PICPA VisMin

REVENUE REGULATIONS
& COURT DECISIONS

ON TAXATION
Atty. Rheneir P. Mora, CPA
Resource Speaker
REVENUE REG. NO. 14-2018
Revised withholding tax rates
1. PROFESSIONAL FEES, TALENT FEES, ETC. FOR SERVICES

RENDERED
2. PROFESSIONAL FEES PAID TO MEDICAL PRACTITIONERS (INCLUDES

DOCTORS OF MEDICINE, DOCTORS OF VETERINARY SCIENCE, AND
DENTISTS) BY HOSPITALS AND CLINICS OR PAID DIRECTLY BY HEALTH
MAINTENANCE ORGANIZATIONS (HMOS) AND/OR SIMILAR
ESTABLISHMENTS
3. INCOME PAYMENTS TO CERTAIN BROKERS AND AGENTS
4. COMMISSIONS OF INDEPENDENT AND/OR EXCLUSIVE SALES

REPRESENTATIVES AND MARKETING AGENTS OF COMPANIES
2
INDIVIDUAL
A. IF THE GROSS INCOME FOR THE CURRENT YEAR DOES NOT EXCEED
P3 MILLION - 5%
B. IF THE GROSS INCOME FOR THE CURRENT YEAR IS MORE THAN P3

MILLION - 10%
NON-INDIVIDUAL
A. IF THE GROSS INCOME FOR THE CURRENT YEAR DOES NOT EXCEED
P720,000 - 10%
B. IF THE GROSS INCOME FOR THE CURRENT YEAR EXCEEDS P720,000

- 15% 3
THE 10% WITHHOLDING TAX RATE SHALL BE APPLIED IN THE

FOLLOWING CASES:
(1) THE PAYEE FAILED TO PROVIDE THE INCOME PAYOR/WITHHOLDING
AGENT OF SUCH DECLARATION; OR
(2) THE INCOME PAYMENT EXCEEDS P3 MILLION, DESPITE RECEIVING
THE SWORN DECLARATION FROM THE INCOME PAYEE.
IN THE CASE OF INDIVIDUAL PAYEES WITH ONLY ONE PAYOR, THE

SWORN DECLARATION SHALL BE ACCOMPLISHED AND SUBMITTED,
TOGETHER WITH A COPY OF THEIR COR, TO THE LONE INCOME PAYOR.
4
INCOME PAYMENTS TO PARTNERS OF GENERAL

PROFESSIONAL PARTNERSHIPS:
A. IF THE GROSS INCOME FOR THE CURRENT YEAR DOES

NOT EXCEED P720,000 - 10%
B. IF THE GROSS INCOME FOR THE CURRENT YEAR

EXCEEDS P720,000 - 15%
5
AN INDIVIDUAL SELLER-INCOME EARNER/PAYEE MAY NOT BE

SUBJECTED TO WITHHOLDING IF THE SOURCE OF INCOME
COMES FROM A LONE INCOME PAYOR AND THE TOTAL
INCOME PAYMENT IS LESS THAN P250,000 IN A TAXABLE
YEAR.
THE CONCERNED INDIVIDUAL SHALL EXECUTE AN INCOME

PAYEE’S SWORN DECLARATION OF GROSS RECEIPTS/SALES
THAT SHALL BE SUBMITTED TO THE LONE PAYOR.
6
7
8
THE PAYEE’S SWORN DECLARATION SHALL BE SUBMITTED

TO THE LONE INCOME PAYOR OF INCOME BEFORE THE
INITIAL PAYMENT OF INCOME OR BEFORE JANUARY 15 OF
EACH YEAR, WHICHEVER IS APPLICABLE.
THE SWORN DECLARATION SHALL BE EXECUTED BY THE

PRESIDENT/MANAGING PARTNER OF THE
CORPORATION/COMPANY/GENERAL PROFESSIONAL
PARTNERSHIP.
9
WITHHOLDING OF INCOME TAX
THE FOLLOWING SHALL BE CONSIDERED AS “DE MINIMIS”

BENEFITS NOT SUBJECT TO INCOME TAX AS WELL AS
WITHHOLDING TAX ON COMPENSATION INCOME OF BOTH
MANAGERIAL, AND RANK AND FILE EMPLOYEES:
- RICE SUBSIDY OF ₱2,000 OR ONE SACK OF 50KG. RICE PER

MONTH AMOUNTING TO NOT MORE THAN ₱2,000;
10
WITHHOLDING OF INCOME TAX
- MEDICAL CASH ALLOWANCE TO DEPENDENTS OF

EMPLOYEES, NOT EXCEEDING ₱1,500 PER EMPLOYEE PER
SEMESTER OF ₱250 PER MONTH;
- UNIFORM AND CLOTHING ALLOWANCE NOT EXCEEDING

₱6,000 PER ANNUM;
11
CIR vs St. Luke’s Medical Center, Inc.
GR 203514 dated 13 February 2017
FACTS:
- ON EARLIER SIMILAR CASES OF SLMC, THE SC RULED THAT SLMC IS
NOT TAX-EXEMPT BUT SUBJECT TO 10% INCOME TAX.
- SLMC PAID THE BASIC INCOME TAX BUT NOT THE PENALTIES.
CONSEQUENTLY, REQUESTED THE SC TO DISMISS THE CASE BASED
ON MOOTNESS.
- HOWEVER, THE BIR INSISTED THAT SLMC IS LIABLE TO PAY THE

