TAX AND BUSINESS-RELATED NEWS [OCTOBER 29-NOVEMBER 4] BIR RULINGS DIGEST COURT OF TAX APPEALS CASES DIGEST
| | | 1. TAX AND BUSINESS-RELATED NEWS | SSS offers 4 penalty-free condonation programs for unpaid premiums, loans Duterte: Power cooperatives should quit if they can't keep up with demand BSP sees inflation easing in 'coming months'; monetary policy to remain accommodative SSS launches 4 programs to let members, employers settle dues sans penalties 4.25 million Filipinos jobless as unemployment hits 8.9 percent in September: PSA Ether scales $4,600 to record high, bitcoin trails COVID payouts nearly halved HMOs’ bottom line in first half of 2021 Concepcion bats for mandatory vaccination of workers in some sectors Pres'l adviser urges gov't to lend to businesses for 13th month pay Economic recovery ‘not a horse race’—DOF BIR special teams to focus on online sellers, influencers BSP assures adequate banknotes supply for the holidays Gov’t needs P330 B to buy out coal plants in Mindanao PAL says Pasay court recognizes US Chapter 11 filing Facebook announces changing parent company name to ‘Meta’ PEZA approves Israeli-Filipino vaccine manufacturing project SC orders filing of charges vs former BSP exec
| SSS offers 4 penalty-free condonation programs for unpaid premiums, loans [Philippine Daily Inquirer, November 4, 2021] The state-run pension fund Social Security System (SSS) this month will offer four condonation programs, penalty-free, to employers who were unable to remit contributions and members who failed to pay loans amid the harder times wrought by the COVID-19 pandemic. Duterte: Power cooperatives should quit if they can't keep up with demand [ABS-CBN News, November 4, 2021] President Rodrigo Duterte said on Thursday power cooperatives should quit if they could not keep up with electrical demand in their areas to allow the entry of bigger players. BSP sees inflation easing in 'coming months'; monetary policy to remain accommodative [ABS-CBN News, November 4, 2021] Inflation is expected to ease in the coming months as the government implements measures to address supply issues, the Bangko Sentral ng Pilipinas said Thursday. 4.25 million Filipinos jobless as unemployment hits 8.9 percent in September: PSA [ABS-CBN News, November 4, 2021] Unemployment in the Philippines further accelerated in September, according to the latest Labor Force Survey released Thursday by the Philippine Statistics Authority. | Ether scales $4,600 to record high, bitcoin trails [Philippine Daily Inquirer, November 3, 2021] Ether, the world’s second-largest cryptocurrency, hit an all-time high on Wednesday, catching up with bitcoin’s rally and riding on news of wider blockchain adoption. COVID payouts nearly halved HMOs’ bottom line in first half of 2021 [Philippine Daily Inquirer, November 2, 2021] A jump in COVID-19-related claims slashed health maintenance organizations’ (HMOs) bottom line by 42.5 percent to P2.6 billion in the first half of 2021, the Insurance Commission (IC) said on Tuesday (Nov. 2). Concepcion bats for mandatory vaccination of workers in some sectors [ABS-CBN News, November 1, 2021] Presidential Adviser for Entrepreneurship Joey Concepcion on Monday said he has suggested that workers in certain sectors should be fully vaccinated. Pres'l adviser urges gov't to lend to businesses for 13th month pay [ABS-CBN News, November 1, 2021] Government should lend business owners money so they can give their employees their proportionate 13th month pay, Presidential Adviser for Entrepreneurship Joey Concepcion said Monday. | Economic recovery ‘not a horse race’—DOF [Manila Bulletin, November 1, 2021] Economic recovery is “not a horse race” among Asian peers, the Department of Finance (DOF) clarified after a number of analysts anticipated that the Philippines may likely become the last country in region to regain its pre-pandemic growth level. BIR special teams to focus on online sellers, influencers [Philippine Daily Inquirer, October 31, 2021] To better monitor online transactions and social media posts for tax compliance, the Bureau of Internal Revenue (BIR) has ordered the creation of a special task force in each of its 19 regional offices that will focus on these newly designated sources of government revenue. BSP assures adequate banknotes supply for the holidays [Manila Bulletin, October 31, 2021] The Bangko Sentral ng Pilipinas (BSP) is assuring the public of sufficient supply of banknotes to meet the increased demand for currency during the holiday season. Gov’t needs P330 B