HIGHLIGHTS FOR AUGUST 2020

SUPREME COURT DECISION

 It is not required that the requests for additional documents by the taxing authority be
made in written form. All subsequent verbal requests made by the tax authority are
sufficient for the purpose of determining the reckoning point of the 120-day period.
(Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ v. Commissioner of Internal Revenue,
G.R. No. 244154, July 15, 2020)

COURT OF TAX APPEALS DECISIONS

 Both the administrative and judicial claims for refund must be filed within the 2-year
prescriptive period from the time of payment of tax. (Euroversal Properties, Inc. v.
Commissioner of Internal Revenue, CTA Case No. 9869, August 3, 2020)
 When initial assessment is already made in the manner prescribed by law, the BIR is not
authorized to issue another assessment beyond the prescriptive period. (ED & F Man
Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case Nos. 9577 & 9739,
August 5, 2020)
 The CTA has jurisdiction to resolve all tax matters which includes the validity of the
CIR's interpretation of a tax provision in the exercise of the latter’s quasi-legislative
function. (Petron Corporation v. Commissioner of Internal Revenue, CTA Case Nos.
9565, 9606 & 9645, August 24, 2020)
 As part of due process, in the issuance of tax assessments, the PAN and FLD must show,
among others, in detail the facts on which the assessment is based; otherwise said
assessment shall be void. The CIR must also not ignore a taxpayer’s request that it be
furnished with details and explanation of the alleged tax liability.(Morning Star Milling
Corporation v. Commissioner of Internal Revenue, CTA Case No. 9294, August 26,
2020)
 Any re-assignment/transfer of cases to another revenue officer or another group of
revenue officers requires the issuance of a new LOA. (Integrated Solutions Technology
Limited v. Commissioner of Internal Revenue, CTA Case No. 9608, August 26, 2020)
 It is only the CIR or his duly authorized representatives who can authorize the audit
examination of taxpayers for purposes of assessment of any deficiency taxes.
(Scicindustrial Corp. v. Bureau of Internal Revenue, CTA Case No. 9616, August 27,
2020)

BIR ISSUANCES

 Revenue Regulations No. 20-2020, August 17, 2020 - This amends certain provisions of
Revenue Regulations (RR) No. 06-2008 in relation to RR No. 6-2008 relative to the
imposition of tax for the sale, barter, exchange or other disposition of shares of stock not
traded through the local stock exchange.
 Revenue Memorandum Order No. 27-2020, July 21, 2020 - This prescribes the BIR
Digital Transformation (DX) Roadmap for 2020-2030, which enumerates the programs,
 outcomes and corresponding timelines that will help the BIR in carrying out its mission
to improve revenue collections to fund the national government programs and initiatives
under the 10-Point Socio Economic Agenda.
 Revenue Memorandum Circular No. 79-2020, August 5, 2020 - This provides the
guidelines for the filing of various returns and payment of tax due thereon by taxpayers
under the jurisdiction of National Capital Region (NCR), Bulacan, Cavite, Laguna and
Rizal during the period of Modified Enhanced Community Quarantine (MECQ).
 Revenue Memorandum Circular No. 80-2020, August 6, 2020 - This amends the RDO
covered by RMC No. 79-2020 by including RDO Nos. 55 to 57.
 Revenue Memorandum Circular No. 81-2020, August 5, 2020 - This provides the
clarification on Annex 4 – Citizen/Client Satisfaction Survey (CCSS) of the Inter-Agency
Task Force (IATF) Memorandum Circular No. 2020-1 by the Secretary of the
Department of Budget and Management (DBM).
 Revenue Memorandum Circular No. 82-2020, August 10, 2020 - This prescribes the
guidelines on the use of the electronic Audit Financial Statements (eAFS) System for the
submission of attachments to the Income Tax Returns (ITRs) of taxpayers with Fiscal
Year Accounting Period and in the submission of attachments to the quarterly ITRs.
 Revenue Memorandum Circular No. 83-2020, August 6, 2020 – This Circular addresses
the issues and concerns of taxpayers regarding the tax implications of measures being
implemented to prevent the spread of COVID-19 on cross-border matters.

