anchored in the taxpayer’s receipt of assessment notice; in the absence of valid LOA, assessments cannot be validly enforced
- Right to travel is guaranteed by the constitutionand may be limited only by law; holding an accused in a criminal case within the reach of the courts by preventing his departure from the Philippines is a valid restriction on his right to travel
- Properties of public dominion are not subject to Real Property Tax (RPT); MRT EDSA III real properties are properties of public dominion, hence, exempt from RPT; Republic of the Philippines is the owner of EDSA MRT III, hence, has the right to protect it from being taxed and sold in public auction
- Absence of proof of receipt of Preliminary Assessment Notice (PAN)resulting in the cancellation of assessment; denial of taxpayer having issued with BIR notices shifts the burden to the BIR to prove that the said notices were actually received by the taxpayer
- Failure to refute denial of administrative claim for refundis sufficient for denial of petition; claim for refund must be supported by compliance to every minute aspect of the law to prosper
- Mere photocopies of documents are inadmissible pursuant to the best-evidence rule; courts are not precluded to accept in evidence a mere photocopy of a documentwhen no objection was raised when it was formally offered; ground for objectionsnot raised at the proper time shall be considered waived
- CTA can rule on issues raised for the first time on appeal; assessment is void if Revenue Officer (RO) who conducted the audit investigation is not authorized through a LOA
[ONUS PROBANDI TO ESTABLISH THE EXISTENCE OF FRAUD IS WITH THE BOC WHICH ORDERED THE FORFEITURE OF THE IMPORTED GOODS] [BOC CANNOT FORFEIT SHIPMENT IN FAVOR OF THE GOVERNMENT IN THE ABSENCE OF FRAUD]
Petitioner Roy M. Garchitorena filed a Petition for Review seeking reversal of the order of Respondent Commissioner of Customs affirming the order of the District Collector of Customs forfeiting the vehicle imported by Petitioner in favor of the government based on the alleged gross undervaluation of the imported vehicle and that the invoice submitted by Petitioner is spurious. Petitioner argued that he did not cause the irregularity in the invoice submitted for the valuation and release of the imported vehicle. Petitioner further contended that his payment of customs duties based on an assessed amount higher than that of the invoice amount is already sufficient for the release of the vehicle; thus, the Respondent has no legal right to withhold the release of the imported vehicle. In ruling, the Court noted certain irregularities in the performance of Respondent’s duties. As noted, the imported vehicle was seized only after two (2) separate request for continuous processing of the shipment had been granted giving several opportunities for Respondent to reassess the veracity of Petitioner’s documents. Further, Petitioner was also able to pay customs duties despite the alert order’s issuance. Pursuant to the Customs Modernization and Tariff Act (CMTA), the processing of goods covered by an alert order shall continue only after a negative finding of the grounds for the alert order’s issuance. This makes the fact of payment of customs duties highly irregular since no order to lift the alert order was issued. Respondent’s allegation of supposed undervaluation is likewise bereft of basis or proof as it is based solely on previous valuation which is already abandoned. Lastly, Respondent is silent on whether Petitioner caused the irregularity in the invoice. As provided in the Supreme Court Case Commissioner of Customs, et al. vs. New Frontier Sugar Corporation, the onus probandi or the burden of proof to establish the existence of fraud is lodged with the Bureau of Customs and failure of proof of fraud is a bar to forfeiture. Absent fraud, the Bureau of Customs cannot forfeit the shipment in favor of the government. Given the irregularities and bereft of basis or proof of the supposed undervaluation, and considering that no fraudulent act can be attributed to Petitioner, the Petition was GRANTED. [ROY M. GARCHITORENA VS. COMMISSIONER OF CUSTOMS, CTA CASE NO. 9972, DECEMBER 9, 2020]
INTERESTS AND YIELDS OF ASSET-BACKED SECURITIES COVERED BY THE GUARANTY OF THE HOME GUARANTY CORPORATION ISSUED BY A SPECIAL PURPOSE TRUST ARE EXEMPT FROM TAX