to buy out coal plants in Mindanao [Manila Bulletin, October 31, 2021] The Philippine government will need to shell out more than P330 billion if it will concretize its plan to ‘buy out’ coal plants in Mindanao grid as part of the country’s commitment for carbon emissions reduction at the 26th Conference of the Parties (COP 26) of the United Nations Climate Change Summit. PAL says Pasay court recognizes US Chapter 11 filing [ABS-CBN News, October 29, 2021] PAL Holdings Inc on Friday said a Pasay City court granted Philippine Airlines' petition for recognition of its Chapter 11 filing in the US. Facebook announces changing parent company name to ‘Meta’ [ABS-CBN News, October 29, 2021] Facebook chief Mark Zuckerberg on Thursday announced the parent company's name is being changed to "Meta" to represent a future beyond just its troubled social network. PEZA approves Israeli-Filipino vaccine manufacturing project [Manila Bulletin, October 29, 2021] Israeli-Filipino joint venture Savepoint Biotek has been approved as manufacturer of oral COVID-19 vaccines with projected annual sales of $180 million from the Philippines and export markets. SC orders filing of charges vs former BSP exec [Manila Times, October 29, 2021] THE Supreme Court has ordered the filing of criminal charges against a former officer of the Bangko Sentral ng Pilipinas' (BSP) Supervision and Examination Sector (SES) for obtaining a loan with the Rural Bank of Kiamba, Sarangani, Inc. (RBKSI) in 2006. | 2. BIR RULINGS DIGEST ON DST ON OFFSHORE MONEY TRANSFERS, CGT ON LAND SWAPPING & GROSS RECEIPTS TAX OF NON-STOCK SAVINGS & LOANS ASSOCIATIONS | OFFSHORE MONEY TRANSFERS NOT MADE BY WAY OF TELEGRAPHIC TRANSFER ARE NOT SUBJECT TO DOCUMENTARY STAMP TAX UNDER SECTION 182 OF THE TAX CODE V Co., a financial service corporation offering financial services through its branches and sub-agents is seeking a confirmatory ruling whether its money transfer remittances released to Philippine recipients on behalf of various offshore money transfer companies are exempt from documentary stamp tax (DST) under Sections 180, 181, and 182 of the 1997 Tax Code, as amended. In reply, the Bureau defined the instruments under each section: (1) Sections 180 and 181 – Bills of exchange are an unconditional order in writing – checks, drafts, and all other kinds of order for payment of money, payable at sight or on demand, and (2) Section 182 – Foreign bills of exchange are drawn outside the Philippines, payable outside the Philippines, or both. The section likewise covers letters of credit, and orders, by telegraph, or otherwise, for the payment of money. Further, Revenue Regulations (RR) No. 26 explains “orders, by telegraph, or otherwise, for the payment of money”; whereas, in a telegraphic transfer, a local bank cables to a certain bank in a foreign country with which it has a local credit and directs the foreign bank to pay another bank or person in the same locality a certain sum of money. Money transfers of V. Co. are not drawn from credit of senders, but are paid, and later withdrawn in cash by a specified recipient. They are likewise not made by way of telegraphic transfer; hence, not considered as foreign bills of exchange, letters of credit, nor telegraphic transfers. For the following reasons, money transfers of V Co. are not subject to DST under Section 182 of the Tax Code. [BIR RULING NO. OT-326-2021, AUGUST 31, 2021] | LAND SWAPPING IS DEEMED WITHIN THE PURVIEW OF DISPOSITION OF REAL PROPERTY UNDER SECTION 24(D)(1) OF THE TAX CODE, HENCE, SUBJECT TO CAPITAL GAINS TAX AND CONSEQUENTLY, TO DOCUMENTARY STAMP TAX Ms. A and Ms. C who entered into a Lot Swapping Agreement are requesting confirmation if the transaction is exempt from tax since there was no consideration involved and the parties did not gain from such exchange, hence, there can be no basis for which taxes may be imposed. In reply, the BIR referenced Section 24(D)(1) of the NIRC of 1997, as amended, on capital gains from sale of real property and cited a prevailing Court case which ruled that the phrase “other disposition” in the aforementioned provision shall be construed in its plain and simple meaning. “Disposition” means an act of disposing; transferring to the care or possession of another; the parting with, alienation of, or giving up property. As established in the previous ruling of the Court, the phrase “other disposition” includes within its purview all kinds of dispositions of real property under Section 24(D)(1) of the Tax Code of 1997, as amended, unless specifically