COURT OF TAX APPEALS DECISIONS
THE CITY TREASURER’S ASSESSMENT IS VOID BECAUSE THE NOTICES FAILED TO STATE THE LEGAL AND FACTUAL BASES OF THE ALLEGED DEFICIENCY, PREVENTING THE TAXPAYER FROM FILING AN INFORMED PROTEST. A valid notice of assessment must be issued by the local treasurer or duly authorized representative whenever correct taxes, fees, or charges have not been paid, and it must state the nature of the tax, fee, or charge, the amount of deficiency including surcharges, interests, and penalties, as well as the factual and legal bases of the assessment, so that the taxpayer is adequately informed and can prepare an intelligent protest within sixty (60) days. In the present case, the Court found that none of the documents issued by the City Treasurer to the taxpayer, including the Tax Data and Assessment Form, the assessment letter and its attachments, and the Letter of Assessment (Final Notice) sufficiently complied with these requirements. Specifically, these documents only provided computations or summaries of the alleged deficiency without explaining the factual or legal bases, such as the ordinances, corporate records, or relevant laws supporting the assessment, thereby preventing taxpayer from preparing an effective protest. As a result, the Court held that the assessments are void for failure to issue a valid notice of assessment, and no assessment could have become final and executory (O&S Trading and Construction Supply, Inc., v. Office of the City Treasurer of Las Piñas, CTA AC No. 303, August 1, 2025; see also City of Taguig et. al., v. Cosmos Bottling Corporation, CTA AC No. 320, September 10, 2025)
THE ASSESSMENTS FOR 2008–2013 WERE VOID AS THE 5-YEAR PRESCRIPTIVE PERIOD HAD LAPSED; FRAUD OR INTENT TO EVADE TAXES, AS BASIS FOR 10-YEAR PRESCRIPTION PERIOD, WAS NOT PROVEN BY CLEAR AND CONVINCING EVIDENCE. Local taxes, fees, or charges must generally be assessed within five (5) years from their due date, while an extraordinary ten (10)-year period applies only in cases of fraud or intent to evade payment, which must be established by clear and convincing evidence. In this case, the Court found that respondent failed to prove fraud or intent to evade taxes for taxable years 2008 to 2013, as the evidence relied upon, such as an excerpt of petitioner’s 2007 financial statement and estimated sales for subsequent years, was unverified, incomplete, and insufficient to demonstrate any substantial under-declaration of income; mere understatement of taxes cannot, by itself, establish fraud. Therefore, the ordinary five-year prescriptive period applies, and since the taxpayer received the assessment only on August 1, 2018, the right to assess taxes for 2008 to 2013 had already lapsed, rendering the assessments void and incapable of becoming final or executory. (O&S Trading and Construction Supply, Inc., v. Office of the City Treasurer of Las Piñas, CTA AC No. 303, August 1, 2025)
PILAA COULD NOT BE APPLIED AS BASIS FOR ASSESSMENT WITHOUT AN ENABLING ORDINANCE, UNVERIFIED SEC RECORDS AND ARBITRARY INCREASE; THE TAXPAYER’S SWORN DECLARATIONS AND AUDITED STATEMENTS ALREADY SUFFICED. The power to impose local taxes must be exercised by the local legislative body or Sanggunian through an appropriate ordinance, and any tax assessment, including the use of the Presumptive Income Level Assessment Approach (PILAA), must be anchored on such ordinance; absent this, the exercise of taxing power is unauthorized. In this case, the LGU applied the PILAA to compute the taxpayer’s local business tax deficiency without presenting any ordinance of Las Píñas City authorizing its use, relying instead on unverified SEC records and arbitrary 10% annual increases. The Court found that petitioner had submitted sworn declarations and audited financial statements sufficient to determine its actual gross income, making the application of the PILAA both unnecessary and legally unfounded. Consequently, the assessment based on the PILAA lacks factual and legal basis, rendering the subject assessment void, and the letters of assessment for taxable years 2008 to 2017 are nullified, cancelled, and set aside. (O&S Trading and Construction Supply, Inc., v. Office of the City Treasurer of Las Piñas, CTA AC No. 303, August 1, 2025; The City of Taguig et. al. v. Union Cement Holdings Corporation, CTA AC No. 313, July 29, 2025)