Petitioner CIR filed a Petition for Review seeking the reversal of the earlier decision of the CTA Special 1st Division ordering Petitioner to refund or issue a Tax Credit Certificate (TCC) to Respondent Bahay Bonds 2 Special Purpose Trust the amount representing erroneous payment of final withholding taxes on the interest earned from Asset-Backed Securities. In ruling, Section 33 of Republic Act (R.A.) No. 9267, otherwise known as “The Securitization Act of 2004” provides that any income or yield generated by a special purpose trust, such as Respondent, shall be exempt from income tax if the income or yield is earned by an investor from any low-cost or socialized housing-related Asset-Backed Securities. Section 19 of R.A. No. 8763 also provides that interest and yields earned or accumulated on mortgage, debentures, bonds, notes, mortgage and Asset-Backed Securities, interest under lease, and other credit instruments, whether issued by the Home Guaranty Corporation or covered by its guaranty shall be exempt from tax. In the instant case, the Respondent’s Asset-Backed Securities carries with it the guaranty of Home Guaranty Corporation; hence, the interests and yields of the Asset-Backed Securities shall be exempt from all taxation. Thus, the Petition was DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. BAHAY BONDS 2 SPECIAL PURPOSE TRUST, CTA EN BANC CASE NO. 2142, DECEMBER 7, 2020]
[DISMISSAL OF CASE DUE TO NON-ACQUISITION OF JURISDICTION FOR FAILURE TO PROTEST] [SUBSTITUTED SERVICE CAN BE RESORTED TO WHEN THE PARTY IS NOT PRESENT AT THE REGISTERED OR KNOWN ADDRESS] [IF A PROCEDURE IS NOT REQUIRED TO BE OBSERVED, NO RIGHT CAN BE DERIVED BY ANY PARTY TO INVOKE THE SAME]
Petitioner Loadstar Shipping Co. Inc. filed a Petition for Review seeking cancellation of the Warrant of Distraint and/or Levy (WDL) issued by Respondent CIR covering taxable year 2014. Petitioner argued that Respondent failed to observe due process when the latter served the assessment notices on its employee (telephone operator) and not on the officers enumerated in Section 11 of Rule 14 of the Rules of Court. Petitioner further contended that it did not receive a Notice of Informal Conference (NIC). On the other hand, Respondent countered that the assessment has become final, executory and demandable for Petitioner’s failure to file an administrative protest to the Formal Assessment Notice/Formal Letter of Demand. In ruling, the Court held that it cannot anymore dig into the merits of the assessment as the same has already attained finality. The record of the case is bereft of any showing that Petitioner filed an administrative protest to the assessment. Perusal of records showed that Petitioner does not deny receipt of the assessment notices, only that they were not allegedly served on its authorized officers. It is a basic tenet that an assessment becomes final, executory and demandable if it remains uncontested after the 30-day period allowed by law to file a protest. Assuming that this Court has jurisdiction, the rule on the service of summons in Rule 14 applies to the Courts and not to Respondent who belongs to the executive branch of the government. Revenue Regulations No. 18-2013 on the modes of service shall apply, which does not limit the service of the assessment notices only to the supposed authorized officers of a company. Moreover, the requirement that an NIC is mandatory prior to the issuance of the Preliminary Assessment Notice was deleted at the time of the questioned assessment period. Considering that the NIC is not required at the time of the assessment period involved in this case, its absence or its non-observance has thus become a non-issue. Consequently, the Petition was DENIED for lack of jurisdiction. [LOADSTAR SHIPPING COMPANY, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9902, DECEMBER 7, 2020]
CLAIMANT HAS THE BURDEN OF PROOF TO ESTABLISH THE FACTUAL BASIS OF HIS CLAIMS FOR TAX CREDIT OR REFUND
Petitioner Arrow Freight Corporation filed a Petition for Review seeking refund on the alleged excess and unutilized Creditable Withholding Tax in the amount of Php 18,683,586 for Calendar Year (CY) 2015. In ruling, the Court cited that in order to claim for refund, the following requisites should be met: (1) the claim must be filed within the two-year prescriptive period; (2) the fact of withholding must be established by a copy of a statement duly issued by the payor to the payee, showing the amount paid and the amount of tax withheld therefrom; and (3) that the income upon which the taxes were withheld must be included in the return of the recipient. Perusal of the documents showed that some of the Certificates are defective due to the absence of the signature of the payor, claim is not supported by original certificates, and TIN of payor indicated in the certificate is incorrect. Moreover, Respondent claimed that Petitioner is liable to deficiency income tax due to undeclared sales as a result of third-party matching. However, the Court did not give credence to Respondent’s allegations considering that it failed to present the required certifications or confirmation from the alleged third party sources to support the integrity of the data acquired from the Audit Information, Tax Exemption and Incentives Division (AITEID). Consequently, the Petition was PARTIALLY GRANTED and Respondent was ORDERED TO REFUND the Petitioner in the reduced amount of Php 9,200,593.94. [ARROW FREIGHT CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9809, DECEMBER 7, 2020]
