Competence. Integrity. Commitment.

COURT OF TAX APPEALS DECISIONS

EXEMPTION FROM RPT INVOLVES MIXED QUESTIONS OF LAW AND FACT; DISPUTE REQUIRES PAYMENT UNDER PROTEST. The proper procedure for contesting a real property tax (RPT) assessment depends on the nature of the issues raised. Where the dispute involves the correctness or reasonableness of the assessment, including claims of tax exemption that require factual determination, the taxpayer must first comply with the following administrative remedies: pay the assessed tax under protest, file a protest with the local treasurer, and, if denied, appeal successively to the Local Board of Assessment Appeals (LBAA), the Central Board of Assessment Appeals (CBAA), and finally the CTA En Banc. Direct recourse to the courts is allowed only where the assessment is illegal and the issues raised are purely legal, without requiring the evaluation of evidence. Thus,  the Court found that the taxpayer’s challenge – asserting that its electrical poles and distribution transformers were exempt from RPT because they were not taxable real property and were not exclusively used by the taxpayer – involved mixed questions of law and fact requiring factual evaluation by the LBAA. Despite receiving the notice of assessment and subsequent collection notices, the taxpayer neither paid the assessment under protest nor pursued the mandatory administrative remedies before the LBAA and CBAA. Instead, it directly filed an action before the Regional Trial Court, rendering the assessment final and executory for failure to exhaust administrative remedies. Accordingly, the CTA En Banc denied the petition and affirmed the CTA Division’s ruling. [Manila Electric Company (MECO) v. Municipality of Cordova, CTA EB No. 2957 (CTA AC No. 258), February 2, 2026]

WHILE REAL PROPERTY OWNED BY THE GOVERNMENT IS EXEMPT FROM RPT, THE CONCESSIONAIRE/OPERATOR IS LIABLE FOR RPT UNDER THE BENEFICIAL USE DOCTRINE BECAUSE IT HAD POSSESSION, CONTROL, AND EXCLUSIVE ECONOMIC BENEFIT FROM OPERATING THE TOLLWAY, AND NO LAW EXPRESSLY GRANTED IT A TAX EXEMPTION; TAX DECLARATION SHOULD BE ISSUED UNDER THE NAME OF THE OPERATOR. While real property owned by the Republic of the Philippines is generally exempt from RPT, the exemption does not apply when the beneficial use of the property has been granted, for consideration or otherwise, to a taxable person. The “beneficial use principle” imposes RPT liability on the taxable entity that actually possesses, controls, and derives economic benefit from the government property, regardless of legal ownership. Applying these principles, the Court held that the taxpayer, as the operator of the STAR Tollway under the Toll Concession Agreement (TCA) and Operations and Maintenance Agreement (OMA), had beneficial use of the subject property because it exercised possession and control over the tollway, collected and owned the toll revenues, and operated the facility for its own revenue-generating business. The Court rejected taxpayer’s argument that the public enjoyed the beneficial use, explaining that only paying toll road users could access the facility and that the taxpayer could deny entry to non-paying motorists, demonstrating its exclusive control and economic benefit. The Court further ruled that the government’s supervisory powers through the Toll Regulatory Board did not negate the taxpayer’s beneficial use, as such oversight merely ensured compliance with the concession agreements. Moreover, the taxpayer failed to identify any law granting it exemption from RPT, and the TCA and OMA expressly obligated the concessionaire and operator to pay all taxes unless specifically exempted by law, reinforcing the rule that tax exemptions must be clearly and expressly granted. Consequently, the City Assessor correctly issued the tax declaration in the taxpayer’s name, which requires government-owned property subject to beneficial use by a taxable person to be assessed in the name of the possessor or grantee. Accordingly, the Court sustained the RPT assessment and denied the petition [South Luzon Tollway Corporation v. City Assessor of Lipa, et al., CTA EB No. 2943 (CBAA Case No. L-145-2020), February 4, 2026]

AN INDEPENDENT POWER PRODUCER UNDER A BOT CONTRACT WITH A GOCC THAT HAD ALREADY PAID VALID RPT WAS ENTITLED TO A REFUND OF THE EXCESS RPT RESULTING FROM THE STATUTORY REDUCTION; NO SEPARATE WRITTEN REFUND CLAIM WAS REQUIRED. A taxpayer may file a written claim for refund or credit of RPT and interests only when an assessment is found to be illegal or erroneous and the tax is thereafter reduced or adjusted. In this case, the Supreme Court had already ruled that the RPT assessments imposed by the Province of Nueva Vizcaya against CE Casecnan Water and Energy Company, Inc. were valid, although the amount payable must be recomputed. The law provides for the reduction and condonation of RPT liabilities, including special levies, penalties, and interests, on properties, machinery, and equipment actually and directly used by independent power producers (IPPs) in the production of electricity under build-operate-transfer (BOT) contracts with government-owned or controlled corporations (GOCCs). Since CE Casecnan was an IPP that entered into a BOT agreement with the National Irrigation Administration (NIA), a GOCC, it was entitled to the benefits  of the law. The Supreme Court further held that the reduced RPT amount should be deducted from the amount already paid by CE Casecnan, even though the taxes had already been settled, because the law  does not distinguish between unpaid liabilities and taxes already paid at the time of its effectivity. Accordingly, the Supreme Court remanded the case to the Central Board of Assessment Appeals (CBAA) to determine the refundable amount, if any. The Court En Banc held that CE Casecnan was not required to file a separate written claim for refund under Section 253 of the LGC, because the refund arose directly from the final and executory judgment of the Supreme Court, and requiring another claim would result in the re-litigation of issues already conclusively resolved and would violate the doctrine of immutability of final judgments. The CBAA therefore correctly proceeded to compute the refund and determined that CE Casecnan was entitled to refund. The Court sustained the CBAA’s factual findings, recognizing that the CBAA was in the best position to evaluate the documents and records submitted by the parties, and found no grave abuse of discretion in its determination. (Province of Nueva Vizcaya v. CE Casecnan Water and Energy Company, Inc., CTA EB Case No. 2979, February 12, 2026)

A CITY’S AUTOMATIC INCREASE OF ITS LFT RATE FROM 50% OF 1% TO 75% OF 1% IN THE SAME REVENUE ORDINANCE WAS VOID BECAUSE TAX RATE INCREASES MUST BE MADE THROUGH A SUBSEQUENT ORDINANCE, NOT MORE THAN ONCE EVERY FIVE YEARS, AND BY NO MORE THAN 10% OF THE PREVAILING RATE, RESULTING IN THE CANCELLATION OF THE ADDITIONAL LFT ASSESSMENTS. While cities may impose a local franchise tax (LFT) of up to 75% of 1% of gross annual receipts, any increase in tax rates must comply with the law by being effected through a subsequent tax ordinance, imposed not more often than once every five years, and limited to a maximum 10% adjustment from the prevailing rate. Applying these principles, the CTA held that the City’s automatic increase of the LFT rate from 50% of 1% to 75% of 1%, contained in the same revenue ordinance, was ultra vires and invalid because the adjustment was not made through a separate ordinance and exceeded the allowable 10% increase from the existing tax rate. Consequently, the CTA reversed the RTC, declared the franchise tax adjustment void, and cancelled the additional LFT assessments (Manila Electric Company v. San Jose del Monte City et. al., CTA AC No. 329, November 12, 2025)

A MUNICIPALITY VALIDLY INCREASED THE LBT RATE ON CONTRACTORS FROM 0.55% TO 0.60% BECAUSE THE ADJUSTMENT WAS MADE SIXTEEN YEARS AFTER THE PREVIOUS ORDINANCE AND DID NOT EXCEED THE 10% INCREASE LIMIT PRESCRIBED BY THE LOCAL GOVERNMENT CODE. Local government units may adjust tax rates not more than once every five years, provided that the increase does not exceed ten percent (10%) of the rates fixed under the existing ordinance. Jurisprudence likewise clarifies that the 10% limitation is reckoned from the tax rate imposed under the immediately preceding valid tax ordinance. Applying these principles, the Court found that the Municipality of Pagbilao validly increased the local business tax (LBT) rate on contractors from 55% of 1% (0.55%) under the 2001 Revised Revenue Code to 60% of 1% (0.60%) under the 2017 Revised Revenue Code, as the ordinances were enacted sixteen years apart and the 0.05% increase was within the allowable 10% ceiling of the previous rate. Accordingly, the Court upheld the validity and legality of the contractor’s LBT rate under the 2017 Revised Revenue Code. (The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as Assistant Municipal Treasurer of the Municipality of Pagbilao v. Team Energy Corporation, CTA AC Case No. 350, March 13, 2026)

A NON-STOCK, NON-PROFIT MUTUAL BENEFIT ASSOCIATION PROVIDING WELFARE BENEFITS EXCLUSIVELY TO ITS MEMBERS IS NOT AN INSURANCE COMPANY OR OTHER FINANCIAL INSTITUTION UNDER THE INSURANCE CODE AND, ABSENT AN EXPRESS STATUTORY IMPOSITION, IS NOT SUBJECT TO LBT WARRANTING THE REFUND OF THE ERRONEOUSLY COLLECTED LBT. LBT may be imposed only on businesses operated for profit and on banks and other financial institutions, including insurance companies, as defined under applicable laws. The Insurance Code expressly excludes mutual benefit associations (MBAs) from the definition of insurance companies, and the Department of Finance likewise recognizes that MBAs are not insurance companies subject to LBT. Applying these provisions, the CTA found that the taxpayer is a duly organized non-stock, non-profit mutual benefit association whose primary purpose is to provide financial assistance, retirement, and welfare benefits to its members, who are personnel of public safety offices, and not to engage in commercial or profit-making insurance business. Its Articles of Incorporation and By-Laws established that its operations are conducted solely for the mutual benefit of its members and not as a means of livelihood or with a view to profit. Consequently, the taxpayer is neither an insurance company nor any other financial institution and cannot be subjected to LBT on its mutual benefit operations. The CTA further emphasized that the taxpayer was not invoking a tax exemption but merely asserting that no law expressly imposed LBT on mutual benefit associations, reiterating the settled rule that taxes cannot be imposed by implication and any ambiguity in tax imposition must be resolved in favor of the taxpayer. Finding no statutory basis for the assessment, the CTA reversed the RTC and ordered the City of San Juan to refund the erroneously collected LBT [(Public Safety Mutual Benefit Fund, Inc. v. San Juan City Treasurer (CTA Case No. 308, February 3, 2026)]

WHERE A CITY MERELY ISSUED BILLING STATEMENTS DURING BUSINESS PERMIT RENEWAL WITHOUT A VALID DEFICIENCY TAX ASSESSMENT, THE FILING OF ADMINISTRATIVE AND JUDICIAL CLAIMS WITHIN TWO YEARS FROM PAYMENT IS A PROPER REMEDY. Section 195 of the Local Government Code applies only when the local treasurer issues a valid notice of assessment for deficiency taxes, which must state the nature of the tax, the amount of deficiency, and the corresponding surcharges, interests, and penalties. Absent such a valid assessment, the taxpayer’s remedy is governed by Section 196, which allows the filing of an administrative and judicial claim for the refund of taxes erroneously or illegally collected within two years from payment. Applying these principles, the Court held that the Billing Statements issued by the Business Permits and Licensing Office during the renewal of respondent’s business permits were not notices of assessment under Section 195 because they merely reflected the business taxes and regulatory fees due, without assessing any deficiency tax, surcharge, interest, penalty, or demand for payment. The city’s own witness likewise admitted that no notices of assessment were issued. Consequently, the taxpayer was not required to file a protest under Section 195 but properly availed itself of the refund remedy under Section 196 by filing its administrative and judicial claim, both within the applicable two-year prescriptive period. Accordingly, the Court sustained the timeliness of respondent’s refund claims and ruled that Section 196, rather than Section 195, governed the case. (Atty. Voltaire Enriquez, in his capacity as City Treasurer of Taguig v. Dacon Corporation, CTA AC No. 321, November 6, 2025; see also Royal Cargo, Inc. v. City Treasurer of Parañaque, CTA AC No. 337, Civil Case No. 2021-010, February 18, 2026)

A HOLDING COMPANY WHOSE BUSINESS IS MERELY OWNING SHARES AND RECEIVING DIVIDENDS IS NOT A NON-BANK FINANCIAL INTERMEDIARY SUBJECT TO LBT; A LOCAL ORDINANCE TAXING ITS DIVIDEND INCOME IS VOID. Local government units are authorized to impose LBT on dividend income only when received by banks and other financial institutions, including non-bank financial intermediaries (NBFIs). A holding company does not become an NBFI merely because it owns shares or receives dividends from its investments; to qualify as an NBFI, it must be authorized to perform quasi-banking functions and regularly engage in financial intermediary activities. Applying these principles, the Court found that the taxpayer’s Articles of Incorporation established that its primary purpose was to own and hold shares of stock and manage its subsidiaries, not to perform quasi-banking or financial intermediary functions. Accordingly, the taxpayer was a holding company, not a bank or NBFI, and its receipt of dividend income did not subject it to LBT. The Court further ruled that Taguig Ordinance, which imposed LBT on dividend income received by holding companies, was invalid because it expanded the taxing authority granted under the Local Government Code and therefore contravened the statute. As local government units possess only delegated taxing powers, they cannot impose taxes beyond those authorized by Congress. Consequently, the Court affirmed the refund of the LBT erroneously collected on  the taxpayer’s dividend income. (Atty. Voltaire Enriquez, in his capacity as City Treasurer of Taguig v. Dacon Corporation, CTA AC No. 321, November 6, 2025)

THE CTA HAS NO APPELLATE JURISDICTION OVER CHALLENGES TO A REGULATORY ENVIRONMENTAL FEE BECAUSE AN EXACTION IMPOSED PRIMARILY TO FUND WATERSHED PROTECTION UNDER A CITY’S POLICE POWER IS A REGULATORY FEE – NOT A LOCAL TAX – EVEN IF IT INCIDENTALLY GENERATES REVENUE. The Court of Tax Appeals has appellate jurisdiction only over decisions of Regional Trial Courts involving local tax cases. Whether an exaction constitutes a tax or a regulatory fee depends on its primary purpose – if imposed primarily to generate revenue, it is a tax; if imposed principally to regulate under the police power, any revenue generated is merely incidental. Applying these principles, the Court held that the Environmental Tax under a Davao City Ordinance was not a local tax but a regulatory fee, as its primary purpose was to fund the protection, conservation, and management of the city’s watershed pursuant to the local government’s police power and environmental mandates under the Local Government Code. Since the exaction was regulatory rather than revenue-raising, it did not constitute a local tax. Consequently, the CTA lacked jurisdiction to entertain the appeal and dismissed the petition for lack of jurisdiction (Dole Philippines, Inc. – Stanfilco Division v. The Sangguniang Panlungsod of the City of Davao, et. al., CTA AC No. 325, March 11, 2026)

A LOCAL GOVERNMENT UNIT CANNOT REFUSE TO ACCEPT LBT PAYMENTS FOR FAILURE TO PRESENT PROOF OF UPDATED RPT PAYMENT. The Local Government Code does not require payment of RPT as a prerequisite to the payment of LBT. Courts cannot read into the law conditions that are not expressly provided. Likewise, the LGU’s Revenue Code merely prescribes the requirements for the issuance of a business permit and do not authorize local officials to refuse acceptance of LBT payments due to unpaid RPT. Applying these principles, the Court held that the municipality had no legal basis to reject the taxpayer’s LBT payments solely because of the absence of proof of updated RPT payment; consequently, the surcharges and penalties imposed on such refusal were invalid, and the trial court correctly ordered their refund (The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as Assistant Municipal Treasurer of the Municipality of Pagbilao v. Team Energy Corporation, CTA AC Case No. 350, March 13, 2026)

A TAXPAYER MAY DIRECTLY CHALLENGE THE VALIDITY OF AN INCREASED LBT RATE IN COURT WITHOUT FIRST APPEALING TO THE SECRETARY OF JUSTICE WHEN THE ISSUE IS A PURE QUESTION OF LAW INVOLVING COMPLIANCE WITH THE LOCAL GOVERNMENT CODE, MAKING THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES INAPPLICABLE. The doctrine of exhaustion of administrative remedies does not apply when the issue raised is a pure question of law, as the interpretation and application of laws are matters within the exclusive competence of the courts. Jurisprudence recognizes that a taxpayer need not first exhaust administrative remedies, such as an appeal to the Secretary of Justice, where the controversy does not involve disputed facts but solely the determination of what the law provides under established circumstances. Applying this principle, the Court held that taxpayer was not barred from questioning the validity of the increased LBT rate under the Revised Revenue Code because the issue involved only the legal question of whether the increase complied with the limitations imposed by the Local Government Code. Since no factual matters were in dispute, the Court validly exercised jurisdiction despite the taxpayer’s failure to appeal before the Secretary of Justice (The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as Assistant Municipal Treasurer of the Municipality of Pagbilao v. Team Energy Corporation, CTA AC Case No. 350, March 13, 2026)

ALTHOUGH LBT ACCRUES ON JANUARY 1, AN INCREASED TAX RATE UNDER A NEW REVENUE ORDINANCE APPLIES ONLY FROM THE FIRST DAY OF THE SUCCEEDING QUARTER AFTER THE ORDINANCE’S EFFECTIVITY, ENTITLING THE TAXPAYER TO A REFUND OF THE EXCESS LBT COLLECTED USING THE HIGHER RATE BEFORE IT BECAME EFFECTIVE. While local taxes generally accrue on the first day of January, any new tax or adjustment in tax rates takes effect only on the first day of the quarter following the effectivity of the ordinance imposing such change. Applying this rule, the Court held that although taxpayer’s LBT for Calendar Year 2018 was initially assessed under the 2001 Revised Revenue Code, the enactment of the 2017 Revised Revenue Code on 21 May 2018 required the application of the new contractor’s tax rate of 60% of 1% beginning only in the third and fourth quarters of 2018, while the first and second quarters remained subject to the 2001 rate. Recomputing the taxpayer’s tax liability using the proper quarterly rates, the Court found that the correct LBT for each of the third and fourth quarters resulted in an overpayment. Consequently, while affirming the RTC’s ruling that the 2017 Revised Revenue Code governed the latter half of 2018, the Court modified the computation and ordered the municipality to refund the excess LBT. (Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as Assistant Municipal Treasurer of the Municipality of Pagbilao v. Team Energy Corporation, CTA AC Case No. 350, March 13, 2026)

REVENUE ISSUANCES

Revenue Memorandum Circular No. 084-2026, July 2026.