COMPROMISE PENALTIES FOR NOT FILING ITS QUARTERLY INCOME
TAX RETURNS
12
ISSUE
WHETHER OR NOT SLMC IS TAX-EXEMPT OR SUBJECT TO 10% INCOME
TAX.
RULING
THE SC REITERATED THAT FOR A HOSPITAL TO BE EXEMPT FROM
INCOME TAX UNDER SECTION 30(E) OF THE TAX CODE, IT MUST BE
BOTH ORGANIZED AND OPERATED EXCLUSIVELY FOR CHARITABLE
PURPOSES. OTHERWISE, THE HOSPITAL SHALL BE SUBJECT TO
PREFERENTIAL TAX RATE OF 10% UNDER SECTION 27(B) OF THE TAX
CODE.
13
ISSUE
WHETHER OR NOT SLMC IS TAX-EXEMPT OR SUBJECT TO 10% INCOME TAX.
RULING
- 10% INCOME TAX APPLIES TO A HOSPITAL THAT IS: (1) PROPRIETARY AND (2)
NON- PROFIT. NON-PROFIT DOES NOT NECESSARILY MEAN CHARITABLE.
INSTEAD, IT CONNOTES THAT NO PART OF THE NET INCOME OR ASSETS
ACCRUES TO OR BENEFITS ANY MEMBER OR SPECIFIC PERSON WITH ALL
INCOME AND ASSET ACCRUING TO THE INSTITUTION’S PURPOSE.
- THE SC FOUND THAT SLMC IS NOT OPERATING EXCLUSIVELY FOR

CHARITABLE PURPOSES. THUS, ITS REVENUE FROM PAYING PATIENTS IS
SUBJECT TO 10% INCOME TAX
14
ISSUE
WHETHER OR NOT SLMC IS LIABLE FOR PENALTIES FOR NON-FILING
OF INCOME TAX RETURNS
RULING
THE SC REITERATED ITS EARLIER DECISION THAT THE SLMC IS NOT
REQUIRED TO PAY PENALTIES FOR NON-FILING OF INCOME TAX
RETURNS AND NON-PAYMENT OF INCOME TAX.
THE SC CANCELLED THE ASSESSMENT FOR INTEREST, SURCHARGE

AND COMPROMISE PENALTIES ON THE BASIS OF GOOD FAITH AND
HONEST BELIEF THAT ON THE PART OF SLMC THAT IS NOT SUBJECT TO
TAX. 15
FACTS:
- ST. LUKE’S MEDICAL CENTER (SLMC) WAS ASSESSED FOR
DEFICIENCY INCOME TAX FOR TAXABLE YEARS 2005 AND 2006.
- SLMC PROTESTED THE ASSESSMENT AND EVENTUALLY ELEVATED

THE CASE TO THE CTA. THE CTA CANCELED THE ASSESSMENT AND
RULED THAT SLMC AS A NON-STOCK, NON-PROFIT HOSPITAL IS TAX-
EXEMPT UNDER SECTION 30(E) AND (G) OF THE TAX CODE.
- THE BIR ARGUED THAT SLMC IS SUBJECT TO 10% INCOME TAX UNDER
SECTION 27(B) OF THE TAX CODE.
16
CIR vs Philippine Daily Inquirer Inc.
GR 213943 dated 22 March 2017
FACTS:
- THIS INVOLVES DEFICIENCY IT AND VAT ASSESSMENTS FOR TY 31
DEC 2004
- THE BIR ISSUED THE FAN 11 MARCH 2008 AND RECEIVED BY PDI ON
17APRIL 2008
- THE ASSESSMENTS AROSE FROM DISCREPANCIES BETWEEN TAX

RETURNS AND INFORMATION FROM 3RD PARTIES
17
FACTS:
- THE BIR ALLEGED THAT PDI FALSELY FILED ITS TAX RETURNS
BECAUSE IT UNDER-DECLARED ITS INCOME BASED ON THE BIR'S
RELIEF SYSTEM.
- THUS, THE TEN-YEAR PRESCRIPTIVE PERIOD FROM DISCOVERY OF

FALSITY SHALL APPLY.
- PDI EXECUTED 3 WAIVERS WHICH IT LATER ON QUESTIONED FOR

BEING DEFECTIVES
18
ISSUE
WHETHER OR NOT DISCREPANCIES BETWEEN PDI’S TAX RETURNS AND
INFORMATION FROM 3RD PARTIES MAKE THE TAX RETURNS FALSE.
RULING
- CITING A PREVIOUS DECISION, THE SC REITERATED THAT THE ENTRY
OF WRONG INFORMATION DUE TO MISTAKE, CARELESSNESS OR
IGNORANCE (WITHOUT THE INTENT TO EVADE TAX) DOES NOT
CONSTITUTE A FALSE RETURN.
- THE SC DID NOT FIND ENOUGH EVIDENCE TO SUPPORT THE CLAIM
THAT THERE WAS FRAUD OR INTENTIONAL FALSITY ON THE PART OF
THE TAXPAYER.
19
ISSUE
WHETHER OR NOT THE WAIVERS EXECUTED BY PDI ARE VALID.
RULING
- THE SC VOIDED THE WAIVERS EXECUTED BY THE TAXPAYER
BECAUSE THE BIR FAILED TO PROVIDE THE OFFICE ACCEPTING
COPIES, AND THE SAID WAIVERS WERE NOT EXECUTED IN THREE
COPIES AS REQUIRED UNDER BIR RULES.
- THE SC RULED THAT THE WAIVERS EXECUTED BY THE TAXPAYER
WERE DEFECTIVE SINCE THE BIR DID NOT FOLLOW ITS OWN RULES ON
WAIVERS. THE DEFECT WAS CAUSED SOLELY BY THE BIR; THUS, THE
WAIVERS HAVE NO EFFECT AND DID NOT EXTEND THE THREE- YEAR
PRESCRIPTIVE PERIOD
20
CIR vs Asalus Corporation
FACTS
-THE BIR ISSUED FAN TO THE ASALUS CORPORATION (ASALUS) FOR ITS
TAX LIABILITY ON THE VAT TRANSACTIONS FOR THE TAXABLE YEAR
2007.
- ASALUS PROTESTED THE FAN BUT THE BIR EVENTUALLY ISSUED THE
FDDA
- ASALUS WENT TO THE CTA ARGUING THAT THE FAN WAS ISSUED
BEYOND THE 3-YEARPRESCRIPTIVE PERIOD
21
FACTS
- THE CTA CANCELLED THE ASSESSMENT ON THE GROUND OF
PRESCRIPTION; CTA RULED THAT THE BIR FAILED PROVE FALSITY IN
ASALUS TAX RETURNS. WHILE THE PAN ALLEGED FALSITY, THE FAN AS
WELL AS THE FDDA FAILED TO REITERATE SAID FALSITY.
- BIR INSISTED THAT THE 10-YEAR PERIOD APPLIES TO THE CASE