[AS A GENERAL RULE, THE 30-DAY PERIOD TO APPEAL IS BOTH MANDATORY AND JURISDICTIONAL] [LASCONA CASE PERIOD IS DIFFERENT SINCE IT IS FOR ASSESSMENT]
Petitioner Lapanday Foods Corporation filed a Petition for Review seeking reversal of the earlier decision of the Court in Division denying its claim for tax credit arising from unutilized input taxes attributable to zero-rated sales for the 1st quarter of 2006 on the ground that the judicial claim was filed out of time. In ruling, the Court discussed that under Section 112 of the Tax Code, Respondent CIR has 120 days from the date of submission of the complete supporting documents within which to act on the application for refund/tax credit. As for the taxpayer, the law provides two (2) scenarios before a judicial claim may be filed with the CTA: (1) the full or partial denial of the claim within the 120-day period, or (2) the lapse of the 120-day period without the CIR having acted on the claim. It is only from the happening of either one may a taxpayer-claimant file its judicial claim for refund or tax credit of unutilized input VAT. Consequently, failure to observe the said period renders the judicial claim premature, divesting the CTA of jurisdiction to act on it. In the case at bar, the expiration of the 120-day period of the administrative claim filed by Petitioner on March 18, 2008 for refund fell on July 16, 2008. Petitioner then had until August 15, 2008 to file its judicial claim. However, the Petition was belatedly filed on October 15, 2018. Petitioner was also mistaken in relying on the Lascona case wherein the ruling was based on Section 228 of the Tax Code and the issue pertains to a tax assessment and not an input VAT refund or credit claim. Thus, there is no reason to neither reverse nor modify the findings of the Court in Division. Consequently, the Petition was DENIED and the earlier Resolutions were AFFIRMED. [LAPANDAY FOODS CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO. 2175, DECEMBER 7, 2020]
[CIVIL LIABILITY DEEMED INSTITUTED WITH THE CRIMINAL ACTION IS ONLY CIVIL LIABILITY EX DELICTO] [CIVIL LIABILITY EX DELICTO CANNOT BE AWARDED IN THE ABSENCE OF ACT OR OMMISSION PUNISHABLE BY LAW] [COMMENCEMENT OF THE PERIOD TO FILE PROTEST IS ANCHORED IN THE TAXPAYER’S RECEIPT OF ASSESSMENT NOTICE] [IN THE ABSENCE OF VALID LOA, ASSESSMENTS CANNOT BE VALIDLY ENFORCED]
Petitioner People of the Philippines, represented by Complainant BIR, filed a Petition for Review praying for the reconsideration of the civil aspect of the Resolutions promulgated by the CTA 2nd Division. Petitioner anchored its right to collect the civil aspect from Respondents Cross Country Oil and Petroleum Corporation on Section 7(b) (l) of Republic Act No. 9282 which provides that the civil action for the recovery of taxes and penalties corresponding to a criminal action shall at all times be simultaneously instituted and jointly determined in the same proceedings by the CTA. In ruling, the Court cited the Gaw Case where the Supreme Court expounded the provision and clarified that the civil liability deemed instituted with the criminal action is only the civil liability ex delicto. It does not include the civil liability arising from a different source of obligation, such as those arising from law. The Court noted that the crime charged against Respondent was for violation of Section 255 of the Tax Code and the acquittal of the accused was based on the findings that Respondents did not commit the crime charged. Thus, the civil liability ex delicto cannot be awarded since there was no act or omission punishable by law which can serve as the source of obligation. Even assuming that the Court En Banc can rule on the civil liability based on the assessments imposed against the Respondent, the same cannot be validly enforced for being void for lack of authority of the revenue officers who conducted the audit since they were not authorized pursuant to a valid LOA. The LOA, which had to be revalidated, was served to Respondent beyond the 30-day mandatory period, hence, considered null and void. On the argument of the Petitioner that the assessments can no longer be controverted for