DUE PROCESS DEFENSE FAILS WHEN TAXPAYER RECEIVES FORMAL LETTER OF DEMAND OR FINAL ASSESSMENT NOTICE (FLD/FAN) BUT FAILS TO TIMELY PROTEST

Petitioner Xytrix Systems Corporation filed a Petition for Review seeking to reverse and set aside the Formal Letter of Demand and Final Assessment Notice (FLD/FAN) and the Warrant of Distraint and/or Levy (WDL) issued by the Respondent Commissioner of Internal Revenue (CIR). The Petitioner argued that it did not receive the Preliminary Assessment Notice (PAN) prior to the issuance of the FLD/FANs, thereby allegedly depriving it due process and rendering the assessments and any collections null and void. Further, the WDL is invalid on the grounds that it was not signed by the Revenue District Officer (RDO), who is the proper approving authority for the issuance of such documents. On the other hand, the Respondent countered that the PAN was properly delivered to the Petitioner and duly received by the Petitioner’s bookkeeper via registered mail, evidenced by a receipt. Also, FLD/FANs were received by the same bookkeeper leaving no basis for the Petitioner’s assertion of not receiving the PAN. Moreover, WDL is validly signed by the Regional Director (RD), who has supervisory authority over it. In ruling, the Court held that the Petitioner’s failure to timely file a protest renders the assessment final and enforceable. Pursuant to Section 228 of the Tax Code and Revenue Regulations (RR) 12-99, as amended by RR 18-13, any protest not filed within thirty (30) days results in an assessment that is final, executory and demandable. The Petitioner is also precluded from denying receipt of the PAN/FLD/FAN, as shown by the acknowledgment receipt; therefore, the due process defense is without merit. The collection of the WDL is likewise proper under Section 207 of the Tax Code, which empowers the CIR or authorized representatives to issue warrants, consistent with Revenue Delegation Authority Order (RDAO) No. 1-2001. Therefore, the Petition was DENIED, and the FLD/FAN and the WLD were UPHELD. [XYTRIX SYSTEMS CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 11021, FEBRUARY 13, 2026]

[AN UNSIGNED BIR FORM 2307 IS NOT A GROUND FOR THE DENIAL OF REFUND WHEN THE TAXPAYER SUBSEQUENTLY AFFIRMS THE ACCURACY OF ITS DETAILS] [CERTIFICATES OF CREDITABLE TAX WITHHELD AT SOURCE OR BIR FORM 2307 SERVE AS PROOF OF WITHHOLDING FOR PURPOSES OF REFUND CLAIM]

Petitioner Renoir Implementation Services Inc. filed a Petition for Review praying that judgment be rendered ordering the Respondent Commissioner of Internal Revenue (CIR) to refund a total amount of Php 33.047,403.21, representing unutilized Creditable Withholding Taxes (CWT) for the Calendar Year (CY) 2019. The Petitioner argues that it is entitled to the refund of its unutilized excess CWT for CY 2019, as it complied with all legal requisites, specifically the filing of refund within the two-year prescriptive period and the withholding of the excess CWT and the inclusion of the related income in its gross income were properly established by manifesting its intention to claim a refund in its Annual Income Tax Return (ITR), citing the “Principle of Solutio Indebiti.” On the other hand, the Respondent counters that the Petitioner is not entitled to the claimed refund for failure to prove that the income covered by the Certificates of Creditable Tax Withheld at Source (BIR Forms No. 2307) was actually declared as part of its income for CY 2019. In ruling, the Court held that the Petitioner complied with the requisites for claiming a refund of excess CWT.  On the issue of the absence of a signature in the conforme portion of BIR Form No. 2307, the same does not invalidate a claim for a refund of CWT, since signing the same is not expressly required under the Tax Code. Moreover, the taxpayer’s presentation and use of BIR Form No. 2307 as evidence signifies its acceptance and affirmation of the details stated therein, as if the form had been duly signed. Additionally, the Court noted that only a portion of the claimed CWT was fully substantiated as declared income, resulting in the partial disallowance of the refund claim. Thus, the Petition is PARTIALLY GRANTED, and the respondent is ordered to REFUND or ISSUE TCC in the amount of Php 27,635,179.25. [RENOIR IMPLEMENTATION SERVICES INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10840, FEBRUARY 5, 2026]

