Tax Bulletin - December 2012

8/13/2019 Tax Bulletin - December 2012

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Tax BulletinDecember 2012



2 Tax Bulletin

HighlightsBIR Issuance

• Revenue Regulations (RR) No. 15-2012 prescribes the policies and guidelineson the accreditation of printers. (Page 2)

• RR No. 16-2012 prescribes the proper tax treatment of sales, exchanges orother dispositions of shares of stock of publicly-listed companies which do notmeet the minimum public oat requirement. (Page 5)

• Revenue Memorandum Circular (RMC) No. 80-2012 mandates all revenueof cials and employees performing “frontline services” to adhere strictly to theAnti-Red Tape Act of 2007. (Page 7)

BSP Issuances

• Circular No. 775 de nes “Reasonable Period of Time” in relation to therequirement on the listing of shares in the PSE under Section 3 of Republic Act(RA) No. 7221, dated May 18, 1994. (Page 8)

• Circular No. 776 amends Subsection X268.3 of the MORB to include a provisionon the grant of temporary rediscounting lines to newly merged or consolidatedbanks. (Page 9)

• Circular No. 777 amends Subsection X151.7 of the MORB on the Opening ofApproved but Unopened Branches. (Page 9)

• Circular No. 778 amends the quali cation requirements of selling agentsand/or market makers of Long-Term Negotiable Certi cates of Time Deposits(LTNCTDs) and/or Unsecured Subordinated Debt (UnSDs). (Page 10)

Court Decision

• Issuance of an assessment is not necessary before criminal prosecution. Asubpoena duces tecum is not a condition precedent for the BIR to resort to thebest evidence obtainable. (Page 12)

BIR Issuances

Revenue Regulations No. 15-2012 dated December 3, 2012

De nition of Terms

• Accreditation refers to the process whereby a printer/taxpayer applieswith the BIR for pre-quali cation to engage in the printing of principal andsupplementary receipts/invoices, and the printer/taxpayer is thereby dulyconstituted as an agent of the BIR in the printing of said receipts/invoices.

• Accreditation Number refers to a systems-generated control number issued toaccredited printers, using the systems for accreditation of printers.

• ATP System refers to the IT infrastructure that is part of the E-Reg TaxpayerRegistration Information Updates (TRIU) system. It caters to the online

RR No. 15-2012 prescribes the policiesand guidelines on the accreditation ofprinters.



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processing of Authority to Print (ATP) and the online submission of the printer’speriodic reports, with the capability to match and process data and generatediscrepancy reports of dubious entries.

• Online System for Accreditation of Printers refers to a convenient facility formonitoring accredited printers who interface with the E-Reg TRIU system forthe online issuance of ATP receipts/invoices, which includes features that willallow the accredited printer to look up approved ATP applications for its clientand generate reports relating thereto.

Policies and Guidelines

• The application for accreditation of printers shall be via a Sworn Statement inthe form prescribed by the BIR, which must be duly executed by the applicant-printer.

• The applicant-printer must comply with the following criteria to qualify for BIRaccreditation:

1. Registered with the BIR as engaged in printing services;2. Has been in the printing business for not less than 3 years and operating

based on a going-concern principle;3. Has no delinquent accounts with the BIR at the time of ling for

accreditation;4. Has a number of printing machines used in printing principal and

supplementary invoices/receipts, which are available for BIR inspection;5. The speci ed printing machines must be capable of generating security/

special marking/features in the printing of the principal and supplementaryinvoices/receipts;

6. Shall not require minimum number of booklets for printing of the principaland supplementary invoices/receipts;

7. Verify compliance with the information requirements per prevailingrevenue issuances, to be printed in the principal and supplementaryinvoices/receipts of its customer/client;

8. Comply with the provisions of the BIR bookkeeping regulations andreportorial requirements;

9. The printer or any of its owners (if a juridical entity) is not connected withthe BIR or is not related to any BIR of cial or employee within the fourthcivil degree of consanguinity or af nity or the latter’s relatives within thefourth civil degree of consanguinity or af nity.

• All printers engaged in the business of printing principal and supplementaryinvoices/receipts shall be required to undergo the accreditation process asprescribed under these regulations.

• All applications shall be submitted using the Online System for Accreditation ofPrinters.

