Competence. Integrity. Commitment.

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

COURT OF TAX APPEALS DECISIONS

AN ASSESSMENT BASED ON A MOA WITHOUT A NEW LOA IS VOID. Only the Commissioner of Internal Revenue (CIR) or duly authorized representatives may authorize the examination of taxpayers through a valid Letter of Authority (LOA) while Bureau of Internal Revenue (BIR) regulations expressly require the issuance of a new LOA whenever a case is reassigned or transferred to another RO, as a Memorandum of Assignment (MOA) cannot substitute for an LOA since authority to examine and assess taxes emanates exclusively from the CIR; assessments issued by unauthorized Revenue Officer (RO) are void ab initio. Applying these principles, the Court held that although the original audit of respondent was covered by a valid LOA issued to the originally assigned RO, the subsequent continuation of the audit by another RO, following the transfer of the original examiner, was unauthorized because she acted solely by virtue of a MOA issued by RDO and not pursuant to a new LOA as required by law and jurisprudence. Consequently, the audit investigation and the resulting Formal Letter of Demand/Final Assessment Notice (FLD/FAN) and Final Decision on Disputed Assessment (FDDA) were declared null and void for having been issued by an unauthorized examiner. The Court further held that the deficiency Value-Added Tax (VAT) assessment lacked factual and legal basis because the CIR failed to substantiate the claim that the taxpayer was liable for VAT, having failed to present the alleged sugar quedans purportedly issued in the names of individual members rather than the cooperative, while evidence showed that respondent was issued Advance Authority to Release Refined Sugar (AARR) under its own name, supporting its VAT-exempt status as previously recognized in jurisprudence. In any event, the assessment had already prescribed because the CIR had only three years from the filing of the VAT return or issuance of the AARRs to assess deficiency VAT, yet the FLD/FAN was issued beyond the prescriptive period. [Commissioner of Internal Revenue v. VMC Farmers Multi-Purpose Cooperative, CTA EB No. 2856 (CTA Case No. 9859), December 10, 2025; Commissioner of Internal Revenue v. Alan U. Chan, CTA EB No. 2988, CTA EB No. 2988 (CTA Case No. 10034), February 11, 2026; Commissioner of Internal Revenue v. Fort Palm Spring Condominium Corporation, CTA EB No. 2963 (CTA Case No. 9999), February 3, 2026]

ACTUAL RECEIPT OF PAN IS MANDATORY; IF RECEIPT IS DENIED BY THE TAXPAYER, THE BIR MUST PROVE THAT PAN IS RECEIVED; PROOF OF MAILING IS NOT SUFFICIENT; SUBSEQUENT FILING OF A PROTEST DOES NOT CURE THE DEFECT; RECEIPT OF FAN BY SECURITY GUARD WITHOUT PROOF OF AUTHORITY IS VOID. Due process requires that a taxpayer must first be validly served with a PAN informing it in writing of the factual and legal bases of the deficiency assessment, with service generally requiring personal service first, and substituted service or service by mail allowed only when personal service is impracticable; jurisprudence consistently holds that actual receipt by the taxpayer is indispensable, and where receipt is denied, the burden shifts to the BIR to prove by competent evidence that the assessment notice was actually received, as mere proof of mailing or registry receipts alone are insufficient. Applying these rules, the Court found that although the BIR presented a registry receipt showing that the PAN was mailed to the taxpayer’s registered address, it failed to prove actual receipt because no registry return card, acknowledgment receipt, or any competent evidence was presented showing that the taxpayer or its authorized representative actually received the PAN, and the BIR likewise failed to prove its alleged personal service. On the contrary, the taxpayer presented evidence that the mailed PAN was returned to sender, directly disputing receipt and shifting the burden of proof to the BIR, which it failed to discharge. Moreover, the taxpayer’s subsequent filing of a protest did not cure the defect, as Supreme Court jurisprudence has consistently held that the BIR’s failure to strictly comply with due process requirements cannot be remedied simply because the taxpayer later participated in the proceedings. Accordingly, because the PAN was not validly served, the entire assessment process was fatally defective, warranting the cancellation of the FLD/FAN, FDDA, Preliminary Collection Letter (PCL), and Final Notice Before Seizure (FNBS), all of which were declared null and void. [Commissioner of Internal Revenue v. JTKC Land, Inc., CTA EB No. 2914 (CTA Case No. 9508), February 26, 2026]; the Court held that the CIR failed to establish valid service of the FAN/FLD dated January 14, 2020 despite evidence that the notices were sent through courier and allegedly received by “SG Carillo,” because no proof was presented showing that such recipient was authorized to receive assessment notices on behalf of the taxpayer, and the CIR in fact failed to authenticate the notation on the courier receipt or establish the recipient’s authority. The Court likewise rejected the argument that the taxpayer’s alleged failure to formally notify the BIR of a change of address cured the defect, ruling that non-compliance with an administrative requirement cannot validate an assessment already void for lack of due process. Since a void assessment produces no legal effect, the deficiency tax assessments never became final, executory, or demandable, rendering the subsequent WDL and WG likewise void and unenforceable. Further, because the Commissioner failed to prove valid receipt of the FLD/FAN within the 3-year prescriptive period, the right to assess deficiency taxes had already prescribed. [Commissioner of Internal Revenue v. Ship to Shore Medical Assist, Inc., CTA EB No. 3029 (CTA Case No. 10550), February 26, 2026; Commissioner of Internal Revenue v. Alan U. Chan, CTA EB No. 2988, CTA EB No. 2988 (CTA Case No. 10034), February 11, 2026; Commissioner of Internal Revenue v. Fort Palm Spring Condominium Corporation, CTA EB No. 2963 (CTA Case No. 9999), February 3, 2026]

FLD/FAN RECEIVED A DAY AFTER THE TAXPAYER REPLIED TO THE PAN IS VOID; FDDA WILL NOT CURE THE DEFECT. The BIR is mandated to inform taxpayers in writing of both the factual and legal bases of an assessment, and jurisprudence establishes that due process requires the BIR not only to receive the taxpayer’s reply to a PAN but to meaningfully consider and specifically address the defenses raised before issuing the FLD/FAN otherwise the assessment is void; applying these principles, although the taxpayer timely filed its Reply to PAN on January 22, 2015 disputing the disallowance of management fees, the BIR issued the FLD/FAN the very next day, January 23, 2015, with the Details of Discrepancy merely duplicating the PAN almost word-for-word except for updated surcharges and interest, and the BIR’s own witness admitted during cross-examination that the FLD was simply a reiteration of the PAN and contained no discussion whatsoever of the taxpayer’s arguments, demonstrating that the taxpayer’s explanations were never meaningfully considered at the PAN stage, thereby rendering the right to be heard illusory and constituting a violation of due process that was not cured by the later issuance of the FDDA, resulting in the nullity of the assessment [Commissioner of Internal Revenue v. Altimax Broadcasting Co., Inc., CTA EB No. 2932 (CTA Case No. 10285), February 10, 2026]

FLD/FAN RECEIVED 8 DAYS AFTER RECEIPT OF THE PAN RENDERS THE ASSESSMENT VOID. A taxpayer who receives a PAN must be given a mandatory 15-day period within which to respond before the BIR may issue a FLD/FAN as this period forms an essential component of procedural due process. Applying these principles, the Court held that the CIR violated the taxpayer’s right to due process when the PAN was received on January 7, 2014, giving the taxpayer until January 22, 2014 to respond, yet the FLD/FAN was issued and received on January 15, 2014, only eight days after receipt of the PAN and seven days before expiration of the statutory response period. The Court rejected the CIR’S argument that due process was substantially complied with merely because the taxpayer was notified of the assessment and was later able to file a protest, emphasizing that disregard of the 15-day grace period is not a minor procedural defect but a fatal violation of the taxpayer’s constitutional right to due process. Thus, the premature issuance of the FLD/FAN invalidated the entire assessment process [Commissioner of Internal Revenue v. Health Plan Philippines, Inc., CTA EB No. 3134 (CTA Case No. 10262), December 5, 2025].

BIR’S GENERIC STATEMENT IN THE FLD/FAN WITHOUT GENUINE EVALUATION OF TAXPAYER’S REPLY TO THE PAN RENDERS THE ASSESSMENT VOID. Due process in tax assessments requires not only that the taxpayer be given an opportunity to respond to a PAN, but also that the BIR genuinely consider the taxpayer’s explanations and specifically state the factual and legal reasons for rejecting them, as failure to do so renders the assessment void; applying these principles, the BIR completely disregarded its explanations, as shown by the FLD/FAN merely reproducing the PAN and identical Details of Discrepancies with no meaningful discussion of respondent’s defenses, while the generic statement that the taxpayer failed to submit sufficient evidence did not specifically address any substantive arguments raised, demonstrating that no genuine evaluation was undertaken and reducing the PAN process to a meaningless formality, thereby violating respondent’s right to due process and nullifying the assessment [Commissioner of Internal Revenue v. Bio-Resource Power Generation Corporation, CTA EB No. 3021 (CTA Case No. 10372), November 27, 2025; CIR v. Beta Electromechanical Corporation, CTA EB No. 2950 (CTA Case No. 10040), February 25, 2026; CPW Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 10665, February 13, 2026].