The BIR clarifies certain provisions of Revenue Regulations No. 004-2026, prescribing the guidelines and procedures for the availment of the one-time abatement of taxes and/or penalties for micro taxpayers

Certificate of Existence of Outstanding Tax Liability/ies	Controlling document to determine the liability/threshold; to be requested from Issuing Offices (i.e. RDO for open stop-filer cases)
Mixed income earners	May avail of abatement
Taxpayer classification	Must be a Micro Taxpayer
Place of filing	RDO where Micro Taxpayer is registered (BIR Form No. 2121); RDO of head office (for multiple branches)
Pending compromise settlement and abatement of penalties	Taxpayer can still apply for abatement Taxpayer should withdraw the pending compromise settlement Administrative appeals against PAN, FAN/FLD or FDDA not deemed withdrawn
Covered taxes	Taxpayer statutorily liable for the tax sought to be abated (e.g. seller for CGT, donor for DST) is classified as a Micro Taxpayer The liability is covered under Section 4 of RR No. 004-2026; and The covered liability as of December 31, 2025, as certified by the issuing office, does not exceed Php80,000.00 RR No. 004-2026 does not distinguish as to the type of transaction involved, provided that the application satisfies the Php80,000.00 threshold per taxable year and all other requirements under the said RR
Covered penalties	All types – interests, surcharges, open case penalties, compromise penalties. For purposes of the Php80,000.00, unpaid basic taxes and compromise penalties shall be included in the computation while surcharges and interests shall be excluded therefrom
RATE cases and Fraud cases	General rule: Not covered Exception: if allowed by the CIR or his duly authorized representative.
Multiple years involved	Can be abated separately Deadline should fall as of December 31, 2025 Php80k threshold applies per year (i.e., you can apply 5 applications for different taxable years if each of the 5 years does not exceed Php80k)
Unfiled returns	No need to file unfiled returns Covered liabilities are cancelled and considered settled upon issuance of the Certificate of Availment and completion of the prescribed procedures
Regularizing the records (for micro taxpayers who ceased operations but wish to update and rectify registration/records)	Can be abated Threshold should be observed
Surcharge and interest	Surcharge and interest not covered in the computation; but considered abated
All taxes per taxable year	Threshold is not per tax type Taxpayer cannot choose which tax type to abate
Reducing basic tax to meet the threshold by payment	Partial payment to be applied first against interests, surcharge and compromise penalties Payment is made on or before December 31, 2025 No refund for partial payment Scenario: taxpayer made partial payment even if original basic tax liability is lower than Php80K and covered by the program
Reasons for denial	Taxpayer’s classification; timeliness; out of scope; out of coverage; threshold; non-payment of abatement fee; incomplete application; lack of required approval for RATE cases; and material misrepresentation
Non submission of proof of payment within 5 days	Not a ground for denial Application is void but can be refiled
Application processed after December 31, 2026	Still timely as long as application is filed on or before December 31, 2026
No collection enforcement upon filing of application	Suspended until application is denied, voided and withdrawn
Certificate of Availment	Serves as basis for the preparation of Authority to Cancel Assessment To be issued within 5 working days from receipt of the proof of payment Closes the covered cases for the taxable year Not a tax clearance May support application for closure/cancellation of business registration but subject to proper application
No more audit	No field audit or new investigation by reason of application for the taxable year; application is evaluated on the documents submitted

BIR DEADLINES FROM AUGUST 3, 2026 TO AUGUST 9, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
AUGUST 5, 2026	SUBMISSION – Summary Report of Certification issued by the President of the National Home Mortgage Finance Corporation (NHMFC). Month of July 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 2000 (Monthly Documentary Stamp Tax Declaration/Return). Month of July 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 2000-OT (Documentary Stamp Tax Declaration/Return One Time Transactions). Month of July 2026
AUGUST 8, 2026	SUBMISSION – All Transcript Sheets of Official Register Books (ORBs) used by Dealers/Manufacturers/Toll Manufacturers/Assemblers/Importers of Alcohol Products, Tobacco Products, Petroleum Products, Non-Essential Goods, Sweetened Beverage Products, Mineral Products & Automobiles. Month of July 2026 e-SUBMISSION – Monthly e-Sales Report for All Taxpayers using CRM/POS and/or Other Similar Business Machines whose last digit of 9-digit TIN is Even Number. Month of July 2026

COURT OF TAX APPEALS DECISIONS

PAGCOR LICENSEES OPERATING IN THE CLARK FREEPORT ZONE ARE SUBJECT TO THE SPECIAL 5% TAX ON GROSS INCOME EARNED (3% NATIONAL GOVERNMENT, 2% LGU) UNDER THE GOVERNING CFZ LAW, RATHER THAN THE GENERAL 5% FRANCHISE TAX UNDER THE PAGCOR CHARTER, MAKING THE CONTRARY PORTION OF RMC NO. 32-2022 NULL AND VOID; SEE DISSENTING OPINION. PAGCOR is subject to a 5% franchise tax on gross revenues or earnings from its gaming operations in lieu of all other national and local taxes, and this tax exemption extends to its licensees and contractees with respect to income derived from casino operations; however, PAGCOR licensees located within a special economic zone or freeport zone are likewise entitled to the special tax regime applicable to registered business enterprises in that zone. Applying these principles, although the PAGCOR Charter extends the 5% franchise tax regime to PAGCOR licensees, taxpayers here were registered businesses operating within the Clark Freeport Zone (CFZ), whose governing law grants registered business enterprises exemption from national and local taxes in exchange for a 5% tax on gross income earned (GIE), with 3% remitted to the National Government and 2% to the relevant LGU. The CFZ tax regime is a special law specifically applicable to businesses located in the zone and therefore prevails over the general 5% franchise tax regime under the PAGCOR Charter. The taxpayer’s Certificates of Registration and Tax Exemption likewise confirmed their entitlement to the 5% GIE regime. Applying the 5% franchise tax to PAGCOR licensees in the CFZ, while subjecting other registered businesses in the same zone to the 5% GIE tax, would defeat the legislative intent to provide uniform tax incentives to businesses located in the country’s ecozones and freeport zones. Thus, the assailed portion of RMC No. 32-2022, which provided that the gaming income of PAGCOR licensees in ecozones or freeport zones remains subject to the 5% franchise tax instead of the applicable 5% GIE regime, is null and void for being inconsistent with the governing law; accordingly, the taxpayers’ gaming income remained subject to the 5% tax on gross income earned, and not the 5% franchise tax. Dissenting Opinion:  The 5% franchise tax applies to the gaming revenues of PAGCOR licensees in lieu of other national and local taxes, even where the licensee operates in an ecozone or freeport. RMC No. 32-2022 merely clarified that the gaming income of PAGCOR licensees remains subject to the 5% franchise tax and not to the GIT, ITH, or corporate income tax, even if the licensee is located in an ecozone or freeport. The PAGCOR Charter prevails over the BCDA incentives regime, as it is the special law specifically governing the gaming industry. Lastly, the PAGCOR Charter governs the tax treatment of gaming income; while The BCDA regime may continue to apply to non-gaming income or matters not specifically covered by the PAGCOR Charter [BIR et al. v. BB International Leisure and Resort Development Corporation, et al., CTA EB No. 2975 (CTA Case No. 10841), February 23, 2026]

A CONDOMINIUM CORPORATION IS NOT SUBJECT TO LBT ABSENT PROOF OF A PROFIT-ORIENTED BUSINESS, AS ASSOCIATION DUES AND ASSESSMENTS COLLECTED SOLELY TO FUND THE MAINTENANCE AND ADMINISTRATION OF COMMON AREAS ARE NOT COMMERCIAL REVENUES; THUS, THE TAXPAYER WAS NOT A TAXABLE CONTRACTOR UNDER THE TAGUIG REVENUE CODE. The liability for Local Business Tax (LBT) presupposes that the taxpayer is engaged in “business,” meaning trade or commercial activity regularly pursued as a means of livelihood or with a view to profit; therefore, the mere receipt of money or collection of assessments does not, by itself, establish that an entity is engaged in a taxable business. Here, the taxpayer, a condominium corporation organized under the Condominium Act, was legally restricted to holding the common areas, managing and administering the condominium project, and undertaking acts necessary, incidental, or convenient to those purposes. Its Articles of Incorporation and By-laws were consistent with these statutory limitations and did not authorize activities directed toward the pursuit of livelihood or profit. The association dues, membership fees, and other assessments collected from unit owners were likewise not revenues earned from a commercial enterprise or consideration for services rendered for a fee; rather, they constituted a common fund used to pay for the maintenance, repair, improvement, reconstruction, and administrative expenses of the condominium project and common areas for the benefit of the unit owners. Consequently, the taxpayer could not be treated as a contractor under the Taguig Revenue Code merely because it collected these assessments, and the LGU failed to present sufficient evidence that the taxpayer was engaged in any other profit-oriented activity. The Supreme Court has recognized that condominium corporations generally do not engage in trade or business when managing and maintaining common areas for the benefit of unit owners and are therefore generally not subject to local business taxation, irrespective of a local ordinance attempting to impose such tax. Although a condominium corporation may potentially become liable for LBT if it is proven to have engaged in activities for profit, no such activities were alleged or established in this case; the assessment was based solely on the collection of assessments used to defray authorized condominium expenses.  [City Treasurer of Taguig City v. Cedacrest Condominium Corporation, CTA EB No. 3061 (RTC SCA No. 291), March 31, 2026; see also City Treasurer of Taguig City v.  Rosewood Pointe Residences Condominium Corporation, CTA EB No. 3008, (SCA Case No. 298 and MeTC Civil Case No. 22-4575) November 27, 2025]

A HOLDING COMPANY THAT MERELY OWNS SHARES AND RECEIVES DIVIDENDS, WITHOUT BSP AUTHORIZATION OR REGULAR FINANCIAL-INTERMEDIARY ACTIVITIES, IS NOT A BANK, FINANCIAL INSTITUTION, OR QUALIFIED NBFI SUBJECT TO LBT ON GROSS RECEIPTS UNDER THE LGC; ORDINANCE CANNOT EXPAND THE LGU’S DELEGATED TAXING POWER. An LGU may impose LBT on the gross receipts of banks and other financial institutions, including qualified non-bank financial intermediaries (NBFIs), but the taxing power of an LGU is merely delegated and must be strictly construed, with any doubt resolved against the municipality. LGC permits the imposition of LBT on the specified gross receipts of banks and other financial institutions, while LGU also defines the entities covered, and it generally prohibits LGUs from imposing income taxes, except on banks and other financial institutions. An entity is considered an NBFI only if the requisites for such classification concur, including BSP authorization to perform quasi-banking functions, principal functions involving the lending, investing, or placement of funds or evidence of indebtedness or equity, and the regular and recurring performance of recognized financial intermediary activities. Applying these rules, the taxpayer’s ownership of shares in a corporation and receipt of dividends did not make it a bank, financial institution, or NBFI because taxpayer was not authorized by the BSP to perform quasi-banking functions and did not regularly or recurringly receive funds from one group for lending or investment with another, principally acquire debt or equity securities using funds received, or borrow against, lend on, or trade in debt or equity securities. The taxpayer was instead a holding company, whose principal purpose was to hold shares in another company to control its policies, and any investment activity was merely incidental to that purpose. The Court therefore distinguished the taxpayer  from financial intermediaries that actively deal with public funds. Consequently, the assessment of LBT on the taxpayer’s dividends had no legal basis, and the local ordinance could not expand the taxing authority granted to the City by the LGC. [Atty. Voltaire Enriquez in his capacity as the City Treasurer of Taguig City v. La Lumiere Holdings, Inc., CTA AC No. 346, December 16, 2025; see also Enriquez v. Rice Creek Holdings, Inc., CTA AC NO 322 (RTC Civil Case No. 663) November 12, 2025, Enriquez v. Chrismon Investments, Inc., CTA AC No 323, February 4, 2026]

REVENUE ISSUANCES

Revenue Memorandum Order No. 14-2026

Pursuant to the Bureau of Internal Revenue’s authority to regulate tax administration, Revenue Memorandum Order (RMO) No. 14-2026 partially revokes certain procedural provisions of RMO No. 4-2025 (particularly Section E) regarding the verification and handling of Cannot Be Located (CBL) taxpayers.

APPLICATION OF FACTS

Revenue Officers (ROs) must immediately exclude the revoked RMO No. 4-2025 procedures when auditing, verifying, or handling taxpayers flagged as absent or missing from their registered business addresses.

REVOKED SECTION

Validate the taxpayer’s non-existence/untraceability and secure supporting certifications and documents. If validation is negative and the taxpayer has no distrainable or leviable property, recommend classification as a “Suspense Account” (11-F-A). Approved CBL dockets remain with the concerned office and in the AR/DA Inventory List for continuing monitoring. Dockets tagged 11-F-A may be recommended for write-off after three (3) consecutive negative validations, with at least twelve (12) months between qualifying validations. The initial validation is not counted. Upon approval of the write-off recommendation and completion of validation, issue an Authority to Cancel Assessment (ATCA). Physical dockets must be kept by the RMD/AHRMD for seven (7) years. If the taxpayer resurfaces, verify the reporting office, require the prescribed Affidavit of Undertaking, update or untag the taxpayer’s registration, and continue collection remedies. Any ATCA previously issued shall be revoked, if applicable. No taxpayer may be reported as CBL, and no ATCA may be issued, without the required review and approval. Written-off dockets must be microfilmed and retained for future reference.

REVENUE ISSUANCES

Revenue Memorandum Order No. 015-2026

Under the tax authority’s power to streamline administrative procedures, the Bureau of Internal Revenue (BIR) reiterates and standardizes the guidelines for processing Freedom of Information (FOI) requests to ensure uniform implementation and eliminate processing delays.

COVERED ISSUANCE	All requests to any office under EO No. 2 s. 2016
STANDARD PROCEDURE	– FOI Receiving Officer will be designated (initial point of contact for FOI request) – FOI Request form to be accomplished. Purpose must be stated (general purpose i.e. for information, for research not allowed)
GROUNDS TO DENY REQUEST	Incomplete request Material misrepresentation BIR’s lack of custody of the information Vexatious request Out of scope request
FOI DECISION MAKER WILL DENY OR APPROVE	Grounds to deny (other than the above): 60-day period to provide clarification lapsed Information is covered by Executive privilege Privileged information relating to National Security, Defense or Relations: Information related to Law enforcement and protection of public and personal safety Confidential information Prejudicial premature disclosures

Revenue Memorandum Circular No. 75-2026 

Under the tax authority’s power to streamline administrative procedures, the Bureau of Internal Revenue (BIR) consolidates and clarifies the guidelines for processing the One-Time Transaction (ONETT) Computation Sheet (OCS) and the electronic Certificate Authorizing Registration (eCAR) to ensure uniform implementation and improve the ease of doing business. 

COVERED ISSUANCE	ONETT Transactions Sale of Real Property Considered as Capital and Ordinary Asset Sale, Transfer or Assignment of Stocks Not Traded in the Stock Exchange Estate
MODES OF FILING AND PAYMENT OF RELATED TAXES	Filing: Electronically; manual, if electronic mode is unavailable Payment – manual or electronic, unless eFPS filer (except not available); for manual payment – any AABs
WHERE TO PROCESS ECAR	Sale of real property (capital or ordinary) – where property is located Shares not traded in local stock exchange – residence of the transferor-individual as indicated in the BIR system; place of registration for non-individual Donation – same with transfer of shares not listed in stock exchange Estate – where Estate of the TIN is issued; if deceased has registered business – where business is registered (because it is where the TIN was secured); if no registered business, RDO where administrator or heirs intend to apply for the issuance of eCAR
INSTANCES OF ANTEDATED SALE	Documents dated before September 7, 1979 or effectivity of Capital Gains Tax Law Documents dated prior to effectivity of CWT regulations Documents dated prior to effectivity of current zonal values Proof of no ante-dating: cancelled checks, invoices, CTS, certification from court or notarial archives
WHOSE TIN IS REQUIRED	Sale of property – transferor and transferee Donation – Donor and Donee Estate – Deceased, heirs, administrator (if any) Spouse’s TIN not required, except when property sold or donated is conjugal or community or spouse is a party to the transaction (buyer or donee)
LOST eCAR	Taxpayer to request for reprinting of the same eCAR. Taxpayer to submit written request, original copy of the supporting documents and payment of certification fee.
PROPERTIES ACQUIRED BY BANKS VIA FORECLOSURE SALE	Considered ordinary asset Banks not considered habitually engaged in the real estate business for purposes of determining the withholding tax rate
REAL PROPERTIES SOLD BY REAL ESTATE LESSORS	Automatically deemed ordinary asset (all properties for lease/rent or being offered for lease/rent or for use in trade or business)
NO DELAY OF eCAR RELEASE IF VAT IS NOT YET PAID UPON APPLICATION	No proof of VAT payment is required. eCAR processing office to inform RDO having jurisdiction over the seller to verify and assess VAT, if warranted.
BUYER ASSUMES CGT	Amount of tax should not be added in the selling price for purposes of determining the CGT Tax Base; computation is based on higher between Selling price or FMV, whichever is higher.
DST ON INSTALLMENT SALE COVERED WITH CTS	DST to accrue upon execution of DOAS; but tax base is at the time when CTS was executed.
DACION EN PAGO	Ordinary asset – Taxes applicable: CWT, VAT and DST Capital asset – Taxes applicable: CGT and DST
INSPECTION REQUIRED	Conflict of data as to the existence of the improvement in documents presented Taxpayer’s invocation of special law that will result in payment of a lesser tax To be conducted within the processing period and should not delay the issuance of eCAR
FORECLOSURE SALE	CGT is due 30 days from expiration of redemption period/judicial confirmation/registration of the certificate of sale. Judicial foreclosure involving Bank-mortgagee – redemption period is 1 year from registration of certificate of sale; if non-bank – CGT is due 30 days from confirmation of the foreclosure of sale by the court. Extrajudicial foreclosure – redemption period is 1 year from registration of the certificate of sale. Extrajudicial foreclosure where mortgagor is a juridical person and mortgagee is a bank – redemption period shall last until the registration of the certificate of sale, which shall in no case be later than 3 months after the foreclosure, whichever is earlier. CWT – 10 days (following end of the month in which the redemption period expires, judicial confirmation of the foreclosure sale, or registration of the certificate of sale, as the case may be). DST – 5 days (following the end of the month; reckoning point – same as CWT).
PRIOR CANCELLATION OF DECEDENT’S TIN BEFORE ESTATE PROCESSING	Not required; can be accomplished parallel to the processing of the estate; issuance of estate TIN is not contingent on the cancellation of the TIN of the decedent with business. Estate of deceased person is issued a TIN separate from TIN of the deceased person. Closure of decedent’s business with BIR is not required prior to the filing of estate tax return.

