The Big One

The Big One

by Marino P Lizaso V


Almost a week before the month of April ended, Central Luzon was struck by a 6.1-magnitude earthquake. Many feared that the tremblor is a prelude to the “Big One” as it shook and took down establishments with the energy it released. Despite rebuking rumours that the said earthquake is a prelude to the Big One, authorities still tirelessly release advisories on what to do when the Big One happens.

the big one

In the business community, the April 15 deadline can be considered as the annual Big One. Accountants, auditors, and tax consultants, from small entities to big multinational corporations, all rush to meet the deadline to file the annual Income Tax Returns (“ITR”) and pay the concomitant annual income tax while, at the same time, scrambling to prepare and finalize all the reports necessary for submission. The Bureau of Internal Revenue (BIR), on the other hand, issues guidelines in filing tax returns and continuously reminds taxpayers to file and pay on time lest they be subjected to penalties.

Majority of big businesses enjoy ease in the filing and payment of its taxes as they are required by the BIR to register under its online filing and payment platform called the electronic Filing and Payment System (“eFPS”). While registration with the eFPS is required for big businesses, other taxpayers may voluntarily register with the system should they wish to enjoy its privileges.

Due to influx of users during tax season, taxpayers sometimes encounter a glitch in the eFPS which causes inability to file and pay through the system. In such cases, can a taxpayer be held liable for payment of surcharge and penalties in case of late filing and payment of an annual ITR due to system downtime, glitch or unavailability of the BIR eFPS?

On 08 April 2019, the Special Second Division of the Court of Tax Appeals (“CTA”) provided an answer. In the case, a corporate taxpayer averred that it made several attempts to file its 2014 annual ITR via the eFPS on the 14th and 15th day of April 2015. However, all of its attempts were unsuccessful and the taxpayer was only able to pay its tax due on 16 April 2019. The taxpayer also paid the corresponding surcharge and penalty since the tax was paid later than the deadline. Thereafter, within the period prescribed by the law, the taxpayer filed a claim for refund before the BIR for the surcharge and penalties it paid in connection with its late payment of tax. Due to the BIR’s inaction on the said claim, the taxpayer timely sought recourse before the CTA seeking action on its claim for tax refund.

In its arguments, the taxpayer claimed that it complied with all the requisites for claiming refund of erroneously collected penalties. The taxpayer also argued that it followed all the procedures enumerated in Revenue Memorandum Circular (RMC) No. 20-2015 which provides alternative modes of filing of certain returns in order to protect the taxpayer against assessment of penalties. The taxpayer further claimed that the BIR had no relevant issuances providing alternative procedures in filing annual ITR in case of occurrence of technical problem, hence, its reliance on RMC 20-2015.

Unfortunately, the CTA did not agree with the taxpayer. In its decision, the CTA ruled that RMC No. 20-2015 only applies to quarterly ITRs due for electronic filing and payment on or before 15 April 2015. Also, the CTA disagrees with the taxpayer’s argument that the BIR has no relevant issuances providing alternative procedures in the filing of filing and payment of annual ITR. The CTA explained that, the BIR, through RMC No. 14-2015 and RMC No. 26-2015, provides for an alternative procedure in case the ITR is not submitted via the eFPS – which is to manually file and manually pay related tax due. Further, the CTA also ruled that as early as April 2002, the BIR already stated that taxpayers shall manually file their returns in case the eFPS is not available during due dates – citing Revenue Memorandum Order (RMO) No. 5-2002, as amended.

                        In the end, the CTA denied the taxpayer’s claim for refund.

It is often said that information is power. Advisories are issued by authorities to ensure that the public is informed of what to do in certain situations. In case the Big One strikes, we should know and practice safety guidelines to keep ourselves and our loved ones safe. Similarly, in the case of tax filings, accountants, auditors, and tax consultants should always keep abreast of relevant rules and regulations to avoid being slapped with penalties by the tax authorities.

And while technology helps make our lives easier, it is not infallible. We should never forget of the “old ways” and be capable of doing things manually, if need be. Further, it is best to submit and pay our tax way before the deadline to have sufficient time to troubleshoot should things not go as planned.

Marino P. Lizaso V is an Assistant Manager from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email or

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