• The applicant-printers must submit complete description and sample oftheir security/special markings/features in the printing of principal andsupplementary invoices/receipts.

• An onsite inspection shall be conducted by the Regional/National MonitoringAccreditation Board (RMAB/NMAB) as part of the evaluation process foraccreditation.



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• The RMAB/NMAB shall have the exclusive authority to approve or denyapplications for accreditation, and to suspend or dis-accredit printers withintheir respective jurisdictions.

• A system-generated “Certi cate of Accreditation” shall be issued within 5working days from receipt of the application for accreditation, together with allthe documentary requirements. The Certi cate of Accreditation shall containa system-generated printer’s accreditation number, which shall be permanentunless and/or until revoked by the BIR.

• A list of all accredited printers per Revenue District Of ce (RDO) shall beposted and updated regularly at the BIR website.

• Taxpayers have the option to choose from the list of accredited printers.

• Only BIR-accredited printers have the authority to print principal and

supplementary receipts/invoices.

• All accredited printers shall enroll with the BIR online ATP System forprocessing of their customers’ applications for ATP.

• The accredited printer, who transfers his registration to another RDO, willnot be required to cancel his accreditation with the previous RDO, provided arequest for a new copy of the Certi cate of Accreditation is made with the newRDO and the old Certi cate of Accreditation is surrendered to the new RDO.

• In meritorious cases, a taxpayer may le a petition for revocation of aprinter’s Certi cate of Accreditation, which shall be led with the RDO having

jurisdiction over the Head Of ce or the branches of such accredited printer forimmediate eld investigation.

• The Certi cate of Accreditation may be revoked if, during the conduct of aTax Compliance Veri cation Drive (TCVD), or in the conduct of regular audit/investigation of the taxpayer’s tax liabilities, the following ndings have beendiscovered:

1. Tampered Certi cate of Accreditation;2. Any misrepresentation in the Sworn Statement submitted by the printer;3. Valid stop- ler cases against the printer for the last 3 months of

operation;4. Unsettled delinquent accounts against the printer for the last 3 months

of operation, except for those with pending applications for compromise/abatement;

5. Printer requires a minimum number of booklets from their clients/customers;

6. Failure to submit reports as required;7. Any violation/s by the accredited printer of the policies and procedures for

accreditation.

• The RMAB/NMAB shall issue a Letter of Warning to the accredited printer forthe violation/s committed.

• A Revocation/Dis-accreditation Notice shall be issued and the Certi cate ofAccreditation shall be automatically revoked upon failure of the accreditedprinter to comply within 2 weeks from receipt of the written warning.

• Discovery of printing of spurious Of cial Receipts/Sales Invoices shall begrounds for immediate revocation of the Certi cate of Accreditation or Dis-



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accreditation. The discovery shall be a cause for immediate business closureunder “Oplan Kandado” and the ling of a criminal case against the accreditedprinter.

• Any person engaged in printing activities without applying for accreditationshall be considered operating without necessary BIR authority, and shall besubject to penalties imposed under existing laws, in addition to the penaltiesprescribed under Section 264 of the Tax Code.

• These regulations shall take effect once the Online System for Accreditation ofPrinters becomes available upon release of a revenue issuance announcing itsavailability.

(Editor’s Note: RR No. 15-2012 was published in the Manila Bulletin on December 7,2012.)

Revenue Regulations No. 16-2012 dated November 7, 2012

• All publicly-listed companies are required at all times to maintain a minimumpercentage of listed securities held by the public (public oat) at either 10% ofthe publicly-listed companies’ issued and outstanding shares (exclusive of anytreasury shares) or at such percentage as may be prescribed by the Securitiesand Exchange Commission (SEC) or Philippine Stock Exchange (PSE).

• Publicly-listed companies which are non-compliant with the minimum publicownership (MPO) requirement were allowed to comply with such requirementup to December 31, 2012.

• A stock transaction tax at the rate of ½ of 1% of the gross selling price or grossvalue in money of the shares of stock imposed under Section 127(A) of the TaxCode shall be levied, assessed and collected on every sale, barter, exchange orother disposition of shares of stock transacted up to December 31, 2012 of apublicly-listed company which is non-compliant with the MPO requirement.