BIR DEADLINES FROM JULY 20, 2026 TO JULY 26, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
JULY 20, 2026	SUBMISSION – Quarterly Information on OCWs or OFWs Remittances Exempt from DST furnished by the Local Banks & Non-Bank Money Transfer Agents – For the Quarter ending June 30, 2026 SUBMISSION – Quarterly Report of Printer – For the Quarter ending June 30, 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 1600 WP (Remittance Return of Percentage Tax on Winnings and Prizes Withheld by Race Track Operators) – eFPS & Non-eFPS Filers. Month of June 2026
JULY 25, 2026	SUBMISSION – Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers. Non-eFPS Filers – For the Quarter ending June 30, 2026 SUBMISSION – Sworn Statement of Manufacturer’s or Importer’s Volume of Sales of each particular Brand of Alcohol Products, Tobacco Products and Sweetened Beverage Products – For the Quarter ending June 30, 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 2550Q (Quarterly Value-Added Tax Return). eFPS & Non-eFPS Filers – For the Quarter ending June 30, 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 2551Q (Quarterly Percentage Tax Return). eFPS & Non-eFPS Filers – For the Quarter ending June 30, 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 2550-DS (Value-Added Tax (VAT) Return for Nonresident Digital Service Provider). For the Quarter ending June 30, 2026 e-FILING & PAYMENT (Online/Manual) – BIR Form 2550-DS (Value-Added Tax (VAT) Return for Nonresident Digital Service Provider). For the Quarter ending June 30, 2026

Dear Valued Clients:

We hope this message finds you well.

Please be advised that Vince Noel Lupango is no longer connected with Dumlao Law Offices effective December 22, 2025, and has no affiliation whatsoever with the Firm after the said date. Any communication or transaction made by him after said date is undertaken solely in his personal capacity. Accordingly, the Firm shall not be responsible for, nor be bound by, any such communication or undertaking.

Should Mr. Lupango, or any of our former staff now under his employ, contact you or any member of your organization after the said date, we would appreciate it if you could kindly inform us so that we may take the appropriate action.

We sincerely appreciate your continued trust and confidence in our Firm.

Thank you for your continued support.

Sincerely,

Dumlao & Co.

COURT OF TAX APPEALS DECISIONS

NEW LOA IS REQUIRED IN CASE OF RE-ASSIGNMENT OF AUDIT TO ANOTHER RO; MOA IS NOT SUFFICIENT; BIR CANNOT VALIDLY REPRODUCE ITS FINDINGS IN THE FLD/FAN WITHOUT ADDRESSING THE TAXPAYER’S EXPLANATIONS. Only revenue officers specifically authorized under a valid Letter of Authority (LOA) may examine a taxpayer’s books of account, and any reassignment of the audit to another Revenue Officer (RO) must be covered by a new LOA issued by the Commissioner of Internal Revenue (CIR) or a duly authorized official. The same provisions likewise mandate that the Preliminary Assessment Notice (PAN), Formal Letter of Demand/Final Assessment Notice (FLD/FAN), and Final Decision on Disputed Assessment (FDDA) state the factual and legal bases of the assessment and meaningfully address the taxpayer’s explanations and evidence; otherwise, the assessment is void for violating due process. Applying these rules, the Court held that although the original LOA authorized ROs Rosario Arriola and Sheila Samaniego to conduct the audit, the actual examination was undertaken by RO Abigail Cayabyab pursuant only to a MOA, without the issuance of the required new LOA, rendering the audit unauthorized and the resulting assessments void. The Court further found that the BIR failed to observe due process because, despite the taxpayer’s timely protest to the PAN, the FLD/FAN merely reproduced verbatim the findings and computations contained in the PAN, without discussing or addressing the taxpayer’s explanations, defenses, and supporting documents, thereby showing that the protest was not genuinely evaluated. [Commissioner of Internal Revenue v. NCR Corporation Philippines, CTA EB No. 2967 (CTA Case No. 10498), March 23, 2026; see also Nationwide Health Systems Baguio, Inc. v. Commissioner of Internal Revenue (CTA Case No. 10686) November 7, 2025]

BIR’S FAILURE TO PROVE THAT PERSONAL SERVICE WAS IMPRACTICABLE BEFORE RESORTING TO SUBSTITUTED SERVICE AND FAILURE TO PRESENT THE REQUIRED WITNESSES AND PROOF OF MAILING CONSTITUTE A DENIAL OF DUE PROCESS. The Tax Code requires strict compliance with the prescribed modes and procedures for the valid service of assessment notices. Personal service is the primary mode, while substituted service or service by mail may only be resorted to when personal service is not practicable, subject to specific requirements. Here, the Court found that the Bureau of Internal Revenue (BIR) failed to establish that personal service of the PAN and FLD/FAN was impracticable, relying merely on the statement of the building guard without conducting reasonable verification. Further, the BIR failed to prove valid service by mail of the PAN as it presented only an LBC official receipt, which did not sufficiently identify the document sent, and failed to submit the required proof of delivery and sworn written report. Likewise, the substituted service of the PAN and FLD/FAN was invalid because the BIR failed to bring a barangay official and two disinterested witnesses to personally observe and attest to the taxpayer’s absence, as required by the regulations, and the notices were instead received by barangay staff member who was not shown to be a proper barangay official. Accordingly, the failure to strictly comply with the requirements for service deprived the taxpayer of due process, rendering the PAN, FLD/FAN, and the resulting Warrant of Distraint and/or Levy void and unenforceable. (Sabre Travel Network Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10848, November 4, 2025)

NO VIOLATION OF DUE PROCESS IF BIR SIGNIFICANTLY REDUCED ASSESSMENT. Administrative due process in tax assessment proceedings requires that the taxpayer be properly notified of the assessment, given a meaningful opportunity to present defenses and supporting evidence, and that the BIR duly consider such submissions and render a decision based on the evidence presented. Due process does not require that the taxpayer’s arguments be accepted, but only that the taxpayer’s defenses be fairly evaluated and that the administrative body explain the basis of its conclusions. Applying these principles, the Court En Banc held that the taxpayer was not denied due process despite its claim that the CIR allegedly ignored its protest and supporting documents until the issuance of the FDDA. The Court found that after the taxpayer filed its protest against the FAN, the CIR evaluated its arguments and evidence and issued the FDDA explaining the basis for sustaining or rejecting the taxpayer’s defenses. The fact that the CIR substantially considered taxpayer’s submissions only at the FDDA stage did not invalidate the assessment proceedings, as the taxpayer was afforded an opportunity to be heard and its defenses were ultimately considered. Moreover, the evaluation of taxpayer’s protest resulted in a significant reduction of the basic deficiency VAT assessment, demonstrating that the CIR did not disregard the taxpayer’s submissions but instead took them into account in resolving the assessment. Accordingly, the Court ruled that the requirements of administrative due process were substantially complied [CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. CTA Case No. 10221), November 12 2025]

A STATEMENT THAT INTEREST AND THE TOTAL AMOUNT DUE SHALL BE ADJUSTED IF PAYMENT IS MADE AFTER THE DUE DATE DOES NOT RENDER THE ASSESSMENT VOID. A taxpayer must be informed of the specific amount of tax assessed and be given a definite period within which to pay the assessed liability. In determining the validity of an assessment, jurisprudence provides that an assessment is void when it fails to indicate a fixed and determinate amount of tax due and does not provide a specific due date for payment, thereby leaving the taxpayer uncertain as to the extent of its obligation. In the present case, however, the Court En Banc ruled that the FAN and the Amended Assessment Notice attached to the FDDA substantially complied with these requirements. Both notices clearly stated the basic deficiency VAT assessed, as well as the corresponding total amount due and the specific deadlines for payment, thereby providing the taxpayer with sufficient notice of its tax liability. The Court further held that the statement in the notices that the interest and total amount due would be adjusted if payment was made beyond the specified date did not make the assessment indefinite or uncertain. Such statement merely recognized that interest continues to accrue until full payment and that the final amount payable may increase due to the taxpayer’s delay in settlement. Hence, the FAN and FDDA issued against the taxpayer constituted a valid demand for payment containing a definite tax liability and due date, thereby complying with the requirements of administrative due process. [CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. CTA Case No. 10221), November 12 2025]

IN CASE OF APPEAL DUE TO DEEMED DENIAL OF PROTEST, NO NEW 180-DAY PERIOD COMMENCES UPON THE FILING OF A REQUEST FOR RECONSIDERATION WITH THE OFFICE OF THE COMMISSIONER. A taxpayer who receives a FLD/FAN may protest the assessment and, if the protest is not acted upon within 180 days from the filing of the request for reconsideration or from the submission of complete supporting documents in case of a request for reinvestigation, may either appeal to the CTA within 30 days from the lapse of the 180-day period or await the final decision on the protest and appeal within thirty (30) days from receipt thereof. However, the 180-day period applies only to the initial administrative protest against the FLD/FAN and does not create a separate or fresh 180-day period for an administrative appeal or request for reconsideration filed after the issuance of a decision by the Commissioner’s duly authorized representative. In this case, the taxpayer submitted its Request for Reinvestigation on January 18, 2019 and completed the submission of supporting documents on February 6, 2019; hence, the CIR or his duly authorized representative had until August 6, 2019 to act on the protest. The Regional Director subsequently issued the FDDA dated March 15, 2021, which the taxpayer received on April 23, 2021, prompting the taxpayer to file a Request for Reconsideration before the Commissioner on May 24, 2021. The taxpayer erroneously assumed that the Commissioner was granted another 180-day period to act on the administrative appeal and consequently filed its Petition for Review on December 20, 2021, counting 30 days from the supposed lapse of the new 180-day period. The Court ruled that no such additional period exists. Since the FDDA had already resolved the administrative protest, the taxpayer’s remedy was either to appeal the FDDA within thirty (30) days from receipt or await the Commissioner’s final decision on the administrative appeal and appeal such decision within the prescribed period. Having filed its Petition for Review beyond the allowable period, the CTA was deprived of jurisdiction over the case; thus, the petition was dismissed without consideration of the merits of the deficiency tax assessment. (Allied Metals, Inc. v. CIR, CTA Case No. 10711, November 4, 2025)

BIR MUST CONDUCT A MINIMUM 10-DAY SURVEILLANCE PERIOD BEFORE CLOSING A BUSINESS ESTABLISHMENT; 4-HOUR VISIT NOT SUFFICIENT. The CIR may suspend business operations and temporarily close business establishments for specified violations, such as failure to issue receipts or invoices, understatement of taxable sales, or failure to file VAT returns. However, the regulations require the conduct of a duly authorized surveillance for a minimum of 10 days before a taxpayer may be classified as a non-compliant taxpayer and before the issuance of a 48-Hour Notice, 5-Day Notice of Violation Conference (VCN), or Closure Order. Applying these rules, the Court held that the BIR violated the taxpayer’s right to due process because, although the Mission Order expressly directed the RO to conduct surveillance for violations of bookkeeping rules, the evidence showed that the supposed surveillance consisted only of a single 4-hour visit, which plainly failed to satisfy the mandatory 10-day surveillance period. The BIR likewise failed to present any written authority extending, shortening, or exempting compliance with the surveillance requirement. The Court further rejected the BIR’s reliance on a later regulation, explaining that while it prescribes procedures for the post-evaluation of point-of-sale (POS) machines, it neither supersedes nor dispenses with the surveillance requirements under a prior regulation governing business closures. Since the post-evaluation relied solely on extracted POS data without the benefit of the mandatory surveillance, it did not constitute substantial evidence of the BIR’s alleged violations. Absent the mandatory surveillance, the BIR could not validly be classified as a non-compliant taxpayer, thereby rendering the 48-Hour Notice, 5-Day VCN, and Closure Order void for lack of factual and procedural basis and in violation of the BIR’s constitutional right to due process [Commissioner of Internal Revenue v. Rebecca D. Duka, CTA EB No. 3050 (CTA Case No. 10393), December 22, 2025)

A PCL AND A FNBS MAY BE ASSAILED BEFORE THE CTA AS “OTHER MATTERS” UNDER THE TAX CODE AND ARE NOT SUBJECT TO THE PROTEST PROCEDURES APPLICABLE TO FLD/FANS.  The Tax Code prescribes the procedure for protesting a tax assessment and provides that a taxpayer may file a request for reconsideration or reinvestigation within 30 days from receipt of a valid assessment, with the corresponding judicial appeal to the Court of Tax Appeals to be filed within 30 days from receipt of the denial of the protest or from the lapse of the 180-day period without action. However, this presupposes the existence of a valid assessment, which jurisprudence defines as a written notice containing not only the computation of the taxpayer’s tax liability but also a demand for payment within a specified period, together with the legal and factual bases of such assessment. Consistent with this, the regulations provide that the administrative protest is directed specifically against an FLD/FAN and not against mere collection notices or other BIR communications. In this case, the Court held that the taxpayer incorrectly applied the procedures when it filed requests for reinvestigation against the Preliminary Collection Letter (PCL) and Final Notice Before Seizure (FNBS). The Court found that these documents were not assessments because they did not contain the essential elements of a valid assessment, such as the computation of the alleged deficiency taxes, the legal and factual bases supporting the liability, and a formal demand for payment within a definite period. Rather, the PCL and FNBS were merely collection letters issued by the BIR arising from the taxpayer’s alleged failure to settle deficiency taxes based on a prior FAN, which the taxpayer claimed it never received. Thus, the taxpayer’s recourse was not to file a protest but to directly challenge the BIR’s collection action as an “other matters”,  such action must be appealed to the CTA within 30 days from receipt of the assailed BIR decision or action. Since the taxpayer received the PCL on June 11, 2018 and the FNBS on June 26, 2018, it should have filed its Petition for Review not later than July 11, 2018 and July 26, 2018, respectively. Its filing only on April 8, 2019 was therefore made beyond the prescribed period, causing the loss of its statutory right to appeal and depriving the CTA of jurisdiction to entertain the case. Accordingly, the Court affirmed the dismissal of the petition for being filed out of time. [Encore Receivable Management, Inc. v. Commissioner of Internal Revenue, CTA EB No. 2937 (CTA Case No. 10062), November 11, 2025]

CTA EN BANC HAS NO JURISDICTION OVER INTERLOCUTORY ORDERS. The Court En Banc has exclusive appellate jurisdiction only over decisions or resolutions on motions for reconsideration or new trial rendered by the Court in Division in the exercise of its jurisdiction over cases arising from administrative agencies, such as the BIR. However, jurisprudence consistently distinguishes between final judgments, which fully dispose of a case and leave nothing more to be done by the court, and interlocutory orders, which do not finally resolve the parties’ rights and liabilities and merely address incidental matters while the main case remains pending. The Court En Banc has no jurisdiction to review interlocutory orders of the Court in Division because allowing such appeals would result in piecemeal litigation, multiplicity of appeals, and unnecessary delay in the resolution of the main case. In this case, although the assailed Resolution was issued in relation to the taxpayer’s Motion for Reconsideration, the Court in Division’s finding that the BIR’s right to assess was preliminarily barred by prescription did not constitute a final adjudication of the tax case. The Court in Division expressly characterized its finding as preliminary, granted only the suspension of collection, lifted the Warrant of Distraint and/or Levy, and prohibited collection of the deficiency VAT, without making a definitive ruling on the validity of the assessment, the Assessment Notices, or the FDDA. [Commissioner of Internal Revenue v. Perf Restaurants, Inc., CTA EB No. 3132 (CTA Case No. 11231), November 6, 2025]

BIR FINDINGS BASED ON TPI WITHOUT COMPLIANCE WITH REQUIREMENTS ARE VOID. The regulations require the BIR to verify TPI obtained through the Reconciliation of Listings for Enforcement (RELIEF) System before using it as the basis of a tax assessment. These issuances mandate the sending of confirmation requests to the identified TPI sources, the procurement of sworn statements attesting to the accuracy of the reported data, and, where the TPI sources are located outside the investigating office’s jurisdiction, the service of confirmation requests by registered mail with registered return cards before proceeding with the assessment. Applying these rules, the Court sustained the cancellation of the deficiency VAT assessment for alleged undeclared sales because the BIR failed to properly validate the RELIEF-generated TPI. Although the BIR relied on TPI indicating undeclared sales with a VAT tax base, the confirmation letters were sent to only four of the seven customers, only one confirmation letter was allegedly received, and, most significantly, the BIR failed to present any registered return cards proving that the confirmation requests had been served on customers located outside the jurisdiction of the investigating office. Thus, the TPI remained unverified and could not constitute competent factual basis for the assessment. [CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. CTA Case No. 10221), November 12 2025]

WHEN A TAX ASSESSMENT IS BASED ON THIRD-PARTY INFORMATION (TPI), THE RO MUST VERIFY THE ALLEGED DISCREPANCIES BY ISSUING CONFIRMATION REQUESTS TO THE THIRD-PARTY SOURCE AND OBTAINING DULY EXECUTED SWORN STATEMENTS ATTESTING TO THE ACCURACY OF THE DATA BEFORE SUCH INFORMATION MAY SERVE AS THE FACTUAL BASIS OF AN ASSESSMENT. Presumption of correctness of a tax assessment applies only when it is supported by actual facts and credible evidence, and cannot rest on unverified or self-serving data. Applying these principles, the Court held that the assessment for unsupported purchases was void because the BIR merely relied on system-generated TPI data comparing the taxpayer’s Summary List of Purchases with its supplier’s reported sales, without presenting duly notarized sworn statements or other competent evidence confirming the alleged discrepancies. The BIR’s reliance on the absence of a response from third-party sources was insufficient, rendering the assessment arbitrary and without factual foundation. [The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue (CTA Case No. 11091, November 12, 2025); see also CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. (CTA Case No. 10221), November 12 2025]

BIR MAY ASSESS TAXPAYER BASED ON UNACCOUNTED SOURCE OF CASH. Tax assessments are presumed correct and made in good faith, and the burden rests upon the taxpayer to prove by substantial evidence that the assessment is erroneous; bare allegations, unsupported by competent documentary evidence, have no probative value and cannot overcome the presumption of correctness. Applying these principles, the Court sustained the assessment for an unaccounted source of cash because the BIR established a discrepancy between the additions to property and equipment reflected in the taxpayer’s Notes to the Audited Financial Statements and its Statement of Cash Flows, while the taxpayer’s explanation that the difference pertained to inventory purchases made in 2017 and later transferred to property and equipment was unsupported by any documentary evidence. Consequently, the taxpayer failed to discharge its burden of proving that the assessment was erroneous. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