SINCE THERE WAS A FINDING OF SUBSTANTIAL OR MORE THAN 30%
UNDER-DECLARATION OF INCOME.
22
ISSUE
WHETHER OR NOT THE ALLEGATION OF SUBSTANTIAL UNDER-
DECLARATION (MORE THAN 30%) IS SUFFICIENT TO MAKE THE RETURN
FALSE, HENCE, THE 10-YEAR PERIOD SHOULD APPLY.
RULING
- THERE IS A PRIMA FACIE EVIDENCE OF A FALSE RETURN IF THERE IS A
SUBSTANTIAL UNDER- DECLARATION OF TAXABLE SALES, RECEIPT OR
INCOME. FAILURE TO REPORT SALES, RECEIPTS OR INCOME IN AN
AMOUNT EXCEEDING 30% OF WHAT IS DECLARED IN THE RETURNS
CONSTITUTES SUBSTANTIAL UNDER-DECLARATION.
23
RULING
- IN CASE OF FALSE RETURNS, THERE IS NO NEED TO SHOW INTENT TO
DEFRAUD. THE MERE SHOWING THAT THE RETURNS FILED BY THE
TAXPAYER WERE FALSE IS SUFFICIENT TO WARRANT THE APPLICATION
OF THE 10-YEAR PRESCRIPTIVE PERIOD
- ACCORDING TO THE SC, WHILE ONLY IN THE PAN THAT THE FALSITY
WAS ALLEGED, FAN AND FDDA MADE REFERENCE TO THE PAN. THUS,
ASALUS WAS PROPERLY INFORMED ABOUT THE ALLEGATION OF FALSE
RETURN.
24
CIR vs Fitness By Design, Inc.
GR 215957 dated 9 November 2016
FACTS
- MORE THAN 8 YEARS FROM FILING OF TAX RETURN, FITNESS BY
DESIGN INC. (FBDI) RECEIVED A FAN COVERING THE TAXABLE YEAR
1995.
- THE IMPOSED 50% SURCHARGE AND INDICATED THAT THE TOTAL

AMOUNT DUE SHALL BE ADJUSTED IF PAID PRIOR OR BEYOND 15 APRIL
2004.
- FBDI PROTESTED THE FAN STATING THAT THE RIGHT OF THE BIR TO
ASSESS HAS ALREADY PRESCRIBED
25
FACTS
- EVENTUALLY, THE BIR ISSUED WARRANT OF DISTRAINT AND/OR LEVY
WHICH PROMPTED FBDI TO GO THE CTA.
- THE CTA CANCELLED THE ASSESSMENT ON THE GROUND OF

PRESCRIPTION.
- THUS, THE BIR ELEVATED THE CASE TO THE SC.
26
ISSUE
WHETHER OR NOT THE BIR CORRECTLY INVOKED FRAUD AND THEREFORE
10-YEAR PRESCRIPTIVE PERIOD SHOULD APPLY.
RULING
- THE SC HELD THAT FRAUD IS A QUESTION OF FACT THAT SHOULD BE
ALLEGED AND DULY PROVEN.
- IT WAS NOTED THAT ASIDE FROM IMPOSING THE 50% SURCHARGE, THE FAN
AND THE AUDIT RESULT/ASSESSMENT NOTICE DID NOT IMPUTE FRAUD ON
THE PART OF THE TAXPAYER NOR DID IT INCLUDE ANY BASIS FOR THE
ALLEGATION OF FRAUD.
- THE SC RULED THAT FRAUD CANNOT BE PRESUMED AND THE WILLFUL
NEGLECT TO FILE THE REQUIRED RETURN OR FRAUDULENT INTENT TO
EVADE TAXES MUST BE PROVEN BY THE PARTY ALLEGING THE FRAUD.
27
ISSUE
WHETHER OR NOT THE FAN ISSUED TO FBDI IS A DEMAND FOR
PAYMENT OR MERELY A REQUEST FOR PAYMENT.
RULING
- THE FAN PROVIDES THAT THE TAX DUE IS STILL SUBJECT TO
MODIFICATION, DEPENDING ON THE DATE OF PAYMENT.
-THE SC REITERATED THAT IN ORDER TO SERVE ITS PURPOSE, THE

FAN SHOULD CONTAIN A DEFINITE AMOUNT OF TAX LIABILITY, AND AN
ACTUAL DEMAND FOR THE PAYMENT OF SUCH. THUS, ABSENT THE
DEFINITE AMOUNT AND ACTUAL DEMAND TO PAY, THE FAN IS VOID.
28
Medicard vs CIR
GR 222743 dated 5 April 2017
FACTS:
- MEDICARD, AN HMO, RECEIVED A LETTER NOTICE (“LN”) CONTAINING
FINDINGS OF DISCREPANCIES BETWEEN ITS VAT RETURNS AND
INCOME TAX RETURNS.
- SUBSEQUENTLY, THE BIR ISSUED A PRELIMINARY ASSESSMENT

NOTICE (“PAN”) AND EVENTUALLY THE FORMAL ASSESSMENT NOTICE
(“FAN”).
- THE BIR ASSESSED MEDICARD FOR DEFICIENCY VAT ON THE BASIS

THAT THE COMPANY SHOULD PAY VAT BASED ON ITS GROSS RECEIPTS
WITHOUT ANY DEDUCTION.
29
Medicard vs CIR
FACTS:
- MEDICARD QUESTIONED ISSUANCE OF FAN WITHOUT THE
PREREQUISITE LETTER OF AUTHORITY
- MEDICARD ALSO ARGUED THAT ITS VAT LIABILITY SHOULD BE BASED