excluded therefrom or subject to another tax treatment. In the absence of a law excluding the Lot Swapping Agreement from the coverage of the foregoing provision of the Tax Code, it is then deemed within the purview of exchange or disposition, and thus, subject to capital gains tax imposed therein. The transaction shall likewise be subject to documentary stamp taxes imposed under Sections 188 and 196 of the Tax Code, as amended. [BIR RULING NO. OT-291-2021, AUGUST 3, 2021] | GROSS RECEIPTS TAX NOT WARRANTED FOR NON-STOCK SAVINGS AND LOANS ASSOCIATIONS AS LONG AS TRANSACTIONS DO NOT FALL UNDER CONTEMPLATED ACTIVITIES OF A NON-BANK FINANCIAL INTERMEDIARY P Co. is seeking a confirmatory ruling on whether a non-stock savings and loan association (NSSLA) is subject to gross receipts tax (GRT) under Revenue Memorandum Circular (RMC) No. 09-2016. The primary purpose of P. Co. is to engage in the operations of a non-stock and non-profit savings and loan association to encourage industry, frugality, and accumulation of savings among its members. RMC No. 9-2016 was issued to clarify the taxability of NSSLAs. Accordingly, they are classified as non-bank financial intermediaries (NBFIs) and are generally subject to GRT, unless otherwise exempted by special rules. In contrary, it was established in Republic Act (R.A.) No. 8367 that NSSLA shall be exempt from payment of tax in respect to income it receives; except income generated from its properties and from any activity conducted for profit. In ruling, the Bureau cited Revenue Regulations (RR) No. 9-2004, which implemented the provisions of R.A. No. 9238 reimposing GRT on banks and non-bank financial intermediaries (NBFI): NBFI is an entity regularly engaged in the lending of funds or purchasing or receivables or other obligations with the funds obtained from the public. It is to be recalled that P Co. exclusively transacts with and obtains funds from members and not to the public. Hence, based on the aforementioned facts, P Co., a NSSLA, is not subject to GRT imposed under RMC No. 9-2016 on its lending activities. [BIR RULING NO. OT-274-2021, JULY 27, 2021] | 3. CTA CASES DIGEST ON VOID ASSESSMENT DUE TO ABSENCE OF PROOF OF TAXPAYER'S RECEIPT, ABSENCE OF LETTER OF AUTHORITY & JUDICIAL CLAIM FOR REFUND | [IF TAXPAYER DENIES HAVING RECEIVED AN ASSESSMENT, THE BURDEN OF PROVING THE ACTUAL RECEIPT LIES WITH THE BIR] [ABSENCE OF LOA RENDERS THE ASSESSMENT NULL AND VOID] [LN SERVES A DIFFERENT PURPOSE THAN AN LOA] [CTA HAS ALSO JURISDICTION TO DETERMINE WHETHER THE WARRANT OF DISTRAINT AND LEVY ISSUED BY BIR IS VALID] Petitioner Drugmaker's Biotech Research Laboratories, Inc. filed a Petition for Review seeking cancellation of the assessment issued by the Respondent Commissioner of Internal Revenue. Petitioner argued that the assessments and Warrant of Distraint and/or Levy (WDL) are null and void due to lack of Letter of Authority (LOA), which is a violation of right to due process. On the other hand, Respondent countered that the tax assessments are presumed correct. In ruling, the Court first held that it has jurisdiction to invalidate or annul distraint orders, opposing the contention of the Respondent. Furthermore, perusal of records showed that the Revenue Officer who conducted the investigation was not duly authorized to audit. The Petitioner merely received a Letter Notice, and not an LOA. Hence, in the absence of such authority, the assessment or examination is a nullity, including all the subsequent proceedings. The Respondent likewise failed to prove that the assessment notices were received by Petitioner. Based on the foregoing, it then becomes unnecessary to address the other issues raised by the parties. Therefore, the Petition was GRANTED. [DRUGMAKER'S BIOTECH RESEARCH LABORATORIES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9635, OCTOBER 15, 2021] | [CIR'S INACTION IS THE DECISION ITSELF, THUS, A DENIAL OF THE REFUND CLAIM] [JUDICIAL CLAIM FOR REFUND NEED TO BE FILED WITHIN 30 DAYS FROM THE LAPSE OF THE 120-DAY PERIOD] Petitioner MTI Advanced Test Development Corporation filed a Petition for Review seeking refund and/or issuance of tax credit certificate (TCC) on unutilized input value-added tax (VAT) attributable to its zero-rated sales, covering April 1, 2011 to March 31, 2012. To counter, Respondent Commissioner of Internal Revenue (CIR) raised the timeliness of the Petition which then anchored the decision of the case. In ruling, the Court cited Rohm Apollo Semiconductor Philippines vs. CIR, to viz: Taxpayers