failure of the Respondent to file a valid protest was, likewise, without merit. Close reading of Section 228 of the Tax Code proves that the commencement of the period to file the protest is anchored on the taxpayer’s receipt of an assessment notice issued based on the findings of the CIR or his duly authorized representative. The assessments issued against the Respondent did not satisfy the requirement under Section 228 of the Tax Code, since the LOA was already null and void. Therefore, it became immaterial whether the Respondent failed to file a protest against the assessments since the same did not attain finality for being intrinsically void. Thus, the Petition was DENIED for lack of merit. [PEOPLE OF THE PHILIPPINES VS. CROSS COUNTRY OIL AND PETROLEUM CORPORATION, ARTURO M. ZAPATA, AND JACOB VALERIANO JR., CTA CRIMINAL EN BANC CASE NO. 071, DECEMBER 4, 2020]
[RIGHT TO TRAVEL IS GUARANTEED BY THE CONSTITUTION AND MAY BE LIMITED ONLY BY LAW] [HOLDING AN ACCUSED IN A CRIMINAL CASE WITHIN THE REACH OF THE COURTS BY PREVENTING HIS DEPARTURE FROM THE PHILIPPINES IS A VALID RESTRICTION ON HIS RIGHT TO TRAVEL]
Petitioner Rappler Holdings Corporation, represented by Maria A. Ressa, filed a Petition for Certiorari with Urgent Ex-Parte Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction assailing the earlier resolutions of the RTC. Petitioner testified that the assailed resolutions directly threaten her right to travel, and were intended to enforce her presence in court, not only during the intended travel period, but also during the entire duration of time that the case is still pending. In ruling, the Court ruled that the right to travel is guaranteed by the Constitution and may be limited or impaired only by law that concerns national security, public safety or public health. As a further requirement, there must be an explicit provision of statutory law or rules of court providing for the impairment. In this case, there are two laws, the “Bayanihan to Heal as One Act” and the “Bayanihan to Recover as One Act”, which explicitly authorize restrictions on travels. In the light of the Constitutional freedom, the Court further ruled that, first, there is no basis to conclude that the assailed resolutions have foreclosed the possibility of Petitioner’s future travels while her criminal case is pending, since the said resolutions were limited narrowly enough to a specific travel period because of the exigencies caused by the pandemic. Second, the anticipation of a future harm is not equivalent to a direct injury or impairment. Until there is a specific act subject of the Court’s review, there is no justiciable controversy which it can adjudicate. Third, the right to travel may be regulated; however, to withhold permission to travel throughout the duration of the trial or the case is certainly excessive. Therefore, the trial court’s prudence may be called again if, upon motion, permission is asked to attend forthcoming engagements outside the country. Finally, the travel restrictions are temporary and flexible and, thus, may also ease up. This reality will allay any concerns that lockdowns will prevent Petitioner from ever coming back and place her permanently beyond the reach of the trial court. Thus, the Petition was DENIED and the assailed Resolutions were AFFIRMED. [RAPPLER HOLDINGS CORPORATION AND MARIA A. RESSA VS. HON. ANA TERESA T. CORNEJO-TOMACRUZ IN HER CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF PASIG, BRANCH 157, AND THE PEOPLE OF THE PHILIPPINES, CTA CASE NO. 10323, DECEMBER 4, 2020]
[PROPERTIES OF PUBLIC DOMINION ARE NOT SUBJECT TO RPT] [MRT EDSA III REAL PROPERTIES ARE PROPERTIES OF PUBLIC DOMINION, HENCE, EXEMPT FROM RPT] [REPUBLIC OF THE PHILIPPINES IS THE OWNER OF EDSA MRT III, HENCE, HAS THE RIGHT TO PROTECT IT FROM BEING TAXED AND SOLD IN PUBLIC AUCTION]
Petitioner Mandaluyong City Government filed a Petition for Review seeking nullification of the earlier decision of the Court in Division finding RTC Branch 208 to have committed grave abuse of discretion in its issuance of the assailed Orders. Petitioner belied Respondent Metro Rail Transit Corporation’s argument that the EDSA MRT III real properties are properties of the public dominion that should not be subjected to RPT. In ruling, the Court held that considering that the MRT EDSA III real properties are intended for and devoted to public use, and the same are recognized under Philippine Laws as properties of the public dominion, therefore, MRT EDSA III real properties are owned by the State or the Republic, pursuant to Article 420 of the Civil Code. The Court En Banc is one with the Court in Division that the Respondents were able to substantiate with prima facie evidence that the Republic, as the owner of the EDSA MRT III real properties has a clear and unmistakable right to protect the same from being taxed for RPT and from being sold in a public auction. Thus, the Petition was DENIED for lack of merit. [MANDALUYONG CITY GOVERNMENT VS. REPUBLIC OF THE PHILIPPINES (DEPARTMENT OF TRANSPORTATION) AND METRO RAIL TRANSIT CORPORATION, CTA EN BANC CASE NO. 2078, DECEMBER 4, 2020]
[ABSENCE OF PROOF OF RECEIPT OF PAN RESULTING IN THE CANCELLATION OF ASSESSMENT] [DENIAL OF TAXPAYER HAVING ISSUED WITH BIR NOTICES SHIFTS THE BURDEN TO THE BIR TO PROVE THAT THE SAID NOTICES WERE ACTUALLY RECEIVED BY THE TAXPAYER]
Petitioner Johnny M. King Jr. filed a Petition for Review seeking cancellation on the assessment issued by Respondent CIR on the ground of violation of due process. Petitioner claimed that the assessment is null and void for having been issued in violation of his right to procedural due process considering that Respondent failed to issue a PAN, and said notice was not received by the Petitioner. On the other hand, Respondent countered that the PAN was issued and served via registered mail and duly received by the Petitioner. In ruling, the Court held that as part of the due process requirement in the issuance of an assessment is the issuance and service of the PAN, showing in the details, the facts and the law or jurisprudence on which the proposed assessment is based. If the taxpayer denies having received an assessment from the BIR, it then becomes incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. Upon examination of the testimonial and documentary evidence presented by the parties, Respondent failed to provide convincing proof that the said PAN was received by the Petitioner. Clearly, Petitioner’s due process rights were violated, thus, the Petition was DENIED. [JOHNNY M. KING JR. VS COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9753, DECEMBER 4, 2020]
[FAILURE TO REFUTE DENIAL OF ADMINISTRATIVE CLAIM FOR REFUND IS SUFFICIENT FOR DENIAL OF PETITION] [CLAIM FOR REFUND MUST BE SUPPORTED BY COMPLIANCE TO EVERY MINUTE ASPECT OF THE LAW TO PROSPER]
Petitioner Maxima Machineries, Inc. filed a Petition for Review seeking refund or issuance of Tax Credit Certificate (TCC) representing unutilized input VAT attributable to VAT zero-rated sales for the period April 1, 2015 to September 30, 2015. Respondent CIR earlier denied the administrative claim for refund for failure of Petitioner to substantiate the said claim. In ruling, the Court cited the case Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue (CIR) wherein the Supreme Court held that when a judicial claim for refund or tax credit in the CTA is an appeal of an unsuccessful administrative claim, the taxpayer has to convince the CTA that the CIR had no reason to deny its claim; thus, it is crucial for a taxpayer in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place. In the instant case, Petitioner did not specifically assail the reasons or bases why its administrative claim was denied by Respondent CIR and that it filed its Petition as if its administrative claim was never acted upon or that there was no decision. Having failed to show that Respondent should not have denied its administrative claim, the Petition must already be denied. Nevertheless, even without considering the Pilipinas Total Gas, Inc. case, the Petition is still not meritorious due to defects in the declared zero-rate sales and substantiation of claimed input VAT. As noted, portion of the zero-rated sales declared by Petitioner is pursuant to Section 108(B)(2) of the 1997 Tax Code. Among others, one of the requirements to qualify as zero-rated sale under the said Section is that the recipient is a foreign corporation doing business outside the Philippines or is a non-resident person not engaged in business who is outside the Philippines when the services were performed. Perusal of the pieces of evidence presented showed that only one of its customers can be proven to be a foreign corporation doing business outside the Philippines. Further, the declared zero-rated sales of services and goods are partially disallowed because the official receipts and sales invoices supporting the zero-rated sales do not comply to the invoicing requirements provided in Section 113 of the 1997 Tax Code as implemented by Revenue Regulations (RR) No. 16-2005. Lastly, a portion of the claimed input VAT is likewise not supported by valid official receipts and sales invoices which are compliant to the invoicing requirements. After considering the defects noted, there are no excess input VAT which may be the subject of a claim for refund or TCC. Consequently, the Petition was DENIED for lack of merit. [MAXIMA MACHINERIES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9723, DECEMBER 3, 2020]
