October 13, 2026 Tax Update

COURT OF TAX APPEALS (CTA)

AN LOA IS REQUIRED ONLY FOR THE EXAMINATION AND ASSESSMENT UP TO THE FAN; WHERE THE LOA-AUTHORIZED GS AND RO COMPLETED THOSE STAGES, AN RO MAY VALIDLY PARTICIPATE IN THE SUBSEQUENT REINVESTIGATION UNDER AN MOA, WITHOUT AFFECTING THE VALIDITY OF THE ASSESSMENT. A Letter of Authority (LOA) is required for the examination of a taxpayer and assessment of deficiency taxes up to the issuance of the Formal Letter of Demand/Final Assessment Notice (FLD/FAN) but is not required for a reinvestigation conducted after the FAN, for which authority under a Memorandum of Assignment (MOA) is sufficient. The examination and assessment culminating in the FAN were conducted by the Group Supervisor (GS) and Revenue Officer (RO) named in the LOA, while another RO participated only after the case was reassigned for reinvestigation pursuant to an MOA following taxpayer’s Request for Reinvestigation. Thus, RO’s authority under the MOA was sufficient, and any possible defect in the reinvestigation would affect only the FDDA, not the validity of the assessment itself. Accordingly, the assessment against the taxpayer was held valid. [Intelligent Touch Corporation v. Commissioner of Internal Revenue, CTA En Banc Case Nos. 2966 and 2969 (CTA Case No. 10215), April 10, 2026]

AN LOA MUST NAME THE RO AUTHORIZED TO CONDUCT THE AUDIT; THUS, THE ASSESSMENT WAS VOID WHEN THE REASSIGNED OFFICERS ACTED ONLY UNDER AN MOA. An LOA is a due process and jurisdictional requirement, and only the revenue officers specifically named therein may conduct the examination unless a new or amended LOA is issued. In this case, the audit was conducted by revenue officers whose authority was based only on an MOA issued by a subordinate official, which could not validly amend or substitute the original LOA; thus, the assessment was void for lack of authority of the examining officers. [Commissioner of Internal Revenue v. Banclife Insurance Co., CTA En Banc Case No. 2860 (CTA Case No. 9939), June 9, 2026] 

ACTUAL RECEIPT OF THE LOA AND PAN BY THE TAXPAYER OR ITS AUTHORIZED REPRESENTATIVE ESTABLISHES PROPER SERVICE. If a taxpayer categorically denies receipt of a Preliminary Assessment Notice (PAN), the burden shifts to the CIR to prove its actual receipt by the taxpayer or its authorized representative. In this case, the CIR discharged this burden by presenting the actual LOA received by taxpayer’s Authorized Representative, on August 23, 2012, and the PAN received by the taxpayer’s HR Assistant, on October 22, 2014; Taxpayer’s failure to question their authority in its Request for Reinvestigation and Administrative Appeal, its delayed assertion of the issue only in the Petition for Review, and the lack of personal knowledge of its witness regarding the recipients supported the finding that the allegation was an afterthought. Since the LOA and PAN were personally served and acknowledged through signed receiving copies, constructive service under RR No. 12-99 was inapplicable.  [Intelligent Touch Corporation v. Commissioner of Internal Revenue, CTA En Banc Case Nos. 2966 and 2969 (CTA Case No. 10215), April 10, 2026]

A FORMAL LETTER OF DEMAND AND ASSESSMENT NOTICE THAT FAILS TO CONTAIN A CATEGORICAL DEMAND FOR PAYMENT WITHIN A DEFINITE PERIOD IS VOID.  A FLD/FAN must contain a clear and categorical demand for payment within a definite period; otherwise, the assessment is void. In this case, the FLD/FAN issued to the taxpayer merely stated that it could pay the assessment but did not impose a definite due date or categorical demand for payment, and the subsequent FDDA containing a payment deadline could not cure the defect because the FLD/FAN and FDDA serve different functions. Thus, the assessments were held void and without legal effect. [Commissioner of Internal Revenue v. Travellers International Hotel Group, Inc., CTA En Banc Case No. 3007 (CTA Case No. 10445), June 11, 2026]

WHEN RECEIPT OF THE PAN AND FAN/FLD IS DENIED, THE CIR MUST PROVE ACTUAL RECEIPT; HERE, ITS FAILURE TO DO SO RENDERS THE ASSESSMENT VOID. The 30-day period to protest an assessment begins only upon the taxpayer’s actual receipt of the FAN/FLD; thus, when receipt is categorically denied, the burden shifts to the CIR to prove actual receipt. In this case, the taxpayer consistently denied receiving the PAN and FAN/FLD, but the CIR presented only registry receipts proving mailing and failed to provide the registry return cards, postmaster certification, or other competent proof of actual receipt. Accordingly, the assessment did not become final and executory, and the lack of proper service deprived taxpayer of due process, rendering the assessment void and allowing the CTA to acquire jurisdiction over its petition. [Commissioner of Internal Revenue v. Banclife Insurance Co., CTA En Banc Case No. 2860 (CTA Case No. 9939), June 9, 2026] 

THE EXTRAORDINARY TEN-YEAR PERIOD FOR TAX ASSESSMENT CANNOT BE INVOKED INCONSISTENTLY WITH THE TAXPAYER’S RIGHT TO DUE PROCESS. The extraordinary 10-year period to assess deficiency taxes applies only in cases of a false or fraudulent return with intent to evade tax, and its invocation must comply with due process requirements. In this case, the CIR simultaneously relied on a waiver extending the ordinary three-year period and invoked the 10-year period for alleged substantial under-declaration, thereby misleading the taxpayer as to the applicable prescriptive period. Since the CIR’s inconsistent invocation of the two periods rendered the 10-year period inapplicable, the ordinary three-year period governed and had already lapsed when the assessment was issued. (Russ Reuben L. Piczon v. Commissioner of Internal Revenue, CTA Case No. 10753, June 17, 2026).

FAILURE TO SUBMIT ADDITIONAL DOCUMENTS DURING REINVESTIGATION DOES NOT BAR THE TAXPAYER FROM PRESENTING THEM BEFORE THE CTA; SEE DISSENTING OPINION. A taxpayer requesting reinvestigation must submit all relevant supporting documents within 60 days from the filing of the protest; otherwise, the assessment becomes final at the administrative level, barring the taxpayer from disputing the assessment before the BIR through newly discovered or additional evidence. However, such finality does not prevent the taxpayer from elevating the case to the CTA, where proceedings are conducted de novo and new or additional evidence may be presented. Thus, although the taxpayer failed to submit its invoices and receipts during reinvestigation, the failure merely warranted the denial of its Request for Reinvestigation and issuance of the FDDA, without barring the CTA from considering the additional documents presented during trial. In contrast, the dissenting opinion maintains that failure to submit the required documents within the prescribed period renders the assessment final and executory, leaving no valid disputed assessment for the CTA to review; consequently, the CTA Division lacked jurisdiction and the Petition for Review should have been dismissed. [Intelligent Touch Corporation v. Commissioner of Internal Revenue, CTA En Banc Case Nos. 2966 and 2969 (CTA Case No. 10215), April 10, 2026]

EXCESS INPUT TAX CARRIED OVER FROM A TAXABLE PERIOD MUST BE DEDUCTED FROM OUTPUT TAX IN THE SUCCEEDING PERIOD, NOT USED TO REDUCE THE CURRENT PERIOD’S VAT DEFICIENCY. Under the rules governing the carry-over of excess input tax, excess input tax from one taxable period is intended to be carried over and applied as a deduction against output tax in the succeeding taxable period, rather than used to reduce the VAT deficiency of the current period. In this case, the taxpayer’s excess input tax from TY 2011 was properly deducted from the allowable input tax in computing its TY 2011 deficiency VAT, not as a disallowance, but to preserve its proper treatment as input tax carried over for use against output tax in TY 2012. Allowing the amount to reduce the TY 2011 deficiency while also permitting taxpayer to use the same amount against its TY 2012 output tax would result in a double benefit, contrary to the purpose of excess input tax carry-over. [Intelligent Touch Corporation v. Commissioner of Internal Revenue, CTA En Banc Case Nos. 2966 and 2969 (CTA Case No. 10215), April 10, 2026] 

CERTIORARI CANNOT BE USED TO REVIEW ERRORS OF JUDGMENT OR REWEIGH EVIDENCE, ABSENT GRAVE ABUSE OF DISCRETION. Certiorari is limited to correcting errors of jurisdiction or grave abuse of discretion and does not lie to review the intrinsic correctness of a lower court’s factual or legal findings; here, the People merely sought to reweigh the evidence and challenge the RTC-Pasig’s finding that the taxpayer’s issuance of Philippine Depositary Receipts (PDRs) was an investment transaction not shown to be subject to VAT, which constituted an alleged error of judgment rather than a jurisdictional error. Moreover, reviewing the acquittal would violate the constitutional protection against double jeopardy, absent due process deprivation or grave abuse of discretion, neither of which was present. Thus, the CTA En Banc denied the Petition and affirmed the CTA Division’s dismissal of the certiorari petition. [People of the Philippines v. Hon. Ana Teresa T. Cornejo-Tomacruz, et al., CTA En Banc Case No. 3037 (CTA SCA Case No. 0014), May 28, 2026].

ELECTRIC COOPERATIVES REGISTERED WITH THE NEA REMAIN PERMANENTLY EXEMPT FROM INCOME TAX UNDER PD NO. 269; HERE, MORESCO-I’S NEA REGISTRATION QUALIFIED IT FOR THE EXEMPTION. Electric cooperatives registered with the National Electrification Administration (NEA) are permanently exempt from income tax, and such exemption was not repealed by the Cooperative Code, as amended by Republic Act No. 9520, which expressly preserved PD No. 269; here, respondent’s Certificate of Registration established that it was registered with the NEA, thereby qualifying it for the permanent income tax exemption under PD No. 269. [Commissioner of Internal Revenue v. Misamis Oriental Rural Electric Service Cooperative I, Inc. (MORESCO-I), CTA En Banc Case No. 3038 (CTA Case No. 10206), June 22, 2026] 

REVENUE ISSUANCES

Revenue Memorandum Circular No. 102-2026

Updates the procedures and documentary requirements for claims of tax credit or refund of excess or unutilized Creditable Withholding Taxes (CWT) on income, including rules on filing, processing periods, and completeness of supporting documents.

Revenue Memorandum Circular (RMC) No. 103-2026 

Amends RMC No. 74-2024 to clarify and specify the authorized processing offices where taxpayers must submit applications (BIR Form No. 1914) for tax credits or cash refunds of erroneously or illegally collected taxes and unauthorized penalties under Section 204(C) in relation to Section 229 of the Tax Code.

BIR DEADLINES FROM OCTOBER 12, 2026 TO OCTOBER 18, 2026. A gentle reminder on the following deadlines, as may be applicable: