Month: March 2026

COURT OF TAX APPEALS DECISIONS

THE CITY OF MANILA’S ASSESSMENT IS VOID FOR ASSESSING TAXPAYER BUSINESS TAX AS HOLDING COMPANY WITHOUT ANY SUPPORTING ORDINANCE; ALSO VOID FOR LACK OF NATURE, BASIS, AND RATE OF THE TAX. Under Section 195 of the Local Government Code (LGC), a valid local tax assessment must clearly state the nature of the tax, the amount of deficiency, and the applicable surcharges, interests, and penalties; in addition, LGC requires that the power of local government units to impose taxes must be exercised through a duly enacted ordinance of the Sanggunian. Applying these principles, the Court found that the City of Manila improperly assessed the taxpayer for “business tax as holding co.” despite the absence of any ordinance imposing such tax on holding companies, and without adequately indicating the legal basis or nature of the tax in the assessment notice. The assessment further failed to specify the tax rate and showed inconsistency as to whether the taxpayer was being taxed as a contractor or a financial institution, even leading to figures that could not be independently verified or recomputed. Such omissions prevented the taxpayer from intelligently protesting the assessment and demonstrated arbitrariness in its issuance, thereby violating due process. Consequently, the deficiency local business tax assessments were declared void. (The City of Manila et. al., v. CTF Hotel and Entertainment, Inc., CTA EB No. 2987, CTA AC 276, September 19, 2025)

THE PERIOD TO FILE A PETITION FOR REVIEW OR A MOTION FOR RECONSIDERATION RUNS FROM THE DATE THE DECISION OR RESOLUTION IS RECEIVED BY THE PARTY’S COUNSEL OF RECORD, AND WHERE A PARTY IS REPRESENTED BY MULTIPLE COUNSELS, NOTICE TO ANY ONE OF THEM IS CONSIDERED SUFFICIENT AND BINDING. In the present case, the DOJ was the counsel of record for petitioner and was properly furnished a copy of the assailed resolution of May 6, 2024, which triggered the running of the reglementary period for filing a motion for reconsideration, regardless of when the BIR or its deputized special prosecutors received a copy. Likewise, the assailed resolution of July 30, 2024 was received by the DOJ on August 2, 2024, and furnished to the BIR on August 6, 2024, giving the petitioner until August 20, 2024, considering weekends and holidays, to file a petition for review. Because the Petition for Review was filed on August 21, 2024, it was clearly out of time. Petitioner’s reliance on its status as private complainant, the deputization of BIR lawyers, or principles of substantial justice and fair play were legally irrelevant to timeliness, and even if the petition were considered timely, the court dismissed the case. (People v. Ronie Romano Eustaquio, CTA EB Crim No. 160, CTA Crim Case No. O-807, October 30, 2025; see also People v. Juanita L. Ilagan, CTA EB Crim No. 158, CTA Crim Case No. O-987)

CRIMINAL ACTIONS FOR VIOLATIONS OF THE TAX CODE PRESCRIBE AFTER FIVE YEARS FROM THE COMMISSION OF THE OFFENSE, OR FROM ITS DISCOVERY IF UNKNOWN, AND THE PRESCRIPTIVE PERIOD IS INTERRUPTED ONLY BY THE INSTITUTION OF JUDICIAL PROCEEDINGS; SEE  DISSENTING OPINION. jurisprudence, including Lim Sr. Case, establishes that the period begins when the taxpayer willfully fails to pay the deficiency taxes after notice or when the assessment becomes final and unappealable. Applying this to the present case, the taxpayer received the Formal Letter of Demand and Assessment Notices on April 7, 2010, with payment due on April 26, 2010, and the Information was only filed on January 28, 2020, well beyond the five-year prescriptive period. Although the Supreme Court in Consebido Case clarified that filing before the DOJ tolls prescription, this ruling applies prospectively and does not affect this case. Even if applied, the prescriptive period commenced on April 27, 2010, upon willful non-payment, and the filing of the complaint in 2019 occurred more than five years later, rendering the criminal action time-barred. (People v. Ronie Romano Eustaquio, CTA EB Crim No. 160, CTA Crim Case No. O-807, October 30, 2025; see also People v. Ziegfried Loo Tian, CTA EB Crim No. 143, CTA Crim Case No. O-943, October 10, 2025) Dissenting Opinion: Consebido Case applies retroactively as it is procedural in nature; and Lim Sr. Case is not applicable as it interpreted 1939 Tax Code.