[MERE PHOTOCOPIES OF DOCUMENTS ARE INADMISSIBLE PURSUANT TO THE BEST-EVIDENCE RULE] [COURTS ARE NOT PRECLUDED TO ACCEPT IN EVIDENCE A MERE PHOTOCOPY OF A DOCUMENT WHEN NO OBJECTION WAS RAISED WHEN IT WAS FORMALLY OFFERED] [GROUND FOR OBJECTIONS NOT RAISED AT THE PROPER TIME SHALL BE CONSIDERED WAIVED]
Petitioner CIR filed a Petition for Review seeking the reversal of the Decision and Resolution of the Court in Division, partially granting the claim for refund of the Respondent’s unutilized and excess input VAT attributable to its zero-rated sales on the solitary argument that the latter allegedly failed to provide the Court with the original or certified true copies of PEZA and SBMA Certificates of Registration of its clients and/or customers. In ruling, the Court took its guidance from the ruling of the Supreme Court in Lorenzana v. Lelina which held that mere photocopies of documents are inadmissible pursuant to the Best Evidence Rule. Nevertheless, evidence not objected to is deemed admitted and may be validly considered by the Court in arriving at its judgment. Courts are not precluded to accept in evidence a mere photocopy of a document when no objection was raised when it was formally offered. Grounds for objections not raised at the proper time shall be considered waived, even if the evidence was objected to on some other ground. Thus, even on appeal, the appellate court may not consider any other ground of objection, except those that were raised at the proper time. Consistent with the foregoing ruling, the Court En Banc fully agreed with the Court in Division in its finding since it was only for the first time via the instant Motion that the Petitioner was raising his objection against the admission of PEZA/SBMA Certificates of Registration of Respondent’s clients on the ground that they were mere photocopies and/or not originals. Thus, the Petition was DENIED for lack of merit. [COMMISSIONER OF INTERNAL REVENUE VS. COLT COMMERCIAL, INC., CTA EN BANC CASE NO. 2074, DECEMBER 3, 2020]
[CTA CAN RULE ON ISSUES RAISED FOR THE FIRST TIME ON APPEAL] ASSESSMENT IS VOID IF REVENUE OFFICER (RO) WHO CONDUCTED THE AUDIT INVESTIGATION IS NOT AUTHORIZED THROUGH A LOA
Petitioner CIR filed a Petition for Review seeking the reversal of the earlier decision of the Court in Division cancelling the assessment issued against Respondent Marketing Convergence Inc. Petitioner argued that Respondent never raised any issue on the Revenue Officers’ (RO) lack of authority to conduct the audit. Therefore, such issue is undisputed and the Court erred when it ruled for the Respondent. Further, Petitioner also argued that a Memorandum of Assignment (MOA) is sufficient to validly reassign an existing audit to another RO; hence, there is no more need for a new Letter of Authority (LOA). In ruling, the Court cited the Lancaster case wherein the Supreme Court, citing Section 1, Rule 14 of the Revised Rules of the Court of Tax Appeals, held that the CTA is well within its authority to consider in its decision the question on the scope of authority of the ROs who were named in the LOA even though the parties had not raised the same in their pleadings or memoranda. On Petitioner’s argument that a MOA is sufficient and a new LOA is unnecessary in cases of reassignment, the Court likewise agreed with the assailed rulings that the subject tax assessments are void because the ROs who conducted the audit of Respondent’s books of accounts were not authorized through an LOA. In the instant case, the audit was reassigned twice only through MOA. The Court has consistently ruled that the RO conducting the audit investigation, whose name is not otherwise indicated in the LOA issued to the taxpayer, is devoid of authority to do so. In case of change on the RO to conduct the audit, a new LOA must be issued not merely a MOA. Thus, the Petition was DENIED and the earlier decision was AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. MARKETING CONVERGENCE INC., CTA EN BANC CASE NO. 2109, DECEMBER 3, 2020]
II. BIR CLARIFIES 5-YEAR NOLCO ENTITLEMENT OF FISCAL TAXPAYERS UNDER BAYANIHAN 2
Revenue Memorandum Circular No. 138-2020, issued on December 23, 2020, further clarifies the provisions of Revenue Regulations (RR) No. 25-2020 which implements the BAYANIHAN provisions on the extended benefits of NOLCO for five (5) years from the original period of three (3) years. It specifically clarifies the reckoning point on where to start and end of the benefits for those taxpayers adhering to fiscal accounting period.
