WEEKLY TAX UPDATES [March 3, 2026]

[A PHOTOCOPY OF A DOCUMENT IS CONSIDERED A DUPLICATE, THUS ADMISSIBLE, UNLESS THE AUTHENTICITY OF THE ORIGINAL DOCUMENT IS QUESTIONED] [WRITING OF THE AMOUNT IN THE SALES BREAKDOWN IS SUFFICIENT COMPLIANCE WITH THE INVOICING REQUIREMENT OF PRINTING THE TERM “ZERO-RATED” ON RECEIPT]

Petitioner Schaeffler Philippines Inc. filed a Petition for Review assailing the CTA First Division’s ruling which denied the Petitioner’s claim for Value-Added Tax (VAT) refund. The Petitioner argues that the photocopied Board of Investments (BOI) Certification proving that Philippine Gold Processing and Refining Corporation (PGPRC) exports 100% of its products should have been accepted as evidence pursuant to the Rules of Evidence. It further argues that the invoicing requirements have been met, with the “zero-rated sale” appearing prominently in the breakdown section of its invoicing format, clearly indicating the nature of the sale transactions. On the other hand, the Respondent, Commissioner of Internal Revenue (CIR), countered that the original BOI Certification should be presented for verification. It further asserts that the invoicing requirements were not met and that the “zero-rated sale” must be printed prominently on each invoice/Official Receipt (OR) and placing it only in the breakdown is insufficient. In ruling, the Court held that photocopies are admissible. Under Rule 130 of the Revised Rules on Evidence, a photocopy of a document is considered duplicate, and therefore, admissible, unless the authenticity of the original document is questioned. The Court further held that the indication of the sales amount beside the term “zero-rated sales” is substantial compliance with the requirement that the term be written or printed on the invoice or receipt. Thus, the Petition was GRANTED. [SCHAEFFLER INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO. 2947, FEBRUARY 20, 2026]

[IMPORTED GOODS MAY BE FORFEITED IN FAVOR OF THE GOVERNMENT FOR FAILURE TO PROVE PAYMENT OF DUTIES/TAXES] [GOOD FAITH PURCHASE IS NOT A DEFENSE IN CUSTOMS FORFEITURE CASES]

Petitioner Arlyn Solita A. Briones, owner and proprietor of ELJ1 Medical Shop, filed a Petition for Review seeking the reversal of the earlier Decision and Resolution of the Court Second (2^nd) Division essentially causing the forfeiture of the Petitioner’s imported medical supplies in favor of the government. Petitioner argued that the seizure was made arbitrarily and without any probable cause since there was no factual basis that the subject goods were smuggled, prohibited, restricted, or regulated. Also, she is a purchaser in good faith and a mere reseller since the seized goods were locally purchased from domestic suppliers. Hence, she is not required to keep importation records under Section 1003 of Customs Modernization and Tarriff Act (CMTA). On the other hand, the Respondent Commissioner of Customs countered that the seizure of the subject goods was not arbitrary as the same was made pursuant to the Respondent’s “visitorial powers” under Section 224 of the CMTA. Also, the Petitioner’s claim that she is a buyer in good faith is immaterial as the same is not a valid defense in a forfeiture proceeding. In ruling, the following conditions under Section 224 of the CMTA were met: (1) Imported goods are present; (2) The goods are openly for sale/kept in storage; (3) There is a seizure under written authority such as Letter of Authority (LOA) and Mission Order (MO); (4) Petitioner failed to show proof of duties/taxes within 15 days; and (5) Petitioner was given full opportunity to present evidence. Furthermore, under the Rules on Judicial Admission, the Petitioner acknowledged some products were manufactured abroad, specifically in Spain, which constitutes a confirmation of importation. Lastly, forfeiture is a proceeding in rem, and good faith of the possessor does not exempt the goods from forfeiture. Consequently, “buyer in good faith defense” is invalid in forfeiture proceedings. Therefore, the forfeiture is AFFIRMED and the Petition is DENIED. [ARLYN SOLITA A. BRIONES, OWNER & PROPRIETOR OF ELJ1 MEDICAL SHOP VS. COMMISSIONER OF CUSTOMS, CTA EN BANC CASE NO. 2946, FEBRUARY 2, 2026)