VESSEL MAY BE SEIZED EVEN IF IT IS A COMMON CARRIER IF IT ENTERED INTO A CHARTER PARTY AGREEMENT; LACK OF KNOWLEDGE OR PARTICIPATION IS IMMATERIAL; SEE DISSENTING OPINION. Forfeiture proceedings are in rem, directed against the property itself rather than its owner, and the mere presence of smuggled goods in commercial quantities aboard a vessel is sufficient to warrant seizure and forfeiture. The law establishes that exemptions from forfeiture only apply if the vessel is a common carrier, has not been chartered or leased for transporting cargo or persons, and if the owner or agent had no knowledge or participation in the unlawful act; and the burden of proof to establish exemption rests squarely on the claimant. Jurisprudence confirms that the owner’s lack of knowledge or personal involvement does not absolve the vessel of forfeiture liability, as the proceedings focus on the vessel’s use in the illegal act and not on personal culpability. Thus, where the vessel was found loaded with smuggled rice and cigarettes even though the vessel was a common carrier engaged in coastwise trade but had entered into a Charter Party Agreement, the taxpayer is disqualified from claiming exemption, as chartered vessels cannot invoke the protection given to common carriers. The Court emphasized that the forfeiture action being in rem means that the owner’s personal knowledge or intent is irrelevant to the vessel’s liability. (Hai Long Shipbuilding & Lighterage Inc., v Office of the Commissioner, CTA Case No. 10622, August 28, 2025) Dissenting opinion: While the taxpayer entered into a Charter Party Agreement, this only disqualifies it from claiming exemption that the vessel must be a common carrier not chartered or leased. However, forfeiture also allows an independent exemption if the owner or agent had no knowledge or participation in the unlawful act, noting that the disjunctive “or” in the statute means the two conditions are alternative, not cumulative. The petitioner consistently denied any knowledge or involvement in smuggling, and that the respondents failed to provide prima facie evidence showing participation, Lastly, the acts of the vessel’s captain were not properly proven, as the affiants were not presented in court, rendering their affidavits hearsay. Based on these points, the dissent concluded that the forfeiture order lacks sufficient evidence.

REVENUE ISSUANCES

Revenue Memorandum Order No. 006-2026

Amends the procedural framework for consolidating Electronic Letters of Authority (eLAs) and provides transitional rules for VAT refund processing to ensure uniform audit reforms.

Revenue Memorandum Circular No. 20-2026

In accordance with the Ease of Paying Taxes Act and its implementing regulations, the Bureau of Internal Revenue (BIR) has issued guidelines for the electronic filing and payment of 2025 Annual Income Tax Returns (AITR) due by April 15, 2026.

BIR DEADLINES FROM MARCH 23, 2026 TO MARCH 29, 2026. A gentle reminder on the following deadlines, as may be applicable:

COURT OF TAX APPEALS DECISIONS

THE CITY TREASURER’S ASSESSMENT IS VOID BECAUSE THE NOTICES FAILED TO STATE THE LEGAL AND FACTUAL BASES OF THE ALLEGED DEFICIENCY, PREVENTING THE TAXPAYER FROM FILING AN INFORMED PROTEST. A valid notice of assessment must be issued by the local treasurer or duly authorized representative whenever correct taxes, fees, or charges have not been paid, and it must state the nature of the tax, fee, or charge, the amount of deficiency including surcharges, interests, and penalties, as well as the factual and legal bases of the assessment, so that the taxpayer is adequately informed and can prepare an intelligent protest within sixty (60) days. In the present case, the Court found that none of the documents issued by the City Treasurer to the taxpayer, including the Tax Data and Assessment Form, the assessment letter and its attachments, and the Letter of Assessment (Final Notice)  sufficiently complied with these requirements. Specifically, these documents only provided computations or summaries of the alleged deficiency without explaining the factual or legal bases, such as the ordinances, corporate records, or relevant laws supporting the assessment, thereby preventing taxpayer from preparing an effective protest. As a result, the Court held that the assessments are void for failure to issue a valid notice of assessment, and no assessment could have become final and executory (O&S Trading and Construction Supply, Inc., v. Office of the City Treasurer of Las Piñas, CTA AC No. 303, August 1, 2025; see also City of Taguig et. al., v. Cosmos Bottling Corporation, CTA AC No. 320, September 10, 2025)

THE ASSESSMENTS FOR 2008–2013 WERE VOID AS THE 5-YEAR PRESCRIPTIVE PERIOD HAD LAPSED; FRAUD OR INTENT TO EVADE TAXES, AS BASIS FOR 10-YEAR PRESCRIPTION PERIOD, WAS NOT PROVEN BY CLEAR AND CONVINCING EVIDENCE. Local taxes, fees, or charges must generally be assessed within five (5) years from their due date, while an extraordinary ten (10)-year period applies only in cases of fraud or intent to evade payment, which must be established by clear and convincing evidence. In this case, the Court found that respondent failed to prove fraud or intent to evade taxes for taxable years 2008 to 2013, as the evidence relied upon, such as an excerpt of petitioner’s 2007 financial statement and estimated sales for subsequent years, was unverified, incomplete, and insufficient to demonstrate any substantial under-declaration of income; mere understatement of taxes cannot, by itself, establish fraud. Therefore, the ordinary five-year prescriptive period applies, and since the taxpayer received the assessment only on August 1, 2018, the right to assess taxes for 2008 to 2013 had already lapsed, rendering the assessments void and incapable of becoming final or executory. (O&S Trading and Construction Supply, Inc., v. Office of the City Treasurer of Las Piñas, CTA AC No. 303, August 1, 2025)