FLD/FAN WITHOUT DUE DATE OF PAYMENT IS VOID. A valid FLD/FAN must contain not only the amount of deficiency tax assessed but also a definite and specific due date for payment, since a final assessment must embody an actual and unequivocal demand for payment; absent such definite payment period, the assessment violates due process and is void. Applying this rule, the Court found that the FLD/FAN issued by the BIR is invalid because, although they stated the deficiency taxes allegedly due and instructed payment through authorized channels, the spaces provided for the due date of payment in every attached FANs were completely left blank. This defect was not merely technical, as the RO repeatedly admitted during cross-examination that no due date was indicated in any of the FANs attached to both the FLD and even the subsequent FDDA. The Court’s own review of the records confirmed the same absence of any specific payment deadline, demonstrating that there was no actual and enforceable demand for payment as required by law [Commissioner of Internal Revenue v. Major Shopping Management Corporation, CTA EB No. 2970 (CTA Case No. 9300), February 12, 2026].

FLD/FAN WITH DEADLINE EARLIER THAN DATE OF ISSUANCE IS VOID; INTEREST COMPUTATION BEYOND THE DUE PAYMENT DEADLINE ALSO RENDERS THE FLD/FAN VOID. A valid FLD/FAN is a substantive prerequisite to tax collection and must not merely compute tax liabilities, but must also contain a clear and definite demand for payment specifying both the exact amount due and a specific future due date within which the taxpayer may comply; otherwise, the assessment is void for violating due process. Applying this rule, the Court found that although the BIR validly conducted the audit, the FLD/FAN issued against respondent suffered from incurable defects because it failed to state a definite due date and merely referred to attached Assessment Notices, which reflected a payment deadline of January 7, 2018 despite the FAN being issued only on December 7, 2018, making compliance legally impossible. The Court further ruled that even assuming the stated date was a typographical error and the intended deadline was January 7, 2019, the assessment still lacked definiteness because the interest computations extended up to January 11, 2019, four days beyond the supposed due date, thereby creating uncertainty as to the actual amount payable and undermining the requirement that tax liability be fixed and determinable. Since a valid assessment must provide the taxpayer a fair opportunity to know the precise liability and comply within a legally enforceable period, the ambiguity in both the due date and the computation of interest rendered the FAN legally ineffective. [Commissioner of Internal Revenue v. IBMS Technology Phils., Corporation, CTA EB No. 2999 (CTA Case No. 10177), Decision dated December 15, 2025]

OSG’S RECEIPT OF RESOLUTION IS THE RECKONING POINT OF APPEAL TO THE CTE EN BANC, NOT BIR’S. A party adversely affected by a Division decision or resolution must file a Petition for Review within fifteen (15) days from receipt, and jurisprudence consistently provides that in cases involving the government, the reckoning of the appeal period is based on receipt by the Office of the Solicitor General (OSG), as principal counsel, and not by deputized government lawyers who merely act as its representatives; applying these rules, although the CIR relied on the BIR deputized counsel’s receipt of the assailed Resolution on October 21, 2024, records showed that the OSG had already received the Resolution earlier on October 15, 2024, making October 30, 2024 the deadline to file either a Petition for Review or motion for extension, yet CIR filed the motion for extension only on November 4, 2024 and the Petition for Review on November 19, 2024, both beyond the reglementary period, thereby rendering the assailed Resolution final and executory by operation of law and depriving the Court of jurisdiction to entertain the appeal [Commissioner of Internal Revenue v. Bio-Resource Power Generation Corporation, CTA EB No. 3021 (CTA Case No. 10372), November 27, 2025]

LESSEE MAY BE SUBJECT TO DST FOR FAILURE TO PROVE THAT LESSOR PAID THE SAME OR IT IS EXEMPT. A Documentary Stamp Tax (DST) is imposed on every lease, agreement, memorandum, or contract for the use or rental of land or tenements; moreover, DST shall be paid by the person making, signing, issuing, accepting, or transferring the taxable document, unless the other party is exempt. Applying these provisions, the Court sustained the deficiency DST assessment against the taxpayer and rejected its argument that the lessor, as recipient of rental income, should be solely liable, holding that the law does not assign DST liability exclusively to the lessor and the taxpayer failed to prove that the lessor paid the DST or the taxpayer was exempt from liability under the lease agreement. The Court likewise upheld the DST assessment on future lease commitments, finding that the amounts disclosed in the audited financial statements represented fixed future minimum rental payments arising from a long-term lease contract renewed for years, covering the land where the supermarket and department store operated, and thus constituted taxable obligations subject to DST for each year of the contract term. [Commissioner of Internal Revenue v. The Landmark Corporation, CTA EB No. 2904 (CTA Case No. 9317), February 23, 2026].

REVENUE ISSUANCES

Revenue Regulations No. 004-2026

One-Time Abatement of Taxes and/or Penalties for Micro Taxpayers

Item	Details
Date Issued	June 22, 2026
Availment Period	Until December 31, 2026
Qualified Taxpayers	Micro taxpayers with gross annual sales not exceeding Php3,000,000 (for mixed-income earners, gross sales cover only business income excluding compensation from employer-employee relationship)
Liability Threshold	Covered basic tax liabilities and/or penalties must not exceed Php80,000 per taxable year
Covered Cases	1. Delinquent accounts 2. Cases with administrative protest pending the BIR office 3. Tax cases disputed before the DOJ and courts 4. Tax collection cases with courts 5. Cases with pending request for compromise settlement 6. Cases with pending request for abatement 7. Criminal violations, except those already filed in court
Cut-off Date of Covered Cases	Liabilities/cases existing on or before December 31, 2025
Application Venue	Revenue District Office (RDO) with jurisdiction over taxpayer
Abatement Fee	Php5,000 one-time fee per approved application
Result Upon Approval	Issuance of Certificate of Availment confirming settlement and closure of case

Revenue Memorandum Circular No. 64-2026 Requires all digital economic participants to systematically generate and display a QR-enabled Registration Seal Badge through the BIR’s Online Registration and Update System (ORUS).

Application	Applies directly to all taxpayers with an online presence, specifically targeting e-commerce merchants, digital content creators, freelancers, vloggers, and electronic service providers who operate commercial storefronts across digital platforms like Shopee, Lazada, TikTok Shop, or standalone domains.
Operational Mandates	Covered entities are strictly prohibited from exposing their full, sensitive Certificate of Registration (COR/eCOR) online to protect data privacy. Instead, they must enroll in the Online Registration and Update System (ORUS) to download and display a dedicated, standardized digital Registration Seal Badge.
Financial and Tax Obligation	While the generation of the badge graphic itself is provided free of charge by the Bureau, processing registration data updates or pulling system data through the portal requires the direct electronic payment of a Php30 loose Documentary Stamp Tax (DST) per transaction.
Public Verification Mechanics	The generated digital badge must be displayed prominently in an unaltered format on public-facing channels (e.g., “About Us” tabs, platform profiles). It features an embedded QR code linking to the official verification portal, allowing consumers and relying parties to audit business legitimacy without exposing sensitive taxpayer identification details.

BIR DEADLINES FROM JUNE 22, 2026 TO JUNE 28, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
June 25, 2026	SUBMISSION – Quarterly Summary List of Sales/Purchases/Importations by a VAT Registered Taxpayer. Non-eFPS Filers – Fiscal Quarter ending May 31, 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 – Fiscal Quarter ending May 31, 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 2550Q (Quarterly Value-Added Tax Return). eFPS & Non-eFPS Filers. Fiscal Quarter ending May 31, 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 2551Q (Quarterly Percentage Tax Return). eFPS & Non-eFPS Filers. Fiscal Quarter ending May 31, 2026
	eFILING & PAYMENT (Online/Manual) – BIR Form 2550-DS (Value-Added Tax Return for Nonresident Digital Service Provider). Fiscal Quarter ending May 31, 2026

COURT OF TAX APPEALS DECISIONS

SERVICE OF NOTICES TO ACCOUNTING STAFF IS VALID IF TAXPAYER DID NOT TIMELY DISPUTE AUTHORITY; SERVICE OF NOTICES TO LAW FIRM/LAWYER IS VALID IF AUTHORIZED BY THE TAXPAYER. Service of assessment notices is governed by the Tax Code and related issuances, which allow service through personal or substituted service and deem service to an authorized representative or tax agent as valid service to the taxpayer. Under these rules, proper receipt is presumed valid when the notice is received by a person authorized by the taxpayer, and admissions made in judicial proceedings bind the party, while the doctrine of apparent authority likewise estops a corporation from denying the authority of its agents who have been clothed with actual or apparent authority to act on its behalf. In this case, the taxpayer’s own witness admitted receipt of the Warrant of Distraint and/or Levy (WDL) through its accounting staff, and the taxpayer did not timely dispute her authority, thereby constituting an implied admission that she was authorized to receive notices on its behalf. Similarly, the taxpayer expressly authorized the law office and its lawyer to receive all documents and communications relating to its tax audit, and the taxpayer’s subsequent conduct in allowing the lawyer to file the protest without objection further confirmed his apparent authority, rendering service of the Preliminary Assessment Notice (PAN) and Formal Letter of Demand/Final Assessment Notice (FLD/FAN) valid and binding. Moreover, the PAN and FLD/FAN were properly served, with the notices duly received, signed, and dated, and the regulation dispensed with stricter acknowledgment requirements. Accordingly, the Court upheld the validity of service of all assessment notices and rejected the taxpayer’s claims of improper notice for lack of merit (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue (CIR), CTA Case No. 10786, December 9, 2025)