PRODUCTIVITY INCENTIVES GRANTED TO RANK-AND-FILE AND SUPERVISORY EMPLOYEES ARE SUBJECT TO  WITHHOLDING TAX, NOT FBT; AN RO CANNOT VALIDLY SUBJECT THE ENTIRE AMOUNT TO FBT WITHOUT DETERMINING CLASSIFICATION OF EMPLOYEE. FBT applies only to fringe benefits granted by an employer to managerial or supervisory employees, while benefits given to rank-and-file employees, as well as certain de minimis benefits and productivity incentives within the limits prescribed by regulations, are excluded from FBT. In this case, the BIR assessed the taxpayer deficiency FBT on productivity incentives and bonuses, alleging that the taxpayer failed to withhold FBT on these payments. The taxpayer, however, established that the amounts represented productivity bonuses granted under its Efficiency Productivity System (EPS), which were subjected to withholding tax on compensation, and submitted its Guidance Document on the Productivity Point System showing that the incentives were granted to both rank-and-file and supervisory employees who exceeded production standards. The Court found that the revenue officer improperly subjected the entire amount to FBT without determining whether the recipients were managerial, supervisory, or rank-and-file employees, despite the exclusion of rank-and-file employees from FBT coverage. Moreover, the revenue officer’s testimony revealed uncertainty as to the proper tax treatment of productivity incentives, admitting that such incentives should instead be treated as compensation subject to withholding tax. Since the BIR failed to present evidence proving that the entire amount of incentives was exclusively granted to managerial or supervisory employees or otherwise fell within the scope of taxable fringe benefits, the assessment lacked sufficient factual and legal basis. Accordingly, the Court cancelled the deficiency FBT assessment against the taxpayer (Somnomed Philippines, Inc. v. CIR, CTA Case NO. 10845, March 19, 2026)

THE BIR CANNOT VALIDLY DISALLOW ADMINISTRATIVE SALARIES AND WAGES EXPENSES IF THE TAXPAYER IS AVAILING OF 5% GIT. An enterprise availing of the five percent (5%) Gross Income Tax (GIT) incentive is subject to tax based on its gross income earned, which refers to gross sales or revenues derived from business activities within the ecozone, less sales discounts, returns, allowances, and cost of sales or direct costs. Unlike ordinary taxpayers, administrative, marketing, selling, operating expenses, and incidental losses are not deducted in determining the taxable base under the GIT regime. In this case, the BIR disallowed salaries, wages, and benefits that were purportedly not subjected to withholding tax, after reconciling the taxpayer’s salaries and benefits per its Income Tax Return and Audited Financial Statements against its Monthly Remittance Returns of Income Taxes Withheld on Compensation. The taxpayer argued that the alleged deficiency had no effect on its tax liability considering that it was a PEZA-registered export manufacturing enterprise subject to the five percent (5%) GIT regime. The Court found merit in the taxpayer’s position, holding that the disallowance pertained to operating expenses and, therefore, could not affect the computation of the taxpayer’s GIT liability because such expenses are not deductible in arriving at gross income earned. Hence, there was no basis to sustain the BIR’s adjustment since the taxpayer sufficiently explained the discrepancy and the BIR failed to establish that the alleged non-withholding resulted in any deficiency tax liability. Accordingly, the assessment for disallowed salaries, wages, and benefits due to alleged non-withholding was cancelled for lack of factual and legal basis (Somnomed Philippines, Inc. v. CIR, CTA Case NO. 10845, March 19, 2026)

MEAL EXPENSES CAN BE DEDUCTED UNDER GIT REGIME IF SUBSTANTIATED AND TAXPAYER PROVED THAT THEY WERE INCURRED DIRECTLY RELATED TO PRODUCTION ACTIVITIES. Deductions from gross income must be supported by sufficient evidence, such as official receipts, invoices, and other relevant accounting records, to establish the fact, amount, and business purpose of the claimed expense. For PEZA-registered enterprises availing of the five percent (5%) GIT incentive, only costs of sales or direct costs are considered in arriving at gross income earned, while administrative, selling, marketing, and other operating expenses are excluded from the computation of the taxable base. Here, the Court found that the taxpayer had established that meal expenses were incurred and were directly related to its production activities, thereby forming part of its cost of sales and allowable direct costs under the GIT regime. The Court further considered the examination conducted by the taxpayer’s independent CPA of the supporting official receipts and invoices and determined that the majority of the claimed meal expenses were adequately substantiated. Nevertheless, the Court held that some expenses could not be allowed because they were either unsupported by sufficient documents, covered only by defective receipts, or could not be properly linked to the taxpayer’s business operations. (Somnomed Philippines, Inc. v. CIR, CTA Case NO. 10845, March 19, 2026)

TO EXCLUDE REIMBURSEMENTS RECORDED AS RECEIVABLES FROM UNDECLARED INCOME, THE TAXPAYER MUST PRESENT SUFFICIENT SUPPORTING EVIDENCE; MERE SCHEDULES DO NOT SUFFICE. All income from whatever source derived is taxable unless specifically excluded by law, and a taxpayer claiming that certain receipts constitute non-taxable reimbursements or a mere return of capital bears the burden of proving such claim through competent and sufficient evidence. Applying this rule, the Court sustained the deficiency assessment for undeclared income after the BIR compared the taxpayer’s VAT returns, annual income tax return, and trade receivables, revealing a discrepancy in reported income. The taxpayer’s contention that the trade receivables included reimbursements of airfare, visa fees, training, medical, and other pre-employment expenses advanced on behalf of its foreign clients was rejected because the schedules of trade and non-trade receivables it submitted merely reflected a breakdown of receivable balances and did not specifically trace or identify the alleged reimbursements. In addition, the schedules were unsupported by sufficient documentary evidence to verify their accuracy and reliability. (Supply Oilfield & Marine Personnel Services, Inc. v. Commissioner of Internal Revenue, CTA Case No. 11048, December 17, 2025)

THE BIR MAY RELY ON THE PARTIES’ AGREEMENT TO DETERMINE A TAXPAYER’S REVENUE BY GROSSING UP THE INCOME PAYMENT BASED ON A PERCENTAGE OF SALES. All income from whatever source derived is taxable unless expressly excluded by law, and the taxpayer has the burden of proving, by competent and sufficient evidence, that the Commissioner’s assessment is erroneous or that the amounts assessed are not subject to income tax. Applying this rule, the Court upheld the deficiency assessment for undeclared income after the BIR recomputed the taxpayer’s sales based on the Trademark License Agreement which obligated the taxpayer to pay a royalty fee equivalent to 1% of its total sales, and found that the resulting sales exceeded those reported in the taxpayer’s income tax return. The Court rejected the taxpayer’s argument that the assessment was based on mere assumptions and that no undeclared income existed after accounting for an alleged over-recording of fees and deducting withholding taxes. It found that the Trademark License Agreement expressly provided only that total sales should be computed net of VAT or similar sales taxes and contained no provision authorizing the deduction of withholding taxes or showing that the taxpayer had contractually assumed such taxes. Likewise, the taxpayer’s claim of an over-recording of expenses was unsupported by receipts or other competent documentary evidence. In the absence of sufficient proof to substantiate its adjustments or disprove the BIR’s computation, the taxpayer failed to overcome the presumption of correctness of the assessment. (Supply Oilfield & Marine Personnel Services, Inc. v. Commissioner of Internal Revenue, CTA Case No. 11048, December 17, 2025)

ARTICLES OF PARTNERSHIP AND BOA ACCREDITATION ARE INSUFFICIENT, BY THEMSELVES, TO PROVE THAT PAYMENTS TO A GENERAL PROFESSIONAL PARTNERSHIP (GPP) ARE EXEMPT FROM INCOME TAX; PROOF OF PAYMENT IS LIKEWISE REQUIRED. A taxpayer claiming that payments to GPPs are not subject to withholding tax must substantiate both the status of the recipients and the actual payments made. Applying these principles, the Court sustained the deficiency EWT assessment on the disallowed professional fees as the taxpayer merely submitted the Articles of Partnership of Magsalin, Magsalin, and Associates and the Board of Accountancy Certificate of Accreditation of Isla Lipana & Co., but failed to present invoices, official receipts, payment vouchers, or other documentary evidence establishing that the questioned professional fees were actually paid to these GPPs. (Supply Oilfield & Marine Personnel Services, Inc. v. Commissioner of Internal Revenue, CTA Case No. 11048, December 17, 2025)

A TAXPAYER CANNOT ESTABLISH THE INCOME TAX EXEMPTION OF PAYMENTS MADE TO NRFC SOLELY THROUGH A SEC CERTIFICATE OF NON-REGISTRATION AND A BIR RULING THAT IS NOT SPECIFICALLY APPLICABLE TO THE TAXPAYER. A taxpayer claiming that payments to non-resident foreign corporations (NRFC) are exempt from Philippine income tax and withholding tax must establish through competent documentary evidence that the recipients are non-resident foreign corporations not engaged in trade or business in the Philippines and that the income is not derived from Philippine sources. Applying these principles, the Court sustained the deficiency EWT assessment on the disallowed professional fees. Although the taxpayer claimed that the amounts represented payments to Newrest Group International SAS and Newrest Group Services for consultancy services allegedly rendered outside the Philippines, it failed to prove that these entities qualified as non-resident foreign corporations, as the SEC Certificate of Non-Registration submitted for Newrest Group International SAS merely showed that it was not registered in the Philippines and did not establish its foreign corporate status. The Court likewise ruled that the taxpayer could not rely on a BIR ruling because it was issued exclusively in favor of Newrest Group Holding SL, and the taxpayer presented no evidence showing that its coverage extended to Newrest Group International SAS or Newrest Group Services.  Moreover, the Court held that the Consultancy Agreement alone, although stating that Pocomwell Ltd. was organized under the laws of Hong Kong, was insufficient to establish its NRFC status, as the taxpayer failed to present a Certificate of Non-Registration from the SEC, proof of incorporation or registration in Hong Kong, a tax residence certificate, or any other competent evidence demonstrating that Pocomwell Ltd. was not engaged in trade or business in the Philippines. (Supply Oilfield & Marine Personnel Services, Inc. v. Commissioner of Internal Revenue, CTA Case No. 11048, December 17, 2025)

LOCAL TREASURER’S FAILURE TO ACT WITHIN 60 DAYS FROM THE FILING OF A PROTEST IS DEEMED A DENIAL BY INACTION; AN APPEAL FILED BEYOND THE 60-DAY PERIOD IS OUT OF TIME. A taxpayer must appeal to the proper court within 30 days either from receipt of the local treasurer’s denial issued within the 60-day period to resolve the protest or, if no action is taken within that period, from the lapse of the 60-day period, as the treasurer’s inaction constitutes a deemed denial; failure to perfect the appeal within the prescribed period renders the assessment final, conclusive, and unappealable. Applying this rule, although the taxpayer timely protested, the local treasurer failed to act within the 60-day period, resulting in a deemed denial on May 12, 2019, from which the taxpayer had only until June 11, 2019 to file its appeal. Since the appeal was filed only on June 13, 2019, it was filed out of time, rendering the assessment final, executory, and unappealable, and the subsequent receipt of the actual denial on May 14, 2019 did not extend or reset the appeal period. [Public Safety Mutual Benefit Fund, Inc., represented by its President Emmanuel B. Peralta v. Rosette F. Laquian, Acting City Treasurer, San Juan City, CTA EB No. 3003 (CTA AC No. 245), December 22, 2025]

BIR FORM 2307 SUPPORTS INCOME TAX CREDITS. A taxpayer claiming CWT as tax credits must substantiate the claim with the corresponding BIR Form 2307 or certificates of creditable tax withheld; otherwise, the claimed tax credits may be disallowed. Applying these provisions, the Court sustained the BIR’s disallowance of the taxpayer’s claimed CWT because the taxpayer failed to present the required CWT certificates. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

CGT CANNOT BE VALIDLY CLAIMED AS DEDUCTION FROM INCOME TAX. Although taxes paid or incurred in connection with the taxpayer’s trade or business are generally deductible from gross income, income taxes imposed under the Tax Code, including CGT, are expressly excluded from allowable deductions. Applying this provision, the Court sustained the BIR’s disallowance of the taxpayer’s claimed deduction representing CGT, holding that CGT is a final income tax and, by law, constitutes a non-deductible expense. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

A CGT ASSESSMENT IS SUSTAINED WHERE THE TAXPAYER PRESENTS A DOCUMENT SHOWING A DIFFERENT BUYER THAN THE ONE IDENTIFIED BY THE BIR AND FAILS TO ESTABLISH THAT THE TWO BUYERS ARE RELATED PARTIES. 

A CGT shall be paid upon the filing of the prescribed return, and the taxpayer claiming payment or exemption bears the burden of proving compliance through competent and admissible evidence. Here, the Court sustained the BIR’s deficiency CGT assessment arising from the taxpayer’s sale of 50% of its shares. Although the taxpayer maintained that the CGT had already been paid and submitted a Deed of Absolute Sale, BIR Form No. 1707 (CGT Return), and a Land Bank BIR payment slip, the Court held that these documents could not be considered because they were not admitted in evidence after the taxpayer failed to present their originals for comparison. The Court further ruled that, even if admitted, the documents would still be insufficient to establish that the CGT payment related to the transaction assessed by the BIR, since the assessment involved the sale of shares to Southern Capital, whereas the submitted documents pertained to Sufficient Grace PTE. Ltd. The taxpayer’s assertion that Sufficient Grace and Southern Capital were related entities likewise remained unsubstantiated, as no documentary evidence proving their relationship was presented. Significantly, the taxpayer’s own witness admitted during cross-examination that no proof of the relationship between the two corporations had been submitted during the administrative proceedings and merely committed to present additional evidence in the future. Accordingly, the taxpayer failed to establish either that the CGT had been paid on the transaction subject of the assessment or that the payment allegedly made in connection with Sufficient Grace corresponded to the sale of shares to Southern Capital. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

SALE OF SHARES RESULTING IN A CHANGE IN OWNERSHIP DOES NOT GIVE RISE TO A DEEMED SALE OF INVENTORY FOR VAT PURPOSES; DEEMED SALE APPLIES ONLY WHEN THE BUSINESS CEASES OPERATIONS. VAT may be imposed on transactions deemed sale only in the specific instances enumerated by law, including retirement from or cessation of business with respect to inventories on hand. Jurisprudence likewise clarifies that a “change of ownership of business” constitutes a deemed sale only when it occurs as an incident of the taxpayer’s retirement from or cessation of business, and not merely because of a restructuring or disposition of assets. Applying these principles, the Court held that the BIR had no factual or legal basis for assessing VAT on the taxpayer’s inventories. Although the taxpayer reduced its ownership in its subsidiary through the sale of shares, the Court found that this transaction did not constitute a change in the taxpayer’s line of business from coffee manufacturing to a holding company. The taxpayer’s Amended Articles of Incorporation expressly authorized it not only to manufacture and sell coffee products but also, under its secondary purposes, to invest in other corporations. Thus, the sale of its investment was consistent with its corporate purposes and did not amount to a retirement from or cessation of business. Since the taxpayer continued its operations and none of the statutory circumstances giving rise to a deemed sale were present, the assessment for deficiency VAT on inventories was declared without factual and legal basis and was accordingly cancelled. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

TO ESTABLISH THAT A SALE IS VAT-EXEMPT, THE TAXPAYER MUST PRESENT THE CERTIFICATE OF REGISTRATION AND TAX EXEMPTION (CRTE), WHICH MUST BE FORMALLY OFFERED AND ADMITTED IN EVIDENCE. A taxpayer claiming VAT-exempt sales bears the burden of proving its entitlement to the exemption through competent and admissible evidence. Correspondingly, the allocation of input tax to exempt sales applies only where the taxpayer has sufficiently established that such sales are indeed VAT-exempt. Applying these principles, the Court upheld the BIR’s deficiency VAT assessment on the taxpayer’s alleged unsupported VAT-exempt sales. Although the taxpayer claimed that certain sales were VAT-exempt and asserted that it had presented a CRTE issued by the Subic Bay Metropolitan Authority (SBMA), the records showed that it submitted only a photocopy of the CRTE, which the Court had previously denied admission as evidence. In the absence of any competent and admissible proof establishing the VAT-exempt status of the transactions, the taxpayer failed to substantiate its claim of exempt sales. Consequently, the Court likewise rejected the BIR’s adjustment disallowing as input tax allocable to exempt sales, holding that since the alleged exempt sales were not proven and were instead treated as taxable sales, there was no basis to allocate or deduct any portion of the allowable input tax as attributable to exempt sales. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

VAT INVOICING REQUIREMENTS ARE ALSO APPLICABLE IN ASSESSMENT CASES AND NOT CONFINED TO CLAIMS FOR VAT REFUNDS. A taxpayer may claim creditable input VAT only when the same is supported by a valid VAT invoice or official receipt issued in accordance with the statutory invoicing requirements. Mandatory information that must appear on such document includes the seller’s VAT registration details, TIN, amount of VAT, date of transaction, description of goods or services, and other relevant particulars. In this case, the taxpayer argued that the strict enforcement of invoicing requirements should only apply to VAT refund claims and not to tax assessment proceedings. The Court En Banc, however, rejected this contention, holding that the law makes no distinction between refund cases and assessment cases in requiring compliance with invoicing rules. The Court ruled that the same statutory requirements govern all instances where a taxpayer seeks recognition of input VAT, whether as a credit against output VAT in an assessment case or as the basis for a refund claim. Thus, the validity of input VAT depends upon strict compliance with the invoicing requirements imposed by law, and a taxpayer cannot invoke a more lenient standard merely because the issue arises in an assessment proceeding rather than a refund application. [CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. CTA Case No. 10221), November 12 2025]

MERE FAILURE TO DECLARE IMPORTATIONS OR PAY THE CORRESPONDING INPUT VAT CANNOT, BY ITSELF, ESTABLISH THE EXISTENCE OF UNDECLARED SALES SUBJECT TO OUTPUT VAT. VAT shall be imposed on every sale, barter, or exchange of goods or properties, and shall be paid by the seller or transferor based on the gross selling price or gross value in money of the goods or properties sold. Thus, before a transaction may be subjected to output VAT, there must first be sufficient proof that a taxable sale, barter, or exchange actually occurred. Importation, standing alone, does not constitute a sale transaction, and the mere failure to declare importations or pay the corresponding input VAT cannot, by itself, establish the existence of undeclared sales subject to output VAT. Applying these principles, the Court upheld the cancellation of the deficiency VAT assessment arising from the alleged undeclared sales attributed to unaccounted importations. The BIR alleged that discrepancies existed between the importation figures in the VAT returns and the importation data obtained from the Bureau of Customs, resulting in alleged undeclared importations reflected in its Summary List of Importations (SLI). Using the Cost Ratio Method, the BIR extrapolated these alleged unreported importations into presumed undeclared sales and imposed deficiency output VAT. However, the Court ruled that the BIR’s conclusion was based merely on an inference that imported goods necessarily resulted in sales, without presenting independent and competent evidence proving that such goods were actually sold in the course of the taxpayer’s business. No sales invoices, official receipts, inventory records, or other documentary evidence were presented to establish the occurrence and amount of the alleged taxable sales. Since VAT liability cannot arise from a presumption of sale based solely on importation discrepancies, the BIR failed to establish the factual basis for the assessment. Accordingly, the Court held that the deficiency VAT assessment was properly cancelled for lack of sufficient factual and evidentiary support. [CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. CTA Case No. 10221), November 12 2025]