PILAA COULD NOT BE APPLIED AS BASIS FOR ASSESSMENT WITHOUT AN ENABLING ORDINANCE, UNVERIFIED SEC RECORDS AND ARBITRARY INCREASE; THE TAXPAYER’S SWORN DECLARATIONS AND AUDITED STATEMENTS ALREADY SUFFICED. The power to impose local taxes must be exercised by the local legislative body or Sanggunian through an appropriate ordinance, and any tax assessment, including the use of the Presumptive Income Level Assessment Approach (PILAA), must be anchored on such ordinance; absent this, the exercise of taxing power is unauthorized. In this case, the LGU applied the PILAA to compute the taxpayer’s local business tax deficiency without presenting any ordinance of Las Píñas City authorizing its use, relying instead on unverified SEC records and arbitrary 10% annual increases. The Court found that petitioner had submitted sworn declarations and audited financial statements sufficient to determine its actual gross income, making the application of the PILAA both unnecessary and legally unfounded. Consequently, the assessment based on the PILAA lacks factual and legal basis, rendering the subject assessment void, and the letters of assessment for taxable years 2008 to 2017 are nullified, cancelled, and set aside. (O&S Trading and Construction Supply, Inc., v. Office of the City Treasurer of Las Piñas, CTA AC No. 303, August 1, 2025; The City of Taguig et. al. v. Union Cement Holdings Corporation, CTA AC No. 313, July 29, 2025)

ONLY THE CITY TREASURER OR ITS AUTHORIZED REPRESENTATIVES - NOT THE BPLO - MAY ISSUE LOCAL BUSINESS TAX ASSESSMENTS. The power to assess and collect local business taxes (LBT) is expressly vested in the City Treasurer, who may deputize representatives under specific conditions, while the Business Permits and Licensing Office (BPLO) is limited to processing business retirements and cannot independently issue or approve tax assessments. In the present case, the subject assessment was issued by the BPLO without any authorization from the City Treasurer, and the LGU failed to provide any ordinance, law, or rule delegating such authority. Testimony and records confirmed that BPLO personnel prepared and approved the assessment, and the mere use of software provided by the City Treasurer or instructions to make payment to the Treasurer does not confer legal authority to the BPLO. Furthermore, the Bureau of Local Government Finance (BLGF) has consistently held that assessment of local taxes is the inherent function of the City Treasurer unless explicitly provided otherwise by law. Accordingly, since the BPLO lacked legal authority to issue the assessment, it is null and void, and the assessment against TMC is cancelled (NLEX Corporation v. The City of Caloocan et. al., CTA AC No. 312, October 8, 2025)

DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIESEQUIRES TAXPAYERS TO FIRST SEEK REVIEW OF THE CIR’S INTERPRETATIONS BY THE SECRETARY OF FINANCE; PETITION DIRECTLY FILED WITH THE CTA WITHOUT AVAILING OF SUCH ADMINISTRATIVE REVIEW IS PREMATURE.  The Commissioner of Internal Revenue has the exclusive authority to interpret tax laws, subject to review by the Secretary of Finance; thus, taxpayers must first seek such administrative review before resorting to the courts in accordance with the doctrine of exhaustion of administrative remedies. Although the Court of Tax Appeals may rule on the validity or constitutionality of tax laws and administrative issuances, this power is generally exercised only after administrative remedies have been exhausted. In this case, the petitioner directly filed a Rule 65 petition before the CTA to invalidate a Revenue Memorandum Circular and a BIR Letter declaring certain MILO products subject to Sweetened Beverage Tax. The court held that these issuances were merely interpretative and not an actual assessment or collection action; hence, the petition was dismissed for prematurity for failure to first seek review by the Secretary of Finance (Nestlé Philippines, Inc. v. CIR, CTA Case No. SCA 006, August 2025).

CRIMINAL CASE MAY PROCEED WITHOUT ASSESSMENT IN CASE OF FRAUD BUT VALIDITY OF ASSESSMENT IS AN ISSUE IN CASE OF WILLFUL FAILURE TO PAY DESPITE A LAWFUL NOTICE AND DEMAND. The general rule is that the collection of taxes must first be preceded by a valid assessment issued by the Commissioner of Internal Revenue, consistent with due process requirements allowing the taxpayer to know the factual and legal bases of the government’s claim and to contest the assessment before payment is enforced. Jurisprudence reiterates that a valid assessment is a substantive prerequisite for tax collection because courts cannot perform a judicial assessment in the first instance, except where the taxpayer files a false or fraudulent return or fails to file a return, allowing the government to file a court action for collection even without an assessment. This rule was clarified in People v. Mendez, which held that when a criminal tax case is filed, the criminal action simultaneously serves as the tax collection case, and a prior or final assessment is not required, provided the prosecution proves both the accused’s guilt beyond reasonable doubt and the civil tax liability through competent evidence. Applying these principles, tax liability in criminal cases under Section 255 may arise through two modes: first, where non-payment results from falsity, fraud, or willful omission (e.g., filing a false return or failure to file), in which case collection may proceed without assessment; and second, where the taxpayer deliberately refuses to pay despite a lawful notice and demand based on a deficiency assessment, in which case the validity of the assessment becomes essential, because if the assessment is void or absent when required by law, the government’s basis for tax collection and criminal liability correspondingly fails. (People of the Philippines v. Ronald Punay Robin, CTA Crim Case No. A-19, August 13, 2025)

