InTAX: February 2024 Issue 2 | Volume 1

Supreme Court

The Supreme Court (SC) has ruled on the following:

In Commissioner of Internal Revenue (CIR) vs. Toledo Power Company, the Third Division of the SC ruled that while the Tax Code provides for the procedure for settlement and compromise of tax disputes including limitations on authority, through the Bureau of Internal Revenue (BIR), the BIR is not precluded from using other less formal methods of resolving tax controversies without going to the courts. When the BIR did not issue a Final Letter of Demand/Final Assessment Notice (FLD/FAN) after receipt of the taxpayer’s voluntary payment based on the deficiency value added tax (VAT) findings in the Preliminary Assessment Notice (PAN), the SC held that there was an informal settlement of tax liability and the BIR thereby relinquished its right to pursue the tax assessment and accepted the payment made by the taxpayer as settlement of taxes assessed. Such informal settlement was construed by the SC as a contract that is generally binding between the parties, except in cases of falsity or fraud under Section 248(b) of the Tax Code. With taxpayer’s double-dealing actions (it was telling the Court of Tax Appeals that it was entitled to a refund of its erroneous payment to the government since its export sales should have been zero-rated but it did not even explain why it paid the deficiency VAT related thereto), the SC considered the taxpayer estopped from seeking refund of the settlement since the taxpayer has already benefitted from the same. The taxpayer is also estopped from questioning the validity of the assessment as by paying the deficiency VAT assessed under the PAN, it impliedly admitted the findings. [GR No. 259309, 13 February 2023; uploaded on 08 February 2024]

In United Coconut Planters Bank vs. CIR, the First Division of the SC ruled that a taxpayer’s options under Section 76 of the Tax Code are qualified by the irrevocability rule only as to the option to carry-over, and not the option to claim a refund. The law does not prevent a taxpayer who originally opted for a refund or tax credit certificate from shifting to the carry-over of the excess creditable taxes to the taxable quarters of the succeeding taxable years. However, in case the taxpayer decides to shift its option to carry-over, it may no longer revert to its original choice due to the irrevocability rule. [G.R. No. 204687, 24 April 2023; uploaded on 21 December 2023]

In McDonald’s Philippines Realty Corporation vs. CIR, the SC En Banc ruled that the doctrine under Aznar vs. Court of Tax Appeals* is abandoned, and only intentional errors in a tax return may justify the application of the extraordinary 10-year prescriptive period to assess taxes. To be considered a false return under Section 222 (a) of the Tax Code, and apply the 10-year prescriptive period, it should be proven that (1) the return contains an error or misstatement, and (2) such error or misstatement was deliberate or willful. The entry of wrong information due to mistake, carelessness or ignorance without intent to evade tax will not make the return a false return.  [G.R. No. 247737 August 8, 2023; Uploaded on 05 December 2023]

*In Aznar vs. Court of Tax Appeals, G.R. No. L-20569, 23 August 1974, the SC held that the 10-year prescriptive period under Section 222 (A) of the Tax Code applies from the time of the discovery of false returns, regardless of whether the deviation from the truth is intentional or not.

Securities and Exchange Commission

The Securities and Exchange Commission (SEC) issued SEC Memorandum Circular (MC) No. 3-2024, dated 5 January 2024, to provide guidelines on the use of the eAMEND portal in relation to the application for amendments under Sections 15 and/or 47 of the Revised Corporation Code, among others.

The salient features of the MC are as follows:

1. The MC shall cover applications within the competent jurisdiction of the Corporate and Partnership Registration Division (CRPD) of the Company Registration and Monitoring Department (CRMD) and the respective Extension Offices of the SEC. (Section 1)

2. Only registered and active Partnerships and Corporations may apply. (Section 2)

3. The MC provides for the documentary requirements for application subject to issuance of digital certificate and subject to regular processing through the eAMEND portal. (Sections 3 and 4)

4. The hard copies shall be filed and submitted to the appropriate addresses of SEC Offices chosen by the applicant as indicated in Annex D of the MC. (Section 5)

5. The MC provides for the process of approval and issuance of the digital certification and original certification.  (Section 6)

6. The application shall be automatically purged by the eAMEND Portal on the following grounds:

a. Failure TO COMPLETE the filling up of the required details and TO UPLOAD the documentary requirements within 60 days from the time of the creation of the account; or

b. Failure TO COMPLY with the SEC's compliance order within 30 days from receipt of the system email notification (in cases of incomplete or non-compliant submission); or

c. Failure TO PAY the amendment fees within 45 days from the date reflected in the Payment Assessment Form (PAF).