TAXPAYER MUST PROVE ACTUAL FILING DATES OF RETURN TO INVOKE PRESCRIPTION. Internal revenue taxes must be assessed within three (3) years from the last day prescribed by law for filing the return or from the actual date of filing, whichever is later, subject to suspension of the prescriptive period. Jurisprudence further clarifies that the FLD/FAN must be issued within the prescriptive period, and that prescription is a matter of defense which the taxpayer must clearly prove, including competent evidence of the actual filing dates of the relevant tax returns. In this case, the taxpayer’s claim that the BIR’s right to assess has prescribed cannot prosper because it failed to present proof of the actual filing dates of its tax returns, which are necessary to determine the reckoning point of the three-year prescriptive period. Absent such proof, the Court cannot establish that the period had lapsed before the issuance of the FLD/FAN, and thus there is no basis to conclude that prescription has set in. Accordingly, the Court held that the BIR’s right to assess the taxpayer has not yet prescribed. (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

TAXPAYER MUST SUBMIT EVIDENCE TO RECONCILE THE DIFFERENCE IN INTEREST BETWEEN ITR AND AFS. Interest expense is deductible only to the extent allowed by law. In this case, the BIR disallowed the taxpayer’s claimed interest expense for exceeding the allowable amount by comparing the interest reflected in the audited financial statements against the amount claimed in the income tax return. Because the taxpayer failed to present competent evidence to overturn the factual and legal basis of the disallowance, the Court upheld the BIR’s assessment and disallowance of the claimed interest expense. (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

TO BE DEDUCTIBLE, BAD DEBTS MUST BE SUPPORTED BY EVIDENCE SHOWING ACTUAL COLLECTION EFFORT. Losses may be deducted from gross income only if they are duly substantiated and properly charged off within the taxable year. The requirement for bad debts requires proof of worthlessness and reasonable efforts to collect before write-off. Moreover, the taxpayer must be sufficiently informed of the factual and legal bases of the assessment to enable an effective protest, but the burden remains on the taxpayer to overcome the presumption of correctness of tax assessments through competent evidence. In this case, the BIR disallowed the taxpayer’s claimed carried-over losses for being unsupported, which the petitioner recharacterized as validly written-off bad debts allegedly approved by its executive and credit committees upon advice of an external consultant who undertook collection efforts. However, the taxpayer failed to present documentary or other competent evidence showing actual, earnest collection efforts or substantiation of worthlessness of the accounts written off, rendering its claims as bare allegations insufficient to overturn the assessment. Thus, the Court sustained the BIR’s disallowance of the claimed losses for lack of factual support (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

DONATIONS AND CHARITABLE CONTRIBUTIONS ARE DEDUCTIBLE FROM GROSS INCOME ONLY IF PROPERLY SUBSTANTIATED. Under the general rules on evidence and tax assessments, the taxpayer bears the burden of proving entitlement to deductions. In this case, the BIR disallowed the taxpayer’s claimed donations and charitable contributions for lack of support. The taxpayer contended that it did not actually claim donations as an expense in its income tax return, pointing out that the relevant line item was left blank and arguing that the alleged amount only appeared in a later-provided matching schedule under a “miscellaneous” account. However, the Court found these explanations insufficient as the taxpayer failed to present competent evidence showing that the amounts were not properly classified as donations or that they complied with the requisites for deductibility. Accordingly, the Court upheld the disallowance for lack of substantiation (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

TAXPAYER MUST PROVE WITH SUPPORTING DOCUMENTS ITS RECONCILIATION ON THE DISCREPANCY BETWEEN FBT EXPENSE PER ITR AND ACTUAL FBT REMITTED. Deductions and claimed tax expenses must be properly substantiated. In this case, the BIR disallowed the taxpayer’s claimed overstatement of fringe benefit tax (FBT) expense upon finding a discrepancy between the FBT expense reported in the taxpayer’s income tax return and the actual FBT withheld and remitted, which the Court found was sufficiently supported. Although the taxpayer alleged that it had submitted documents to the BIR showing no discrepancy and that the amounts matched, it failed to formally offer such supporting documents in evidence before the Court, leaving the assessment unrebutted. Accordingly, the Court upheld the disallowance of the overclaimed FBT expense. (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

AN ASSESSMENT ITEM REFLECTED IN THE FLD/FAN BASED SOLELY ON THE TRIAL BALANCE, WITHOUT DISCLOSURE OF THE SPECIFIC ACCOUNT OR DETAILED COMPUTATION, WITH PARTICULARS REVEALED ONLY LATER IN THE FDDA, IS IMPROPER AND MUST BE DELETED. Due process in tax assessments requires that the taxpayer be informed in writing of the factual and legal bases of the assessment through the FLD/FAN, enabling the taxpayer to properly and intelligently file a protest. Failure to comply with this mandatory requirement renders the assessment void, consistent with jurisprudence emphasizing that mere conclusions or general computations are insufficient. In this case, respondent assessed petitioner for deficiency percentage tax on alleged receipts not subjected to gross receipts tax, presenting in the FLD only a computation of “receipts not subjected to GRT” supposedly derived from petitioner’s trial balance, but without identifying the specific accounts, entries, or detailed breakdown of the adjusting items used in the computation. The taxpayer argued that it was deprived of due process because the FLD contained only a bare computation and the details were disclosed only at the FDDA stage, where the BIR even admitted that the adjustments came from “credit balance and adjustments in the trial balance,” while suggesting that the taxpayer could simply trace the figures from its submitted trial balance. The Court rejected this reasoning, holding that such generalized reference was insufficient and that the BIR had a duty to specifically identify the exact items in the trial balance used as basis for the adjustments. Since the lack of particulars prevented the taxpayer from intelligently contesting the assessment at the administrative stage, the Court ruled that the BIR failed to comply with the requirements of due process, warranting the deletion of the deficiency percentage tax assessment and its corresponding findings in the FDDA. (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

AN EWT ASSESSMENT PREMISED SOLELY ON GENERAL TRIAL BALANCE CLASSIFICATIONS AND COMPARISON WITH THE ALPHALIST IS IMPROPER AND MUST BE DELETED. Tax assessments must clearly state the factual and legal bases thereof in the FLD/FAN to satisfy due process, and failure to provide sufficient particulars deprives the taxpayer of the opportunity to intelligently contest the assessment, rendering it void. In this case, the BIR assessed taxpayer for deficiency expanded withholding tax by merely using generalized classifications such as “Subject to 1% WE” and “Subject to 10% WE” to describe various income payments allegedly derived from the taxpayer’s trial balances, and then comparing these with amounts reflected in the taxpayer’s Alphalist. The Court found that this approach was too vague and failed to identify the specific transactions, payees, or income items subject to withholding, thereby preventing the taxpayer from properly understanding and contesting the basis of the deficiency assessment. Accordingly, the Court ruled that the BIR failed to comply with the mandatory requirements of due process, and the expanded withholding tax assessment was deleted from the FLD/FAN and FDDA. (RCBC Leasing & Finance Corporation v. Commissioner of Internal Revenue, CTA Case No. 10786, December 9, 2025)

A TAXPAYER MAY CHALLENGE A BIR ASSESSMENT BEFORE THE CTA, WHETHER THROUGH AN APPEAL FROM (1) FLD/FAN OR FDDA OR (2) WDL OR WG, BUT FAILURE TO COMPLY WITH THE REGLEMENTARY PERIOD DEPRIVES THE CTA OF JURISDICTION. Jurisdiction over the subject matter is conferred by law and is determined by the court at the earliest opportunity, being indispensable to the validity of all proceedings. The CTA in Division has exclusive appellate jurisdiction over decisions of the CIR in cases involving disputed assessments, refunds, or other matters arising under the NIRC, and such jurisdiction may only be exercised when the appeal is seasonably filed within the reglementary period. In this case, the taxpayer failed to comply with the mandatory requirements for a valid protest by filing the same beyond the 30-day period from receipt of the FLD/FAN and without properly indicating the nature and basis of the protest, thereby rendering the assessment final, executory, and no longer a disputed assessment cognizable by the CTA. Consequently, there was no valid action or decision of the CIR that could be elevated under the first instance of CTA jurisdiction. Likewise, the taxpayer’s recourse against the WDL and WOGs was likewise filed beyond the 30-day reglementary period counted from receipt of the issuances, thereby failing to perfect an appeal even under the CTA’s “other matters” jurisdiction. Thus, both on the basis of an unappealed final assessment and belated judicial recourse against enforcement issuances, the Court in Division correctly held that it had no jurisdiction to entertain the petition (Cap John Hay Trade and Cultural Center, Inc. v. CIR, CTA Case EB No. 2923, CTA Case No. 10014, December 4, 2025)