ON COLLECTION NET OF THE AMOUNTS EARMARKED AND PAID TO
MEDICAL SERVICE PROVIDERS.
30
Medicard vs CIR
ISSUE
WHETHER OR NOT AN LOA IS ALWAYS REQUIRED BEFORE AN
ASSESSMENT IS ISSUED.
RULING
- AN LOA CANNOT BE DISPENSED WITH IN THE CONDUCT OF A TAX
AUDIT AND EVENTUAL ISSUANCE OF A TAX ASSESSMENT.
- UNDER SECTION 6 OF THE NIRC , THE POWER TO EXAMINE AND MAKE
TAX ASSESSMENT IS GRANTED TO THE CIR. THUS, UNLESS THE AUDIT
IS DONE BY CIR HIMSELF, OTHER TAX OFFICER CANNOT VALIDLY
CONDUCT AN AUDIT WITHOUT PRIOR AUTHORITY FROM THE CIR.
- THE SC ALSO EXPLAINED THAT A LETTER NOTICE (LN) IS NOT A
SUBSTITUTE FOR AN LOA.
31
Commissioner of Internal Revenue v. G&W Architects,
Engineers, and Project Consultants, Co.,
CTA EB No. 1572, February 23, 2018
- THE TAXPAYER WAS ASSESSED WITH DEFICIENCY INCOME TAX AND VAT
FROM UNDECLARED PURCHASES.
- THE BIR ARRIVED AT THE ASSESSMENT USING THIRD-PARTY MATCHING.
- THE TAXPAYER CONTESTED THE ASSESSMENT, AND THE SAME WAS

CANCELLED BY THE CTA SECOND DIVISION.
- THE CTA DIVISION RULED THAT THE THIRD PARTY MATCHING WAS NOT
VERIFIED IN ACCORDANCE WITH RMO NO. 46-04.
32
Commissioner of Internal Revenue v. G&W Architects,
Engineers, and Project Consultants, Co.,
CTA EB No. 1572, February 23, 2018
- FURTHER, THE CTA DIVISION RULED THAT SINCE WHAT WAS UNDECLARED
WERE PURCHASES.
- THE BIR HAS THE BURDEN TO PROVE THAT THE SAME UNDECLARED
PURCHASES RESULTED IN DEFICIENCY TAXES.
- UPON REACHING THE CTA EN BANC, THE COURT UPHELD THE RULING OF
THE SECOND DIVISION.
33
Moog Controls Corporation, Philippines v. Commissioner
of Internal Revenue,
CTA Case No. 9077, February 22, 2018
- THE TAXPAYER WAS FOUND LIABLE FOR DEFICIENCY TAXES BY THE CTA.
THE DECISION WAS PROMULGATED ON JANUARY 3, 2018.
- THE TAXPAYER FILED FOR RECONSIDERATION OF THE DECISION,

ARGUING THAT THE AMENDMENTS BROUGHT ABOUT BY TRAIN LAW
PROHIBITS THE SIMULTANEOUS APPLICATION OF DEFICIENCY AND
DELINQUENCY INTEREST.
34
Moog Controls Corporation, Philippines v. Commissioner
of Internal Revenue,
- THE CTA RULED THAT GIVEN THE EFFECTIVITY PERIOD OF THE TRAIN LAW,
THE COMPUTATION OF INTERESTS FROM JANUARY 1, 2018 ONWARDS
SHOULD FOLLOW THE SAID LAW.
- IN OTHER WORDS, THE COMPUTATION OF INTERESTS USING THE TAX

CODE PRIOR TO THE AMENDMENTS OF THE TRAIN LAW SHOULD APPLY,
BUT ONLY UP TO DECEMBER 31, 2017. FROM JANUARY 1, 2018 ONWARDS,
THE INTERESTS AS IMPOSED BY TRAIN LAW SHOULD APPLY.
35
City of Davao v. Randy Allied Ventures, Inc.,
CTA EB No. 1591, February 20, 2018)
- THE TAXPAYER WAS ASSESSED WITH DEFICIENCY

LOCAL BUSINESS TAX (LBT) ON ITS DIVIDEND INCOME.
- UPON CONTESTING THE SAME, THE RTC FOUND THAT

THE PRIMARY PURPOSE OF THE HOLDING COMPANY IS
SUFFICIENT TO INCLUDE ACTIVITIES OF A NON-BANK
FINANCIAL INTERMEDIARY.
36
City of Davao v. Randy Allied Ventures, Inc.,
CTA EB No. 1591, February 20, 2018)
- THE CTA, HOWEVER, REVERSED THE CONCLUSION OF THE RTC, SAYING

THAT THE SAME IS NOT SUFFICIENT TO TREAT A HOLDING COMPANY AS A
FINANCIAL INTERMEDIARY.
- THE PRIMARY PURPOSE, WITHOUT ACTUAL PROOF THAT THE HOLDING

COMPANY PRIMARILY FUNCTIONS AS A FINANCIAL INTERMEDIARY IS
INSUFFICIENT GROUND TO CONSIDER A HOLDING COMPANY AS A
FINANCIAL INTERMEDIARY, AND THUS LIABLE TO LBT ON DIVIDEND
INCOME.
37
Commissioner of Internal Revenue v. China State
Philippines Construction Corporation,
CTA EB No 1558, February 08, 2018
- THE RESPONDENT WAS ASSESSED FOR DEFICIENCY IT, VAT, AND EWT FOR
THE TAXABLE YEARS 2003 TO 2006.
- THE CTA DIVISION RULED TO CANCEL AND WITHDRAW THE ASSESSMENT

AFTER IT FOUND OUT THAT THE BIR’S LOA FAILED TO COMPLY WITH
SECTION 3(C) OF RMO NO. 43-1990.
- ACCORDINGLY, THE ASSESSMENT WAS DECLARED VOID FOR LACK OF