PRESCRIPTION PERIOD FOR ASSESSMENT RUNS, UNLESS VALIDLY TOLLED; DEFECTIVE SERVICE DOES NOT SUSPEND IT

Petitioner Fortune Plastic Processing & Chemical Corporation filed a Petition for Review praying that the 2018 assessment issued by Respondent Commissioner of Internal Revenue (CIR) be cancelled. The Petitioner argued that there were no proper service of Preliminary Assessment Notice (PAN) and Final Assessment Notice and Formal Letter of Demand (FAN/FLD). Notices were allegedly served to a barangay staff who was not authorized to receive documents on Petitioner’s behalf. Specifically, the requirements for substituted service under Revenue Regulations (RR) No. 12‑99 and Revenue Memorandum Order (RMO) No. 40‑2019 were not strictly complied with. Also, no registry return card or proof of delivery was presented. Consequently, since no valid assessment was served within the 3‑year prescriptive period, the government’s right to assess had already prescribed and garnishment was illegal. On the other hand, the Respondent claimed that Revenue Officers (ROs) exerted diligent efforts to personally serve the notices before resorting to substituted service. Also, the PAN and FAN/FLD were allegedly served by substituted service at Petitioner’s registered address, and registered mail. Lastly, the Petitioner allegedly failed to protest within 30 days from receipt of the FAN/FLD. Thus, assessment allegedly became final, executory and demandable. In ruling, the Court held that since the Petitioner denied receipt of the assessment, the 30‑day period to appeal was correctly reckoned from the Petitioner’s receipt of the garnishment notices. On the service of assessment, the same was defective because it did not strictly comply with RR No. 12‑99 and RMO No. 40‑2019, as the notices were left to a barangay staff, not a barangay official, and without the presence of two disinterested witnesses or proper documentation. Also, the BIR likewise failed to prove service by registered mail, having presented no registry return card or proof of delivery. For violation of administrative due process under Section 228 of the Tax Code, the deficiency assessments were declared void. Consequently, the Warrant of Distraint and/or Levy and Warrants of Garnishment, being dependent on a void assessment, were likewise VOID. [FORTUNE PLASTIC PROCESSING & CHEMICAL CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10984, JANUARY 20, 2026)

[A NEW LOA MUST BE ISSUED WHEN THE REVENUE OFFICERS ORIGINALLY NAMED THEREIN ARE COMPLETELY REPLACED] [A MOA IS NOT A VALID SUBSTITUTE; THUS, WITHOUT A VALID LOA, THE AUDIT & RESULTING TAX ASSESSMENT ARE VOID]

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking reversal of the earlier Decision of the Court Special Third (3^rd) Division cancelling the assessment issued against the Respondent Stepan Philippines Quaternaries Inc. Petitioner argued that once a Letter of Authority (LOA) is issued, any duly authorized revenue officer may continue the audit through a Memorandum of Assignment (MOA), even if not specifically named in the LOA. Also, the Respondent’s right to due process was respected since it received the Preliminary Assessment Notice (PAN) and Formal Letter of Demand/Final Assessment Notice (FLD/FAN) and was given the opportunity to protest and submit documents. Furthermore, the Respondent never questioned the authority of Revenue Officer (RO) Tenorio during administrative proceedings or in its Petition, and thus, the CTA Division allegedly erred in ruling on an issue not raised by the parties. On the other hand, Respondent maintained that the audit was conducted without a valid LOA, as RO Tenorio was not among those named in the original LOA. They contended that a MOA is not a substitute for an LOA, which must be issued by the CIR or duly authorized Revenue Regional Director. Since the audit and assessment were conducted without proper authority, the assessment is void for violation of due process. In ruling, the Court held that when ROs named in the LOA are completely replaced, a new LOA is required. A MOA cannot confer authority to examine a taxpayer’s books. RO Tenorio herself admitted that no new LOA was issued authorizing her to conduct the audit. Consequently, the assessment notices were null and void for violating due process. Furthermore, under Rule 14, Section 1 of the Revised Rules of the CTA, the Court may rule on related issues necessary for the orderly disposition of the case. The authority of the RO is inextricably linked to the validity of the assessment and may be resolved even if not raised by the parties. Thus, the Petition is DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. STEPAN PHILIPPINES QUATERNARIES, INC. CTA EN BANC CASE NO. 2936, JANUARY 8, 2026)