SEC ISSUANCES

 MC NO. 24 S. 2020, August 24, 2020 – This provides for the guidelines on posting of
additional securities deposit, substitution of securities deposit and change of resident
agent.
 MC NO. 23 S. 2020, August 18, 2020 – This provides for the rules on corporate debt
vehicle.
 MC NO. 22 S. 2020, August 18, 2020 – This provides for the guidelines on corporate
term, under Section 11 of the Revised Corporation Code of the Philippines (RCC).
 MC NO. 20 S. 2020, August 11, 2020 – This provides for SEC rules on the number of
independent directors and sectoral representatives of exchanges and other organized
markets.

BSP ISSUANCES

 BSP Circular No. 1093 dated August 20, 2020 – This contains amendments to the
Manual of Regulations for Banks (MORB) on the real estate limits of universal and
commercial banks (UBs/UKs) and thrift banks (TBs).

 Circular Letter No. CL-2020-041 dated August 28, 2020 – This contains the operational
relief measures covering prescriptive period and processing fees under the Manual of
Regulations on Foreign Exchange Transactions (FX Manual), as amended.
 Memorandum No. M-2020-064 dated August 17, 2020 – This is addressed to all
concerned banks regarding the documentary requirements and procedures on the use of
 bank asset (real property in the name of the bank) as underlying collateral for
rediscounting.
 Memorandum No. M-2020-060 dated August 5, 2020 – This is addressed to all covered
Non-Bank BSP-Supervised Financial Institutions (BSFIs) regarding the guidelines on the
electronic submission of the Annual Report (AR) and Audited Financial Statements
(AFS).

IC ISSUANCES

 Approval of the Commission is required only if the change in the ownership of a

company which indirectly owns a domestic insurance and/or reinsurance broker company
would affect the ownership structure of the latter. (LO-2020-10, August 27, 2020)
 Inclusion of a Surety Company in the Negative List of the GPPB results in the rejection
of the surety bonds it issued. (LO-2020-08, August 19, 2020)
 Insurer of the guilty party may validly require the insured in a motor car insurance policy
to submit a Certificate of No Claim secured from the third-party insurer in relation to
such claim. Failure to submit the Certificate of No Claim can delay the claims process or
if warranted after investigation, deny the claim for third-party property damage. (LO-
2020-06, August 7, 2020)
 Circular Letter 2020-82, August 4, 2020 – This provides for the guidelines on the
suspension of reglementary periods during the Modified Enhanced Community
Quarantine (MECQ) period from 4 to 18 August 2020.
 Circular Letter 2020-81, August 3, 2020 – This provides for the guidelines on the
operations of regulated entities under the Modified Enhanced Community Quarantine
(MECQ) effective August 4 to 18, 2020.

It is not required that the request for additional documents by the taxing authority be made in
written form. All subsequent verbal request made by the tax authority are sufficient for the
purpose of determining the reckoning point of the 120-day period.

In granting the petition, the Supreme Court (SC) held that there is no requirement in the Tax
Code or in RMC No. 49-2003 that the taxing authority's request for additional documents should
be made in a specific form. Stated differently, nowhere in the law does it require that the request
for additional documents must always and absolutely be made in written form. While written
requests would be preferred because it would be easier for the BIR to keep track of the
documents submitted by the taxpayer in response thereto, the law does not explicitly prohibit
verbal requests for additional documents as long as they are duly made by authorized BIR
officials.

Here, the 120-day period should be reckoned from April 29, 2014, the time the taxpayer’s
corresponding submission of complete documents in response to the BIR’s verbal requests for
additional documents. The BIR had 120 days from such time or until August 27, 2014 to act on
the taxpayer’s administrative claim for refund but failed to act within such period. Thus, the
taxpayer had thirty (30) days or until September 26, 2014, to file its judicial claim. Since its
Petition for Review was filed before the CTA on September 25, 2014, it timely fell within the
30-day period to file a judicial claim. (Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ v.
Commissioner of Internal Revenue, G.R. No. 244154, July 15, 2020)

Note: This case applies only to claims for refund prior to the effectivity of RMC No. 54-2014.
Under RMC 54-2014, the taxpayer is now required to submit complete documents upon its filing
of an administrative claim for VAT refund/tax credit, as no other documents shall be accepted
thereafter.

II.SC CASE DIGEST

LAW DOES NOT PROHIBIT VERBAL REQUEST FOR ADDITIONAL DOCUMENTS IN
SUPPORT OF INPUT VAT REFUND AS LONG AS IT IS DULY MADE BY AUTHORIZED
BIR OFFICIALS
Petitioner Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ filed a Petition for Review on
Certiorari seeking reversal of the CTA En Banc’s decision dismissing Petitioner’s claim for
refund or issuance of Tax Credit Certificate representing excess and unutilized input VAT
for calendar year 2010. The main issue is whether or not the Petitioner’s judicial claim for
refund was filed out of time. In ruling, the Court held that the 120-day period should be
reckoned from the time the taxpayer submitted complete documents in support of its
administrative claim, without prejudice to the BIR’s request for additional documents which
did not obtain in this case; thus, with the lapse of 120 days, the taxpayer may file its judicial
claim for refund within thirty (30) days. Perusal of the document shows that the Petitioner
complied with the BIR official’s written and verbal request for additional documents and the
verbal requests were well-documented and all confirmed by the BIR; hence, there is no
danger of losing track of when to reckon 120-day period. The 120-day period should,
therefore, be reckoned from the April 29, 2014 Petitioner’s letter stating that it already
submitted completed documents in support of its refund claim. In turn, the BIR has 120 days
form such time (until August 27, 2014) to act on the administrative claim for refund,
however, BIR failed to act within such period. Hence, Petitioner had thirty (30) days (until
September 26, 2014) to file judicial claim. Thus, its Petition for Review was timely filed on
September 25, 2014. Above disquisition only applies to claim for refund made prior to RMC
No. 54, 2014 (June 12, 2014) wherein the taxpayer is now required to submit complete
documents upon its filing of an administrative claim for VAT refund/tax credit, as no other
documents shall be accepted thereafter. Consequently, Petition was GRANTED and earlier
decision was REVERSED and SET ASIDE. [ZUELLIG-PHARMA ASIA PACIFIC LTD.
PHILS. ROHQ VS. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 244154, JULY
15, 2020]
THE Supreme Court remanded to the Court of Tax Appeals (CTA) the
dismissed tax refund claim of Zuellig Pharma Asia Pacific Ltd. Phils. ROHQ.
worth P39.93 million representing excessive and unutilized input value-added
tax for 2010.
In a 12-page decision dated July 15 released last month, the court’s second
division said the CTA “erred in dismissing” the company’s claim for refund.

“Since the CTA-Second Division had already conducted a trial on the merits
but instead chose to dismiss Zuellig-PH’s claim on the aforementioned
ground, the Court finds it proper to remand the case to it for a resolution on
the merits with utmost dispatch,” the court said, reversing the decision of the
CTA.

It said that Zuellig timely filed its petition for review before the CTA on Sept.
25, 2014.

Zuellig filed an administrative claim for refund before the Bureau of Internal
Revenue in February 2011 for taxes it paid in 2010.

In June of the same year, the bureau requested Zuellig to submit supporting
documents to its claim and complied the next month. Further “verbal requests
for submission of documents” were made from 2012 to 2014, the court said,
citing the company. Complete submission was made on April 29, 2014.

Under the Tax Code, the court said that the bureau is to grant a refund or
issue a tax credit certificate within 120 days from submission of complete
documents. The taxpayer has 30 days from the receipt of the denial or lapse
of the period 120-days without a decision, to fail a claim to the CTA.

Revenue Memorandum Circular No. 49-2003 also states that claims shall be
processed within 120 days from receipt of complete document.

The court said the company complied with the BIR’s written and verbal
requests for additional documents. All verbal requests and submissions in
response were confirmed by the bureau, it said.
It said that the 120-day period should be counted starting from the April 29,
2014 letter of Zuellig, stating that it had already submitted complete
documents.

“Thus, its Petition for Review was timely filed on September 25, 2014,” it said.

The court also said that the Tax Code or the RMC No. 49-2003 did not require
the authority’s request for additional documents in a specific form.

“Stated differently, nowhere in the law does it require that the request for
additional documents must always and absolutely be made in written form,” it
said

The court said that this applies to refund claims filed before June 11, 2014 as
RMC No. 54-2014 requires taxpayers to submit complete documents upon
filing of an administrative case.

The tax appellate court’s second division in March 2017 dismissed the tax
refund claim of Zuellig for being filed out of time, saying the 120-day period
the bureau should act on the refund claim should start on July 5, 2011 when
the company submitted the requested documents.

The CTA disregarded the verbal requests for written documents as it should
be in writing, it said. The court en banc affirmed the decision in January 2019.