IAET MAY STILL BE VALIDLY IMPOSED FOR TAXABLE YEARS PRIOR TO THE EFFECTIVITY OF THE CREATE LAW THAT ABOLISHED IT, NOTWITHSTANDING THAT THE FAN/FLD WAS ISSUED ONLY AFTER THE LAW TOOK EFFECT IN 2021. In tax law, repeals or amendments affecting tax impositions are applied only prospectively unless expressly made retroactive. Specifically, the regulations on IAET provide that IAET is no longer imposed upon the effectivity of the CREATE Act and applies prospectively. In this case, the taxpayer’s argument that CREATE Law effectively barred the assessment of IAET is untenable because there is no showing that Congress intended the repeal to operate retroactively; thus, IAET remains imposable for taxable year 2017, which is a period prior to the law’s effectivity (April 2021), notwithstanding that the FLD/FAN were issued in June 2021, after CREATE took effect. Accordingly, since the taxable period involved preceded the CREATE Law, the BIR can assess IAET against the taxpayer (DHL Supply Chain Phils, Inc. v. CIR, CTA Case No. 10722, December 2, 2025)

THE CTA MAY VALIDLY RULE ON A REFUND CLAIM EVEN WHEN THE CASE FILED PERTAINS TO THE DISPUTE OF AN ASSESSMENT. The CTA has jurisdiction over cases involving decisions of the CIR on disputed tax assessments and claims for refund or issuance of tax credit certificates, and may resolve refund claims in the same proceeding when necessary to determine the correct tax liability and avoid multiplicity of suits. In this case, the taxpayer’s claim for refund representing amounts garnished and collected by the BIR was properly entertained by the Court as the refund is directly anchored on the nullification of the IAET assessment. Records show that the BIR enforced collection through garnishment from the petitioner’s bank account and subsequently issued a manager’s check in favor of the BIR, which was duly admitted by the BIR and supported by documentary evidence, while the WDL and WG were issued during the pendency of the case. Thus, since the assessment was found void and the taxpayer was held not liable for IAET, the amounts collected have no legal basis and must be returned. Accordingly, to avoid multiplicity of suits and ensure full adjudication of tax liability in a single proceeding, the Court ordered the refund of the garnished amount (DHL Supply Chain Phils, Inc. v. CIR, CTA Case No. 10722, December 2, 2025)

VAT ASSESSMENT BASED ON UNDER-DECLARED EXPENSE SHOULD BE CANCELLED. Tax assessments based on third-party information (TPI) matching must be supported by verified and credible evidence, as the presumption of correctness accorded to tax assessments cannot rest on another presumption. Moreover, VAT is imposed only on actual sales or receipts from the sale of goods or services, not on purchases or disbursements. In this case, the BIR assessed the taxpayer for an alleged unaccounted source of cash after finding discrepancies between the  SLP and third-party sales declarations, where TPI amounts exceeded the taxpayer’s recorded purchases. The Court held that the BIR failed to properly verify the TPI data, rendering the assessment factually deficient. More importantly, the discrepancy merely suggested an alleged under declaration of purchases, which by itself does not establish VAT liability since VAT attaches to sales, not purchases. The Court further noted that even assuming the discrepancy represented unaccounted cash used for purchases, the corresponding transactions would generate input VAT credits that would offset any output VAT. Since the assessment relied solely on layered presumptions unsupported by actual facts, the Court ruled that the deficiency VAT assessment based on the alleged unaccounted source of cash lacked factual basis and must be cancelled. (Fort Bonifacio Development Corporation v. CIR, CTA Case No. 10425, February 13, 2026)

A VAT ASSESSMENT BASED SOLELY ON A COMPARISON OF THE AFS AND VAT RETURNS, AND ON THE ARBITRARY DIVISION OF ANNUAL FIGURES TO DERIVE A HALF-YEAR ASSESSMENT, LACKS SUFFICIENT FACTUAL BASIS, IS IMPROPER, AND SHOULD BE CANCELLED. The BIR is empowered to examine a taxpayer’s books, records, papers, and other relevant documents in determining tax liabilities, and any resulting assessment must be grounded on actual facts rather than assumptions or arbitrary estimations. In this case, the BIR assessed the taxpayer for alleged overclaimed input VAT after comparing the taxpayer’s AFS with its VAT returns and concluding that the input taxes claimed exceeded those supported by financial records. The Court found merit in taxpayer’s argument that the assessment was arbitrary because the BIR examiners failed to consider its notes to the financial statements and instead relied on incomplete figures. More critically, the BIR failed to determine the actual portion of input taxes attributable to the audit period of July to December 2014, and merely divided annual figures by two under the unsupported assumption that purchases were evenly distributed throughout the year. Since the BIR neglected to examine the taxpayer’s supporting records to establish the actual amounts pertaining to the covered period, the resulting deficiency assessment lacked factual basis and the Court ordered the cancellation of the alleged overclaimed input tax assessment. (Fort Bonifacio Development Corporation v. CIR, CTA Case No. 10425, February 13, 2026)

WDL INITIATES COLLECTION EFFORTS OF THE BIR; PCL IS MERELY A DEMAND FOR PAYMENT AND DOES NOT ITIATE COLLECTION PROCEEDING. The BIR’s right to collect assessed taxes is exercised through administrative remedies of distraint and levy or through judicial proceedings, and collection efforts are deemed properly commenced only upon the issuance and service of a WDL or the filing of a court action, not by mere demand letters. The Court held that a Preliminary Collection Letter (PCL) merely constitutes a demand for payment and warning of future enforcement, but does not itself initiate collection proceedings or suspend the running of the prescriptive period. In this case, although the CIR argued that collection began upon issuance of the PCL, the Court found that the letter only demanded payment within ten days and warned that administrative remedies may later be pursued. By contrast, only the subsequently issued WDL expressly initiated actual collection by commanding seizure and levy of taxpayer property pursuant to the Tax Code. Accordingly, the Court En Banc ruled that collection efforts legally commenced only upon issuance of the WDL, affirmed the Division’s findings, and denied the CIR’s petition for lack of merit. (CIR v. South Cotabato 1 Electric Cooperative, Inc. CTA EB No. 3001 (CTA Case No. 10937), December 3, 2025.)

REVENUE ISSUANCES

Revenue Memorandum Circular No. 59-2026 All covered Non-Resident Digital Service Providers (NRDSPs) must register and fulfill tax liabilities in the Philippines, as international income tax treaties do not exempt them from consumer-level Value-Added Tax (VAT). 

Legal Principle (Treaty vs. Consumption Tax)	Income Tax Treaties vs. Business Tax Status: Double Taxation Agreements (DTAs) entered into by the Philippines apply exclusively to national Income Taxes. Because VAT is an indirect, consumption-driven business tax on the privilege of transaction, tax treaties provide zero exemption or preferential relief against the 12% Philippine digital VAT framework.
Registration Requirements	Administrative Compliance for NRDSPs: Even if an NRDSP’s core digital offerings are legally classified as “VAT-Exempt” under Section 109 of the Tax Code, the platform retains a mandatory obligation to register with the BIR and file periodic VAT returns to properly record and validate its Philippine-sourced VAT-exempt sales.
Cross-Border Cost-Sharing	B2B Transfer & Reverse Charge Control: When a foreign affiliate commands terms, sets pricing, or handles ordering/delivery for an entity in the Philippines, that affiliate is treated as the operational NRDSP. The local Philippine subsidiary must assume tax liability by utilizing the Reverse Charge Mechanism (BIR Form 1600-VT) to withhold and remit the 12% VAT.
Online Booking and Travel Platforms	Taxable Base Determination: For online booking systems, marketplaces, and travel hubs, the 12% VAT is applied only to the subscription fees, service charges, or commissions earned by the NRDSP platform—not to the entire gross room or reservation booking value collected from the user.
Pre-existing/Advance Contracts	Transitional Boundary Rules: For multi-month digital subscriptions or long-term technology contracts fully paid prior to June 2, 2025, buyers must segregate the covered period. Any pro-rated duration extending beyond June 2, 2025, is subject to the 12% VAT, requiring local B2B buyers to compute and remit the tax under the reverse charge mechanism.
Online Ads and Payments	Situs of Consumption – Digital Ads: If a Philippine business purchases digital advertising services, 12% VAT is due because the service is consumed by a local purchaser, regardless of whether the target audience is located abroad.
Online Ads and Payments	Situs of Consumption – Fund Transfers: International financial service NRDSPs are subject to 12% VAT only on the service fees or transaction charges collected from clients residing in the Philippines.