BEING A NON-STOCK NON-PROFIT MUTUAL BENEFIT ASSOCIATION IS EXCLUDED FROM THE DEFINITION OF AN INSURANCE COMPANY & THEREFORE CANNOT BE CLASSIFIED AS A FINANCIAL INSTITUTION SUBJECT TO LOCAL BUSINESS TAX

Petitioner Public Safety Mutual Benefit Fund Inc., representing Jose Chiquito Malayo, filed a Petition for Review seeking to reverse the earlier Decision and Order by the Regional Trial Court (RTC) of Pasig City, arguing that it qualifies as a mutual benefit association and is therefore not subject to Local Business Taxes (LBT) imposed on insurance companies. It asserts that its status is supported by its Amended Articles of Incorporation and By-Laws under the Corporation Code of the Philippines, as well as by Section 30 of the Tax Code of 1997, as amended, and Section 403 of the Insurance Code of the Philippines. Also, the City of San Juan Revenue Code of 2013 adapts the legal definition of “insurance company,” which excludes mutual benefit associations, and that Local Finance Circular (LFC) No. 2-93 likewise limits the imposition of business taxes to insurance companies. Lastly, the Department of Finance – Bureau of Local Government Finance (DOF-BLGF) recognized its exemption in a Letter-Opinion dated January 14, 2016, and thus claims that the Tax Order of Payment (TOP) is invalid and that it is entitled to a refund Taxable Year (TY)  2022, consistent with the case of City Treasurer of Manila vs Philippine Beverage Partners, Inc. On the other hand, the Respondent Rosette Laquian, City Treasurer of San Juan City, counters that the Petitioner failed to cite any legal provision exempting it from LBT, emphasizing that taxation is the rule and exemption is the exception. It maintains that the Petitioner is engaged in the insurance business under the Insurance Code of the Philippines and derives income from insurance premiums, which justifies the imposition of LBT regardless of its claimed charitable purposes. Further, the exclusion of mutual benefit associations from the definition of insurance companies under the Insurance Code does not constitute a tax exemption and applies only within the context of the Code. In any event, the Petitioner may still be taxed as a financial institution under the LGC and the City of San Juan Revenue Code, while also arguing that LFC No. 2-93 and the corresponding DOF-BLGF Letter-Opinion are not binding. Lastly, the LGC does not allow payment under protest for LBT, as such a remedy is provided only for real property taxes under Section 252 of the LGC. In ruling, the Court held that the Petitioner had validly availed of the remedies under Sections 195 and 196 of the LGC by filing a timely protest, paying the amount, and subsequently pursuing a refund claim within the prescribed periods. On the TOP issued by the Respondent, the same did not constitute a valid notice of assessment because it merely functioned as a billing instrument for business permit renewal and did not indicate any deficiency tax, surcharges, or penalties. Since the Petitioner is a non-stock, non-profit mutual benefit association, it is excluded from the definition of an insurance company and therefore cannot be classified as a financial institution subject to LBT under the LGC and the City of San Juan Revenue Code of 2013 in relation to the Insurance Code of the Philippines. Consequently, the imposition and collection of the LBT lacked legal basis, entitling the Petitioner to the REFUND of the amount paid. [PUBLIC SAFETY MUTUAL BENEFIT FUND INC., REPRESENTING JOSE CHIQUITO MALAYO VS. ROSETTE LAQUIAN, CITY TREASURER OF SAN JUAN CITY, CTA AC NO. 308, FEBRUARY 3, 2026]