2016 VAT ASSESSMENT IS VOID WITHOUT A VALID SERVICE ASSESSMENT, AND NO EVIDENCE OF FALSITY OR FRAUD WAS SHOWN. The collection of taxes presupposes a valid and demandable assessment, unless nonpayment arises from falsity, fraud, or willful omission. In this case, the Court found that the alleged deficiency VAT for TY 2016, purportedly arising from undeclared, was based solely on a void assessment due to improper service, with no evidence of falsity or fraud on the part of the taxpayer. The BIR failed to attach supporting importation documents or provide a detailed breakdown of the alleged deficiency, and its own witness admitted that such evidence was not submitted. Consequently, there is no competent evidence establishing the VAT liability, and the Court held that the appellant cannot enforce civil tax liability. The appeal was therefore denied, affirming the lower court’s decision and resolution. (People of the Philippines v. Ronald Punay Robin, CTA Crim Case No. A-19, August 13, 2025)

ON DISSENTING OPINION: SALES SHOULD BE RECORDE IN THE PRINCIPAL PLACE OF BUSINESS IF THE BRANCH NEITHER ACCEPTS ORDERS NOR ISSUES SALES INVOICE; LGU CANNOT TAX ON THE BASIS OF DELIVERY. The Implementing Rules and Regulations of the Local Government Code defines the principal office, branch or sales office, and warehouse, and provides that sales made in a locality with a branch, sales office, or warehouse must be recorded there and the corresponding tax paid to that locality; otherwise, the sale must be recorded in the principal office and the tax accrues to the city or municipality where such principal office is located. Here, although the Davao City is authorized to impose LBT on manufacturers, the determination of whether the taxpayer is liable depends on whether the facility it maintains in the locality qualifies merely as a warehouse for storage, a manufacturing site, or a branch or sales office, since this classification determines the proper situs of taxation under the LGC and its IRR. However, the appellate court found that the trial court resolved the case without receiving evidence, merely directing the parties to submit memoranda and dispensing with trial, thereby leaving the factual circumstances unresolved; consequently, the case was remanded to the Regional Trial Court of Davao City for trial and presentation of evidence to determine the factual and legal issues necessary to properly decide the petitioner’s liability for local business tax. Dissenting Opinion:  Case need not be remanded as court  for further trial because the trial court conducted a trial on the merits and rendered judgment based on documentary evidence on record and the parties stipulated during pretrial that issues could be resolved without testimonial evidence. Davao warehouse is not a branch or sales office because it neither accepts orders nor issues sales invoices, so the situs of taxation remains with the petitioner’s principal office in Makati. It further emphasizes that the 2017 Davao City Revenue Code conflicts with the LGC and its IRR by taxing sales based on delivery rather than the location of the principal office or a legitimate branch, creating a risk of dual taxation. Consequently, the assessments are invalid and should be set aside. (Alaska Milk Corporation v. Office of the City Treasurer and/or Davao City, CTA AC No. 272. October 22, 2025)

THE NATIONAL FOOD AUTHORITY, AS A GOVERNMENT INSTRUMENTALITY PERFORMING ESSENTIAL PUBLIC FUNCTIONS, USED ITS CABANATUAN PROPERTIES FOR PUBLIC SERVICE, SO THE CTA HELD IT IS EXEMPT FROM REAL PROPERTY TAX AND VOIDED THE CITY’S DELINQUENCY NOTICES. Local government units are prohibited from levying real property taxes on the national government, its agencies, and instrumentalities, and properties of public dominion used for public purposes are likewise exempt, unless the beneficial use of such properties has been granted to a taxable person. Thus, the Court held that the National Food Authority (NFA) qualifies as a government instrumentality because it performs essential governmental functions, such as maintaining and distributing the national rice buffer stock, while being vested with corporate powers, administering special funds, and enjoying operational autonomy, without being organized as a GOCC. In line with this, the NFA’s properties in Cabanatuan City, used as offices and warehouses for public service operations, remain exempt from real property tax, and the Notices of Delinquency issued by the City Treasurer demanding tax payment are therefore declared void. The Court further emphasized that NFA properly availed itself of the extraordinary remedy of prohibition, as the issue involved a pure question of law regarding the authority of the local officials to assess and collect taxes, and no remand to the lower court was necessary. (National Food Authority v. City Government of Cabanatuan City et. al., CTA AC No. 275, August 28, 2025)