In any instance, the corporation may re-apply through the eAMEND portal. (Section 7.A)

7.  The application may be cancelled motu proprio by the SEC on the following grounds:

a. Non-submission of three (3) original sets (in hard copies) to the appropriate SEC Office of the documentary requirements that have been approved in the portal system within 30 days from the date indicated in the digital copy of the Certificate of Amendment; and

b. Non-compliance of any lawful order of the SEC in instances of incomplete documentary requirements and/or inconsistent entries of the documents processed in the system with the submitted hard copies of the documentary requirements. (Section 7.B)

8. The Amendment Form shall form part of the original Articles of Incorporation and/or By-laws of the corporation and any changes made to the Articles of Incorporation and/or By-laws, as provided in the Amendment Form and duly approved by the SEC, shall be considered official and legally valid when presented to other government agencies for any purpose. (Section 8)

9. The implementation of the eAMEND will start on 23 February 2024. The public is advised to be guided by the following procedures:

a. All applications (such as on-going, unpaid and expired PAF) submitted through the electronic mail platform may opt to proceed with the email application or apply through the eAMEND portal;

b. All applications that have been filed and paid prior to the implementation of the eAMEND Portal, shall proceed through the electronic mail platform for approval. 

Beginning 23 February 2024, only system-generated Amendment Form shall be acceptable for applications covered under Section 1.A of the MC. Any alteration, erasure, modification, or revision in the system-generated application under Section 1.A and the uploaded application under Section 1.B shall result in the automatic cancellation of the application after non-compliance of any lawful order of the Commission. (Section 9)

10. Annotations to the Articles of Partnership, Articles of Incorporation, the By-Laws, as the case may be, filed through the eAMEND Portal undertaken by the Corporation, shall be listed therein. (Section 10)

11. The MC shall take effect immediately upon its publication in newspaper of general circulation. (Section 12)

(RGM&Co. Note: The MC is posted in the SEC website on 19 February 2024.  As of date, there is no notice that the MC has already been published in the newspaper of general circulation.)

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued the following:

Revenue Memorandum Circular (RMC) No. 26-2024, dated 13 February 2024, to announce the availability of the following BIR Forms in the Electronic Filing and Payment System (eFPS):

BIR Form No.	Description	Deadline of Filing/Payment
2200-AN January 2018 (ENCS)	Excise Tax Return for Automobiles and Non-Essential Goods	Before removal of the aforementioned products from the place of production.
2200-A January 2020 (ENCS)	Excise Tax Return for Alcohol Products	Before removal of the alcohol products from the place of production.
2200-T August 2022 (ENCS)	Excise Tax Return for Tobacco, Heated Tobacco, Vapor and Novel Tobacco Products	Before removal of the tobacco products from the place of production.

All mandated eFPS taxpayers who are required to file the said return and pay the corresponding tax due thereon, if any, shall use the eFPS facility effective immediately.

RMC No. 27-2024, 20 February 2024, to prescribe the updated checklist of documentary requirements for the following BIR registration-related frontline services:

• Application for Registration
  • Self-Employed Individuals (CDR No. F1101)
  • Estate and Trust (CDR No. F11ET)
  • Corporations, Partnerships, Cooperatives, Associations (Taxable or Non-Taxable) (CDR No. F1103)
  • Thru Philippine Business Hub (PBH) (CDR No. F11PBH)
  • Branch and Facility (CDR No. F11BF)
  • Employees (CDR No. F1102)
  • Purely TIN Issuance (CDR No. F1104)
  • Authority to Print (ATP) Invoices (CDR No. F1106)
  • Books of Accounts (CDR No. F1105B)
• Application for Permit to Use Loose Leaf Books of Accounts/Invoices (CDR No. F1100)
• Application for Registration Information Updates (CDR No. F1105)
• Application for Transfer of Registration (CDR No. F1105T)
• Application for Cancellation of TIN (CDR No. F1105C)

The BIR shall only process applications or requests with complete documentary requirements and shall not process deficient or incomplete applications or requests, pursuant to the Implementing Rules and Regulations of Republic Act No. 11032 or the “Ease of Doing Business and Efficient Government Delivery Act of 2018”.

Here are the links to the full text of the issuances: RMC No. 26-2024, RMC No. 27-2024, RMC No. 27-2024 Annexes, Commissioner of Internal Revenue vs. Toledo Power Company, Mcdonald's Philippines Realty Corporation vs. Commissioner of Internal Revenue, United Coconut Planters Bank vs. Commissioner of Internal Revenue, and SEC MC No. 3-2024 Guidelines on the Use of eAmend Portal.