BIR DEADLINES FROM JUNE 15, 2026 TO JUNE 21, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
June 15, 2026	REGISTRATION (Online thru ORUS or Manual) – Permanently Bound Loose-Leaf Books of Accounts/Invoices and Other Accounting Records. Fiscal Year ending May 31, 2026
June 15, 2026	eFILING & PAYMENT (Online/Manual) – BIR Form 1702-RT/1702-EX/1702-MX. Fiscal Year ending February 28, 2026
June 15, 2026	eFILING & 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 February 28, 2026
June 15, 2026	e-FILING & e-PAYMENT – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld). eFPS Filers under Group A. Month of May 2026
June 15, 2026	e-PAYMENT – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld) – eFPS Filers under Group E, D, C & B. Month of May 2026
June 16, 2026	SUBMISSION – Consolidated Return of All Transactions based on the Reconciled Data of Stockbrokers. June 1-15, 2026
June 20, 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 May 2026
June 20, 2026	e-FILING – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld) – eFPS Filers under Group C. Month of May 2026

SECURITIES AND EXCHANGE COMMISSION 

SEC SUSPENDS IMPOSITION OF PER-MONTH DELAY PENALTY. The SEC exercised its regulatory authority to suspend the imposition of the per-month delay penalty on covered corporations while maintaining existing reportorial and monitoring obligations. Suspension applies prospectively and uniformly, excludes retroactive relief for previously settled penalties, preserves filing duties and base penalties, and remains effective only for a limited period after which enforcement automatically resumes. SEC Memorandum Circular No. 16, Series of 2026 (Suspension of the Per-Month Delay Penalty), 2026. 

Title	Context
Temporary Suspension Only	The SEC temporarily suspended the imposition of the per-month delay penalty for covered corporations, while preserving the Commission’s authority to regulate reportorial compliance. The suspension applies prospectively and only removes the monthly penalty component; corporations remain subject to reportorial monitoring and compliance requirements.
Uniform Coverage	The suspension applies equally to all covered domestic and foreign corporations without distinction. Application of facts: eligibility is not dependent on capitalization, retained earnings, or prior offenses, ensuring uniform implementation.
Prospective Effect Only	The suspension has no retroactive application and does not alter obligations already finalized. Pending assessments are adjusted to remove future monthly penalties, while settled assessments remain final and are not refundable.
Filing Duties Remain	The suspension affects only the monthly penalty and does not remove filing obligations. Corporations are still required to comply with reportorial deadlines and remain under a continuing duty to submit required reports.

DATE	FILING/SUBMISSION
June 15, 2026	REGISTRATION (Online thru ORUS or Manual) – Permanently Bound Loose-Leaf Books of Accounts/Invoices and Other Accounting Records. Fiscal Year ending May 31, 2026
June 15, 2026	eFILING & PAYMENT (Online/Manual) – BIR Form 1702-RT/1702-EX/1702-MX. Fiscal Year ending February 28, 2026
June 15, 2026	eFILING & 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 February 28, 2026
June 15, 2026	e-FILING & e-PAYMENT – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld). eFPS Filers under Group A. Month of May 2026
June 15, 2026	e-PAYMENT – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld) – eFPS Filers under Group E, D, C & B. Month of May 2026
June 16, 2026	SUBMISSION – Consolidated Return of All Transactions based on the Reconciled Data of Stockbrokers. June 1-15, 2026
June 20, 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 May 2026
June 20, 2026	e-FILING – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld) – eFPS Filers under Group C. Month of May 2026

COURT OF TAX APPEALS DECISIONS

ASSESSMENT IS VOID IF TAXPAYER DENIES RECEIPT OF THE PAN AND BIR FAILED TO PROVE ACTUAL RECEIPT THEREOF. A PAN must be actually received by the taxpayer and the taxpayer must be given a reasonable opportunity to respond before the issuance of FLD/FAN, as part of the constitutional and statutory requirements of due process in tax assessment proceedings. Once the taxpayer categorically denies receipt of the PAN, the burden shifts to the BIR to prove by a preponderance of evidence that the PAN was in fact received by the taxpayer or its authorized representative. In this case, although the BIR presented a photocopy of a registry receipt allegedly showing mailing of the PAN, this evidence was insufficient to establish actual receipt because it lacked material details of the mailing transaction and was unsupported by an authenticated affidavit of the mailer. Thus, the BIR failed to discharge its burden of proving valid service of the PAN, resulting in a violation of the taxpayer’s right to due process and rendering the deficiency tax assessments null and void. The assessments were further rendered void by the participation of revenue officers who were not properly authorized to conduct the audit examination. [(CIR v. Bohol JSL Enterprises, Incorporated, CTA EB No. 2989 (CTA Case No. 10575, March 17, 2026); see also Mac Graphics Carranz International Corporation v. CIR (CTA Case No. 11150) March 18, 2026)

PARTICIPATION OF A GROUP SUPERVISOR IN THE AUDIT WITHOUT LOA RENDERS THE ASSESSMENT VOID. NIRC requires that an RO must first be specifically authorized through a valid LOA issued by the CIR or his duly authorized representative before conducting any audit or examination of a taxpayer’s books of accounts and accounting records. Jurisprudence consistently holds that the absence of a valid LOA, or the participation of an RO not named in the LOA without the issuance of a new or amended LOA, renders the resulting assessment void for violating due process and existing BIR regulations. In this case, while the subject LOA originally authorized RO De Guzman and GS Yahya to conduct the audit, the records showed that GS Glovasa later actively participated in the audit process, supervised the investigation, signed the Post-Reporting Notice, audit reports, and memorandum recommending the issuance of the PAN, despite not being authorized under any new or amended LOA. The BIR’s own witness likewise admitted that no LOA was issued in favor of GS Glovasa. Since her participation formed an essential part of the audit and assessment process, the deficiency income tax, VAT, and EWT assessments were declared null and void for having been conducted by an unauthorized revenue officer. [CIR v. Bohol JSL Enterprises, Inc., CTA EB No. 2989 (CTA Case No. 10575) March 17, 2026]

TAXPAYER HAS NO FRESH 180-DAY PERIOD ON APPEAL TO CIR; REMEDY IS TO WAIT FOR CIR’S DECISION, WHICH IS APPEALABLE TO THE CTA. A taxpayer may appeal a disputed assessment to the CTA within 30 days from receipt of the denial of the protest or from the lapse of the 180-day period within which CIR or his authorized representative must act on the protest. Jurisprudence further clarifies that the taxpayer’s remedies in cases of inaction are mutually exclusive, and there is only one continuous 180-day period reckoned from the submission of supporting documents, with no fresh 180-day period arising from an administrative appeal to the CIR. In this case, the taxpayer erroneously treated its administrative appeal to CIR filed on December 21, 2018 as giving rise to a new 180-day period, despite the original 180-day period from the filing of the protest having already lapsed on May 20, 2018. Consequently, when the FDDA was issued on November 26, 2018, the taxpayer’s remedy was limited to appealing the adverse decision to the CTA within 30 days from receipt thereof. Since the taxpayer instead relied on an invalid assumption of a renewed 180-day period and belatedly filed its Petition for Review, the CTA Division correctly ruled that it had no jurisdiction over the case due to the late appeal. [Friendlycare Foundation, Inc. v. CIR, CTA EB No. 3056, (CTA Case No. 10123), March 17, 2026]

SPLASH COLOGNES FALL WITHIN THE DEFINITION OF TOILET WATERS SUBJECT TO EXCISE TAX. NIRC imposes excise tax on perfumes and toilet waters, and jurisprudence has consistently held that the definition of “toilet waters” under Revenue Regulations No. 8-84, which implemented the percentage tax regime under the NIRC of 1977, is no longer applicable following the substantive change introduced by Executive Order No. 273 converting the tax on toilet waters from a percentage tax into an excise tax. Since RR No. 8-84 was issued specifically to implement the old sales or percentage tax system, it was deemed impliedly repealed upon the enactment of the new excise tax framework. Consequently, the Court gave weight to the CIR’s subsequent interpretation classifying colognes, including baby colognes and splash colognes, as “toilet waters” subject to excise tax, consistent with the CIR’s authority to interpret tax laws. Applying these principles, the Court held that the taxpayer Green Cross, Inc.’s splash colognes fall within the ordinary and commercial meaning of “toilet waters” and are therefore subject to excise tax, rejecting the taxpayer’s reliance on the 3% essential oil threshold found in RR No. 8-84 and its argument on legislative reenactment (Green Cross, Inc. v. Commissioner of Internal Revenue, CTA Case No. 11163, March 17, 2026)

THE REGIONAL DIRECTOR’S LETTER SIGNIFYING INTENT TO PROCEED WITH COLLECTION IS CONSIDERED A FINAL DECISION; SEE DISSENTING OPINION. A taxpayer may appeal a denial or inaction on a protest to the CTA within 30 days from receipt of the decision or lapse of the 180-day period. A final decision for purposes of appeal must be issued by the CIR or a duly authorized representative and must be unequivocal and final in character; however, the Supreme Court clarified that not all BIR communications, particularly collection-related issuances, constitute appealable final decisions. In this case, the taxpayer argued that it timely filed its judicial appeal after receiving the WDL treating it as the CIR’s final decision on its protest. However, the CTA held that the letter issued by a Regional Director, an official equivalent to a division chief, which explicitly signified the BIR’s intent to proceed with collection, already constituted the final decision on the disputed assessment; thus, the taxpayer should have filed its appeal within 30 days from receipt of said letter, not WDL. The Court rejected the taxpayer’s argument that it was still awaiting resolution of its protest, emphasizing that the CIR’s delegated authority allows regional officials to issue binding final decisions. The Court further held that a WDL is not the final decision on an assessment but merely a collection remedy. Nonetheless, the CTA ultimately ruled that despite procedural finality, the assessment was void ab initio because it was tainted by due process violations, specifically the participation of a revenue officer who was not properly authorized under a valid LOA but was instead assigned through a mere Memorandum of Assignment. Accordingly, the Court held that an assessment issued in violation of due process cannot attain finality, produces no legal effect, and cannot support any collection action; hence, both the deficiency tax assessment and the resulting WDL were declared void, and the BIR was barred from enforcing collection. (Gensbio Marketing Corp. v. CIR, CTA Case No. 10054, March 18, 2026) Separate opinion: only a valid FDDA containing factual and legal bases and an explicit declaration of finality is appealable, and collection issuances like warrants cannot substitute for such a decision;  the letter cannot be treated as an FDDA because it did not state factual/legal bases or indicate finality and therefore cannot trigger the 30-day appeal period) instead, the case should be treated as one of inaction.