VALID LOA FOR THE YEARS 2003 TO 2005. FURTHER, THE CTA DIVISION
LIKEWISE CANCELLED THE ASSESSMENT FOR THE TAXABLE YEAR 2006. AS
NOTICED, THE 3-YEAR PRESCRIPTIVE PERIOD HAD LAPSED.
38
Commissioner of Internal Revenue v. China State
Philippines Construction Corporation,
CTA EB No 1558, February 08, 2018
- THE CIR FILED ITS MR AND ASSAILED FOR THE FIRST TIME THE
ISSUE ON FALSE RETURNS AND THAT THE 10-YEAR PRESCRIPTION
SHALL APPLY.
- THE CTA DIVISION DENIED THE ALLEGATION BECAUSE THE

SAME WAS RAISED ONLY IN THE MR. WHEN ELEVATED TO THE
CTA EN BANC, IT AFFIRMED THE ASSAILED DECISION OF THE
DIVISION.
- THEREBY, ASSESSMENT TO PETITIONER WAS CANCELLED AND

WITHDRAWN.
39
San Miguel Foods, Inc. v. Commissioner of Internal Revenue,
CTA No. 9046, February 12, 2018
- TAXPAYER WAS ASSESSED FOR DEFICIENCY IT, VAT, AND DST FOR THE
TAXABLE YEAR 2010.
- THE CTA RELIEVED THE TAXPAYER FROM PAYMENT OF THE DEFICIENCY

TAXES FOR FAILURE OF THE BIR TO DEMAND TO PAY THE TAXES DUE WITHIN
A SPECIFIC PERIOD.
- THE BIR ERRONEOUSLY LEFT THE SPACES FOR DUE DATES IN THE
ENCLOSED FANS BLANK.
40
San Miguel Foods, Inc. v. Commissioner of Internal Revenue,
- THE TAXPAYER THEN WAS DEPRIVED OF THE DATE TO PAY THE

ASSESSMENT AMOUNT.
- THE ASSESSMENT WAS LIKEWISE CANCELLED FOR FAILURE TO

ISSUE LOA ANEW DESPITE THE REASSIGNMENT OF THE TAX
ASSESSMENT CASE TO OTHER REVENUE OFFICERS.
41
NES Global Talent v. Commissioner of Internal Revenue,
- TAXPAYER CLAIMED THAT THE CTA HAS NO AUTHORITY TO IMPOSE

DEFICIENCY ASSESSMENT AS THE SAME FALLS WITHIN THE POWERS OF THE
BIR.
- THE CTA HOWEVER DENIED IMPOSING ASSESSMENT BUT MERELY

DETERMINING THE PROPER TAXES TO BE PAID.
- ACCORDINGLY, THE TAXPAYER’S CLAIM FOR REFUND OF FWT IS CLOSELY

RELATED WITH THE ISSUE OF THE PROPER TAXES THAT ARE DUE FROM THE
TAXPAYER.
42
NES Global Talent v. Commissioner of Internal Revenue,
- THE CTA HELD THAT THE PETITIONER'S SHOULDERING OF THE TAX

EXPENSES OF ITS ASSIGNED FOREIGN EMPLOYEES IS CONSIDERED
COMPENSATION THAT BENEFITTED THE EMPLOYEES, WHICH IS TAXABLE. IN
SUCH A CASE, NO REFUND MAY BE CLAIMED THEREFROM.
- HOWEVER, THIS DECISION WAS REVERSED WHEN CTA WAS CONVINCED

WITH THE TAXPAYER’S RECONSIDERATION THAT WTC ON PAYMENTS MADE
TO FOREIGN EMPLOYEES WERE COMPUTED BASED ON THE GROSSED-UP
VALUE OF THE GUARANTEED NET TAKE HOME PAY.
43
Ayala Corporation Vs. Commissioner of Internal Revenue,
- THE TAXPAYER SEEKS THE ISSUANCE OF A TAX CREDIT CERTIFICATE (TCC)

PERTAINING TO ITS ALLEGED EXCESS OR UNUTILIZED CREDITABLE
WITHHOLDING TAX (CWT) FOR CALENDAR YEARS (CY) 2012 AND 2013.
- ALTHOUGH THE TAXPAYER FILED ITS ADMINISTRATIVE AND JUDICIAL

CLAIM WITHIN 2 YEARS FROM THE FILING OF THE FINAL/ADJUSTED RETURN,
IT WAS FOUND OUT THAT NOT ALL THE AMOUNT CLAIMED AS REFUNDS
WHICH CORRESPONDS TO THE INCOME PAYMENTS WHICH WERE VERIFIED
TO HAVE BEEN INCLUDED IN PETITIONER'S TAXABLE GROSS INCOME PER ITS
ANNUAL INCOME TAX RETURNS FOR CYS 2012 AND 2013.
44
Ayala Corporation Vs. Commissioner of Internal Revenue,
- ACCORDINGLY, ONLY A PORTION OF THE TAXPAYER’S CLAIM WAS

ALLOWED, THAT IS, THOSE THAT WERE PROVEN TO HAVE BEEN DECLARED
AS PART OF GROSS INCOME.
- ONE OF THE REQUISITES FOR CLAIMING CREDITABLE WITHHOLDING TAX

REFUNDS IS THAT IT MUST BE SHOWN IN THE RETURN OF THE RECIPIENT THAT
THE INCOME PAYMENT RECEIVED WAS DECLARED AS PART OF THE GROSS
INCOME.
45
Ale Mart Corporation Vs. Commissioner of Internal Revenue,
CTA No. 8998, February 14, 2018)
- THE BIR ASSESSED THE TAXPAYER WITH DEFICIENCY INCOME TAX. IN ITS
ASSESSMENT, RESPONDENT CIR DISALLOWED AS DEDUCTION SALES
RETURNS AND DISCOUNTS.
-PETITIONER FILED A PETITION FOR REVIEW WITH THE CTA ARGUING THAT
RESPONDENT ERRED IN APPLYING SECTION 34(A)(1)(B) OF THE NIRC OF
1997 IN DISALLOWING THE SALES RETURNS AND DISCOUNTS AND
CONTENDING THAT NOT BEING ORDINARY AND NECESSARY EXPENSES.
46
Ale Mart Corporation Vs. Commissioner of Internal Revenue,
CTA No. 8998, February 14, 2018)
- THE COURT STATED THAT BY THE NATURE OF RETURNS AND DISCOUNTS,

