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.

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A billing statement is not a deficiency tax assessment which must be the subject of the protest if the taxpayer does not agree, pursuant to Section 195 of the LGC.

The taxpayer applied to renew its business permit in Taguig City. As part of the renewal process, the City Government of Taguig issued a billing statement asking the taxpayer to pay certain fees. These included the Contractor’s Tax, Environmental Impact Fee, and other local charges, which the taxpayer paid.

The taxpayer later sent a letter requesting a refund of the amounts paid for business tax and the environmental impact fee. However, the City denied the request, treating it as a tax protest under Section 195 of LGC. The City claimed that the protest should have been filed within 60 days from receipt of the billing statement, and since the taxpayer filed beyond this period, the claim was too late. The taxpayer disagreed and explained that their request should be treated as a claim for refund under Section 196 of the LGC, which gives taxpayers up to two years from the date of payment to file such claims.

The Court agreed with the taxpayer. It ruled that the refund claim was filed on time under Section 196. The Court also said that the billing statement was simply a payment requirement to get a business permit. It was not a formal tax assessment that needed to be protested under Section 195. (Taguig City Government vs. Kensington Place Condominium Corporation, CTA EB No. 2807 (SCA Case No. 272), December 3, 2024)

The change in header name from "Charge Invoice" to "Commercial Invoice" does not constitute a system enhancement that will necessitate a new CAS Permit from the BIR.

The taxpayer filed a claim for refund of unutilized input VAT on its alleged zero-rated sales. However, the BIR denied the claim, asserting that the taxpayer’s PTUCAS only covered “Charge Invoices,” while the taxpayer had issued “Commercial Invoices” instead. The BIR argued that this change in the invoice header amounted to a system enhancement, which required a new PTUCAS. According to the BIR, the use of Commercial Invoices without securing an updated permit rendered the invoices invalid and without probative value. In response, the taxpayer insisted that it issued valid invoices, had a valid PTUCAS and Authority to Print (ATP), and that no actual enhancement was made to its accounting system that would require a new permit.

The Court ruled that the invoices were valid, explaining that simply changing the title from “Charge Invoice” to “Commercial Invoice” did not amount to a system enhancement that would require a new PTUCAS. The contents and format of the invoices remained materially the same, and no substantial changes were made to the taxpayer’s accounting system.

However, the taxpayer still failed to prove its entitlement to a refund. The Court found that the taxpayer did not provide enough evidence to show that its sales qualified as zero-rated under the Tax Code. (MD Rio Vista-Agri Ventures, Inc. v. Commissioner of Internal Revenue, C.T.A. Case No. 10624, December 10, 2024)

The term "actual use" refers to the purpose for which the property is principally or predominantly utilized by the· person in possession thereof. Furthermore, the term "directly" means "without anything intervening" or "proximately or without intervening agency or person."

The taxpayer sought exemption from RPT on its lands, buildings, and equipment used for electric power transmission. Under the law, the taxpayer is granted an exemption from RPT for machineries and equipment actually, directly, and exclusively used in electric power generation and transmission. Meanwhile, lands, buildings, and other improvements used for such purposes are classified as "Special Class" properties and assessed at only 10 percent of their fair market value. Local officials contested the exemption, claiming that some properties such as warehouses, linemen’s quarters, and partially vacant lots were not directly used for electric power transmission.

The Court ruled in favor of the taxpayer. It explained that "actual use" refers to the main purpose for which a property is used, and "directly" means "without anything intervening" or "proximately or without intervening agency or person." Based on the evidence, the Court found that the contested properties were necessary to the taxpayer’s operations and supported its transmission functions under its legislative franchise.

Thus, the Court held that the taxpayer’s properties were actually and directly used for electric power transmission and qualified either for full exemption or special classification under the law. These facilities were deemed essential to maintaining safe and reliable electricity transmission, and the local government could not validly impose real property taxes on them. (Heide D. Pangilinan, in her official capacity as the City Assessor, and Florida R. Oca, in her official capacity as the City Treasurer of Cabanatuan City v. The Central Board of Assessment Appeals, CTA EB No. 2827, December 12, 2024)

An assessment (i.e. FLD) differs from a decision (i.e. FDDA). The invalidity of one does not necessarily result to the invalidity of the other.

This is an appeal on the assessment issued by the BIR against the taxpayer. The taxpayer argued that the FDDA issued by the BIR is not a valid assessment as it does not contain any date purporting to be a definite due date to pay the alleged deficiency taxes due.

A void FDDA does not ipso facto render an assessment void. An assessment becomes a disputed assessment after a taxpayer has filed its protest to the assessment in the administrative level. Thereafter, the BIR either issues a decision on the disputed assessment or fails to act on it and is, therefore, considered denied. The taxpayer may appeal the decision on the disputed assessment or the inaction of the BIR. Hence, an FDDA provides an assessment of the BIR but is not the only means that the final tax liability of a taxpayer is fixed.

An assessment differs from a decision. The invalidity of one does not necessarily result to the invalidity of the other. Thus, when the FDDA indicated an invalid date of payment, it did not affect the validity of the FLD per se. In the present case, while the FLD dated August 5, 2016 stated that the taxpayer is requested to pay the alleged deficiency taxes “within the time shown in the enclosed assessment notice,” the attached Assessment Notices therewith clearly indicated the date of payment to be September 10, 2016. (Goodyear Steel Pipe Corporation v. Commissioner of Internal Revenue, CTA Case No. 10555, December 16, 2024)

For refund claims under Section 112(C) of the Tax Code, if the CIR fails to act within the 90-day period, the taxpayer must treat the inaction as a deemed denial and file an appeal within 30 days from the lapse of the 90-day period. A subsequent decision by the BIR issued beyond the 90-day period does not reset or suspend the 30-day period to appeal.

