March 23, 2026 Tax Updates

COURT OF TAX APPEALS DECISIONS

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

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

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

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

REVENUE ISSUANCES

Revenue Memorandum Order No. 006-2026

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

Revenue Memorandum Circular No. 20-2026

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

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