DUE DATES LAPSED BEFORE THE RECEIPT OF THE FLD/FAN RENDER THE ASSESSENT VOID. A valid tax assessment must constitute a definite and unequivocal demand for payment within a specific and future due date, as due process requires that taxpayers be properly informed of their liability and given a genuine opportunity to pay or contest the assessment; failure to state a definite due date or the existence of an actual demand for payment renders the assessment void for violating due process. In this case, the Court found that the FLD/FAN and the FDDA were void because both contained due dates that had already lapsed even before the taxpayer received them, effectively depriving petitioner of any meaningful opportunity to comply or respond, and rendering the supposed demand for payment indefinite and illusory since the amounts were also subject to adjustment depending on the date of payment. The Court held that such assessments failed to meet the substantive requirement of a valid assessment under the NIRC because they did not establish a fixed, demandable tax liability payable within a proper prescribed period, and instead merely imposed retrospective and conditional due dates, violating the taxpayer’s right to due process. As a result, both the FLD/FAN and FDDA were declared void, the deficiency tax assessment was cancelled, and the BIR was permanently enjoined from collecting the assessed taxes and compromise penalties. (Eastern Petroleum Corporation v. CIR, CTA Case No. 10342, March 18, 2026)

 ASSESSMENT IS VOID IF THE BIR ignored the taxpayer’s explanation in the PAN; the item of assessment is final if uncontested by the taxpayer. NIRC requires that taxpayers be informed in writing of the facts and law on which an assessment is based. Jurisprudence consistently holds that due process in tax assessments includes not only the taxpayer’s right to be heard but also the BIR’s duty to meaningfully consider and address the taxpayer’s explanations; failure to do so renders the assessment void. In this case, although the taxpayer submitted a detailed Reply to the PAN disputing the use of unverified third-party RELIEF/AITEID data, alleged undeclared purchases and sales, VAT consequences, and disallowed input taxes, the BIR issued the FLD/FAN and FDDA without addressing these defenses and merely reiterated the PAN computations without explanation or evaluation of the taxpayer’s arguments, thereby showing that the Reply to PAN was ignored. Consequently, the Court held that the BIR violated the petitioner’s right to due process, rendering the deficiency tax assessments void and unenforceable insofar as the disputed items were concerned, while allowing examination of uncontested portions. However, the due process infirmity does not extend to the portions of the assessments that were not specifically refuted by the taxpayer in the Reply to PAN. With respect to those items, the Court proceeds to examine their factual and legal validity based on the evidence on record. (Sarcaoga v. CIR, CTA Case No. 10850, March 19, 2026)

TAXPAYER MUST SUBMIT RECEIPTS AND ADEQUATE DOCUMENTATION TO SUPPORT EXPENSES. Deductions from gross income are not allowed unless the taxpayer substantiates such expenses with sufficient evidence such as official receipts or other adequate records, and jurisprudence consistently places the burden on the taxpayer to prove entitlement to deductions once properly disallowed by the BIR. In this case, the BIR disallowed the taxpayer’s claimed purchases on the ground that they were unsupported by official receipts and adequate documentation, and while the taxpayer questioned the basis of the computation, it failed to present competent evidence to substantiate the alleged expenses or refute the BIR’s findings. Thus, applying the rule on burden of proof and the statutory requirement of substantiation, the CTA upheld the disallowance of the unsupported purchases and sustained the resulting deficiency income tax assessment (Sarcaoga v. CIR, CTA Case No. 10850, March 19, 2026)

SEPARATE NOTICE AS TOP WITHHOLDING AGENT (TWA) IS NOT REQUIRED; PUBLICATION ON BIR WEBSITE AND NEWSPAPER IS SUFFICIENT. Certain taxpayers designated as TWA are required to withhold creditable withholding tax at specified rates. Inclusion in the TWA list is effective upon publication in a newspaper of general circulation or posting on the BIR website, which constitutes sufficient notice and triggers the withholding obligation beginning on the first day of the month following publication. In this case, although the taxpayer argues that it was not served a separate written notice of its classification as a TWA, the Court held that such individual notice is not required because publication of the official TWA list in Malaya Business Insight and its availability on the BIR website constituted valid constructive notice, and the petitioner’s obligation to withhold EWT commenced; thus, its failure to withhold the required taxes on purchases of goods and services justified the deficiency EWT assessment. (Sarcaoga v. CIR, CTA Case No. 10850, March 19, 2026)

A TAXPAYER WHO FAILS TO TIMELY AND VALIDLY PROTEST AN FLD/FAN WITHIN 30 DAYS IS BARRED FROM CONTESTING THE ASSESSMENT, ESPECIALLY WHERE ITS PRIOR ACTS AND PARTICIPATION IN THE ASSESSMENT PROCESS ESTABLISH IMPLIED RECEIPT AND AUTHORITY, CAUSING THE ASSESSMENT TO BECOME FINAL, EXECUTORY, AND DEMANDABLE. A taxpayer must file a valid administrative protest within 30 days from receipt of the FLD/FAN; otherwise, the assessment becomes final, executory, and demandable, precluding further inquiry into its merits. In this case, although the taxpayer alleged lack of receipt of the FLD/FAN and questioned the authority of the person who received it, the CTA held that the taxpayer is estopped from denying receipt because it previously recognized and acted on notices served through the same recipient, thereby implying authority under the doctrine of implied authorization. The records further showed that the taxpayer participated in the assessment process through the informal conference and filed a protest without disputing receipt of the FLD/FAN, constituting admission by silence. Moreover, the taxpayer’s acceptance of the FLD/FAN gives rise to a disputable presumption that a complete assessment (including both FLD and FAN) was duly served, which the taxpayer failed to rebut. Having failed to timely and properly protest within the reglementary period, the assessment became final and incontestable, thereby rendering taxpayer liable for the deficiency taxes assessed. (Sirawai Plywood and Lumber Corporation v. Commissioner of Internal Revenue, CTA Case No. 10810, March 31, 2026)

REVENUE ISSUANCES

Revenue Memorandum Circular No. 042-2026

Mandatory Requirement	The Certificate of Entitlement to Tax Incentives (CETI) remains a mandatory attachment to the Annual Income Tax Return (AITR) for RBEs availing of income tax incentives.
Clarifications of Recent Rules	The non-inclusion of the CETI in the illustrative list of attachments in RMC No. 20-2026 does not constitute a waiver or removal of the requirement.
Scope of Application	This applies to all Registered Business Enterprises (RBEs) duly registered with Investment Promotion Agencies (IPAs).
Enforceability	The requirement remains enforceable regardless of whether it is expressly listed in subsequent circulars providing general lists of AITR attachments.

Registered Business Enterprises (RBEs) must continue to attach the Certificate of Entitlement to Tax Incentives (CETI) to their Annual Income Tax Returns (AITR) under the mandates of the CREATE and CREATE MORE Acts.

Mandatory Requirement	The Certificate of Entitlement to Tax Incentives (CETI) remains a mandatory attachment to the Annual Income Tax Return (AITR) for RBEs availing of income tax incentives.
Clarifications of Recent Rules	The non-inclusion of the CETI in the illustrative list of attachments in RMC No. 20-2026 does not constitute a waiver or removal of the requirement.
Scope of Application	This applies to all Registered Business Enterprises (RBEs) duly registered with Investment Promotion Agencies (IPAs).
Enforceability	The requirement remains enforceable regardless of whether it is expressly listed in subsequent circulars providing general lists of AITR attachments.