are reminded that when the 120-day period lapses and there is inaction on the part of the CIR, they must no longer wait for it to come up with a decision thereafter. The CIR's inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within 30 days from the lapse of the 120-day period. It is to be noted that the Petitioner, albeit filing for a refund with the Bureau of Internal Revenue (BIR) within two (2) years after the close of the taxable quarter when the zero-rated sales were made, the judicial claim was filed only on July 12, 2019 when the thirty 30-day period after the expiration of the 120 days given to the BIR to grant a refund or issue TCC for creditable input taxes ended on August 17, 2013. Based on the foregoing, the Petition was DISMISSED due to lack of jurisdiction. [MTI ADVANCED TEST DEVELOPMENT CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10112, OCTOBER 13, 2021] | [DIRECT DENIAL OF RECEIPT OF MAILED NOTICES SHIFTS THE BURDEN TO THE SENDER TO PROVE THAT SUCH WERE, IN FACT, RECEIVED BY THE ADDRESSEE] [REGISTRY RECEIPT ONLY PROVES THE FACT OF MAILING AND NOTHING MORE] Petitioner Altimax Broadcasting Co., Inc., filed a Petition for Review seeking cancellation of the assessment issued by Respondent Commissioner of Internal Revenue. Petitioner contested the issuance of Warrant of Distraint and/or Levy (WDL) by Respondent, claiming that it did not priorly receive a Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN) which are integral in observing taxpayer’s right to due process. Section 3 of Revenue Regulations (RR) No. 12-99 provides that one of the modes of service of the PAN, FLD, and FAN is by service through mail. Moreover, for such mode to constitute sufficient proof of proper service, the registry receipt issued by the post office must contain sufficiently identifiable details of the transactions. Relative thereto, it was established that while a mailed letter is deemed received by the addressee in the course of mail, receipt of such is a disputable presumption and denial of which shifts the burden to the sender to prove that the mailed letter was actually received by the addressee. In the presentation of evidence, the Respondent forwarded the Registry Receipts for the service of PAN and FLD/FAN but the same were subsequently declared as insufficient evidence of service for such receipts only proved the fact of mailing of the subject notices, but nothing of the fact of that the PAN and FAN were actually served and received by Petitioner or any of its authorized representative(s). Consequently, non-receipt of the subject notices precluded Petitioner from contesting the assessments which is a clear violation of its right to due process; hence, the subject tax assessments were declared null and void. As such, the assessments bear no valid fruit and the WDL produces no effect. In view of the foregoing considerations, the Petition was GRANTED and the WDL were WITHDRAWN and SET ASIDE. [ALTIMAX BROADCASTING COMPANY, INC., VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10044, OCTOBER 6, 2021] | FAILURE TO ADDUCE SUFFICIENT PROOF IS FATAL TO THE CLAIM OF REFUND Petitioner MTI Advanced Test Development Corporation filed a Petition for Review seeking refund or issuance of Tax Credit Certificate (TCC) representing its unutilized input value added tax (VAT) attributable to zero-rated sales. In ruling, the Court held that the Petitioner evidently failed to comply with the substantiation requirements. In order to prove entitlement to credits for input taxes due or paid, Petitioner must not only present the supporting documents prescribed under Section 4.110-8 of Revenue Regulations (RR) No. 16-05, but more importantly, these documents must likewise comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the Tax Code of 1997, as amended, and implemented by Section 4.113-1 (A) and (B) of RR No. 16-05. Perusal of records showed that the Petitioner failed to establish that the subject of claim was not carried over nor applied against any output tax in the succeeding quarters. Thus, the Petition was DENIED for lack of merit. [MTI ADVANCED TEST DEVELOPMENT CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9679, SEPTEMBER 29, 2021] | Thank you and best regards, WILLIE B. SANTIAGO Lawyer & Certified Public Accountant Tax & Corporate Services Division TL : (+632) 8 894-5892 Loc. 703 Website: www.dmdcpa.com.ph Don Jacinto Building De la Rosa corner Salcedo Streets Legaspi Village, Makati City 1229 Philippines | |
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