EXCESS INPUT VAT CREDITS FROM PRIOR PERIODS MUST BE PROVED BY SUFFICIENT DOCUMENTARY EVIDENCE. A taxpayer is allowed to claim input VAT credits only to the extent that such credits are properly substantiated and remain available for application against output VAT. A taxpayer claiming excess input VAT credits carried over from prior periods bears the burden of proving, through sufficient documentary evidence, that the credits were validly earned, properly recorded, and remained unutilized in subsequent taxable periods. In this case, the Court En Banc sustained the disallowance of claimed excess input VAT credits which it sought to apply against its assessed deficiency VAT liability. The Court found that the taxpayer failed to present adequate evidence showing that the alleged excess input VAT credits from prior periods had not yet been applied or exhausted and were still available for carry-over. [CIR v. BASF Philippines, Inc., CTA EB No. 2754 (CTA Case No. 10221); BASF Philippines, Inc. v CIR, CTA EB No. 2755. CTA Case No. 10221), November 12 2025]

ABSENCE OF FORMAL DEBT INSTRUMENT DOES NOT PRECLUDE IMPOSITION OF DST. DST is an excise tax imposed on the transaction itself rather than on the document evidencing it. Thus, loan agreements and similar transactions are subject to DST regardless of the form of the documentation, and the taxpayer bears the burden of proving either that the transaction is not subject to DST or that the corresponding tax has been properly remitted. The Court applied prevailing jurisprudence holding that the absence of formal debt instruments does not preclude the imposition of DST because the tax attaches to the loan transaction itself and not to the document evidencing it. Since the taxpayer neither disputed the existence of the advances nor presented proof that the corresponding DST had been paid, the Court sustained the deficiency DST assessment in full. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

DST RETURN AND PROOF OF PAYMENT TO THE BIR CONSTITUTE THE BEST EVIDENCE OF PAYMENT OF DOCUMENTARY STAMP TAX; CHECK VOUCHERS ALONE ARE INSUFFICIENT. A DST is imposed on taxable documents and transactions, including lease agreements and certain advances, and the taxpayer asserting that the DST has already been paid or remitted bears the burden of proving actual payment to the BIR through competent and credible documentary evidence. Applying this rule, the Court sustained the deficiency DST assessment after the BIR found that the taxpayer failed to file and pay DST on its lease agreements and advances from related parties, as disclosed in its audited financial statements and supplementary information submitted to the BIR. Although the taxpayer maintained that it had already shouldered the DST by remitting the corresponding amounts to the other contracting parties for payment to the BIR, the Court held that such assertion was unsupported by sufficient proof. The lease agreement confirmed that the taxpayer was contractually liable for the DST, and while the corresponding check voucher showed payment its lessor, the taxpayer failed to present any documentary evidence, such as a DST return or proof of payment to the BIR, establishing that the lessor actually remitted the tax. Similarly, the check vouchers submitted to support the alleged payment on advances from related parties merely evidenced insurance-related payments and bore no relation to the payment or remittance of DST on the advances in question. (Supply Oilfield & Marine Personnel Services, Inc. v. Commissioner of Internal Revenue, CTA Case No. 11048, December 17, 2025)

DST TO BE CLAIMED AS DEDUCTIBLE MUST BE SUPPORTED BY PROOF OF TAX PAYMENT. No deduction from gross income shall be allowed unless the taxpayer substantiates the claimed expense with sufficient evidence, such as official receipts or other adequate records, establishing both the amount of the expense and its direct connection to the taxpayer’s business. Banks and other specified financial institutions are responsible for remitting DST when they are parties to a taxable transaction. Applying these principles, the Court sustained the BIR’s disallowance of the taxpayer’s claimed DST expense. Although the taxpayer argued that the DST had already been withheld and remitted by the banks involved in its loan transactions, it failed to present competent evidence proving that the transactions were indeed entered into with banks or that the corresponding DST had actually been remitted. In the absence of adequate documentary support to substantiate the deduction and rebut the presumption of correctness of the assessment, the Court upheld the disallowance of the claimed DST expense. (The Table Group Inc., represented by Mr. Walden Chu v. Commissioner of Internal Revenue, CTA Case No. 11091, November 12, 2025)

BIR DEADLINES FROM JULY 13, 2026 TO JULY 19, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING / SUBMISSION
July 13, 2026	E-FILING – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group C. Month of June 2026
July 14, 2026	E-FILING – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group B. Month of June 2026
July 15, 2026	REGISTRATION (Online thru ORUS or Manual) – Permanently Bound Loose-Leaf Books of Account/Invoices and Other Accounting Records. Fiscal Year ending June 30, 2026 SUBMISSION – List of Medical Practitioners – For the Quarter ending June 30, 2026 SUBMISSION – Quarterly List (with Monthly Breakdown) of Contractors of Gov’t. Contracts entered into by the Provinces/Cities/Municipalities/Barangays – For the Quarter ending June 30, 2026 E-FILING & PAYMENT (Online/Manual) – BIR Form 1702-RT/1702-EX/1702-MX – Fiscal Year ending March 31, 2026 E-FILING & PAYMENT (Online/Manual) – BIR Form 1707-A (Annual Capital Gains Tax Return for Onerous Transfer of Shares of Stock Not Traded Through the Local Stock Exchange) – by Corporate Taxpayers. Fiscal Year ending March 31, 2026 E-FILING & PAYMENT (Online/Manual) – BIR Form 2200-M (Excise Tax Return for Mineral Products) – For the Quarter ending June 30, 2026 E-FILING & E-PAYMENT – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group A. Month of June 2026 E-PAYMENT – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group E, D, C & B. Month of June 2026
July 16, 2026	SUBMISSION – Consolidated Return of All Transactions based on the Reconciled Data of Stockbrokers. July 1–15, 2026

COURT OF TAX APPEALS DECISIONS

THE ASSESSMENT WAS VOID BECAUSE THE RO, WHO HAD NO AUTHORITY UNDER THE LOA, CONDUCTED THE AUDIT, EXAMINATION, AND RECOMMENDATION OF DEFICIENCY ASSESSMENTS; SEE DISSENTING OPINION. Examination of a taxpayer must be conducted only by the Revenue Officers (RO) specifically authorized under a valid Letter of Authority (LOA) as the LOA is the exclusive source of authority to examine a taxpayer’s books and records; any assessment resulting from an audit conducted by unauthorized officers is void, and any collection proceeding based thereon is likewise invalid. Here, the Court held that although the LOA authorized Revenue Officer Ami and Group Supervisor Causapin to examine the taxpayer’s books, the audit, examination, and recommendation of the deficiency assessments were actually performed by Revenue Officer Ventura, who admitted conducting the examination despite having no valid LOA authorizing her to do so. Consequently, the assessment was a nullity from the outset, and the subsequent collection measures. Dissenting Opinion: CTA lacks jurisdiction because the taxpayer failed to file a timely administrative protest against the Formal Letter of Demand/Final Assessment Notice (FLD/FAN), thus, the assessment had attained finality, thereby authorizing the BIR to proceed with collection. Accordingly, the CTA could only determine whether the Warrant of Distraint and/or Levy (WDL) was properly issued in the course of collection, but could no longer invalidate the underlying assessment based on alleged defects in the LOA. The dissent cautioned that allowing the taxpayers to challenge the FLD/FAN indirectly through the CTA’s “other matters” jurisdiction would effectively revive lost remedies, reward failure to comply with statutory protest procedures, improperly expand the CTA’s jurisdiction, and amount to judicial legislation. Consequently, the dissent voted to grant the Petition for Review and uphold the BIR’s collection efforts. [CTA EB No. 2867, CTA Case No. 9745, November 19, 2025; see also CIR v. Misnet Education, Inc., CTA EB No. 2825 (CTA Case No. 9941), November 18, 2025]

TAXPAYER CANNOT BELATEDLY CHALLENGE THE AUTHORITY OF ITS FOOD HANDLERS TO RECEIVE FLD/FAN AND FDDA AFTER CONSISTENTLY ALLOWING THEM TO ACCEPT SUCH DOCUMENTS, INCLUDING LOA WITHOUT OBJECTION. FLD/FAN and Final Decision on Disputed Assessment (FDDA) are validly served when delivered to the taxpayer’s registered address through the modes prescribed by the regulations, and that only a decision or collection notice which constitutes the CIR’s final determination on a disputed assessment is appealable to the CTA. The Court applied the doctrine of equitable estoppel, holding that a taxpayer who previously accepted BIR notices through the same employee and acted upon them cannot later deny such employee’s authority to receive subsequent assessment notices. Applying these principles, the Court found that the FLD/FAN and FDDA were validly served at the taxpayer’s registered address and received by its food handler, who was identified as a staff member. The taxpayer had consistently allowed its food handlers to receive prior BIR communications, including the LOA, and even acted upon those notices without questioning their authority. The Court held that the taxpayer was estopped from later claiming that the same employees were unauthorized to receive the FLD/FAN and FDDA. Consequently, the FDDA became final and executory when the taxpayer failed to appeal within the mandatory 30-day period. Since the taxpayer filed its Petition for Review only after the assessment had become final and executory, the CTA held that it did not acquire jurisdiction over the case and dismissed the petition. (Delicious Kakanin Enterprises Corporation v. CIR and Regional Director, Revenue Region No. 5, Caloocan City, CTA Case No. 10988, March 12, 2026)

ASSESSMENT IS VOID IF THE BIR FAILED TO VALIDLY SERVE THE PAN AND FLD/FAN AFTER SENDING THE NOTICES TO THE TAXPAYER’S FORMER INTRAMUROS ADDRESS DESPITE KNOWLEDGE OF ITS TRANSFER TO QUEZON CITY AND RDO TRANSFER, AND FAILED TO PROVE ACTUAL RECEIPT THEREOF. The assessment notices be served personally, or, if personal service is impracticable, by substituted service or registered mail to the taxpayer’s registered or known address. If the taxpayer denies receipt of assessment notices, the burden shifts to the BIR to establish by competent evidence that the notices were actually received, such as registry return cards bearing the taxpayer’s or its authorized representative’s signature or certifications from the Bureau of Posts. Applying these principles, the Court found that although the BIR claimed to have attempted personal service before sending the PAN and FLD/FAN by registered mail, the notices were sent to the taxpayer’s former address in Intramuros, Manila despite the BIR’s prior knowledge that the taxpayer had already transferred its principal place of business to Quezon City and had completed the corresponding transfer of its RDO. The Court held that the taxpayer had sufficiently established that it had duly informed the BIR of its change of address through the prescribed registration procedures, while the CIR failed to present any evidence to dispute such fact or to prove that the assessment notices were actually received at the old address. The Court likewise rejected the CIR’s contention that the taxpayer should have filed an administrative protest after subsequently requesting and obtaining copies of the assessment notices, stressing that due process requires the BIR itself to validly serve the assessments before the period to protest can commence. The taxpayer’s later acquisition of copies upon request could not cure the invalid service nor validate an assessment that had already been rendered void by non-compliance with the statutory notice requirements. Because the taxpayer was never properly informed of the assessments, it was deprived of the opportunity to administratively contest the alleged deficiency taxes, thereby violating its constitutional right to due process. As a consequence, the PAN, FAN, and FLD were declared void, and the WDL, being merely a collection remedy founded on invalid assessments, was likewise declared without legal basis. (Vestina Security Services, Inc. v. CIR, CTA Case No. 10889, November 24, 2025; see also Freyssinet Philippines, Inc. v. CIR, CTA Case No. 11084, November 21, 2025

TAXPAYER’S LATER DENIAL OF RECEIPT OF PAN IS NOT A NEWLY DISCOVERED EVIDENCE. A taxpayer must be served with a PAN and FLD/FAN, thereby affording the taxpayer an opportunity to respond as part of due process. In addition, under the Rules of Court, a motion for new trial based on additional evidence may be granted only upon proof of fraud, accident, mistake, excusable negligence, or newly discovered evidence. Applying these principles, the Court found that the taxpayer’s right to due process was not violated because the evidence established that the PAN was timely sent through LBC, with the tracking receipt showing that it was posted and scheduled for delivery the following day. More significantly, the taxpayer’s own Finance Clerk, in her original Judicial Affidavit and testimony, unequivocally admitted that BIR officers personally delivered the PAN in and positively identified the PAN presented in court. The taxpayer raised the alleged non-receipt of the PAN only after the CTA Division had rendered an adverse decision, relying on a Supplemental Judicial Affidavit in which the same witness recanted her previous testimony. The Court held that this belated assertion did not constitute newly discovered or omitted evidence because, through the exercise of reasonable diligence, the taxpayer could have raised the issue as early as its receipt of the FAN and certainly during the administrative protest and trial before the CTA. The Court also found the taxpayer’s position to be inherently inconsistent, as it initially argued that it was deprived of the full 15-day period to respond to the PAN, an argument that presupposed receipt of the PAN, before later claiming that it never received the PAN at all. Since the supplemental affidavit merely sought to introduce forgotten evidence through a piecemeal presentation of proof, and no compelling reason existed to warrant a liberal application of procedural rules, the Court sustained the validity of the assessment process and ruled that there was no denial of due process. [IBMS Technology Phils. Corporation v. CIR, CTA EB No. 2907 (CTA Case No. 9970), November 12, 2025]

ISSUANCE OF FLD/FAN ON THE SAME DATE AS ISSUANCE OF THE PAN VIOLATES THE TAXPAYER’S DUE PROCESS. The taxpayer shall have 15 days from receipt of the PAN to submit a reply, and only after receipt of such response or upon the taxpayer’s failure to respond within the prescribed period may the BIR issue the FLD/FAN. The PAN stage is an essential component of administrative due process because it provides the taxpayer an opportunity to dispute the findings and allows the BIR to reconsider its position before issuing a final assessment. The Court likewise ruled that the BIR’s premature issuance of an FLD/FAN before the lapse of the 15-day response period constitutes a denial of due process, and the taxpayer’s subsequent filing of a protest does not cure the defect. In this case, the Court found that the BIR failed to observe the mandatory due process requirements in the issuance of the assessment. The taxpayer received the PAN on January 4, 2012, giving it until January 19, 2012 to file a response. However, the taxpayer issued the FLD/FAN on the same date, January 4, 2012, without waiting for the taxpayer’s reply or the expiration of the 15-day period granted by law and regulations. The fact that the taxpayer subsequently filed a protest to the PAN on January 11, 2012 did not validate the defective assessment, as the BIR had already made a determination of respondent’s alleged tax liabilities without considering any possible response to the PAN. Hence, the premature issuance of the FLD/FAN constituted a violation of respondent’s right to due process, rendering the assessment void and properly subject to cancellation. [CIR v. Asia United Leasing Finance Corporation, CTA EB No. 2984 (CTA Case No. 8525) November 3, 2025; see also CIR v. Misnet Education, Inc., CTA EB No. 2825 (CTA Case No. 9941), November 18, 2025]

A DUE DATE EARLIER THAN THE DATE OF MAILING OF FLD/FAN RENDERS THE ASSESSMENT VOID. A valid FLD/FAN must not only state the taxpayer’s definite tax liability but also require payment within a specific and prospective period. Due date for payment is a substantive requirement, as it affords the taxpayer a real and fair opportunity to comply, and assessments lacking a valid due date are void. Applying these principles, the Court held that the FLD/FAN was invalid even assuming it had been properly served because it indicated September 21, 2022 as the due date for payment but was mailed only on September 23, 2022, making compliance legally impossible before the taxpayer could even receive the notice. The Court ruled that a lapsed due date renders the demand for payment illusory and ineffective, deprives the taxpayer of the opportunity to comply, violates the due process guarantee, which contemplates that delinquency interest accrues only after the taxpayer has been duly notified and has failed to pay on the due date appearing in the notice and demand. Since the FLD/FAN failed to contain a valid, prospective, and enforceable demand for payment, it did not constitute a valid assessment and was declared void (Freyssinet Philippines, Inc. v. CIR, CTA Case No. 11084,November 21, 2025)

BIR HAS 3 YEARS TO ASSESS AS A RULE; TAXPAYER MUST PROVE WHICH PART OF ASSESSMENT PRESCRIBES. The BIR must assess internal revenue taxes within three (3) years from the last day prescribed by law for filing the return or from the actual filing date, whichever is later. Since the BIR neither alleged nor proved the existence of a false or fraudulent return, the ordinary 3-year prescriptive period governed the assessment of the taxpayer’s deficiency taxes. Where the FLD/FAN was issued after 3 years from date of filing, the assessment is considered prescribed. However, the Court held that the assessments for deficiency Income Tax and the December EWT and WTC remained timely, as the FAN was issued within the applicable three-year period for those liabilities. The Court further ruled that a factual determination was still necessary to segregate the alleged deficiencies attributable to the prescribed periods from those pertaining to the non-prescribed periods; otherwise, absent sufficient proof, the deficiencies would be attributed only to the portion of taxable year that remained assessable. [IBMS Technology Phils. Corporation v. CIR, CTA EB No. 2907 (CTA Case No. 9970), November 12, 2025]

BIR CANNOT VALIDLY INVOKE THE 10-YEAR PRESCRIPTIVE PERIOD ABSENT A CLEAR STATEMENT IN THE ASSESSMENT NOTICE, PROOF THAT THE UNDER-DECLARATION EXCEEDED THE 30% THRESHOLD, AND EVIDENCE OF A DELIBERATE OR WILLFUL MISSTATEMENT. The BIR has the right to  assess internal revenue taxes within 3 years from the last day prescribed for filing the return or the actual filing thereof, whichever is later, while the ten 10-year prescriptive period applies only in cases of a false or fraudulent return with intent to evade tax or failure to file a return. The extraordinary 10-year period may be invoked only upon strict compliance with due process requirements, namely: (1) the assessment notice must clearly state that the BIR is applying the 10-year prescriptive period instead of the ordinary 3-year period; (2) it must disclose the factual and legal bases for alleging falsity or fraud, including the computation showing that the taxpayer’s under-declaration exceeded the 30% threshold; and (3) the alleged false return must be supported by clear and convincing evidence of a deliberate or willful misstatement, since a false return requires intentional falsity and not merely an inaccurate declaration. Applying these principles, the Court ruled that the BIR could not rely on the 10-year prescriptive period because the FLD/FAN did not state that the extraordinary period was being invoked, and although the BIR alleged that the taxpayer underdeclared sales by more than 30%, it failed to disclose the computation establishing that threshold. More significantly, the BIR failed to present clear and convincing evidence that the taxpayer deliberately or willfully filed a false VAT return, with its own revenue officer admitting during trial that no evidence of willfulness or intent to evade taxes had been established. Consequently, the Court held that the BIR’s authority to assess had already prescribed, rendering the FLD/FAN and the subsequent FDDA void and without legal effect (Justice Maria Lourdes P.A. Sereno v. CIR, CTA Case No. 10793, December 26, 2026; see also Freyssinet Philippines, Inc. v. CIR, CTA Case No. 11084,November 21, 2025; The City of Manila v. CIR, CTA Case No. 10654, November 12, 2025)

BIR HAS 3 YEARS TO COLLECT, WHICH BEGINS UPON THE ISSUANCE OF THE FLD/FAN; REQUEST FOR RECONSIDERATION DOES NOT TOLL THE RUNNING OF THE PERIOD. When a deficiency tax assessment is validly issued within the ordinary 3-year prescriptive period, the BIR has a separate 3-year period from the date the assessment notice is released, mailed, or sent to the taxpayer within which to collect the assessed taxes through distraint, levy, or judicial action. Jurisprudence likewise establishes that only a request for reinvestigation that is granted by the CIR suspends the running of the period to collect, whereas a mere request for reconsideration does not interrupt prescription. In this case, the taxpayer received the FLD in 2014 to initiate collection. Although the taxpayer subsequently filed a protest in the form of a request for reconsideration, such protest did not suspend the prescriptive period because it neither involved the submission of new evidence nor constituted a granted request for reinvestigation. Since the BIR commenced its collection efforts only in 2020, when the WDL was served, more than 3 years had already elapsed from the date the assessment became collectible. Accordingly, the Court held that the BIR’s right to collect had prescribed, rendering its collection efforts legally unenforceable. CIR v. Jimmy Kho, CTA EB No. 2877 (CTA Case No. 10308), November 18, 2025.