It may be recalled that Bayanihan to Recover as One Act (BAYANIHAN 2) extends the NOLCO from three (3) years to five (5) years covering taxable years 2020 and 2021, regardless if the taxpayer is adhering to calendar or fiscal accounting period.
III. BIR CLARIFIES THE GUIDELINES ON THE UTILIZATION OF 5% TAX CREDI UNDER PERA
Revenue Memorandum Circular (RMC) No. 139-2020, issued on December 23, 2020, prescribes the guidelines on the utilization of 5% tax credit prescribed under Republic Act (R.A.) No. 9505 (PERA Act of 2008)
IV.TAX AND BUSINESS-RELATED NEWS [DECEMBER 26-JANUARY 7]
- DOF halts franchise tax on POGOs to comply with SC ruling
- Delayed contribution rate hike endangers SSS—chief
- Philippines hits imported cars and vans with tariffs to help domestic industry
- Customs says study shows ‘improved’ processing of cargo with digitalization
- Bureau of Customs revenue collection surpasses 2020 target
- Sotto files fresh bill renewing ABS-CBN franchise
- Customs fuel tax collections rise by half
- Nonlife insurers seek tax remedies amid virus burden
- BIR large taxpayers’ unit collects P1.4T, tops goal by P135 B
- DOF says state-run firms remit P160 billion in dividends to Treasury
- PhilHealth sticking to hike premiums by Jan. 2021 as ‘mandated by law’
- Japanese investors welcome CREATE bill says DOF
- PhilHealth announces increase in membership contributions in 2021
- GSIS urges pensioners to report info online next year to avoid virus
- DTI finalizing report on safeguard duty on imported vehicles
DOF halts franchise tax on POGOs to comply with SC ruling [Manila Bulletin, January 6, 2021]
The Department of Finance (DOF) said it will comply the Supreme Court’s order barring the imposition of franchise tax on all bets generated by Philippine offshore gaming operations (POGOs)
Source: https://mb.com.ph/2021/01/06/dof-halts-franchise-tax-on-pogos-to-comply-with-sc-ruling/
Delayed contribution rate hike endangers SSS—chief [Manila Bulletin, January 5, 2021]
State-run Social Security System (SSS) warned that any delay in implementing the scheduled increase in contribution rate as well as minimum and maximum monthly salary credits (MSCs) could endanger the pension fund.
Source: https://mb.com.ph/2021/01/05/delayed-contribution-rate-hike-endangers-sss-chief/
Philippines hits imported cars and vans with tariffs to help domestic industry [ABS-CBN News, January 4, 2021]
The Philippines is imposing temporary duties on imported passenger cars and light commercial vehicles to protect its tiny carmaking industry hit hard by the pandemic, its trade minister said on Monday.
Customs says study shows ‘improved’ processing of cargo with digitalization [ABS-CBN News, January 4, 2021]
The Bureau of Customs on Monday said there were improvements in the processing of cargo in 5 ports across the country as the agency shifted to digital systems, based on a study by the agency.
Bureau of Customs revenue collection surpasses 2020 target [Philippine Daily Inquirer, January 4, 2021]
The Bureau of Customs (BOC) surpassed its annual target collection for 2020 by 6.6% or P33.5billion.