THE SAME ARE INDEED NOT ORDINARY AND NECESSARY EXPENSES
CONTEMPLATED UNDER THE SAID SECTION, BUT ARE ALLOWED AS A
DEDUCTION.
- SALES RETURNS AND DISCOUNTS NEED NOT BE ORDINARY AND

NECESSARY EXPENSES UNDER SECTION 34 OF THE NIRC OF 1997, AS
AMENDED.
47
Tektite Insurance Brokers, INC. Vs. CIR,
- BIR ROO NO. 43 ISSUED A TAX VERIFICATION NOTICE (TVN) NO.

00121502 AUTHORIZING REVENUE OFFICER (RO) TO EXAMINE THE
TAXPAYER’S RECORDS.
- DUE TO THE TRANSFER OF THE FIRST RO, A REVALIDATION NOTICE WAS

ISSUED AUTHORIZING A NEW RO TO CONTINUE THE EXAMINATION.
- THEREAFTER, THE TAXPAYER RECEIVED THE FINAL ASSESSMENT NOTICE

(FAN) WITH FLO NO. 043A- B110-0715, FINDING IT LIABLE FOR DEFICIENCY
IT, VAT AND EWT.
48
Tektite Insurance Brokers, INC. Vs. CIR,
- THE TAXPAYER ASSAILED THE VALIDITY OF THE FAN. THE COURT RULED
THAT MERE “TAX VERIFICATION NOTICE” IS NOT THE VALID LOA
CONTEMPLATED UNDER THE LAW.
- THUS, CONSIDERING THAT THE REVENUE OFFICER WHO CONDUCTED THE

EXAMINATION WAS NOT VALIDLY AUTHORIZED TO DO SO, THE
ASSESSMENT IS VOID.
- THE SUBSEQUENT ISSUANCE OF THE REVALIDATION NOTICE TO RO MA.

LOURDES MORALES AND GROUP SUPERVISOR AUREA S. GUEVARRA
DIRECTING THEM TO CONTINUE THE AUDIT DID NOT CURE THE SAID
INFIRMITY IN THE PROCESS.
49
Petnet, Inc. vs. Commissioner of Internal Revenue
CTA EB No. 1479 [CTA Case No. 9113], February 1, 2018
- PETNET (PETITIONER) FILED A PETITION FOR REVIEW PRAYING THAT IT BE

REFUNDED/CREDITED FOR ITS ALLEGED UNUTILIZED INPUT VAT FOR THE
PERIOD FROM APRIL 2012 TO DECEMBER 2012.
- THE ADMINISTRATIVE CLAIM WAS FILED ON TIME.
- PETITIONER ADMITTED THAT IT HAS SUBMITTED COMPLETE DOCUMENTS IN

SUPPORT OF ITS ADMINISTRATIVE CLAIM UPON THE FILING THEREOF.
- THUS, THE 120-DAY PERIOD SHALL BE RECKONED FROM DECEMBER 19,
2013 AND ENDED ON APRIL 18, 2014.
50
Petnet, Inc. vs. Commissioner of Internal Revenue
CTA EB No. 1479 [CTA Case No. 9113], February 1, 2018
- SINCE RESPONDENT FAILED TO ACT ON THE CLAIM,

PETITIONER HAD 30 DAYS FROM APRIL 18, 2014, OR UNTIL MAY
18, 2014, TO FILE A JUDICIAL APPEAL.
- HOWEVER, PETITIONER FILED THE JUDICIAL CLAIM FOR

REFUND/CREDIT ONLY LAST AUGUST 12, 2015. THUS, THE CASE
WAS DISMISSED.
51
Nube Storage Systems, Inc. vs. Commissioner of Internal
Revenue
- PETITIONER ERRONEOUSLY COMPUTED AND PAID DST, IN THE AMOUNT

OF P2,500,000.00, ON THE SUBSCRIPTION OF ITS SHARES OF STOCK BY ITS
INCORPORATORS.
- THE CORRECT DST DUE FROM THE AFOREMENTIONED TRANSACTION WAS

ONLY P25,000.00.
- SINCE THE ADMINISTRATIVE CLAIM AND JUDICIAL CLAIM FOR

REFUND/CREDIT WERE FILED ON TIME, THE CTA DIVISION GRANTED THE
PETITION.
52
8199 Convenience Corporation vs. Commissioner of Internal
Revenue
- PETITIONER WAS ASSESSED FOR DEFICIENCY INCOME TAX AND VAT FOR
THE TAXABLE YEAR 2009. THE BIR OIC-REGIONAL DIRECTOR EVENTUALLY
ISSUED AN FDDA, FROM WHICH THE PETITIONER FILED A MOTION FOR
RECONSIDERATION. –
- THEREAFTER, BIR REVENUE REGION NO. 6 ISSUED A PRELIMINARY

COLLECTION LETTER AGAINST PETITIONER.
- PETITIONER ARGUES THAT IT WAS CONSTRAINED TO TREAT THE PCL AS A

DENIAL OF ITS PROTEST. THUS, WITHIN 30 DAYS AFTER IT RECEIVED THE PCL,
PETITIONER FILED WITH THE CTA THE INSTANT PETITION.
53
8199 Convenience Corporation vs. Commissioner of Internal
Revenue
- HOWEVER, RESPONDENT ARGUES THAT THE PETITION WAS FILED OUT OF