SECURITIES AND EXCHANGE COMMISSION 

THE SEC TEMPORARILY ALLOWS CORPORATIONS TO USE AN EARLIER GIS FORM SO THEY CAN CONTINUE COMPLYING WITH FILING REQUIREMENTS WHILE THE NEW BENEFICIAL OWNERSHIP REPORTING SYSTEM IS BEING FINALIZED. Under its authority to regulate corporate reportorial compliance and filing procedures, the SEC issued a notice temporarily allowing corporations to use the 2020 version of the General Information Sheet (GIS) form to ensure continuity in mandatory filings while the updated beneficial ownership reporting framework and related electronic systems are still being completed. Applying this policy, corporations that are still in the process of setting up or restoring access to their electronic filing and beneficial ownership registry accounts may proceed with urgent GIS submissions through the electronic filing platform using the 2020 form during the transition period, after which the SEC will require the use of the updated reporting framework and the submission of beneficial ownership declarations through the integrated registry system once the new version becomes mandatory. (SEC Notice: Temporary Use of 2020 Form for Urgent Filing of General Information Sheet on eFAST, 10 March 2026).

REVENUE ISSUANCES

Revenue Memorandum Circular No. 014-2026

The BIR clarifies Revenue Memorandum Circular No. 8-2026 on the lifting of the suspension of tax audit and field operations, together with Revenue Memorandum Order No. 1-2026 and Revenue Memorandum Order No. 6-2026 on the implementation of revised audit policies, procedures, and safeguards.

SEC MEMORANDUM CIRCULAR NO. 4 SERIES OF 2026 AMENDS THE REVISED SRC RULE 68, INCREASING THE MANDATORY AUDIT THRESHOLD TO TOTAL ASSETS OR TOTAL LIABILITIES OF MORE THAN P3,000,000 TO ALIGN WITH NATIONAL MSME POLICY AND SUPPORT EASE OF DOING BUSINESS.

BIR DEADLINES FROM MARCH 16, 2026 TO MARCH 22, 2026. A gentle reminder on the following deadlines, as may be applicable:

COURT OF TAX APPEALS DECISIONS

ACCREDITATION OF TAX AGENTS BEFORE THE BUREAU OF INTERNAL REVENUE (BIR) IS VALID AND DOES NOT ENCROACH UPON THE REGULATORY AUTHORITY OF THE PROFESSIONAL REGULATORY BOARD OF ACCOUNTANCY (BOA). Under the National Internal Revenue Code, as amended, the Commissioner of Internal Revenue (CIR) is expressly authorized to accredit and register tax agents, and administrative agencies may validly exercise not only powers expressly granted but also those implied and necessary to carry out their statutory mandates, consistent with the Supreme Court’s ruling in J. Accountants Party-List, Inc., which upheld agency accreditation of professionals as regulation of a specific activity rather than of the profession itself. Applying this doctrine, the Court held that the BIR’s accreditation of tax agents does not unduly restrict the practice of accountancy nor encroach upon the regulatory authority of the Professional Regulatory Board of Accountancy since what is regulated is not the accountancy profession per se but the distinct activity of tax representation before the BIR; the requirements on competence, continuing education, fees, and sanctions are reasonable mechanisms to ensure integrity and efficiency in tax administration and apply to all who seek to practice before the Bureau, not exclusively to CPAs. Consequently, the assailed regulations are neither ultra vires nor violative of the doctrine of non-delegation, but a valid exercise of the BIR’s delegated and incidental powers (Emilino T. Maestro v. CIR, CTA Case No. 11309, August 6, 2025)

HOLDING COMPANY IS NOT SUBJECT TO LOCAL BUSINESS TAX ON DIVIDENDS INCOME. A city, such as the City of Taguig, may impose local business taxes only on contractors and other independent contractors at the prescribed graduated rates, and on banks and other financial institutions within the allowable percentage of their gross receipts. Local business taxes are imposed on the privilege of engaging in business, meaning regular commercial activity undertaken for profit. However, the Local Government Code prohibits local government units from taxing income or gains already subject to national income tax, except in the case of banks and other financial institutions. The Court emphasized that dividends and interest may be subjected to local business tax only when they form part of the gross receipts of banks or other financial institutions. Thus, when the taxpayer is a holding company, as reflected in its articles of incorporation, and its audited financial statements show that it merely earns dividend, interest, and foreign exchange income, with no evidence that it operates as a bank or financial institution or is engaged in business activities contemplated by law, the assessment of local business tax on such income has no legal basis. (The City of Taguig et. al., v. Union Cement Holdings Corporation, CTA Case No. 294, 2025)