BIR DEADLINES FROM MAY 18, 2026 TO MAY 24, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
May 20, 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 April 2026

COURT OF TAX APPEALS DECISIONS

THE BIR MUST EXPLAIN THE BASIS FOR STARTING ITS INCOME TAX DEFICIENCY COMPUTATION FROM A ZERO TAXABLE INCOME, DESPITE THE TAXPAYER’S NET LOSS POSITION. Taxpayers must be informed in writing of the legal and factual bases of an assessment; otherwise, the assessment is void for violating due process. In this case, the BIR improperly set the taxpayer’s net taxable income to zero by completely disregarding its declared net operating loss without providing any explanation in the FLD/FAN and FDDA. The Court found that the reported loss was duly supported and constitutes a valid net operating loss. Consequently, the BIR’s unexplained disallowance was invalid, and the taxpayer’s net operating loss must be recognized in computing its 2016 income tax liability (DMCI Holdings, Inc., v. CIR, CTA Case No. 10784, November 4, 2025)

THE BIR CANNOT VALIDLY DISALLOW EXPENSES RELATED TO PASSIVE INCOME. Taxpayers are allowed to deduct from gross income all ordinary and necessary expenses incurred in the conduct of their trade or business, and there is no legal requirement to allocate or apportion such expenses based on the nature or source of income. The Supreme Court also held that common expenses are fully deductible without distinction among income streams. In this case, the BIR disallowed 99% of the reported expenses, by applying an allocation formula that limited allowable deductions to those supposedly attributable to its minimal “active income,” while disallowing expenses linked to “passive income.” The Court found this approach arbitrary and without legal basis, as the law does not mandate such allocation, and the cited authorities were inapplicable, involving different factual contexts such as foreign corporations or tax-exempt income. Moreover, the taxpayer substantiated that its total claimed expenses were properly recorded, reconciled with its audited financial statements, and directly related to its business operations, as confirmed by the ICPA. Consequently, the disallowance of expenses for being “unnecessary” was unsupported by both law and evidence and must be cancelled. (DMCI Holdings, Inc., v. CIR, CTA Case No. 10784, November 4, 2025)

CASH RECEIPTS BOOKS ARE INSUFFICIENT PROOF OF EXEMPTION FROM DST ON ADVANCES. A DST is imposed on specific taxable transactions such as loans, advances, and certain lease agreements; moreover, DST attaches to the instrument and any party to the transaction may pay it, with full payment by one extinguishing the liability of the others. In this case, the Court upheld the DST assessment on the taxpayer’s “advances for future dividends” and “advances from affiliates,” ruling that the cash receipts book presented merely showed a breakdown of cash inflows and was insufficient to prove that the amounts were actually non-taxable dividends receivable rather than taxable advances subject to DST. However, the Court cancelled the DST assessment on “receivables from wholly owned subsidiary,” finding that the same intercompany transaction had already been subjected to and paid for DST. Finally, the taxpayer admitted liability for DST on rent expense, which was accordingly sustained. (DMCI Holdings, Inc., v. CIR, CTA Case No. 10784, November 4, 2025)

TRAVEL EXPENSES AND GOLF MEMBERSHIP FEES ARE SUBJECT TO FBT IF NOT BUSINESS-RELATED. Fringe benefits furnished or granted by an employer to managerial or supervisory employees are subject to FBT, except when they are proven to be necessary business expenses or fall under specifically exempt categories. The burden rests on the taxpayer to substantiate that such expenditures are ordinary and necessary business-related costs. In this case, the BIR assessed the taxpayer for deficiency FBT arising from travel expenses, golf club memberships, and motor vehicle benefits allegedly granted to officers and directors. The Court partially granted the taxpayer’s position on travel expenses, recognizing that a portion incurred by the Managing Director was sufficiently substantiated as business-related participation in an investor event, and thus excluded from FBT. The remaining amount was properly subjected to FBT for lack of adequate proof that the expenses were business-necessary. The Court likewise sustained the FBT assessment on golf membership fees, finding that the taxpayer failed to establish that the club shares and related expenses were used exclusively for business purposes or constituted ordinary and necessary expenses, thereby classifying them as taxable fringe benefits. On the other hand, the FBT assessment on the motor vehicle was cancelled, as the Court found that the correct acquisition cost and computation showed that the taxpayer had properly reported and paid the corresponding tax, rendering the assessment without legal and factual basis. (DMCI Holdings, Inc., v. CIR, CTA Case No. 10784, November 4, 2025)

DIVIDENDS PAID TO A NRFC ARE GENERALLY SUBJECT TO 30% FWT, SUBJECT TO THE TAX-SPARING RULE, WHICH ALLOWS A REDUCED 15% RATE IF THE COUNTRY OF THE RECIPIENT ALLOWS A CREDIT FOR TAXES DEEMED PAID IN THE PHILIPPINES, AND SUBJECT FURTHER TO PREFERENTIAL RATES UNDER APPLICABLE TAX TREATIES OR EXEMPTION FOR QUALIFIED FOREIGN GOVERNMENTS AND CERTAIN FINANCING INSTITUTIONS. In this case, the BIR imposed 30% FWT on the taxpayer’s dividend payments to various foreign entities, alleging failure to sufficiently prove entitlement to exemptions or treaty relief. The Court partly sustained the assessment after reviewing the documentary submissions: (a) entities were recognized as foreign government institutions entitled to exemption; (b) certain were found entitled to 15% preferential treaty rates; and (c) other foreign institutional investors were treated as NRFCs subject to the 30% rate due to lack of sufficient proof of residency, beneficial ownership, or entitlement to tax sparing or treaty relief. (DMCI Holdings, Inc., v. CIR, CTA Case No. 10784, November 4, 2025)

THE ASSESSMENT IS VOID WHEN THE BIR FAILS TO PROPERLY CONSIDER OR ADEQUATELY ADDRESS THE TAXPAYER’S ARGUMENTS IN THE FLD/FAN, OR MERELY ACKNOWLEDGES THEM WITHOUT PROVIDING A CLEAR AND REASONED EXPLANATION. A tax assessment is void if the taxpayer is not properly informed in writing of the factual and legal bases thereof. Jurisprudence further requires the CIR to address the taxpayer’s defenses and evidence; failure to consider or explain the rejection of such arguments constitutes a violation of due process that renders the assessment void. In this case, the BIR failed to meaningfully address petitioner’s protests against the assessment, including its claim that the audit was merely a “table audit” without examination of books, as well as its specific legal and factual defenses on VAT, EWT, FWT, prescription, treaty exemptions, and tax incentives; instead, the either ignored or only partially acknowledged these arguments in the FLD/FAN without explaining their rejection, thereby depriving petitioner of an opportunity to intelligently contest the assessment. Consistent with Avon Case, such failure to consider and explain the rejection of the taxpayer’s evidence and arguments violates due process and invalidates the assessment. Accordingly, the Court cancelled and declared void the deficiency tax assessment (Subic Water & Sewerage Co. Inc. v. CIR, CTA Case No. 10465)

ASSESSMENT IS VOID WHEN THE BIR ISSUED THE FAN/FLD EIGHT DAYS AFTER THE PAN WAS RECEIVED BY THE TAXPAYER. A taxpayers must be given a mandatory 15-day period from receipt of the Preliminary Assessment Notice (PAN) to respond before the issuance of a Formal Letter of Demand/Final Assessment Notice (FLD/FAN), and any violation of this due process requirement renders the assessment void; applying these rules, the taxpayer received the PAN on January 16, 2013 and thus had until January 31, 2013 to reply, yet the BIR issued the FLD/FAN on January 24, 2013, only eight days after receipt and well within the prohibited period, thereby depriving the taxpayer of its right to respond and invalidating the entire assessment regardless of any subsequent protest, leading the Court to declare the deficiency tax assessment null and void and to enjoin its collection (Provident Tree Farms, Inc. v. CIR, CTA Case No. 10459, March 2, 2026)

THE PROPER BASIS FOR APPEALING THE BIR’S ACTION BEFORE THE CTA IS THE WARRANT OF GARNISHMENT, NOT THE LETTERS OR CERTIFICATIONS ISSUED BY BANKS, WHICH ARE MERELY MINISTERIAL IN NATURE AND DO NOT CONSTITUTE APPEALABLE ACTS. Appeals involving disputed assessments or “other matters” (including collection remedies like warrants of garnishment) must be brought within thirty (30) days from the taxpayer’s receipt of the Commissioner’s decision or from the actionable act itself; applying these principles, although the issuance of Warrants of Garnishment (WOGs) constitutes an appealable “other matter” under the CTA’s jurisdiction, the taxpayer failed to properly invoke such jurisdiction by erroneously treating bank-issued letters and certifications – mere ministerial confirmations of garnishment and not acts of the BIR rendered in the exercise of quasi-judicial authority – as the appealable decisions triggering the reglementary period, instead of directly assailing the WOGs or timely obtaining copies thereof from the BIR despite having knowledge of the garnishment, thereby resulting in a failure to file a proper and timely appeal within the period prescribed by law; consequently, the Court is left with no recourse but to dismiss the Petition for Review for lack of jurisdiction without delving into the merits (Feliciano T. Baligod, CTA Case No. 11090, March 2, 2026)

THE PERIOD FOR FILING A MOTION FOR RECONSIDERATION OF THE CTA DIVISION’S DECISION IS COUNTED FROM THE OSG’S RECEIPT OF THE DECISION, NOT FROM THE BIR’S RECEIPT THEREOF. The Office of the Solicitor General (OSG) remains the principal counsel of the government even when it deputizes agency lawyers, such that service of decisions and the reckoning of reglementary periods must be based on the OSG’s receipt, not that of deputized counsel, who merely act under its control and supervision; applying these principles, the BIR’s argument that the prescriptive period should be counted from the BIR legal officers’ receipt of the assailed Decision fails, as the OSG, being the principal counsel, controls the computation of the period to file a Motion for Reconsideration regardless of who actually prepares the pleadings, and any internal arrangement or memorandum delegating such preparation to BIR officers cannot override established procedural rules and jurisprudence, especially where the lack of OSG involvement even contravenes the requirement of its direct supervision, thus rendering petitioner’s Motion for Reconsideration filed out of time when reckoned from the OSG’s receipt and warranting denial of the Petition; accordingly, the Court affirms the ruling that the prescriptive period was correctly computed from the OSG’s receipt. [CIR v. First Telecom Philippines, Inc. CTA EB No. 3140 (CTA Case No. 10688), March 11, 2026]

FAN/FLD WITHOUT DUE DATE RENDERS THE ASSESSMENT VOID; FDDA CANNOT CURE THE DEFECT; DEFECT MAY STILL BE INVOKED EVEN IF RAISED BELATEDLY. A valid deficiency tax assessment must constitute a written notice and demand for payment of a definite tax liability, which becomes demandable only when it contains a specific due date for payment. The Supreme Court also invalidated assessments for failure to indicate due dates in the Formal Letter of Demand/Final Assessment Notice (FLD/FAN), emphasizing that such omission renders the demand incomplete and void; it was further clarified by the Supreme Court that defect in the FLD/FAN cannot be cured by subsequently stating a due date in the Final Decision on Disputed Assessment (FDDA), as both documents serve distinct functions – the FLD/FAN being the operative demand for payment while the FDDA merely resolves the protest; applying these rules, the FLD/FAN failed to state any due date for payment, rendering the assessments void, and although the taxpayer argued that the issue was raised belatedly, the Court properly took cognizance of it since it is directly related to the validity of the assessment and based entirely on evidence already on record, while the BIR’s contention that the defect was cured by inserting due dates in the FDDA was rejected. [CIR v. Grand Union Supermarket, CTA EB No. 2893 (CTA Case No. 10299), March 12, 2026]

A RULING OF THE REGIONAL DIRECTOR ON A REQUEST FOR RECONSIDERATION SUBMITTED TO THE COMMISSIONER IS NOT SUBJECT TO APPEAL BEFORE THE CTA.  The CTA may only take cognizance of appeals involving a “decision, ruling, or inaction” of the Commissioner of Internal Revenue (CIR) or his duly authorized representative in cases involving disputed assessments, and jurisprudence has consistently held that only such final, appealable acts of the CIR or a properly authorized representative may be elevated to the CTA, while acts of subordinate officials without clear delegation of authority are not considered appealable decisions; applying these rules, the taxpayer initially protested the FLD/FAN through an administrative protest and subsequently elevated the matter via a request for reconsideration to the CIR, but instead of a decision from the CIR or a duly authorized representative acting within delegated authority, it was merely Regional Director Tabule who issued the denial letter, despite the taxpayer’s own acknowledgment that only the CIR may resolve such administrative appeals, and no evidence was presented showing that RD Tabule was validly authorized to act for or bind the CIR in deciding the request for reconsideration; thus, RD Tabule’s denial cannot be deemed the final decision contemplated by law that would trigger the CTA’s appellate jurisdiction, as it is a non-appealable act of a subordinate officer lacking authority to render a final ruling on the protest, rendering the petition premature and outside the jurisdiction of the CTA [Bioenergy 8 Corporation v. CIR, CTA EB No. 3004 (CTA Case No. 10260), March 13, 2026)]

AN ASSESSMENT IS VOID WHEN ADDITIONAL EXAMINERS REVIEW THE BOOKS OF ACCOUNTS WITHOUT A NEW OR AMENDED LOA. A Letter of Authority (LOA) is a mandatory prerequisite for a valid tax audit because it confers upon specifically named revenue officers the legal authority to examine a taxpayer’s books, and any audit conducted by officers not expressly covered by a valid LOA – or by officers substituted or added through mere internal memoranda or endorsements without issuance of a new or amended LOA – is void and renders the resulting assessment without legal effect; applying these rules, although the LOA initially authorized Revenue Officers Jan Andre Abellera and Johnro Galicia to examine the taxpayer, the audit was later actually conducted with the participation of Revenue Officers Oradia and Zamora based only on a letter issued by the  Chief purportedly “authorizing” their assistance, without any corresponding new or amended LOA issued by the Commissioner or authorized representative, thereby violating the requirement that only officers named in a valid LOA may conduct or participate in the audit; since these unauthorized officers were actively involved in the examination that led to the issuance of the deficiency tax assessment, the entire audit process was tainted with invalidity, making the resulting assessments void. [CIR v. First Telecom Philippines, Inc. CTA EB No. 3079 (CTA Case No. 10486), March 13, 2026]

REVENUE ISSUANCES

Revenue Memorandum Order No. 037-2026

Qualified taxpayers may electronically file specific income tax returns via the offline eBIRForms system, streamlining compliance with updated filing procedures.

Coverage	Applies to individual taxpayers classified under a specific category (e.g., micro and small taxpayers)
Forms Covered	BIR Forms 1701-MS, 1701, and 1701A
Manner of Filing	1701-MS: Manual or Electronic (Offline eBIRForms); 1701 & 1701A: Electronic via eBIRForms or eFPS
Mode of Payment	Manual: Authorized Agent Banks or Revenue Collection Officers; Online: ePayment gateways or eFPS
Application of Facts	A taxpayer under the covered classification may validly file electronically using the offline system and pay through authorized or online channels, ensuring compliance with updated procedures

Revenue Memorandum Order No. 036-2026

Taxpayers are required to use the updated offline eBIRForms system, applying new forms, tax codes, and extended deadlines to ensure compliant electronic tax filing.

System Update	Release of Offline eBIRForms Package Version 7.9.6.0 with enhanced security and bug fixes
New Form Included	Annual income tax return for micro/small individual taxpayers
Deadline Adjustment	Filing deadline for annual income tax returns extended to May 15 (for applicable year)
Tax Code Updates	Additional Alphanumeric Tax Codes (ATCs) for specific income payments
Other Enhancements	Increased TIN branch code field length and updated tax rates for certain returns
Application to Taxpayer	Taxpayer must adopt the updated system, use revised forms and ATCs, and follow extended deadlines for proper compliance

BIR DEADLINES FROM MAY 4, 2026 TO MAY 10, 2026. A gentle reminder on the following deadlines, as may be applicable:

DATE	FILING/SUBMISSION
May 5, 2026	SUBMISSION – Summary Report of Certification issued by the President of the National Home Mortgage Finance Corporation (NHMFC). Month of April 2026
	e-FILING & PAYMENT (Online/Manual) – BIR Form 2000 (Monthly Documentary Stamp Tax Declaration/Return). Month of April 2026
	e-FILING & PAYMENT (Online/Manual) – BIR Form 2000-OT (Documentary Stamp Tax Declaration/Return One-Time Transactions). Month of April 2026
May 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 April 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 April 2026
May 10, 2026	SUBMISSION – List of Buyers of Sugar Together with a Copy of Certificate of Advance Payment of VAT made by each buyer appearing in the List by a Sugar Cooperative. Month of April 2026
	SUBMISSION – Information Return on Releases of Refined Sugar by the Proprietor or Operator of a Sugar Refinery or Mill. Month of April 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 Odd Number. Month of April 2026
	eFILING & PAYMENT/REMITTANCE (Online/Manual) – BIR Form 2200-M Excise Tax Return for the Amount of Excise Taxes Collected from Payment Made to Sellers of Metallic Minerals. Month of April 2026
	eFILING & PAYMENT (Online/Manual) – BIR Forms 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation) and/or 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded) and/or 0619-F (Monthly Remittance Form of Final Income Taxes Withheld). Non-eFPS Filers. Month of April 2026
	e-FILING & PAYMENT (Online/Manual) – BIR Form 2200-C (Excise Tax Return for Cosmetic Procedures) with Monthly Summary of Cosmetic Procedures Performed. Month of April 2026
	e-FILING & PAYMENT (Online/Manual) – BIR Form 1600-VT (Monthly Remittance Return of Value-Added Tax) and/or 1600-PT (Other Percentage Taxes Withheld) and Monthly Alphalist of Payees (MAP). eFPS & Non-eFPS Filers. Month of April 2026
	e-FILING & PAYMENT (Online/Manual) – BIR Form 1606 (Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset Including Taxable and Exempt). Month of April 2026
	e-FILING & PAYMENT (Online/Manual) – BIR Form 0620 (Monthly Remittance Form of Tax Withheld on the Amount Withdrawn from the Decedent’s Deposit Account) – eFPS & Non-eFPS Filers. Month of April 2026
	e-FILING & e-PAYMENT/REMITTANCE – BIR Form 1600-VT (Monthly Remittance Return of Value-Added Tax) and/or 1600-PT (Other Percentage Taxes Withheld) and BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation). National Government Agencies (NGAs). Month of April 2026