Source: https://business.inquirer.net/315211/bureau-of-customs-revenue-collection-surpasses-2020-target#ixzz6ipFSzV7K
Sotto files fresh bill renewing ABS-CBN franchise [Manila Bulletin, January 4, 2021]
Senate President Vicente C. Sotto III on Monday filed a bill renewing the franchise granted to ABS-CBN Corporation under Republic Act 7966 for another 25 years.
Source: https://mb.com.ph/2021/01/04/sotto-files-fresh-bill-renewing-abs-cbn-franchise/
Customs fuel tax collections rise by half [Manila Bulletin, January 1, 2021]
Based on a report submitted to Finance Secretary Carlos G. Dominguez III, the Customs bureau raised P12.83 billion from excise tax on petroleum products in November, up by more than half from P8.33 billion in the same month in 2019.
Source: https://mb.com.ph/2021/01/02/customs-fuel-tax-collections-rise-by-half/
Nonlife insurers seek tax remedies amid virus burden [Philippine Daily Inquirer, December 31, 2020]
Nonlife insurers are pushing for additional tax reforms and amendments to the seven-year-old Insurance Code to help the sector rebound from the challenging year wrought by the COVID-19 pandemic.
Source: https://business.inquirer.net/314961/nonlife-insurers-seek-tax-remedies-amid-virus-burden#ixzz6icHgbEBl
BIR large taxpayers’ unit collects P1.4T, tops goal by P135 B [Manila Bulletin, December 31, 2020]
The leading tax collection unit of the Bureau of Internal Revenue (BIR) has surpassed by a big margin its collection assignment as it garnered P1.4 trillion of December 22, 2020.
Source: https://mb.com.ph/2020/12/31/bir-large-taxpayers-unit-collects-p1-4t-tops-goal-by-p135-b/
DOF says state-run firms remit P160 billion in dividends to Treasury [ABS-CBN News, December 30, 2020]
The Bangko Sentral ng Pilipinas (BSP) is the top contributor, remitting P40.53 billion, followed by the Philippine Deposit Insurance Corp. (PDIC) with P17.98 billion, and the Philippine Amusement and Gaming Corp. (PAGCOR) with P17 billion.
PhilHealth sticking to hike premiums by Jan. 2021 as ‘mandated by law’ [ABS-CBN News, December 30, 2020]
Philippine Health Insurance Corp (PhilHealth) will go ahead with the monthly premium hike of 3.5 percent beginning Jan. 1 next year as it is mandated by law, a PhilHealth official said Wednesday.
Japanese investors welcome CREATE bill says DOF [ABS-CBN News, December 29, 2020]
Japanese investors welcome a bill seeking to lower corporate income tax rates, the Department of Finance said Monday.
Source: https://news.abs-cbn.com/business/12/29/20/japanese-investors-welcome-create-bill-says-dof
PhilHealth announces increase in membership contributions in 2021 [Manila Bulletin, December 29, 2020]
The Philippine Health Insurance Corporation is implementing the scheduled contribution rate and adjustment in income ceiling for 2021 to ensure sufficient funding for the health care benefits of its 110 million members as mandated by Republic Act No. 11223 or the Universal Health Care (UHC) Law.
Source: https://mb.com.ph/2020/12/29/philhealth-announces-increase-in-membership-contributions-in-2021/
GSIS urges pensioners to report info online next year to avoid virus [ABS-CBN News, December 28, 2020]
Pensioners must report to GSIS on their birth month in 2021 and it may be done online through Viber, FB Messenger, Skype or Zoom after texting through SMS messaging, or emailing the GSIS to request the online interview schedule,” GSIS President and General Manager Rolando Ledesma Macasaet said.
DTI finalizing report on safeguard duty on imported vehicles [Philippine Daily Inquirer, December 28, 2020]
The Department of Trade and Industry (DTI) is finalizing a report that would recommend whether or not to further tax imported cars to protect workers in assembly and manufacturing plants as the auto industry still reels from lackluster demand.
If you wish to get a copy of the complete texts of the above issuances, send us an email thru taxseminars@dmdcpa.com.ph.
Recent Comments