BIR HAS 3 YEARS TO COLLECT; FILING OF ANSWER TO PETITION CONSTITUTES JUDICIAL ACTION FOR COLLECTION. When a tax assessment is validly issued within the 3-year prescriptive period, the BIR has another 3 years from the date the assessment notice is released, mailed, or sent to the taxpayer within which to collect the assessed taxes through distraint, levy, or judicial action. Jurisprudence further recognizes that while a granted request for reinvestigation may suspend the running of the period to collect, the filing of a judicial action for collection, such as the BIR’s Answer to a taxpayer’s petition for review before the CTA praying for payment of the assessed taxes, constitutes a valid mode of collection. In this case, the Court found that although the taxpayer’s protest requested a reinvestigation, there was no evidence that the CIR informed the taxpayer that such request had been granted. Consequently, no suspension of the collection period occurred, and the 3-year period to collect commenced upon the issuance of the FLD/FAN. Nevertheless, before the expiration of this period, the BIR filed its Answer to the taxpayer’s Petition for Review, which, under prevailing jurisprudence, constituted a judicial action for the collection of the assessed taxes. Accordingly, the Court held that the BIR timely initiated collection proceedings and that its right to collect had not yet prescribed. [IBMS Technology Phils. Corporation v. CIR, CTA EB No. 2907 (CTA Case No. 9970), November 12, 2025]

THE FLD/FAN WAS DECLARED VOID BECAUSE, DESPITE THE TAXPAYER’S TIMELY REPLY TO THE PAN WITH EXPLANATIONS, RECONCILIATIONS, AND SUPPORTING DOCUMENTS, THE BIR MERELY REITERATED THE PAN FINDINGS IN THE FLD/FAN WITHOUT ADDRESSING THE TAXPAYER’S DEFENSES OR PROVIDING THE FACTUAL AND LEGAL BASES FOR REJECTING THEM, VIOLATING DUE PROCESS. The BIR must inform the taxpayer in writing of the factual and legal bases of the assessment and, as an essential component of due process, consider and address the taxpayer’s defenses and supporting evidence; otherwise, the assessment is void. While the invalidity of a FDDA does not automatically invalidate the underlying assessment, the assessment itself becomes void when the BIR fails to observe these due process requirements. In this case, although the taxpayer timely filed a Reply to the PAN disputing the alleged undeclared receipts, unsupported interest expense, and deficiency expanded withholding tax through explanations, reconciliations, and supporting documents, the BIR merely reproduced the findings in the PAN in the FLD/FAN with only the interest amounts updated, without addressing or explaining why the taxpayer’s defenses were rejected. As a result, the taxpayer was deprived of meaningful notice of the factual and legal bases for the continued assessment, constituting a denial of due process that rendered the deficiency tax assessments null and void (Bethlehem Holdings, Inc. v. CIR, CTA Case No. 10991, November 18, 2025)

THE TAXPAYER’S PROTEST FILED BEYOND THE 30-DAY PERIOD RENDERS ASSESSMENT FINAL, EXECUTORY, AND DEMANDABLE, DEPRIVING THE CTA OF JURISDICTION. A taxpayer must file a valid protest against a FLD/FAN within 30 days from receipt; otherwise, the assessment becomes final, executory, and demandable, leaving the courts without jurisdiction to review it. Applying these rules, the Court held that although the taxpayer’s protest was dated September 8, 2022, the controlling date was the actual filing date, which was September 14, 2022, as evidenced by the registered mail acceptance stamp on the envelope addressed to the authorized Regional Director. Since the taxpayer received the FLD/FAN on August 10, 2022, he had only until September 9, 2022 to file his protest. The Court ruled that the protest was filed five days late, rendering the assessment final and executory. Consequently, the Court no longer had jurisdiction to review the assessment and dismissed the petition (Mangubat v. CIR, CTA Case No. 11063, February 3, 2026)

CTA LACKS JURISDICTION TO ENTERTAIN PETITION FILED 10 MONTHS AFTER RECEIPT OF THE FDDA. A taxpayer adversely affected by the denial of an administrative protest must either appeal the FDDA to the CTA or elevate the matter to CIR, as the case may be, within 30 days from receipt of the FDDA; otherwise, the assessment becomes final, executory, and demandable. A taxpayer has only three remedies after filing an administrative protest: (1) appeal to the CTA within 30 days from receipt of the denial of the protest; (2) if the denial is issued by the CIR’s authorized representative, elevate the protest to the CIR within the same 30-day period; or (3) in case of inaction, appeal to the CTA within 30 days from the lapse of the 180-day period. Applying these rules, the Court found that the taxpayer received the FLD/FAN on April 12, 2021 and timely filed a request for reinvestigation on April 20, 2021. Although the BIR initially granted the taxpayer 60 days to submit supporting documents, it subsequently informed the taxpayer that it would proceed with the issuance of the FDDA due to the taxpayer’s failure to submit the required documents within the prescribed period. The taxpayer received the FDDA, expressly denominated as the BIR’s “final decision” on the protest, on November 12, 2021. Consequently, the taxpayer had only until December 12, 2021 to either appeal to the CTA or elevate the matter to the CIR. However, the taxpayer filed its Petition for Review only on September 27, 2022, approximately ten (10) months after receipt of the FDDA. The Court therefore held that the petition was filed beyond the mandatory and jurisdictional 30-day period, thereby depriving the CTA of jurisdiction to entertain the case. (Delicious Kakanin Enterprises Corporation v. CIR and Regional Director, Revenue Region No. 5, Caloocan City, CTA Case No. 10988, March 12, 2026)

CTA RETAINED JURISDICTION TO REVIEW THE VALIDITY OF THE WDL UNDER “OTHER MATTERS” BUT WILL NOT RULE ON VALIDITY OF THE ASSESSMENT ITSELF AS WDL COULD NOT BE TREATED AS THE CIR’S DECISION ON THE ASSESSMENT. A taxpayer may appeal to the CTA within 30 days from receipt of the CIR’s adverse decision on a disputed assessment or from the lapse of the 180-day period in case of inaction. Where the taxpayer opts to await the CIR’s decision after the 180-day period, such choice is mutually exclusive from immediately appealing the inaction. The CTA has jurisdiction not only over disputed assessments but also over “other matters” arising under the NIRC, including the validity of WDL. Applying these rules, the Court found that the taxpayer timely protested the FLD/FAN and, after the lapse of the 180-day period without action, elected to await the decision of the BIR’s authorized representative instead of immediately appealing to the CTA. When the authorized representative eventually issued the FDDA the taxpayer filed a Request for Reconsideration with the CIR. However, instead of receiving a decision on the administrative appeal, the taxpayer received WDL, which it argued constituted a constructive denial of its Request for Reconsideration. The Court rejected this argument, holding that under prevailing jurisprudence, a WDL issued during collection proceedings can no longer be treated as the CIR’s final decision on a disputed assessment. Since the Request for Reconsideration remained unresolved, there was no appealable decision on the assessment over which the CTA could exercise jurisdiction, and the Court therefore lacked jurisdiction to review the correctness of the assessment and the FDDA. Nevertheless, the Court ruled that it had jurisdiction to determine the validity of the WDL as an “other matter” arising under the Tax Code. Considering that the taxpayer filed its Petition within the filing period granted, the petition was timely insofar as it questioned the validity of the WDL. Accordingly, the Court held that it had only partial jurisdiction over the case, allowing review of the WDL while dismissing the challenge to the assessment for lack of jurisdiction (The Greenbelt Madison Condominium Association, Inc. v. CIR, CTA Case No. 10789, November 26, 2025)

THE TAXPAYER CANNOT VALIDLY INVOKE THE EARLY CLOSURE OF THE CASHIER AND ALLEGED ADVICE OF COURT PERSONNEL TO FILE VIA COURIER  TO JUSTIFY LATE FILING; CTA CANNOT RELAX THE RULES TO ALLOW BOTH LATE PAYMENT OF DOCKET FEES AND LATE FILING OF THE PETITION; HENCE, THE CTA ACQUIRED NO JURISDICTION OVER THE CASE. The CTA has exclusive appellate jurisdiction over decisions and inactions of the CIR involving disputed assessments and other matters arising under the NIRC, including the validity of  WDL. A taxpayer may directly appeal a WDL to the CTA within 30 days from receipt thereof, as the issuance of a WDL may constitute an implied denial of the taxpayer’s protest. Applying these principles, the Court found that the taxpayer received the WDL on October 28, 2021 and therefore had until November 29, 2021 to file a petition for review. However, the Petition for Review was actually filed only on December 3, 2021, beyond the mandatory and jurisdictional 30-day period. The Court rejected the taxpayer’s claim that it had attempted to file the petition on November 29, 2021 but was prevented from doing so because the cashier had allegedly closed early and court personnel advised it to file through a private courier, ruling that these allegations were unsupported by evidence and, in any event, contradicted by court records showing that the Cash Division continued accepting payments until after 4:30 p.m. The Court likewise held that even assuming such advice had been given, it was not binding on the Court, and the doctrine allowing the late payment of docket fees under exceptional circumstances was inapplicable because the delay pertained not merely to the payment of docket fees but to the actual filing of the petition itself. Since the timely perfection of an appeal is mandatory and jurisdictional, the belated filing deprived the CTA of jurisdiction to entertain the case, warranting the dismissal of the petition. (Helicon Technology Corporation v.  CIR, CTA Case No. 10694, December 29, 2025)

THE RECKONING PERIOD FOR FILING AN APPEAL WITH THE CTA EN BANC BEGINS FROM THE OSG’S RECEIPT OF THE DECISION, NOT FROM THE BIR’S RECEIPT THEREOF. A party adversely affected by a decision or resolution of the CTA Division on a motion for reconsideration or new trial must file a petition for review with the CTA En Banc within 15 days from receipt thereof, unless a timely motion for extension is filed before the expiration of the reglementary period. The period to appeal in cases involving the government is reckoned from the date the Office of the Solicitor General (OSG), as the government’s principal counsel, receives the assailed decision or resolution, and not from receipt by the deputized government lawyer, who merely acts as the OSG’s representative under its supervision and control. Applying these principles, the Court found that while the BIR’s deputized counsel received the CTA Division’s Resolution on October 11, 2024, the OSG had actually received it earlier on October 9, 2024. Thus, the 15-day period to file a petition for review or a motion for extension expired on October 24, 2024. Since the CIR filed the Petition for Review only on October 28, 2024, without having sought a timely extension, the appeal was filed beyond the mandatory and jurisdictional period. Consequently, the CTA Division’s Resolution had already become final and executory by operation of law, leaving the CTA En Banc with no jurisdiction to entertain the belated appeal [CIR v. Berong Nickel Corporation, CTA EB No. 3017 (CTA Case No. 10319), December 17, 2025; see also CIR v. Misnet Education, Inc., CTA EB No. 2825 (CTA Case No. 9941), November 18, 2025]

AN ELECTRIC COOPERATIVE MUST ESTABLISH THAT IT IS A NON-STOCK, NON-PROFIT ENTITY DULY REGISTERED WITH THE NEA BEFORE IT MAY VALIDLY INVOKE THE INCOME TAX EXEMPTION. Electric cooperatives registered with the National Electrification Administration (NEA) are granted a permanent exemption from income tax, and despite the temporary withdrawal of tax incentives The Court emphasized that tax exemptions are construed strictly against the taxpayer, who bears the burden of proving entitlement thereto. Applying these principles, the Court held that although the taxpayer claimed to be permanently exempt from income tax as an electric cooperative, it failed to establish that it was a non-stock, non-profit electric cooperative duly registered with the NEA. The document purportedly proving its NEA registration was not formally admitted in evidence, and the BIR specifically denied the taxpayer’s allegation of NEA registration in its Answer. In the absence of competent and admitted evidence establishing the taxpayer’s qualification for the exemption, the Court ruled that the taxpayer could not invoke the tax exemption, thereby sustaining the deficiency income tax assessment, including the corresponding surcharge and interest [Bukidnon II Electric Cooperative, Inc. (BUSECO) v. CIR, CTA Case No. 10930, December 5, 2025]

TO BE DEDUCTIBLE, TAXPAYER MUST PROVE THAT SALARIES AND WAGES WERE SUBJECTED TO WTC; TAXPAYER MUST PROVE LINK TO EXPENSES; AFS MUST BE PRESENTED AND MUST TRACE THE DISALLOWED AMOUNT. Under the Rules of Evidence, entries in official records are prima facie evidence of the facts stated therein, although the taxpayers still bear the burden of proving entitlement to deductions or non-liability for assessed taxes with competent evidence. In this case, the Court upheld the disallowance in Salaries and Wages representing payments to contractors and subcontractors for failure to establish that these were properly subjected to Withholding Tax on Compensation (WTC) noting that while the taxpayer invoked the Monthly Alphalist of Payees (MAP) attached to its Expanded Withholding Tax (EWT) returns and argued that these showed compliance with 2% EWT on payments, the Court found that such documents only proved EWT compliance and did not automatically establish that the subject salaries and wages were duly subjected to WTC or properly linked to the disallowed expenses. The Court further ruled that the taxpayer’s attempt to rely on its Audited Financial Statements to show that the payments formed part of “Direct Labor” under Cost of Services could not be given credence, as the AFS was not admitted in evidence due to failure to present the original documents for comparison, and even if considered, the figures therein did not specifically identify or sufficiently trace the payments to the disallowed amount. Accordingly, the Court sustained the BIR’s disallowance for lack of competent and specific proof that the contested salaries and wages were properly subjected to withholding tax requirements. [IBMS Technology Phils. Corporation v. CIR, CTA EB No. 2907 (CTA Case No. 9970), November 12, 2025]

REVENUE ISSUANCES

REVENUE MEMORANDUM CIRCULAR NO. 72-2026 

Under the tax authority’s power to streamline administrative procedures, the requirement to secure a prior confirmatory tax ruling for qualified nominee transfers of proprietary club shares is completely removed, moving instead to a post-audit verification system to improve the ease of doing business. 

Covered Issuance	Circular clarifying the tax-exempt status of corporate nominee transfers of proprietary club shares and dispensing with advance regulatory approvals. Transfer is exempt from: • Capital Gains Tax (CGT) • Documentary Stamp Tax (DST) • Donor’s Tax
Scope of Exemption and Conditions	All transfers of proprietary club shares from an outgoing corporate nominee/trustee to an incoming nominee/trustee where the legal title changes but the underlying corporation retains absolute beneficial ownership, solely to comply with club rules requiring registration under a natural person. Conditions: 1. The corporation remains the beneficial owner. 2. The transfer is documented by a Declaration of Trust or Trust Agreement. 3. The share is recorded in the corporate books. 4. The transfer is without monetary or non-monetary consideration, directly or indirectly, in favor of the outgoing or incoming nominee.
Activities Allowed / Conditions	Taxpayers may bypass advance confirmatory rulings and proceed directly to the appropriate Revenue District Office (RDO) for the processing of the electronic Certificate Authorizing Registration (eCAR). To qualify, the proprietary club share must be recorded as a corporate asset, a valid Declaration of Trust or Trust Agreement must be executed, and no monetary or non-monetary consideration may be exchanged between the outgoing and incoming nominees.
Duration / Resolution	Effective immediately upon issuance on June 30, 2026. All pending requests for confirmatory rulings previously submitted to the BIR will no longer be acted upon, and compliance for all covered transactions will be verified solely through mandatory post-audit checks.
Pending Applications	All applications currently pending before the BIR shall no longer be acted upon. Applicants may proceed directly to the Revenue District Office (RDO) having jurisdiction over the transaction for the processing of the electronic Certificate Authorizing Registration (eCAR).