FRANCHISE TAX MAY BE IMPOSED ONLY BY THE LOCAL GOVERNMENT UNIT (LGU) WHERE THE TAXPAYER’S PRINCIPAL OFFICE IS LOCATED. A PROVINCE CANNOT LEVY FRANCHISE TAX MERELY BECAUSE THE SERVICES ARE RENDERED OR THE CUSTOMERS ARE SITUATED WITHIN THE PROVINCE BUT OUTSIDE THE TERRITORIAL JURISDICTION OF THE CITY OR MUNICIPALITY WHERE THE PRINCIPAL OFFICE IS LOCATED. A province or city may impose franchise tax only on businesses enjoying a special or secondary franchise and only on gross receipts derived from the exercise of such franchise within its territorial jurisdiction. The Supreme Court clarified that liability requires concurrence of two elements: the existence of a franchise and the actual exercise of rights or privileges thereunder within the taxing LGU’s territory, with situs determined by where the franchise privilege is exercised Thus, where the taxpayer has a special or secondary franchise, and  it  supplies power to DANECO, which is located in Montevista, a municipality within the jurisdiction of Province of Compostela Valley, and where DANECO in turns delivers the same to customers including municipalities of Province of Davao Del Norte; and there is no showing that the taxpayer’s principal office is located in Province of Davao Del Norte and Compostela Valey, Province of Davao Del Norte and Compostela Valley cannot impose franchise tax on gross receipts from Daneco (National Transmission Corporation v. Province of Davao Del Norte, CTA AC No. 298, 2025)

ENVIRONMENTAL IMPACT FEE AND BUSINESS PLATE/STICKER FEE ARE REGULATORY, AND NOT REVENUE, IN NATURE, AND ARE OUTSIDE THE JURISDICTION OF THE CTA. The Court of Tax Appeals (CTA) exercises appellate jurisdiction over decisions of the Regional Trial Courts in local tax cases, i.e., matters where the primary purpose of the exaction is to raise revenue. Applying this, the Environmental Impact Fee and the Business Plate/Sticker Fee are regulatory in nature rather than revenue-generating: the Environmental Impact Fee compensates for environmental and social costs and covers solid waste management, with liability imposed even on property owners or managers for tenant non-compliance, while the Business Plate/Sticker Fee is imposed to support inspection and regulation of businesses. Because these exactions primarily serve regulatory purposes, they are not considered local taxes, and therefore, the CTA lacks jurisdiction to rule on the petitioner’s refund claims regarding these fees, confining its review solely to the petitioner’s liability for the Local Business Tax. (Serendra Condominium Corporation v. Taguig City Government et. al, CTA AC Case No. 302, 2025)

CONDOMINIUM DUES ARE NOT SUBJECT TO LOCAL BUSINESS TAX DESPITE BEING CLASSIFIED AS “REVENUES” IN THE TAXPAYER’S AUDITED FINANCIAL STATEMENTS. A condominium corporation is organized as a non-stock, non-profit entity, existing primarily to hold title to common areas and manage the condominium project for the benefit of unit owners, and its collection of association dues, membership fees, and other assessments is incidental to that purpose and not profit-oriented. Applying this principle, the taxpayer’s classification of dues as “Revenues” in its 2016 AFS does not constitute an admission of business activity, as these fees are collected solely to defray expenses and maintain the condominium’s common areas. Moreover, under the Taguig Revenue Code, the taxpayer cannot be considered a “contractor” because it does not engage in trade or render services for profit. Accordingly, the taxpayer is not subject to Local Business Tax, not by virtue of an exemption, but because it is not engaged in any business activity as contemplated by law. (Serendra Condominium Corporation v. Taguig City Government et. al, CTA AC Case No. 302, 2025)

UNDER SECTION 196, A STATEMENT OF ACCOUNT ISSUED MERELY FOR BUSINESS PERMIT RENEWAL IS NOT A VALID ASSESSMENT, SO THE TAXPAYER’S REMEDY IS A REFUND CLAIM, NOT A PROTEST UNDER SECTION 195. Under Section 196 of the Local Government Code of 1991, a taxpayer may file a claim for refund or tax credit within two (2) years from payment of taxes that were erroneously or illegally collected, which applies when no valid assessment under Section 195 has been issued by the local treasurer. Jurisprudence establishes that a valid assessment must clearly state the nature of the tax, the amount of deficiency, and the corresponding surcharges, interests, and penalties, and that documents issued merely in connection with business permit issuance or renewal cannot be treated as notices of assessment. In this case, the Statement of Account issued by the City Treasurer was not intended to determine any tax deficiency but merely served to facilitate the renewal of petitioner’s business permit; it did not indicate any deficiency tax, surcharge, or interest, nor did it state the factual and legal basis for the alleged liability. Consequently, the Statement of Account does not constitute a valid assessment under Section 195, and since there was likewise no showing that the taxing authority made a formal determination that petitioner failed to pay the correct taxes, the applicable remedy is a refund claim under Section 196, rather than the protest procedure under Section 195. (Holcim Philippines, Inc. v. The City of anila et. al., CTA AC No. 315, 2025)