TIME AND THAT THE CTA DID NOT HAVE JURISDICTION.
- THE COURT RULED THAT A PRELIMINARY COLLECTION LETTER (PCL) FROM

THE BIR IS AMONG THE “OTHER MATTERS ARISING UNDER THE NIRC” FROM
WHICH A TAXPAYER MAY FILE AN APPEAL WITH THE CTA, THUS, THE
PETITION WAS FILED ON TIME.
54
CBK Power Company Limited vs. Commissioner of Internal
Revenue, CTA Case No. 8246 & 8302
CTA EB No. 1225 and G.R. Nos. 203054-55, February 2, 2018
- PETITIONER FILED A CLAIM FOR REFUND/CREDIT OF ITS ALLEGED

UNUTILIZED INPUT VAT. HOWEVER, RESPONDENT OPPOSED ON THE
GROUND THAT PETITIONER FILED TO FULLY SUBSTANTIATE ITS CLAIM.
- THE COURT PARTIALLY GRANTED THE PETITION. IT, THEREFORE,

DISALLOWED THE REFUND/CREDIT OF A PORTION OF THE TOTAL INPUT
TAXES CLAIMED FOR NON-COMPLIANCE WITH THE SUBSTANTIATION
REQUIREMENTS UNDER SECTION 113 (A), (B), AND (C) OF THE 1997 NIRC.
55
CBK Power Company Limited vs. Commissioner of Internal
Revenue, CTA Case No. 8246 & 8302
CTA EB No. 1225 and G.R. Nos. 203054-55, February 2, 2018
- EXAMPLES OF THE VIOLATIONS, AMONG OTHERS, ARE:

(A) INPUT TAXES SUPPORTED BY DOCUMENTS OTHER THAN A VAT INVOICE
FOR PURCHASE OF GOODS;
(B) INPUT TAXES SUPPORTED BY A VAT INVOICE BUT NOT AN ORIGINAL

COPY; AND
(C) VAT INVOICE NOT ISSUED IN THE NAME OF PETITIONER BUT WITH THE
TIN AND ADDRESS OF THE PETITIONER
56
ARDCI NGO Group, Inc. vs. CIR,
CTA Case no. 9056, February 5, 2018
- PETITIONER CLAIMS THAT IT RECEIVED THE FLD/FAN ON SEPTEMBER 26,

2014 AND FILED ITS PROTEST ON OCTOBER 27, 2014 VIA A PRIVATE
COURIER, WHICH WAS RECEIVED BY BIR ON OCTOBER 29, 2014.
- RESPONDENT HOWEVER, ARGUES THAT PETITIONER FAILED TO FILE ITS

PROTEST ON TIME SINCE PETITIONER RECEIVED THE FLD/FAN ON
SEPTEMBER 24, 2014 BUT FILED ITS PROTEST ONLY ON OCTOBER 29, 2014,
WHICH IS BEYOND THE THIRTY DAY PERIOD FOR FILING A PROTEST.
- THE COURT RULED THAT THE PETITIONER’S PROTEST WAS FILED OUT OF
TIME. BOTH PARTIES HAD ADMITTED THAT RESPONDENT ACTUALLY
RECEIVED THE PROTEST ON OCTOBER 29, 2014
57
ARDCI NGO Group, Inc. vs. CIR,
CTA Case no. 9056, February 5, 2018
- BASING IT ON PETITIONER’S ALLEGATION OF ITS RECEIPT OF THE

ASSESSMENT ON SEPTEMBER 26, 2014, IT WAS TWO DAYS LATE WHEN IT
FILED ITS PROTEST ON OCTOBER 29, 2014.
- FURTHER, COURT EMPHASIZED THAT IN FILING OF PLEADINGS, THE RULES

DOES NOT INCLUDE FILING VIA PRIVATE COURIER. THOUGH IT IS NOT
PROHIBITED, IT IS ESTABLISHED THAT IN FILING VIA A PRIVATE COURIER, THE
DATE OF THE ACTUAL RECEIPT BY THE COURT IS THE DATE OF FILING.
- IN THIS CASE, PETITIONER IS TWO DAYS LATE. THUS, CTA DID NOT
ACQUIRE JURISDICTION TO REVIEW THE CASE.
58
COLT Commercial, Inc. vs. CIR
- PETITIONER FILED ITS ADMINISTRATIVE CLAIM FOR ITS UNUTILIZED INPUT

VAT COVERING THE FIRST QUARTER OF TY 2013 ON JUNE 26, 2015.
-DUE TO INACTION OF THE BIR, PETITIONER FILED ITS PETITIONER FOR

REVIEW ON NOVEMBER 23, 2015. RESPONDENT ARGUES THAT THE PETITION
FOR REVIEW IS PREMATURE SINCE ITS ADMINISTRATIVE CLAIM IS STILL
PENDING FOR INVESTIGATION.
- THE COURT RULED THAT THE PETITIONER WAS FILED ON TIME, APPLYING
SECTION 112 (C) OF THE NIRC AND THE CASE OF ROHM APOLLO
SEMICONDUCTOR PHILS. VS. CIR (GR 168950).
59
COLT Commercial, Inc. vs. CIR
- THE COURT HELD THAT UPON THE LAPSE OF THE 120DAYS AND THERE IS
INACTION ON THE PART OF CIR, THE INACTION IS DEEMED DENIAL OF THE
CLAIM AND THE TAXPAYER MUST FILED ITS APPEAL WITHIN 30DAYS FROM
THE LAPSE OF THE 120- DAY PERIOD.
- THUS, PETITIONER TIMELY FILED ITS JUDICIAL CLAIM ON NOVEMBER 23,

2015.
- NONETHELESS, THE COURT DENIED PETITIONER’S PETITION FOR REVIEW

BECAUSE EVEN IF PETITIONER HAS MORE THAN ENOUGH EXCESS INPUT
VAT TO COVER ITS OUTPUT TAX LIABILITY, AND WERE CARRIED OVER TO
THE SUCCEEDING PERIODS, PETITIONER FAILED TO PROVIDE EVIDENCE
THAT ITS EXCESS INPUT VAT WAS DEDUCTED AS VAT REFUND /TCC
CLAIMED. 60