BIR DEADLINES FROM JULY 6, 2026 TO JULY 12, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
July 8, 2026	SUBMISSION – All Transcript Sheets of Official Register Books (ORBs) used by Dealers/Manufacturers/Toll Manufacturers/Assemblers/Importers of Alcohol Products, Tobacco Products, Petroleum Products, Non-Essential Goods, Sweetened Beverage Products, Mineral Products, and Automobiles. Month of June 2026
	e-SUBMISSION – Monthly e-Sales Report for all taxpayers using CRM/POS and/or other similar business machines whose last digit of the 9-digit TIN is an even number. Month of June 2026
July 10, 2026	SUBMISSION – List of Buyers of Sugar together with a copy of the Certificate of Advance Payment of VAT made by each buyer appearing in the list by a Sugar Cooperative. Month of June 2026
	SUBMISSION – Information Return on Releases of Refined Sugar by the Proprietor or Operator of a Sugar Refinery or Mill. Month of June 2026
	e-SUBMISSION – Monthly e-Sales Report for all taxpayers using CRM/POS and/or other similar business machines whose last digit of the 9-digit TIN is an odd number. Month of June 2026
	eFILING & PAYMENT/REMITTANCE (Online/Manual) – BIR Form 2200-M (Excise Tax Return for the Amount of Excise Taxes Collected from Payments Made to Sellers of Metallic Minerals). Month of June 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation). Non-eFPS Filers. Month of June 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 2200-C (Excise Tax Return for Cosmetic Procedures) together with the Monthly Summary of Cosmetic Procedures Performed. Month of June 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 1600-VT (Monthly Remittance Return of Value-Added Tax) and/or BIR Form 1600-PT (Monthly Remittance Return of Other Percentage Taxes Withheld), together with the Monthly Alphalist of Payees (MAP), for eFPS and Non-eFPS Filers. Month of June 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 1606 (Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset, Including Taxable and Exempt Transactions). Month of June 2026
	e-FILING & e-PAYMENT/REMITTANCE – BIR Form 1600-VT (Monthly Remittance Return of Value-Added Tax) and/or BIR Form 1600-PT (Other Percentage Taxes Withheld), and BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) for National Government Agencies (NGAs). Month of June 2026
July 11, 2026	e-FILING – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group E. Month of June 2026
July 12, 2026	e-FILING – BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) – eFPS Filers under Group E. Month of December 2025

COURT OF TAX APPEALS DECISIONS

ASSESSMENT IS VOID IF EXAMINER WHO RECOMMENDED THE ISSUANCE OF THE FLD/FAN IS NOT NAMED IN THE LOA. A Revenue Officer (RO) may examine a taxpayer’s books of accounts and recommend deficiency assessments only when duly authorized through a valid Letter of Authority (LOA) issued by the Commissioner of Internal Revenue (CIR) or his duly authorized representative; without such LOA, the conduct of audit or examination is void. In this case, records and testimony established that one of the ROs, who was not included in the electronic LOA (eLOA), actively participated in the audit process, including reviewing the docket, examining the memorandum report and supporting documents, and re-evaluating the case after the Preliminary Assessment Notice (PAN) stage to support the issuance of the Formal Letter of Demand/Final Assessment Notice (FLD/FAN). She admitted that the case was referred to her for “initial review” before the FLD was issued, and she worked on the audit report and recommendations despite lacking authority under any LOA. In addition, the Group Supervisor (GS), also not named in the eLOA, participated in preparing the memorandum recommending issuance of the PAN, thereby effectively engaging in audit functions reserved exclusively for authorized officers. The Court rejected the BIR’s characterization that these officers merely “reviewed” the case, finding instead that their actions constituted substantive audit participation, which is legally impermissible without a valid LOA. Accordingly, the entire assessment is void. (Pampanga III Electric Cooperative, Inc. v. CIR, CTA Case No. 10999, February 3, 2026)

SUBSTITUTION OF GS WITHOUT LOA AT THE REINVESTIGATION STAGE WHILE RETAINING THE ORIGINAL RO WILL NOT INVALIDATE THE ASSESSMENT. The issuance of a valid LOA prior to the conduct of a tax audit is a mandatory requirement of due process and has been consistently emphasized by the Supreme Court where it held that an assessment is void if conducted by revenue officers who are not properly authorized under a valid LOA, as memoranda of assignment or internal issuances cannot substitute for authority granted by the CIR or his duly authorized representative. In this case, the LOA expressly authorized certain examiners (RO and GS) to examine the taxpayer’s books of accounts and other records and while a subsequent Memorandum of Assignment (MOA) resulted in the substitution of a GS during the reinvestigation stage, while the RO who was originally and validly named in the LOA remained continuously authorized and participated in the audit. The Court further noted that the new GS participation was anchored on the reassignment for reinvestigation and did not involve a complete replacement of all originally authorized revenue officers. Thus, since at least one revenue officer duly named in the LOA continued to conduct and participate in the audit, the examination was not void. [Telstra International (AUS) Limited ROHQ, v. CIR, CTA Case No. 10655, February 12, 2026]

MULTIPLE SUCCESSIVE LOA ISSUED DUE TO BIR PERSONNEL CHANGES DOES NOT VIOLATE “ONE LOA PER TAXABLE YEAR” RULE. Only ROs specifically authorized under a valid LOA may examine a taxpayer’s books of accounts, and while the “one LOA per taxable year” rule generally limits the issuance of multiple LOAs for the same tax type and period, jurisprudence recognizes that the issuance of a new or replacement LOA for the same taxable period is valid when necessitated by reassignment, transfer, promotion, retirement, or inability of previously assigned ROs to continue the investigation, provided the taxpayer is properly informed of the officers authorized to conduct the audit. In this case, the Court found that each successive LOA was validly issued as a consequence of personnel changes within the BIR, specifically the promotion and reassignment of previously authorized GS and examiners, with the replacement LOAs issued precisely to reflect these changes and ensure compliance with due process requirements. The evidence further showed that the taxpayer was informed each time of the identities of the new authorized revenue officers, and the subsequent replacement LOAs were intended not to create unauthorized overlapping authority but to continue the audit process in accordance with BIR rules governing reassignment of cases. Since the successive LOAs were issued for legitimate administrative reasons and served the purpose of keeping the taxpayer informed of the officers legally authorized to conduct the audit, the Court held that there was no violation of due process and that the audit investigation and resulting assessment were undertaken pursuant to valid LOAs. (Set and Stage Resource Management, Inc. v. CIR, CTA Case No. 10703, February 13, 2026)

3-YEAR PRESCRIPTIVE PERIOD WAS EXTENDED BY 420 DAYS DURING COVID-19 PANDEMIC. The BIR generally has 3 years from the date prescribed by law for filing the return, or from the actual filing date if filed late, within which to assess internal revenue taxes; however, the running of this prescriptive period is suspended when the CIR is legally prohibited from making an assessment, including periods recognized by law during national emergencies. In this case, although the taxpayer argued that the deficiency tax assessments had prescribed because there was allegedly no valid waiver extending the assessment period, the Court rejected this contention and held that the assessments were timely issued. The Court found that while the original prescriptive periods for income tax and VAT for taxable year 2017 would have ordinarily lapsed in 2021, the running of the statute of limitations was automatically suspended by operation of law, which excluded periods when the National Capital Region was under ECQ and MECQ during the COVID-19 pandemic. After excluding a total of 420 days from the computation of prescription, the Court held that the issuance of the FLD/FAN remained well within the extended assessment period, rendering the taxpayer’s challenge based on the alleged invalidity of waivers immaterial since the extension arose by operation of law and not by contractual waiver. (Ford Group Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10728, November 20, 2025)

A TAXPAYER CANNOT INVOKE NON-RECEIPT OF THE PAN WHERE THE SAME REPRESENTATIVE CONSISTENTLY RECEIVED THE LOA AND FLD/FAN AND PARTICIPATED IN THE ASSESSMENT PROCEEDINGS BY SUBMITTING SUPPORTING DOCUMENTS AND FILING A PROTEST. Due process in tax assessments requires that the taxpayer be properly served with a PAN and where personal service is not practicable, substituted service is valid if the notice is left at the taxpayer’s registered or known address with a clerk or person in charge. When a taxpayer denies receipt of an assessment, the burden shifts to the BIR to prove valid service by competent evidence. Applying these principles, the Court found that the BIR sufficiently established valid substituted service of the PAN through Ngo, who regularly received the taxpayer’s tax notices. The records showed that the taxpayer had previously stipulated in the Joint Stipulation of Facts the issuance of the first LOA, FLD/FAN and second LOA, all of which were similarly received by Ngo as evidenced by handwritten acknowledgments and signatures appearing on the notices. The taxpayer likewise acted upon these notices by submitting documents requested under the first LOA, filing a protest against the FLD/FAN, and acknowledging the second LOA in the petition, thereby demonstrating actual receipt through the same representative. The Court also noted the taxpayer’s inconsistent position in challenging Ngo’s authority only with respect to the PAN despite not disputing Ngo’s receipt of all prior BIR notices, and a comparison of signatures on the PAN and other notices showed clear similarity, further confirming authenticity. Consequently, the Court held that the taxpayer duly received the PAN through valid substituted service, and the BIR sufficiently discharged its burden of proving proper service. (Judy Bautista Lee v. Commissioner of Internal Revenue, CTA Case No. 10973, November 18, 2025)

FAILURE TO PROTEST THE FLD/FAN WITHIN 30 DAYS RENDERS THE ASSESSMENT FINAL AND ENFORCEABLE. A taxpayer must file a valid administrative protest against an FLD/FAN within 30 days from receipt thereof; otherwise, the assessment becomes final, executory, and demandable, and the taxpayer is thereafter barred from disputing its validity or raising defenses against the assessment. In this case, the records clearly established, and the taxpayer expressly admitted, receipt of the FLD/FAN but failed to file any timely and valid protest within the mandatory 30-day period, thereby causing the assessments to attain finality and become legally enforceable, precluding the taxpayer from later contesting the validity of the underlying assessment or questioning subsequent collection measures. Although the taxpayer attempted to invalidate the assessment by claiming non-receipt of the PAN, the Court found this argument unavailing because the BIR presented competent evidence proving valid service, including the receiving copies of the PAN signed by the taxpayer’s bookkeeper. Significantly, the same bookkeeper had likewise received the LOA, Notice of Informal Conference (NIC), FLD, FAN, and Warrant of Distraint and/or Levy (WDL) on behalf of the taxpayer without prior objection as to her authority, thereby estopping the taxpayer from subsequently denying receipt of the PAN or questioning her authority to receive official BIR notices. Since the taxpayer failed to timely dispute the FLD/FAN and the Court found no merit in its denial of receipt of the PAN, the assessments were held final, executory, and demandable, validating the BIR’s collection actions (Xytrix Systems Corporation v. CIR, CTA Case No. 11021, February 13, 2026)

(1) DEMAND TO PAY “30 DAYS FROM RECEIPT” OF FLD/FAN AND (2) STATEMENT INTEREST WILL BE ADJUSTED IF PAYMENT IS MADE BEYOND THE SPECIFIC PERIOD DO NOT MAKE THE AMOUNT AND DUE DATE INDEFINITE. A valid tax assessment must constitute a written notice and demand for payment containing a definite amount of tax liability and a definite due date. In this case, the Court held that the assessments sufficiently complied with legal requirements because, while the FLD noted that interest may be adjusted if payment is made beyond the specified date, the Assessment Notices clearly indicated that payment was due “30 days from receipt,” which is a determinable and definite period, thereby constituting a valid and enforceable demand for payment. The Court further explained that the reference to interest adjustment does not render the assessment indefinite, as it merely reflects the statutory rule that interest continues to accrue until full payment of the tax. Accordingly, the FLD/FAN were upheld as valid assessments containing a definite amount and due date (Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue, CTA Case No. 10344, February 6, 2026; see also Judy Bautista Lee v. Commissioner of Internal Revenue, CTA Case No. 10973, November 18, 2025)

ASSESSMENT BASED ON UNVERIFIED TPI IS VOID. A deficiency tax assessment must be founded on actual, verified facts supported by credible evidence, and not merely on unconfirmed Third-Party Information (TPI). When the BIR relies on TPI generated through computerized matching of taxpayers’ declarations, the investigating revenue officer is required to verify the discrepancies by issuing confirmation requests to the third-party sources, securing sworn statements attesting to the veracity of the reported data, and, when the sources are outside the investigating office’s jurisdiction, proving service through registered return cards. In the present case, the BIR assessed the taxpayer for alleged undeclared sales after relying on computerized matching between the taxpayer’s VAT declarations and purchase declarations allegedly made by third parties. However, despite issuing several confirmation requests, the BIR failed to obtain the required sworn statements from the supposed third-party sources, produced only a single reply that did not contain the mandatory sworn attestation, failed to identify which source provided the response, and did not present registered return cards for multiple third-party sources located outside the jurisdiction of the investigating office. The records therefore failed to establish that the discrepancies reflected in the computerized matching data were ever independently verified in accordance with mandatory BIR procedures. The Court thus ruled that the assessment lacked factual and legal basis, that the BIR failed to comply with its own regulations governing TPI verification, and that the resulting deficiency income tax and VAT assessments, together with the corresponding WDL, were void and unenforceable for want of credible evidentiary support. (Judy Bautista Lee v. Commissioner of Internal Revenue, CTA Case No. 10973, November 18, 2025 see also Set and Stage Resource Management, Inc. v. CIR, CTA Case No. 10703, February 13, 2026)

BIR CANNOT LEGALLY ISSUE WDL WITHOUT FDDA; CTA CANNOT RULE ON THE MERITS OF THE ASSESSMENT. Taxpayers must be informed in writing of the facts and law on which an assessment is based, and they are afforded the right to protest and await a final decision by the CIR before resorting to judicial remedies; absent such final decision, issuances made in the course of collection do not constitute appealable determinations. The Court ruled that the WDL was issued prematurely because the taxpayer’s protest remained unresolved and no Final Decision on Disputed Assessment (FDDA) or final action had been issued, meaning there was no established tax delinquency that could justify summary collection remedies like WDL. The Court emphasized that collection mechanisms may only be enforced once a tax liability becomes final, executory, and demandable, and that issuing a WDL on the basis of a non-final assessment violates due process. Accordingly, the WDL was declared void for being prematurely issued and for lacking a valid basis, although the Court clarified that it had no jurisdiction to rule on the merits of the underlying assessment itself (Everwing Profem Corporation v. CIR, CTA Case No. 11082, February 10, 2026)

FDDA SERVED VIA SUBSTITUTED SERVICE WITHOUR PROVING PERSONAL SERVICE IS IMPRACTICABLE IS VOID; BUT VOID FDDA WILL NOT AFFECT VAILIDTY OF THE FLD/FAN. The BIR regulations require strict compliance with the modes and procedure for service of assessment notices, including personal service at the taxpayer’s registered or known address and, only when such is not practicable, valid substituted service supported by proof of non-presence, participation of a barangay official and two disinterested witnesses, and the submission of a sworn report of service; failure to comply with these requirements renders substituted service void for violation of due process. In this case, the taxpayer’s FDDA was served by substituted service allegedly after a failed attempt at its old registered address and left with the barangay official; however, the taxpayer had already duly updated its registered address as evidenced by BIR Form Nos. 1905 and 2303, and the BIR failed to prove that personal service was impracticable or that the taxpayer was not present at its updated address, as well as failed to present the serving revenue officer, barangay official, or disinterested witnesses, or the required sworn Report on Personal/Substituted Service, thereby rendering the substituted service improper and the FDDA void. Nonetheless, consistent with jurisprudence, a void FDDA does not automatically invalidate the underlying assessment, as the assessment and the decision on a disputed assessment are distinct, and the former may remain valid and enforceable despite defects in the latter (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981, February 11, 2026)

REGIONAL DIRECTORS ARE ALLOWED TO SIGN WDL; RDAO DOES NOT REQUIRE PUBLICATION. The BIR may enforce collection of delinquent taxes through summary administrative remedies, including distraint and levy, provided such collection action is exercised by revenue officials properly authorized by the CIR, whose authority may be delegated through valid internal issuances such as Revenue Delegation Authority Orders (RDAO), with internal delegations becoming immediately effective even without publication. In this case, the taxpayer challenged the validity of the WDL solely on the ground that it was signed by the Regional Director instead of the Revenue District Officer, allegedly contrary to prior delegation rules. The Court rejected this argument, finding that when the WDL was issued and received in 2022, a new RDAO had already taken effect and expressly delegated authority to Regional Directors to sign and approve WDL involving Regional Office cases. Since RDAO of 2022 constituted a valid internal delegation of authority by the CIR and did not require publication to become effective, the Regional Director was fully authorized to issue the WDL. (Xytrix Systems Corporation v. CIR, CTA Case No. 11021, February 13, 2026)

ELECTRIC COOPERATIVES REGISTERED WITH THE NEA ENJOY A PERMANENT INCOME TAX EXEMPTION DESPITE NON REGISTRATION WITH CDA. This exemption remains effective despite subsequent issuances withdrawing fiscal incentives, because later laws and interpretations are construed as maintaining or reinstating such tax privileges for National Electrification Administration (NEA)-registered electric cooperatives. In this case, the taxpayer, an electric cooperative duly registered with the NEA, is deemed to fall squarely within the scope of the permanent income tax exemption, regardless of its non-registration with the CDA, following established rulings that NEA registration alone suffices to retain tax-exempt status and that conflicting issuances cannot override the statutory exemption granted to electric cooperatives. Accordingly, the Court held that the taxpayer cannot be subjected to income tax liability, rendering the deficiency income tax assessment, including the NIC, PAN, FLD/FAN, and related issuances, void for lack of legal basis (Pampanga III Electric Cooperative, Inc. v. CIR, CTA Case No. 10999,February 3, 2026)

SOURCE OF INCOME IS DETERMINED BY PLACE WHERE ACTIVITY IS PERFORMED REGARDLESS OF PLACE OF PAYMENT OR CUSTOMERS’ RESIDENCY/LOCATION.  Enterprises registered within the Subic Special Economic Zone (SSEZ) are entitled to the preferential gross income tax (PGIT) in lieu of all national and local internal revenue taxes, provided that income from “sources within the Customs Territory” (i.e. within the Philippines) does not exceed 30% of total income; jurisprudence clarifies that the “source” of income is determined not by the residence of the payor or place of payment, but by the place where the income-generating activity is actually performed. In this case, the BIR assessed the taxpayer for deficiency tax on the theory that sales to customers outside the SSEZ constituted income sourced within the Philippines, thereby pushing the taxpayer beyond the 30% threshold and disqualifying it from PGIT; however, the Court rejected this approach, holding that the proper test is where the sales and services were actually rendered, and the evidence, such as invoices, receipts, and related documentation issued and accomplished within the SSEZ, showed that the taxpayer’s income-generating activities were performed within the zone, regardless of the customers’ residency or location or whether withholding certificates were issued by payors within the Philippines. Thus, the taxpayer remained qualified for the PGIT regime and was not liable for RCIT and VAT, rendering the BIR’s assessments void for lack of legal basis as they were premised on an erroneous determination of income source and improper disqualification from the tax incentive. (West Automotive Corporation v. CIR, CTA Case No. 10561, February 10, 2026)

A TAXPAYER SEEKING TO SUBSTANTIATE THE CORRECT TAX TREATMENT BEARS THE BURDEN OF PROVIDING PROPER TRACING, RECONCILIATION, OR DECLARATION IN THE ITR; JOURNAL VOUCHERS, AND GENERAL LEDGERS ALONE DO NOT SUFFICE. Taxable income is determined based on gross income less allowable deductions, and taxpayers claiming adjustments or reconciling items that affect the computation of taxable income bear the burden of substantiating such claims with competent evidence sufficient to establish the correctness of the reported tax treatment. In this case, the taxpayer argued that the adjustment relating to training expenses with corresponding dealer share merely involved a reclassification, which had no effect on taxable income. While the Court recognized that, in principle, the accounting reclassification appeared to have a neutral effect on the taxpayer’s net taxable income since it only affected presentation and did not alter the overall tax base, it nevertheless rejected the taxpayer’s claim for failure to sufficiently substantiate the adjustment. The Court found that the taxpayer merely presented journal vouchers and general ledger extracts for the affected revenue and expense accounts but failed to provide tracing, reconciliation, or proof that the corresponding reduced selling or marketing expenses were actually declared in the Annual Income Tax Return. In the absence of competent evidence establishing that the adjustment indeed resulted in a nil tax effect, the Court ruled that the reconciling item could not be considered. (Ford Group Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10728, November 20, 2025)

CLAIMS FOR SALES DISCOUNTS MUST BE SUPPORTED BY DOCUMENT INDENTIFYING THE NATURE OF THE TRANSACTION, ACTUAL DATE, SPECIFIC GOODS RETURNED; JOURNAL VOUCHERS AND GENERAL LEDGERS ARE NOT SUFFICIENT. Deductions or adjustments affecting gross income are allowable only when sufficiently substantiated by adequate records and competent evidence proving that the transactions were genuinely incurred in connection with the taxpayer’s business operations. In this case, the taxpayer claimed deductions consisting of sales returns of parts and sales discounts which were deducted from revenue for income tax purposes but allegedly not reflected in its VAT returns. The Court held that the claimed sales returns of parts could not be recognized because the taxpayer merely presented journal vouchers and general ledger extracts, which were insufficient to establish the validity of the returns since they did not identify the nature of the return transaction, the actual date of return, the specific goods or parts returned, or the identity of the customers involved. In contrast, the Court ruled favorably on the sales discounts after finding that the taxpayer adequately substantiated these transactions through journal vouchers, general ledger extracts, and credit notes issued to dealers, which sufficiently demonstrated that the discounts represented legitimate cash subsidies granted to dealers on vehicle sales in the ordinary course of business and properly identified the dealers who benefited therefrom. (Ford Group Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10728, November 20, 2025)

ADVERTISING EXPENSES PAID TO FOREIGN MEDIA AND AFFILIATES ARE NECESSARY AND ORDINARY TO THE TAXPAYER’S TRADE OR BUSINESS; EXPENSES MUST BE DEDUCTED IN THE YEAR WHERE LIABILITY BECOMES FIXED AND DETERMINABLE. Business expenses are deductible for income tax purposes only if they are ordinary and necessary, incurred in carrying on the taxpayer’s trade or business, properly substantiated by adequate records, and claimed in the correct taxable year consistent with the taxpayer’s accounting method. Jurisprudence provides that an expense is “necessary” when it is appropriate and helpful to the business, and “ordinary” when reasonably connected with the taxpayer’s operations, regardless of whether the supplier is local or foreign. Applying these principles, the Court found that the taxpayer sufficiently established that its foreign advertising expenses consisting of payments to foreign media companies such as Facebook, Google, and Twitter through Mindshare, as well as regional marketing charges paid to affiliates were directly related to promoting products in the Philippine and ASEAN markets and were therefore legitimate and deductible business expenses. However, the Court disallowed foreign advertising expenses incurred in CY 2016 but claimed in CY 2017, holding that under the accrual method of accounting and the “all-events test,” expenses must be deducted in the year when the liability becomes fixed and determinable, not in a subsequent taxable year. Accordingly, while the bulk of the foreign advertising expenses was allowed as deductible, the out-of-period expenseswere properly disallowed. (Ford Group Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10728)

SALE TO SBMA-REGISTERED ENTITY IS SUBJECT TO ZERO-RATED VAT; REQUISITES. Sales made by a VAT-registered supplier from the Philippine customs territory to enterprises duly registered within the Subic Bay Freeport Zone are treated as constructive export sales subject to 0% VAT, provided: (1) the seller is VAT-registered, (2) the buyer is an SBMA-registered entity entitled to special tax incentives, and (3) the goods sold are shown to have been delivered to and consumed within the freeport zone. Applying these principles, the Court found that the taxpayer successfully established that its zero-rated sales because the taxpayer proved that it was a VAT-registered entity, submitted customer’s Certificates of Registration and Tax Exemption (CRTEs) issued by SBMA covering the audit period, and presented sales invoices clearly reflecting the vehicles and parts sold, delivery dates, destinations within the SBFZ, and acknowledgment receipts showing actual delivery within the freeport zone. The Court rejected the BIR’s position that automobiles are automatically excluded from zero-rating because they are not production-related goods, ruling that the decisive factor is not the classification of the goods but whether the sale is legally treated as an export transaction under the separate customs territory principle. Nevertheless, the Court sustained partial disallowances for several transactions that were inadequately substantiated, particularly invoices with illegible signatures, unsupported sales, transactions outside the covered taxable period, and unsupported “other income” items allegedly treated as zero-rated sales. (Ford Group Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10728)

ALLEGATIONS OF ERROR MUST BE SUPPORTED BY EVIDENCE. Any expense otherwise deductible from gross income shall be allowed only if the corresponding required withholding tax has been properly withheld and remitted to the BIR. In this case, the BIR disallowed the taxpayer’s claimed expenses on the ground that the appropriate expanded withholding taxes were not shown to have been withheld on various income payments. The Court held that the taxpayer’s bare allegations of error, unsupported by competent evidence, could not overturn the assessment. Thus, a reduced amount was sustained for failure to comply with withholding requirements and failure to substantiate contrary claims. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981, February 11, 2026)

ALLEGATION OF TIMING DIFFERENCE BETWEEN SALES PER ITR AND SAWT REQUIRES PROOF THAT DISCREPANCY WAS REPORTED IN ANOTHER PERIOD.  All income derived from whatever source, including gross sales or receipts, forms part of taxable income and must be fully declared in the income tax return, with the burden resting on the taxpayer to properly report and substantiate all income earned within the taxable year. In this case, the BIR found a discrepancy arising from the comparison of the taxpayer’s Sales per Summary Alphalist of Withholding Tax at Source (SAWT) and its declared Sales per ITR, which the BIR treated as undeclared income subject to income tax. The taxpayer argued that the variance was merely due to timing differences in the recognition of income and the issuance or utilization of BIR Form No. 2307 by customers, asserting that sales are recorded upon delivery or actual sale while withholding certificates may be issued later upon payment. However, the Court held that the taxpayer failed to present sufficient evidence to prove that the discrepancy was already reported in another taxable year or that it was otherwise properly subjected to income tax, and mere allegations of timing differences cannot overcome the presumption of correctness of the assessment. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981, February 11, 2026)

INTEREST MUST BE SUPPORTED BY RECEIPTS/INVOICE TO PROVE IT IS PAID OR INCURRED; LOAN AGREEMENT AND AFS MERELY PROVE EXISTENCE AND THUS INSUFFICIENT. Interest paid or incurred within a taxable year on indebtedness connected with the taxpayer’s trade, business, or profession may be claimed as a deductible expense, provided that the taxpayer is able to substantiate both the existence of the obligation and the actual payment or incurrence of the expense with sufficient supporting documents. In this case, although the taxpayer presented a loan agreement showing a loan obligation with a principal amount and annual interest rate, as well as disclosure in the AFS, the Court held that these documents merely established the existence of the loan but did not sufficiently prove the actual interest expense claimed as deduction since no vouchers, receipts, ledgers, or other documentary evidence were submitted to verify the expense; thus, the assessment disallowing the deduction for unsupported interest expense was sustained. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981, February 11, 2026)

RETIREMENT BENEFIT EXPENSE MAY BE SUPPORTED BY ACTUARIAL VALUATION REPORT. An employer who establishes or maintains a pension trust or retirement plan for its employees may deduct from gross income the reasonable retirement benefit expenses or pension liabilities accrued during the taxable year, provided that such amounts are properly substantiated and recognized in accordance with applicable accounting standards. In this case, the Court found that the assessment disallowing the taxpayer’s retirement benefit expense was improper because the taxpayer was able to sufficiently establish the validity of the deduction through documentary and accounting evidence. The amount pertained to accrued retirement benefit cost recognized in the taxpayer’s AFS, specifically disclosed in the notes, showing that the taxpayer maintained a defined benefit retirement plan covering permanent employees. The Court noted that the retirement benefit obligation was computed through actuarial studies, and was further supported by the actuarial valuation report. Since the expense was properly accrued, adequately disclosed, and sufficiently substantiated by competent evidence, the Court ruled that the retirement benefit expense was a valid deductible expense and ordered the cancellation of the assessment. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981, February 11, 2026)

MEDICAL EXPENSES MUST BE SUPPORTED BY RECEIPTS/INVOICE TO PROVE PAYMENT; AGREEMENTS AND LEDGERS ARE NOT SUFFICIENT. Ordinary and necessary business expenses may be deducted from gross income only if the taxpayer is able to substantiate the amount of the expense with sufficient evidence, such as official receipts, sales invoices, or other adequate records, and establish that the expense is directly connected with the conduct, development, or operation of its trade or business. In this case, the Court sustained the assessment disallowing the taxpayer’s claimed staff medical because, although the taxpayer argued that the expenses pertained to medical assistance extended to employees, purchases from drugstore, and employee medicine, which the taxpayer characterized partly as de minimis benefits, the Court found that the taxpayer failed to sufficiently substantiate the deduction. While the taxpayer submitted the Supplement to the Group Corporate Agreement with Avega Managed Care, Inc. and a general ledger snapshot, it failed to present the underlying official receipts, sales invoices, or other documentary proof necessary to verify the nature and actual payment of the claimed expenses. Absent competent supporting evidence, the Court held that the taxpayer failed to overcome the presumption of correctness accorded to tax assessments, thereby sustaining the disallowance of the deduction. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981, February 11, 2026)

PENALTIES MUST BE SUPPORTED BY PROOF OF ACTUAL PAYMENT; SCHEDULE IS NOT SUFFICIENT. Deductible business expenses must be properly substantiated by sufficient evidence, such as official receipts, invoices, or other adequate records proving both the existence and actual payment of the expense during the taxable period. In this case, the Court sustained the assessment disallowing the taxpayer’s claimed penalties, which the taxpayer asserted represented interest penalties arising from the late filing of BIR tax returns, because the taxpayer failed to satisfy the statutory substantiation requirement. The Court found that the taxpayer merely submitted a schedule summarizing the transactions but did not present the corresponding filed tax returns, proof of payment, official receipts, or other documentary evidence necessary to verify the nature and actual payment of the claimed expense. In the absence of competent supporting documents, the taxpayer failed to establish the validity of the deduction, and thus the Court upheld the assessment made by the Bureau of Internal Revenue. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981)

RENTAL EXPENSES MUST BE SUPPORTED BY INVOICE/RECEIPTS TO PROVE ACTUAL PAYMENT; LEASE AGREEMENT IS NOT SUFFICIENT. A taxpayer may deduct from gross income reasonable rental payments and other charges required as a condition for the continued use or possession of property used in the conduct of trade or business, provided that such expenses are properly substantiated in accordance with the documentary requirements of tax law. In this case, although the taxpayer argued that the dues and subscriptions expense represented association dues pursuant to its lease agreement, which required monthly payments for maintenance, security, and other building services necessary for its business operations, the Court held that the deduction was properly disallowed for lack of sufficient substantiation. The Court found that while the lease agreement established the taxpayer’s obligation to pay the association dues, it did not, by itself, prove that the expenses were actually incurred and paid during the taxable period. The taxpayer failed to present supporting invoices, official receipts, or other documentary evidence from the lessor or condominium corporation that could verify the actual payment of the claimed expense. (3D Networks Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10981)

BRANCH PROFIT REMITTANCE TAX (BPRT) IS IMPOSED ON PROFITS ACTUALLY REMITTED BY A BRANCH TO ITS HEAD OFFICE, OR ON PROFITS APPLIED OR EARMARKED FOR SUCH REMITTANCE. In this case, the BIR assessed the taxpayer for deficiency BPRT on the theory that unaccounted branch profits were not reflected in the taxpayer’s account and were therefore either actually or constructively remitted to its head office; however, the Court found that this conclusion was unsupported by evidence, as the BIR failed to establish any actual remittance or any act showing earmarking or appropriation of profits for remittance, and instead relied solely on a presumption derived from alleged discrepancies. On the contrary, the taxpayer successfully demonstrated through its audited financial statements and Statement of Changes in Home Office Account that no remittance occurred, as its Home Office account and accumulated earnings consistently increased and even in succeeding years, which is inconsistent with any inference of remittance, whether actual or constructive, and was further corroborated by the testimony of its finance manager confirming that no branch profits were ever remitted or offset against any payable to the head office. Accordingly, the Court held that the deficiency BPRT assessment had no factual or legal basis and must be cancelled for lack of actual or constructive remittance. [Telstra International (AUS) Limited ROHQ, v. CIR, CTA Case No. 10655, February 12, 2026]

INPUT VAT ARISING FROM PAYMENTS FOR SERVICES RENDERED BY NON-RESIDENTS MAY ONLY BE CLAIMED AS INPUT TAX IF PROPERLY SUBSTANTIATED BY A DULY FILED BIR FORM NO. 1600 AND PROOF OF REMITTANCE OF THE FINAL WITHHOLDING VAT. Applying this, the Court found that a comparison between the taxpayer’s VAT returns and its BIR Form No. 1600 disclosed a discrepancy in the amount of services rendered by non-residents, showing that the taxpayer overclaimed input tax corresponding to unsubstantiated transactions. (National Reinsurance Corporation of the Philippines v. CIR, CTA Case No. 11156, February 13, 2026)

INPUT VAT ATTRIBUTABLE TO VAT-EXEMPT SALES MUST BE DISALLOWED; EXCESS INPUT VAT CARRIED OVER TO SUBSEQUENT PERIOD CANNOT ABSORB THE ASSESSMENT DUE TO DOUBLE RECOVERY. A VAT-registered taxpayer engaged in both VATable and VAT-exempt transactions is required to proportionately allocate input VAT when such input taxes cannot be directly attributed to a specific transaction, and only the portion attributable to VATable transactions may be recognized as input tax credit, while input VAT allocable to exempt sales must be excluded. Applying these provisions, the Court found that the taxpayer had substantial mixed transactions but failed to properly deduct from its available input VAT the portion attributable to exempt sales, despite reporting significant exempt revenues. After recomputing the proper allocation of the taxpayer’s input VAT based on the proportion of VATable and exempt sales, the Court determined that the taxpayer overclaimed input VAT. The Court rejected the taxpayer’s argument that its large excess input VAT carryover from prior periods should absorb the assessment, ruling that the overstated input tax credits had already been carried forward and remained available for utilization in succeeding taxable periods; thus, allowing an offset against the present assessment would effectively permit double recovery to the prejudice of the government. Since the taxpayer failed to establish that these disallowed input tax credits were not subsequently utilized, the Court sustained the assessment. (National Reinsurance Corporation of the Philippines v. CIR, CTA Case No. 11156, February 13, 2026)

CANCELLED OFFICIAL RECEIPTS CANNOT SERVE AS A VALID BASIS FOR DEFICIENCY VAT ASSESSMENT; OFFICIAL RECEIPTS PERTAINING TO A DIFFERENT TAXABLE YEAR MUST BE SUPPORTED BY SUFFICIENT EVIDENCE ESTABLISHING THAT THE TRANSACTION WAS PROPERLY REPORTED AND THAT THE CORRESPONDING VAT WAS DULY DECLARED AND REMITTED IN THAT YEAR. Value-added tax is imposed on gross receipts derived from the sale of services, and the BIR is authorized to assess deficiency VAT when a taxpayer fails to declare taxable receipts. In this case, the BIR assessed the taxpayer for deficiency VAT arising from alleged undeclared receipts based on purportedly missing Official Receipts (ORs), computed by deriving the average sales per issued OR and multiplying it by the number of allegedly missing receipts. The taxpayer argued that the receipts were not missing, asserting that several ORs had been cancelled while others pertained to transactions in another year. Upon examination of the documentary evidence, the Court found that some ORs were validly cancelled, while several receipts indeed bore 2018 dates. However, the taxpayer failed to present sufficient proof that the receipts dated in 2018 had actually been reported and remitted during that year, and the Court noted that the issuance of the receipts was not chronological, thereby casting doubt on the taxpayer’s claim that such transactions properly belonged to 2018. As a result, while the Court rejected the assessment insofar as cancelled receipts were concerned, it sustained the deficiency VAT assessment attributable to receipts dated in 2018 for which the taxpayer failed to substantiate prior reporting. (Set and Stage Resource Management, Inc. v. CIR, CTA Case No. 10703, February 13, 2026)

FAILURE TO COMPLY WITH INVOICING REQUIREMENTS RESULTS IN DISALLOWANCE OF INPUT VAT. A taxpayer may claim input value-added tax only when such input tax is supported by valid VAT invoices issued in strict compliance with the invoicing requirements, and failure to satisfy these documentary requirements warrants the disallowance of the corresponding input tax credits. In this case, the BIR disallowed the taxpayer’s claimed input VAT after finding that several supporting invoices and official receipts failed to comply with mandatory invoicing requirements prescribed by law. Upon examination of the documentary evidence submitted by the taxpayer, the Court found that input VAT was properly disallowable due to multiple invoicing defects, including unsupported transactions, incorrect VAT amounts, failure to indicate the nature of services rendered, absence of VAT amount, missing authorized signatures, absence of the taxpayer’s address, incomplete the taxpayer details, and failure to state the taxpayer’s TIN. These deficiencies rendered the supporting documents legally insufficient to substantiate entitlement to input VAT credits under the Tax Code. (Set and Stage Resource Management, Inc. v. CIR, CTA Case No. 10703, February 13, 2026)

REVENUE ISSUANCES

BIR DEADLINES FROM JUNE 29, 2026 TO JULY 5, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
June 29, 2026	e-FILING & PAYMENT (Online/Manual) – BIR Form 1702Q (Quarterly Income Tax Return For Corporations, Partnerships and Other Non-Individual Taxpayers) and Summary Alphalist of Withholding Taxes (SAWT) – Fiscal Quarter ending April 30, 2026
June 30, 2026	SUBMISSION – Soft copies of Inventory List and Schedules stored and saved in DVD-R/USB properly labeled together with Notarized Sworn Declaration – Fiscal Year ending May 31, 2026
	SUBMISSION – Manufacturers’/Assemblers’/Importers’ Sworn Statement of each Particular Brand/Model of Automobile, Alcohol Products, Tobacco Products and Sweetened Beverage Products. 1st Semester of 2026
	SUBMISSION – Proof of eFiled BIR Form 1702– RT/1702-EX/1702-MX with Audited Financial Statements (AFS), 1709 (if applicable), and Other Attachments through Electronic Audited Financial Statements (eAFS)– Fiscal Year ending February 28, 2026
	e-SUBMISSION – Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayers. eFPS Filers – Fiscal Quarter ending May 31, 2026
	ONLINE REGISTRATION (thru ORUS) – Computerized Books of Accounts and Other Accounting Records – Fiscal Year ending May 31, 2026
July 1, 2026	SUBMISSION – Consolidated Return of All Transactions based on the Reconciled Data of Stockbrokers. June 16-30, 2026
	SUBMISSION – Engagement Letters and Renewals or Subsequent Agreements for Financial Audit by Independent CPAs. Fiscal Year beginning September 1, 2026
July 5, 2026	SUBMISSION – Summary Report of Certification issued by the President of the National Home Mortgage Finance Corporation (NHMFC). Month of June 2026
	e-FILING/FILING & e-PAYMENT/PAYMENT – BIR Form 2000 (Monthly Documentary Stamp Tax Declaration/Return). Month of June 2026
	e-FILING/FILING & e-PAYMENT/PAYMENT – BIR Form 2000-OT (Documentary Stamp Tax Declaration/Return One-Time Transactions). Month of June 2026