A TAXPAYER ENGAGED IN MANUFACTURING OR WHOLESALE DISTRIBUTION OF ESSENTIAL COMMODITIES (E.G., CEMENT) IS ENTITLED TO THE PREFERENTIAL LOCAL BUSINESS TAX RATE, EVEN WITHOUT PRIOR LGU REGISTRATION AS SUCH. Cities are authorized to impose local business taxes; however, the tax on manufacturers, millers, producers, wholesalers, distributors, dealers, or retailers of essential commodities, including cement, shall be limited to one-half of the rates imposed on ordinary manufacturers or wholesalers. The law does not require prior registration with the local government as a manufacturer or wholesaler of essential commodities in order to claim the preferential rate, since local government units possess no inherent power to tax and may not impose requirements beyond those authorized by law. In this case, although the LGU argued and the RTC ruled that the taxpayer could only avail of the preferential rate after amending its business registration in March 2022, the evidence on record, including documentary and testimonial proof, established that the petitioner was in fact engaged in the manufacturing and/or wholesale distribution of cement, which is classified as an essential commodity. Consequently, the taxpayer is entitled to the preferential local business tax rate, notwithstanding the absence of prior registration specifically identifying it as a manufacturer or wholesaler of essential commodities. (Holcim Philippines, Inc. v. The City of Manila et. al., CTA AC No. 315, 2025)

A LOCAL GOVERNMENT UNIT MAY APPLY A PRESUMPTIVE INCOME LOCAL ASSESSMENT (PILAA) WHEN A TAXPAYER EITHER NEGLECTS OR REFUSES TO DECLARE GROSS SALES OR RECEIPTS, OR SUBMITS AN INADEQUATE DECLARATION WITHOUT AUDITED FINANCIAL STATEMENTS, PROVIDED THAT SUCH APPLICATION IS EXPRESSLY AUTHORIZED BY ORDINANCE. In this case, although the taxpayer later submitted a Certification of gross sales with its administrative claim for refund in December 2021, no proof of gross sales or receipts was presented at the time the Statement of Account was issued in 2020, satisfying the first condition for PILAA. The second condition was likewise met because the use of a presumptive income assessment under such circumstances is permitted. Accordingly, the LGU properly applied PILAA in assessing the petitioner’s local business tax. (Holcim Philippines, Inc. v. The City of Manila et. al., CTA AC No. 315, 2025)

THE PROSECUTION FAILED TO ESTABLISH CRIMINAL LIABILITY FOR TAX NONPAYMENT BECAUSE IT DID NOT PROVE THAT THE BIR ASSESSMENT NOTICES WERE PROPERLY SERVED ON THE CORPORATION OR ITS AUTHORIZED REPRESENTATIVES, AND THUS THE CORPORATION WAS NOT SHOWN TO BE LEGALLY OBLIGATED TO PAY THE ALLEGED DEFICIENCY TAX; CORPORATE OFFICERS CANNOT BE HELD CRIMINALLY LIABLE FOR TAX VIOLATIONS BASED SOLELY ON THEIR TITLES IN THE CORPORATION, ABSENT PROOF OF THEIR ACTIVE PARTICIPATION, KNOWLEDGE OF, OR ABILITY TO PREVENT THE ALLEGED NONPAYMENT OF TAXES. A corporation and its responsible officers may be held criminally liable for willfully failing to file returns, pay taxes, or supply correct and accurate information. To sustain a conviction, the prosecution must establish: (1) that the corporate taxpayer was legally obliged to pay the tax; (2) that it failed to pay the tax at the time or times required by law or rules and regulations; and (3) that the accused officer willfully failed to pay, actively participated in, or had the power to prevent the violation. In this case, accused Chow Master Corporation (CMC), a Philippine corporation engaged in the restaurant business and registered with the BIR, was alleged to have deficiency income tax liability for TY 2011 arising from BIR assessments. However, the prosecution failed to show that notices and demands, including the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN), were properly served to CMC or its duly authorized representatives in accordance with Section 3.1.6 of Revenue Regulations Nos. 12-99 and 18-2013, which provide for personal, substituted, or mail service with clear documentation of delivery. The prosecution’s sole witness, RO Balazo, testified only generally from records and did not personally witness service, nor could she verify the authority of the individuals allegedly receiving the notices to bind CMC. As a result, CMC was not shown to have been legally required to pay any deficiency tax. Regarding accused Rebecca Ann K. Sy and Alice Lao Yap, the prosecution relied on a 2010 General Information Sheet showing Sy as President and Yap as Corporate Secretary, but presented no evidence of their actual positions, roles, or duties at the time of the alleged violation. There was also no proof that they actively participated in, had knowledge of, or could have prevented the nonpayment of taxes. Consistent with the Supreme Court’s ruling in Suarez vs. People et al., G.R. No. 253429, October 6, 2021, mere titular office does not establish criminal liability; liability arises from active participation or the power to prevent the wrongful act. Accordingly, the elements of Section 255 were not established beyond reasonable doubt, warranting the acquittal of the accused.