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REVENUE REGULATIONS

& COURT DECISIONS

1. PROFESSIONAL FEES, TALENT FEES, ETC. FOR SERVICES

2. PROFESSIONAL FEES PAID TO MEDICAL PRACTITIONERS (INCLUDES

3. INCOME PAYMENTS TO CERTAIN BROKERS AND AGENTS

4. COMMISSIONS OF INDEPENDENT AND/OR EXCLUSIVE SALES

B. IF THE GROSS INCOME FOR THE CURRENT YEAR IS MORE THAN P3

B. IF THE GROSS INCOME FOR THE CURRENT YEAR EXCEEDS P720,000

THE 10% WITHHOLDING TAX RATE SHALL BE APPLIED IN THE

IN THE CASE OF INDIVIDUAL PAYEES WITH ONLY ONE PAYOR, THE

INCOME PAYMENTS TO PARTNERS OF GENERAL

A. IF THE GROSS INCOME FOR THE CURRENT YEAR DOES

B. IF THE GROSS INCOME FOR THE CURRENT YEAR

AN INDIVIDUAL SELLER-INCOME EARNER/PAYEE MAY NOT BE

THE CONCERNED INDIVIDUAL SHALL EXECUTE AN INCOME

THE PAYEE’S SWORN DECLARATION SHALL BE SUBMITTED

THE SWORN DECLARATION SHALL BE EXECUTED BY THE

THE FOLLOWING SHALL BE CONSIDERED AS “DE MINIMIS”

- RICE SUBSIDY OF ₱2,000 OR ONE SACK OF 50KG. RICE PER

- MEDICAL CASH ALLOWANCE TO DEPENDENTS OF

- UNIFORM AND CLOTHING ALLOWANCE NOT EXCEEDING

- HOWEVER, THE BIR INSISTED THAT SLMC IS LIABLE TO PAY THE

- THE SC FOUND THAT SLMC IS NOT OPERATING EXCLUSIVELY FOR

THE SC CANCELLED THE ASSESSMENT FOR INTEREST, SURCHARGE

- SLMC PROTESTED THE ASSESSMENT AND EVENTUALLY ELEVATED

- THE ASSESSMENTS AROSE FROM DISCREPANCIES BETWEEN TAX

- THUS, THE TEN-YEAR PRESCRIPTIVE PERIOD FROM DISCOVERY OF

- PDI EXECUTED 3 WAIVERS WHICH IT LATER ON QUESTIONED FOR

- BIR INSISTED THAT THE 10-YEAR PERIOD APPLIES TO THE CASE

- THE IMPOSED 50% SURCHARGE AND INDICATED THAT THE TOTAL

- THE CTA CANCELLED THE ASSESSMENT ON THE GROUND OF

- THUS, THE BIR ELEVATED THE CASE TO THE SC.

-THE SC REITERATED THAT IN ORDER TO SERVE ITS PURPOSE, THE

- SUBSEQUENTLY, THE BIR ISSUED A PRELIMINARY ASSESSMENT

- THE BIR ASSESSED MEDICARD FOR DEFICIENCY VAT ON THE BASIS

- MEDICARD ALSO ARGUED THAT ITS VAT LIABILITY SHOULD BE BASED

- THE BIR ARRIVED AT THE ASSESSMENT USING THIRD-PARTY MATCHING.

- THE TAXPAYER CONTESTED THE ASSESSMENT, AND THE SAME WAS

- THE TAXPAYER FILED FOR RECONSIDERATION OF THE DECISION,

- IN OTHER WORDS, THE COMPUTATION OF INTERESTS USING THE TAX

- THE TAXPAYER WAS ASSESSED WITH DEFICIENCY

- UPON CONTESTING THE SAME, THE RTC FOUND THAT

- THE CTA, HOWEVER, REVERSED THE CONCLUSION OF THE RTC, SAYING

- THE PRIMARY PURPOSE, WITHOUT ACTUAL PROOF THAT THE HOLDING

- THE CTA DIVISION RULED TO CANCEL AND WITHDRAW THE ASSESSMENT

- ACCORDINGLY, THE ASSESSMENT WAS DECLARED VOID FOR LACK OF

- THE CTA DIVISION DENIED THE ALLEGATION BECAUSE THE

- THEREBY, ASSESSMENT TO PETITIONER WAS CANCELLED AND

- THE CTA RELIEVED THE TAXPAYER FROM PAYMENT OF THE DEFICIENCY

- THE TAXPAYER THEN WAS DEPRIVED OF THE DATE TO PAY THE

- THE ASSESSMENT WAS LIKEWISE CANCELLED FOR FAILURE TO

- TAXPAYER CLAIMED THAT THE CTA HAS NO AUTHORITY TO IMPOSE

- THE CTA HOWEVER DENIED IMPOSING ASSESSMENT BUT MERELY

- ACCORDINGLY, THE TAXPAYER’S CLAIM FOR REFUND OF FWT IS CLOSELY

- THE CTA HELD THAT THE PETITIONER'S SHOULDERING OF THE TAX

- HOWEVER, THIS DECISION WAS REVERSED WHEN CTA WAS CONVINCED

- THE TAXPAYER SEEKS THE ISSUANCE OF A TAX CREDIT CERTIFICATE (TCC)

- ALTHOUGH THE TAXPAYER FILED ITS ADMINISTRATIVE AND JUDICIAL

- ACCORDINGLY, ONLY A PORTION OF THE TAXPAYER’S CLAIM WAS

- ONE OF THE REQUISITES FOR CLAIMING CREDITABLE WITHHOLDING TAX

- THE COURT STATED THAT BY THE NATURE OF RETURNS AND DISCOUNTS,

- SALES RETURNS AND DISCOUNTS NEED NOT BE ORDINARY AND

- BIR ROO NO. 43 ISSUED A TAX VERIFICATION NOTICE (TVN) NO.

- DUE TO THE TRANSFER OF THE FIRST RO, A REVALIDATION NOTICE WAS