ONLY THE CITY TREASURER OR ITS AUTHORIZED REPRESENTATIVES – NOT THE BPLO – MAY ISSUE LOCAL BUSINESS TAX ASSESSMENTS. The power to assess and collect local business taxes (LBT) is expressly vested in the City Treasurer, who may deputize representatives under specific conditions, while the Business Permits and Licensing Office (BPLO) is limited to processing business retirements and cannot independently issue or approve tax assessments. In the present case, the subject assessment was issued by the BPLO without any authorization from the City Treasurer, and the LGU failed to provide any ordinance, law, or rule delegating such authority. Testimony and records confirmed that BPLO personnel prepared and approved the assessment, and the mere use of software provided by the City Treasurer or instructions to make payment to the Treasurer does not confer legal authority to the BPLO. Furthermore, the Bureau of Local Government Finance (BLGF) has consistently held that assessment of local taxes is the inherent function of the City Treasurer unless explicitly provided otherwise by law. Accordingly, since the BPLO lacked legal authority to issue the assessment, it is null and void, and the assessment against TMC is cancelled (NLEX Corporation v. The City of Caloocan et. al., CTA AC No. 312, October 8, 2025)
DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIESEQUIRES TAXPAYERS TO FIRST SEEK REVIEW OF THE CIR’S INTERPRETATIONS BY THE SECRETARY OF FINANCE; PETITION DIRECTLY FILED WITH THE CTA WITHOUT AVAILING OF SUCH ADMINISTRATIVE REVIEW IS PREMATURE. The Commissioner of Internal Revenue has the exclusive authority to interpret tax laws, subject to review by the Secretary of Finance; thus, taxpayers must first seek such administrative review before resorting to the courts in accordance with the doctrine of exhaustion of administrative remedies. Although the Court of Tax Appeals may rule on the validity or constitutionality of tax laws and administrative issuances, this power is generally exercised only after administrative remedies have been exhausted. In this case, the petitioner directly filed a Rule 65 petition before the CTA to invalidate a Revenue Memorandum Circular and a BIR Letter declaring certain MILO products subject to Sweetened Beverage Tax. The court held that these issuances were merely interpretative and not an actual assessment or collection action; hence, the petition was dismissed for prematurity for failure to first seek review by the Secretary of Finance (Nestlé Philippines, Inc. v. CIR, CTA Case No. SCA 006, August 2025).
CRIMINAL CASE MAY PROCEED WITHOUT ASSESSMENT IN CASE OF FRAUD BUT VALIDITY OF ASSESSMENT IS AN ISSUE IN CASE OF WILLFUL FAILURE TO PAY DESPITE A LAWFUL NOTICE AND DEMAND. The general rule is that the collection of taxes must first be preceded by a valid assessment issued by the Commissioner of Internal Revenue, consistent with due process requirements allowing the taxpayer to know the factual and legal bases of the government’s claim and to contest the assessment before payment is enforced. Jurisprudence reiterates that a valid assessment is a substantive prerequisite for tax collection because courts cannot perform a judicial assessment in the first instance, except where the taxpayer files a false or fraudulent return or fails to file a return, allowing the government to file a court action for collection even without an assessment. This rule was clarified in People v. Mendez, which held that when a criminal tax case is filed, the criminal action simultaneously serves as the tax collection case, and a prior or final assessment is not required, provided the prosecution proves both the accused’s guilt beyond reasonable doubt and the civil tax liability through competent evidence. Applying these principles, tax liability in criminal cases under Section 255 may arise through two modes: first, where non-payment results from falsity, fraud, or willful omission (e.g., filing a false return or failure to file), in which case collection may proceed without assessment; and second, where the taxpayer deliberately refuses to pay despite a lawful notice and demand based on a deficiency assessment, in which case the validity of the assessment becomes essential, because if the assessment is void or absent when required by law, the government’s basis for tax collection and criminal liability correspondingly fails. (People of the Philippines v. Ronald Punay Robin, CTA Crim Case No. A-19, August 13, 2025)
2016 VAT ASSESSMENT IS VOID WITHOUT A VALID SERVICE ASSESSMENT, AND NO EVIDENCE OF FALSITY OR FRAUD WAS SHOWN. The collection of taxes presupposes a valid and demandable assessment, unless nonpayment arises from falsity, fraud, or willful omission. In this case, the Court found that the alleged deficiency VAT for TY 2016, purportedly arising from undeclared, was based solely on a void assessment due to improper service, with no evidence of falsity or fraud on the part of the taxpayer. The BIR failed to attach supporting importation documents or provide a detailed breakdown of the alleged deficiency, and its own witness admitted that such evidence was not submitted. Consequently, there is no competent evidence establishing the VAT liability, and the Court held that the appellant cannot enforce civil tax liability. The appeal was therefore denied, affirming the lower court’s decision and resolution. (People of the Philippines v. Ronald Punay Robin, CTA Crim Case No. A-19, August 13, 2025)
ON DISSENTING OPINION: SALES SHOULD BE RECORDE IN THE PRINCIPAL PLACE OF BUSINESS IF THE BRANCH NEITHER ACCEPTS ORDERS NOR ISSUES SALES INVOICE; LGU CANNOT TAX ON THE BASIS OF DELIVERY. The Implementing Rules and Regulations of the Local Government Code defines the principal office, branch or sales office, and warehouse, and provides that sales made in a locality with a branch, sales office, or warehouse must be recorded there and the corresponding tax paid to that locality; otherwise, the sale must be recorded in the principal office and the tax accrues to the city or municipality where such principal office is located. Here, although the Davao City is authorized to impose LBT on manufacturers, the determination of whether the taxpayer is liable depends on whether the facility it maintains in the locality qualifies merely as a warehouse for storage, a manufacturing site, or a branch or sales office, since this classification determines the proper situs of taxation under the LGC and its IRR. However, the appellate court found that the trial court resolved the case without receiving evidence, merely directing the parties to submit memoranda and dispensing with trial, thereby leaving the factual circumstances unresolved; consequently, the case was remanded to the Regional Trial Court of Davao City for trial and presentation of evidence to determine the factual and legal issues necessary to properly decide the petitioner’s liability for local business tax. Dissenting Opinion: Case need not be remanded as court for further trial because the trial court conducted a trial on the merits and rendered judgment based on documentary evidence on record and the parties stipulated during pretrial that issues could be resolved without testimonial evidence. Davao warehouse is not a branch or sales office because it neither accepts orders nor issues sales invoices, so the situs of taxation remains with the petitioner’s principal office in Makati. It further emphasizes that the 2017 Davao City Revenue Code conflicts with the LGC and its IRR by taxing sales based on delivery rather than the location of the principal office or a legitimate branch, creating a risk of dual taxation. Consequently, the assessments are invalid and should be set aside. (Alaska Milk Corporation v. Office of the City Treasurer and/or Davao City, CTA AC No. 272. October 22, 2025)
THE NATIONAL FOOD AUTHORITY, AS A GOVERNMENT INSTRUMENTALITY PERFORMING ESSENTIAL PUBLIC FUNCTIONS, USED ITS CABANATUAN PROPERTIES FOR PUBLIC SERVICE, SO THE CTA HELD IT IS EXEMPT FROM REAL PROPERTY TAX AND VOIDED THE CITY’S DELINQUENCY NOTICES. Local government units are prohibited from levying real property taxes on the national government, its agencies, and instrumentalities, and properties of public dominion used for public purposes are likewise exempt, unless the beneficial use of such properties has been granted to a taxable person. Thus, the Court held that the National Food Authority (NFA) qualifies as a government instrumentality because it performs essential governmental functions, such as maintaining and distributing the national rice buffer stock, while being vested with corporate powers, administering special funds, and enjoying operational autonomy, without being organized as a GOCC. In line with this, the NFA’s properties in Cabanatuan City, used as offices and warehouses for public service operations, remain exempt from real property tax, and the Notices of Delinquency issued by the City Treasurer demanding tax payment are therefore declared void. The Court further emphasized that NFA properly availed itself of the extraordinary remedy of prohibition, as the issue involved a pure question of law regarding the authority of the local officials to assess and collect taxes, and no remand to the lower court was necessary. (National Food Authority v. City Government of Cabanatuan City et. al., CTA AC No. 275, August 28, 2025)
SECURITIES AND EXCHANGE COMMISSION
THE SEC TEMPORARILY ALLOWS CORPORATIONS TO USE AN EARLIER GIS FORM SO THEY CAN CONTINUE COMPLYING WITH FILING REQUIREMENTS WHILE THE NEW BENEFICIAL OWNERSHIP REPORTING SYSTEM IS BEING FINALIZED. Under its authority to regulate corporate reportorial compliance and filing procedures, the SEC issued a notice temporarily allowing corporations to use the 2020 version of the General Information Sheet (GIS) form to ensure continuity in mandatory filings while the updated beneficial ownership reporting framework and related electronic systems are still being completed. Applying this policy, corporations that are still in the process of setting up or restoring access to their electronic filing and beneficial ownership registry accounts may proceed with urgent GIS submissions through the electronic filing platform using the 2020 form during the transition period, after which the SEC will require the use of the updated reporting framework and the submission of beneficial ownership declarations through the integrated registry system once the new version becomes mandatory. (SEC Notice: Temporary Use of 2020 Form for Urgent Filing of General Information Sheet on eFAST, 10 March 2026).
REVENUE ISSUANCES
Revenue Memorandum Circular No. 014-2026
The BIR clarifies Revenue Memorandum Circular No. 8-2026 on the lifting of the suspension of tax audit and field operations, together with Revenue Memorandum Order No. 1-2026 and Revenue Memorandum Order No. 6-2026 on the implementation of revised audit policies, procedures, and safeguards.
| Key Clarification | The issuance of a Replacement eLA due to reassignment of Revenue Officers is not considered a new audit authority and does not require a separate approval from the Commissioner of Internal Revenue. |
| Audit Initiation from Complaints | Verified complaints or information from informers or other government agencies may trigger an audit but must be processed in accordance with Revenue Regulations No. 16-2010 as confidential information and subject to preliminary investigation. |
| Important Deadlines |
March 13, 2026 – Deadline for taxpayers to file a written request for non-consolidation of VAT audit cases. March 20, 2026 – Automatic consolidation of pending LOA/eLA covering the same taxpayer and taxable period (unless a request for non-consolidation was filed). May 15, 2026 – Deadline for VAT audit section (VATAS) and Large Taxpayers VAT unit (LTVAU) to review, organize and prepare all ongoing audits and assessments for transfer to the appropriate regular offices of the BIR, in accordance with RMO No. 1-2026. May 18, 2026 – All pending LOAs/eLAs covering the same taxpayer and taxable period, where multiple LOAs/eLAs exist and which were previously allowed to proceed separately, shall be automatically consolidated. Where only one LOA/eLA exists, no consolidation shall take place; however, such cases shall be transferred to the appropriate regular offices pursuant to RMO No. 1-2026. |
| Effect on Existing Audit Actions | Audit findings developed before consolidation remain valid and will continue under the Replacement eLA without reissuing prior notices unless there are material changes. |
| VAT Audit Office Transition | Certain VAT audit offices and task forces will wind down operations until May 29, 2026, and all audit documents, evidence, and case records must be formally turned over to the appropriate office. |
| Waiver of Prescription | The existing Waiver of the Defense of Prescription executed under the original LOA/eLA remains valid and continues to toll the statute of limitations even after replacement. |
| Service Requirement | The Replacement eLA must still be properly issued and served to the taxpayer according to existing procedures. |
SEC MEMORANDUM CIRCULAR NO. 4 SERIES OF 2026 AMENDS THE REVISED SRC RULE 68, INCREASING THE MANDATORY AUDIT THRESHOLD TO TOTAL ASSETS OR TOTAL LIABILITIES OF MORE THAN P3,000,000 TO ALIGN WITH NATIONAL MSME POLICY AND SUPPORT EASE OF DOING BUSINESS.
| Mandatory Audit Requirement | Corporations with total assets or total liabilities at or below the prescribed threshold (P3,000,000) shall not be required to submit audited financial statements. |
| Alternative Submission (Unaudited FS) | Corporations not required to submit audited financial statements must submit financial statements accompanied by a Statement of Management’s Responsibility (SMR) |
| SMR Signatories |
Stock and Non-stock corporations: Chairman of the Board, President or Chief Executive Officer, and Treasurer or Chief Financial Officer, all duly authorized by the Board of Directors
One Person Corporations (OPCs): President and Treasurer |
| Exemptions to Audit Exemption |
The exemption from mandatory audit does not apply to:
|
| Applicability | The amended threshold shall apply to financial statements covering fiscal years ending on or after December 31, 2025. |
BIR DEADLINES FROM MARCH 16, 2026 TO MARCH 22, 2026. A gentle reminder on the following deadlines, as may be applicable:
| DATE | FILING/SUBMISSION |
| March 10, 2026 | SUBMISSION – Consolidated Return of All Transactions based on the Reconciled Data of Stockbrokers. March 1-15, 2026 |
| March 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 February 2026 |