The taxpayer filed a claim for refund under Section 112(C) of the Tax Code. After the lapse of the 90-day period within which the CIR was mandated to act, the taxpayer received a decision from the BIR. Believing that the 30-day period to appeal should only begin from receipt of the CIR’s decision, the taxpayer filed its Petition for Review before the Court of Tax Appeals beyond the 30 days reckoned from the expiration of the 90-day period.

Section 112(C) provides that if the CIR fails to act on a claim for refund within 90 days from submission of complete documents, such inaction shall be deemed a denial, in which case the taxpayer may appeal to the CTA within 30 days from the expiration of the 90-day period. Jurisprudence has consistently held that the 30-day period to appeal is mandatory and jurisdictional and begins to run the day after the lapse of the 90 days, regardless of whether a decision is subsequently received.

The CTA dismissed the petition for lack of jurisdiction. It ruled that the taxpayer should have treated the CIR’s inaction as a denial upon the expiration of the 90-day period and filed the appeal within the 30-day window thereafter. The belated receipt of the decision from the BIR did not suspend or reset the period to appeal. Accordingly, the failure to timely file the Petition rendered the Court without jurisdiction to entertain the case. (“K” Line Maritime Academy Philippines, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 10270, December 18, 2024) 

RR No. 18-2024
December 17,2024
This implements Section 32(B)(5) of the NIRC, as amended by Republic Act No. 12066, or the CREATE MORE Act

RMC No. 133-2024,
December 18, 2024
This amends certain provisions on the issuance of eCAR relative to One-Time Transaction

This provides the new venue for processing and issuance of eCAR for transactions pertaining to sale of personal property, as follows:

“b. Sale of personal property – RDO where the Tax Identification Number (TIN) of the seller/transferor is registered or RDO which has jurisdiction over the residence of seller/transferor.”

BSP Memorandum No. M-2024-037, December 10, 2024
This provides new guidelines on the submission of the documentary and reportorial requirements under BSP Circular No. 1198.

All OPS shall use the prescribed formats provided in the appendices attached to the memorandum. Failure to conform with the format will result in the reportorial requirements not being submitted subject to applicable penalties for delayed or unsubmitted reporting.

OPS that are non-banks shall submit the following documents within 6 months from the effectivity of this circular:

1. Certification of Compliance;
2. Gap Assessment; and
3. Documentary requirements for those engaged in merchant acquisition.

OPS that are banks shall submit the following documents within 6 months from the effectivity of this circular:

1. Gap assessments
2. Notice of MPAA and other documentary requirements.

In addition, all OPS shall submit their AFS within 120 days after the end of the reference year. The AFS shall contain a Certification of the External Auditor indicating Compliance with relevant confidentiality clauses, disclosure requirements, and other matters affecting the condition or soundness of the OPS.

OPS-MAL shall submit the following documents within 15 days after the end of their reference quarters:

1. monthly Data Entry Templates for each reference quarter; and
2. List of delisted merchants with reasons for delisting.

OPS-MAL shall submit a Notice to the BSP of significant changes 30 days prior to the effective date of the change. Changes in average monthly value of collected funds shall be submitted within 60 days after its occurrence.

SEC OGC Opinion No. 24-34, dated November 6, 2024, posted December 3, 2024
When the function of the Chairman of the Board consists merely of presiding at the meetings of the Board, a non-Philippine national may qualify as Chairman of the Board in a corporation engaged in partially nationalized activities.

The Corporation inquired whether a foreigner is disqualified from acting as a Chairman under the Anti-Dummy Law of a sixty percent (60%) Filipino-owned corporation engaged in partially nationalized activities even if he is not performing any executive function.

In previous SEC-OGC Opinions, the Commission opined that, when the function of the Chairman of the Board as provided for in the by-laws consists merely of presiding at the meetings of the Board, a non-Philippine national may qualify as Chairman of the Board.

Thus, for as long as the Chairman does not perform any executive function and merely presides at board meetings, the answer is in the negative.

SEC OGC Opinion No. 24-36, dated November 19, 2024, posted December 3, 2024
Additional paid-in capital is any contribution of stockholders over the par value of shares.

The Corporation, which is a real estate development corporation primarily engaged in real estate acquisition and leasing, has the opportunity to purchase a real estate which is way beyond its paid-up capital. Thus, the Corporation intends to raise funds for the acquisition of the property by allowing an investor to subscribe to preferred shares but instead of subscribing at par, the investor will subscribe and pay for the preferred shares at a premium.

The Corporation inquired, among others, on the following:

• Whether the premium is considered additional paid-in capital (“APIC”);
• Whether there is a limitation on the amount of premium for each preferred share; and
• Whether the premium paid can be used by the Corporation to acquire a land which it will own and develop.

As to the first query, the premium paid or the amount received over the par value of its shares is APIC. APIC is defined as “any contribution of stockholders over the par value of shares. Incidentally, a share premium is also defined as the amount received by a firm over the par value of its shares.”

As to the second query, generally, there is no limitation on the amount of premium for the preferred shares.

As to the third query, from the moment the corporation receives the premium paid, ownership thereof is transferred to the corporation, and the corporation, being now the owner of the funds, can disburse the same for the operation of its business, such as for acquisition of land.

SEC OGC Opinion No. 24-39, dated November 26, 2024, posted December 3, 2024
Paid-up capital includes share premium or the additional paid-in capital.

The corporation inquired whether the definition of “paid-up capital” under the Retail Trade Liberalization Act of 2000 (“RTLA”), as amended, includes additional paid-in capital (“APIC”).

The Commission confirmed the Corporation’s position that the definition of “paid-up capital” under the 2000 RTLA should include share premium or the APIC for purposes of determining compliance with the minimum paid-up capital requirement thereto.