ALL VIOLATIONS PRESCRIBE IN FIVE YEARS FROM COMMISSION OR DISCOVERY, INTERRUPTED BY PROCEEDINGS OR OFFENDER’S ABSENCE, AND IN THIS CASE, THE FILING OF THE COMPLAINT-AFFIDAVIT BEFORE THE DOJ. All violations of the Code prescribe after five (5) years, with the period running from the commission of the offense or, if unknown, from discovery and the institution of judicial proceedings. The prescriptive period is interrupted by the commencement of proceedings and does not run when the offender is absent from the Philippines. In this case, the alleged violations involved the accused corporation’s failure to remit withheld compensation taxes, which under the “pay-as-you-file” system could have been readily ascertained by the BIR from its Electronic Filing and Payment System. Accordingly, the prescriptive period for each WTC return was reckoned from the statutory due date of each return, ranging from January 15, 2017, to August 15, 2019. The earliest alleged offense, failure to pay the WTC return for December 31, 2016, would have prescribed on January 15, 2022. However, the filing of the Complaint-Affidavit before the Department of Justice on October 10, 2019, effectively interrupted prescription for all 16 counts, rendering the criminal action timely and within the five-year period. The Court further clarified that the Discovery Rule does not apply when the BIR could have reasonably detected the violation and that preliminary investigations suffice to toll prescription, ensuring the government’s right to prosecute was exercised within the legally prescribed period (People of the Philippines v. Reynaldo Y. Dia et. al., CTA Crim. Case No. 0-1002, July 2025).

CRIMINAL LIABILITY FOR FAILURE TO REMIT WITHHOLDING TAXES WAS DISMISSED DUE TO FINANCIAL INCAPACITY, DISCONTINUED PROJECTS, AND EFFORTS TO PAY ET. AL., DEMONSTRATING LACK OF WILLFULNESS. THE PRESIDENT CANNOT BE HELD LIABLE BASED ON TITULAR POSITION ALONE AND MUST BE PROVEN TO HAVE ACTIVELY PARTICIPATED AS A RESPONSIBLE OFFICER. Any person or corporation required to file returns, remit taxes withheld, or supply correct information, who willfully fails to do so, may be criminally liable, with penalties imposed on responsible officers of corporations. In this case, the accused was required to remit withholding taxes on compensation (WTC) for multiple periods from December 31, 2016, to July 31, 2019, as reflected in its eFPS filings, and records from the BIR indicated non-payment of several returns. However, the prosecution failed to establish that the accused acted willfully, as its failure to pay was due to financial incapacity, discontinued projects, terminated client relationships, labor cases, and other obligations, and it made efforts to settle unpaid taxes, including attempts to negotiate with the BIR and to apply for tax amnesty. Furthermore, the prosecution did not prove that the accused, the President, was a responsible officer actively involved in the preparation or payment of the tax returns, as mere titular position alone does not establish criminal liability. While the failure to remit WTC was undisputed, the absence of willful intent and lack of evidence linking the accused to the act resulted in acquittal for reasonable doubt. Nonetheless, the accused remains civilly liable to pay the deficiency WTC, although the extent of such liability requires reopening of the trial for determination (People of the Philippines v. Reynaldo Y. Dia et. al., CTA Crim. Case No. 0-1002, July 2025).

SECURITIES AND EXCHANGE COMMISSION 

SEC ISSUES REVISED BENEFICIAL OWNERSHIP DISCLOSURE RULES; APPLICATION: ENTITIES MUST IDENTIFY, DECLARE, AND REPORT BENEFICIAL OWNERS TO ENHANCE TRANSPARENCY AND COMPLY WITH AML/CFT STANDARDS. The Securities and Exchange Commission (SEC) issued Memorandum Circular No. 15, Series of 2025, effective January 1, 2026, establishing a framework requiring corporations and other covered entities to identify, declare, and report information on their beneficial owners. The Circular aims to enhance corporate transparency, prevent the misuse of corporate structures for illicit activities, and ensure compliance with international standards on anti-money laundering (AML) and combating the financing of terrorism (CFT). SEC Memorandum Circular No. 15, s. 2025 (2025).

SEC MEMORANDUM CIRCULAR NO. 4 SERIES OF 2026 AMENDS THE REVISED SRC RULE 68, INCREASING THE MANDATORY AUDIT THRESHOLD TO TOTAL ASSETS OR TOTAL LIABILITIES OF MORE THAN P3,000,000 TO ALIGN WITH NATIONAL MSME POLICY AND SUPPORT EASE OF DOING BUSINESS.

SEC ISSUED GUIDELINES REQUIRING OPCS TO TIMELY APPOINT OFFICERS AND SUBMIT REPORTORIAL FORMS, WITH PENALTIES FOR NON-COMPLIANCE. Under the regulatory authority of the Revised Corporation Code of the Philippines and the power of the Securities and Exchange Commission to enforce corporate governance standards, the Commission issued guidelines to monitor and regulate the compliance obligations of One Person Corporations (OPCs), particularly regarding the appointment of officers and submission of required forms and reports, and to establish uniform penalties for violations. (Guidelines on the Compliances of One Person Corporations (OPCs), SEC Memorandum Circular No. 10, Series of 2026, 16 February 2026).

REVENUE ISSUANCES

Revenue Regulation No. 001-2026

Revenue Regulations No. 001-2026 amends VAT rules for Registered Business Enterprises (RBEs) to clarify filing procedures, allow optional VAT registration, and extend system reconfiguration deadlines to December 31, 2026.

BIR DEADLINES FROM MARCH 9, 2026 TO MARCH 15, 2026. A gentle reminder on the following deadlines, as may be applicable: