BOI CERTIFICATIONS DO NOT CONCLUSIVELY SHOW THAT THE SUBJECT SALES ARE INDEED EXPORT SALES SUBJECT TO 0% VAT

Petitioner Phil. Best Canning Corporation filed a Petition for Review seeking a refund of alleged excess and unutilized input Value-Added Tax (VAT) arising from its domestic purchases attributable to zero-rated transactions and purchases of capital goods for the taxable year 2018. Petitioner argued that it fully complied with the invoicing requirements under Section 113 of the Tax Code in issuing its invoices and official receipts, and that deducting the 12% output VAT against its unutilized input VAT is improper. On the other hand, the Respondent Commissioner of Internal Revenue (CIR) countered that the Petition should be dismissed for the Petitioner's failure to substantiate its administrative claim for a refund and to sufficiently prove its entitlement to a VAT refund. In ruling, although the Petitioner timely filed both its administrative and judicial claims for refund, the case was litigated de novo, requiring full proof of all requisites for a VAT refund. While the Petitioner proved that it is a VAT-registered taxpayer, it failed to prove that the input VAT claimed arose from zero-rated export sales under Section 106(A)(2)(a)(1) of the Tax Code. The Petitioner failed to present proof, such as contracts or delivery receipts showing actual export sales paid for in foreign currency in accordance with the Bangko Sentral ng Pilipinas (BSP) rules. The Board of Investments (BOI) certifications submitted merely established the Petitioner’s status as an exporter, not that the specific sales involved were zero-rated. Having failed to establish that the sales were zero-rated, the Petitioner’s claim necessarily failed, rendering discussion of the other requisites unnecessary. Thus, the Petition was DENIED. [PHIL. BEST CANNING CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10505, JANUARY 21, 2026]

[AN ASSESSMENT THAT INTRODUCES DEFICIENCY ITEMS NOT PREVIOUSLY RAISED IN THE NOTICE FOR INFORMAL CONFERENCE (NIC) & PRELIMINARY ASSESSMENT NOTICE (PAN) VIOLATES DUE PROCESS & IS VOID] [THE DATE OF FILING OF AN ADMINISTRATIVE PROTEST SENT THROUGH REGISTERED MAIL IS THE DATE OF MAILING, NOT THE DATE OF RECEIPT BY THE BIR] [TAXPAYER SHOULD BE AFFORDED THE OPPORTUNITY TO PRESENT HIS SIDE, DURING VARIOUS STAGES OF THE ASSESSMENT PROCESS]

Petitioner A & A Securities, Inc. filed a Petition for Review seeking to overturn and set aside the Final Decision on Disputed Assessment (FDDA) issued by Respondent Commissioner of Internal Revenue (CIR), which assessed Petitioner for deficiency Income Tax for taxable year (TY) 2017. Petitioner argued that the assessment violated due process, as the alleged unreported income did not appear in the Notice for Informal Conference (NIC) and Preliminary Assessment Notice (PAN). Also, the income tax liability reflected in the PAN had already been paid and acknowledged by the Bureau of Internal Revenue (BIR), thereby extinguishing the obligation. Further, the alleged discrepancy represented income of its agent, not its own, and the corresponding taxes had already been withheld. On the other hand, the Respondent asserted that Petitioner’s administrative protest was filed out of time, as it was received by the BIR only on January 6, 2021, allegedly depriving the Court of jurisdiction. Also, under Revenue Memorandum Circular (RMC) No. 11-2014, the issuance of a new deficiency tax assessment in the Formal Letter of Demand/Final Assessment Notice (FLD/FAN) was valid and justified by discrepancies between the Petitioner’s VAT and Income Tax Returns (ITR) indicating undeclared income. In ruling, the Court held that the Petitioner was not informed of Regional Director (RD) Rosario's 2017 Income Tax assessment on unreported income during an informal conference and pre-assessment stages of the assessment process. Said assessment only made its debut in RD Rosario's FLD/FAN. Since the BIR’s NIC and PAN failed to inform Petitioner that it has unpaid Income Tax on unreported income resulting from the comparison of its VAT Returns and Annual ITR, the Petitioner was deprived of opportunity to present its side during the informal conference and pre-assessment stages, in violation of the due process requirements under the applicable revenue regulations. Consequently, the BIR defeated the very objective of the NIC and PAN mechanisms, which are intended to allow the early resolution of issues with the taxpayer without going through a formal assessment. Thus, the Petition was GRANTED, and the FDDA was OVERTURNED, resulting in the CANCELLATION of the assessment. [A & A SECURITIES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10866, JANUARY 20, 2026]

[YEARBOOKS ARE QUALIFIED AS “BOOKS” UNDER SECTION 109 (Y) OF THE TAX CODE, THEREFORE VAT-EXEMPT] [RETROACTIVE APPLICATION OF BIR RULINGS IS PROHIBITED WHEN PREJUDICIAL TO THE TAXPAYER]

Petitioner Midtown Printing Co., Inc., filed a Petition for Review with a Motion for the Issuance of a Status Quo Ante Order seeking to reverse and set aside the Final Decision on Disputed Assessment (FDDA) issued by the Respondent Commissioner of Internal Revenue (CIR), which held Petitioner liable for deficiency Income Tax and Value-Added Tax (VAT) covering Taxable Year (TY) 2013. Petitioner argued that the printing of yearbooks is a VAT-exempt transaction, and that it relied in good faith on prior BIR rulings treating yearbooks as exempt. It claimed that the retroactive application of BIR Ruling No. 421-2013 is unfair, considering that it was issued only after the close of taxable year 2013, thereby depriving the taxpayer of the opportunity to pass on the VAT burden to its customers. In addition, the application of such a ruling violates the right to equal protection, as other printers and publishers continue to enjoy the VAT exemption. On the other hand, the Respondent countered that tax exemptions are strictly construed and the burden of proving entitlement rests on the taxpayer. There is no law expressly granting tax exemption to the printing of yearbooks. Likewise, yearbooks do not qualify as “books” since they are customized for specific clients, irregularly issued, and have no fixed prices. Finally, the Petitioner is liable for the deficiency Income Tax and VAT regardless of such ruling. In ruling, the Court held that the term “books” should be given its plain meaning, which includes yearbooks, and that BIR Ruling No. 421-2013 cannot be applied retroactively as it would prejudice a taxpayer who relied in good faith on previous rulings. The Court further found that the selective application of the ruling violated equal protection, and that denying the exemption would unduly burden students, which is contrary to the State policy on education. Thus, the Petition was GRANTED, and the assessment was CANCELLED. [MIDTOWN PRINTING CO., INC. VS. COMMISSIONER ON INTERNAL REVENUE, CTA CASE NO. 10570, JANUARY 16, 2026]

[LOCAL TREASURERS MUST COMPUTE TRANSFER TAXES STRICTLY ON THE FAIR MARKET VALUE OF THE ACTUAL PROPERTY INTERESTS TRANSFERRED; THUS, TAXPAYER MAY SEEK REFUND OF OVERPAID LOCAL TRANSFER TAXES, BUT DAMAGES REQUIRE PROOF OF BAD FAITH] [REPUDIATION OF INHERITANCE IS NOT TAXABLE UNDER THE LOCAL SPHERE]

Petitioners Lorenzo Eng Chong J. Ong and Wilson S. Ong filed a Petition for Review seeking the reversal of the Decision rendered by the Regional Trial Court (RTC) of Pasay City in relation to the imposition of transfer tax by the Respondent Pasay City Treasurer Hon. Emelito Tecson.  Petitioners argued that transfer tax should be based only on actual portions transferred, not full Fair Market Value (FMV) of entire property. Likewise, repudiation/renunciation of inheritance is not a taxable transfer. If taxable, only aliquot shares should be assessed. Furthermore, the Respondent’s refusal to resolve the Petitioner’s protest violated due process which warranted damages. On the other hand, Respondent countered that since each property had only one tax declaration, it correctly used the entire FMV as the tax base and tax declarations enjoy a presumption of regularity. Likewise, Section 135 of the Local Government Code (LGC) and Pasay City Revenue Code allow the use of the entire FMV when computing transfer taxes. Lastly, there is no bad faith or arbitrariness which attended the assessment. In ruling, the Court held that RTC erred in upholding computation based on full FMV. Transfer tax should apply only to actual portions transferred. Repudiation/renunciation of inheritance does not constitute taxable transfer. Hence, no transfer tax should be imposed thereon. Petitioners are entitled to a refund of ₱2,614,342.36, representing the overpaid transfer taxes. However, Petitioners are not entitled to damages and Attorney’s fees since there is no showing of bad faith or malice by Respondents. Thus, the Petition is PARTIALLY GRANTED. [LORENZO ENG CHONG J. ONG & WILSON S. ONG VS PASAY CITY & CITY TREASURER, CTA AC NO. 09, JANUARY 12, 2026]

REFUND OF ILLEGALLY COLLECTED TAX FOR LACK OF A VALID ASSESSMENT FALLS UNDER SECTION 196 OF THE LOCAL GOVERNMENT CODE

Petitioner, the City Treasurer of Taguig, filed a Petition for Review seeking to reverse the Decision of the Regional Trial Court (RTC) which ordered the refund of Local Business Tax (LBT) payments to the Respondent, Eastheights Holdings, Inc., covering Taxable Years (TY) 2018 and 2019. The Petitioner argued that the RTC erred in applying Section 196 of the Local Government Code (LGC), which governs the refund or credit of taxes erroneously or illegally collected, instead of Section 195 of the LGC, which pertains to the protest of local tax assessments. Also, the Billing Statements issued to the Respondent constituted valid notices of assessment that triggered the sixty (60)-day period within which to file a protest under Section 195. In contrast, the Respondent maintained that Section 196, and not Section 195, is the applicable remedy. It argued that the Billing Statements were issued merely as a prerequisite for the renewal of its business permit and did not qualify as valid notices of assessment, as they lacked the essential requisites of a lawful assessment. In ruling, the Court held that Section 196 of the LGC properly governs the case. It found that the Billing Statements could not be considered valid notices of assessment because they did not contain the essential elements required of a valid assessment, particularly the nature of the deficiency, the legal basis for the tax imposed, and the specific amount assessed. Absent a valid assessment, the sixty (60)-day protest period under Section 195 did not apply. The Court further held that both the administrative and judicial claims for refund were timely filed within the two (2)-year prescriptive period from the date of payment, in accordance with Section 196 of the LGC. Consequently, the RTC correctly ordered the refund of the LBT payments, as the City Treasurer collected the taxes without issuing a valid assessment. Thus, the Petition was DENIED, and the RTC’s order directing the refund was AFFIRMED. [ATTY. VOLTAIRE ENRIQUEZ, IN HIS CAPACITY AS THE CITY TREASURER OF TAGUIG VS EASTHEIGHTS HOLDINGS, INC., CTA AC NO. 324, JANUARY 8, 2026]