• The sale, barter, transfer and or assignment of publicly-listed companies thatstill fail to meet the MPO requirement after the lapse of the grace period shallbe subject to:

1. The 5% - 10% nal capital gains tax rate imposed under Sections 24(C),25(A)(3), 25(B), 27(D)(2), 28(A)(7)(c), and 28(B)(5)(c) of the Tax Code;

and2. Documentary stamp tax (DST).

• The taxes imposed herein shall not apply to the following:

1. Dealers in securities, as de ned in Section 22(U) of the Tax Code, providedthat they shall be subject to VAT on the basis of their gross receipts andincome tax from their sale or exchange of securities.

2. Investors in shares of stock in a mutual fund company, as de ned inSection 22(BB), in connection with the gains realized by said investor uponredemption of said shares of stock in a mutual fund company pursuant toSection 32(B)(7)(h) also of the Tax Code;

3. All other persons, whether natural or juridical, who are speci cally exemptfrom national internal revenue taxes under existing investment incentivesand other special laws.

RR No. 16-2012 prescribes the propertax treatment of sales, exchanges orother dispositions of shares of stockof publicly-listed companies which donot meet the minimum public oatrequirement.



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• No sale, exchange, transfer or similar transaction intended to conveyownership of, or title to, any share of stock shall be registered in the books ofthe corporation unless the receipts for payment of taxes and the Certi cateAuthorizing Registration (CAR) and/or Tax Clearance Certi cate (TCL) are led

with, and recorded by, the stock transfer agent or secretary of the corporation.It shall be the duty of these persons to inform the BIR of any case of non-payment of tax.

• For proper monitoring of compliance with these Regulations, the following listsand reports shall be forwarded to the BIR National Of ce, through the Of ce ofthe Assistant Commissioner, Large Taxpayers Service (LTS):

1. Lists from the PSE:

a. List of publicly-listed companies which are non-compliant with theMPO requirement as of December 31, 2011;

b. List of publicly-listed companies which are non-compliant with theMPO requirement thereafter up to December 31, 2012;

c. List of publicly-listed companies that become non-compliant with theMPO requirement as of January 1, 2013;

d. Quarterly list of all publicly-listed companies indicating their publicfloat or public ownership level;

e. Quarterly list of publicly-listed companies that have become non-compliant with the MPO requirement after January 1, 2013;

f. Other reports or lists that may be requested by the BIR pursuant toSection 5 of the Tax Code.

2. All publicly-listed companies shall furnish the BIR a copy of the following:

a. Quarterly Public Ownership Report duly submitted to the PSE, whichshall be filed with the BIR within 15 calendar days after the end ofeach quarter;

b. Corporate disclosures involving block sale transactions duly submittedto the PSE, which shall be submitted to the BIR within 3 calendar daysafter the disclosure was made to the PSE;

3. The following shall be punished in accordance with the provisions of TitleX, Chapters I and II of the Tax Code:

a. Any stock transfer agent or secretary of the corporation or thestockbroker who caused the registration of transfer of ownership ortitle on any shares of stock without having been furnished with thereceipts of the payment of the taxes due and corresponding CAR/TCLand/or has recorded the same;

b. Any responsible director, corporate officer, partner or employee whofails to submit the reports required under these regulations.

(Editor’s Note: RR No. 16-2012 was published in the Manila Bulletin on December 9,2012)



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Revenue Memorandum Circular No. 80-2012 dated November 28, 2012

• The following are the BIR of ces that have face-to-face interactions withtaxpayers and other external stakeholders, and are regularly rendering

frontline services:

a. All regional of ces and all their divisions, except the AdministrativeDivision and the Document Processing Division

b. All revenue district of cesc. All divisions under the Large Taxpayers Service, except the Large Taxpayer

Document Processing and Quality Assurance Divisions and the LargeTaxpayer Performance Monitoring and Programs Division

d. Taxpayer Information and Education Divisione. Asset Valuation Divisionf. One-Stop-Shop Center (holding of ce in the Department of Finance)g. Collection Enforcement Division

h. Collection Programs Divisioni. Withholding Tax Division j. Law Division

k. International Tax Affairs Divisionl. Appellate Divisionm. National Investigation Division

• The following guidelines shall be strictly observed by the above BIR of ces:

1. All of cers or employees shall accept written applications, requests and/ordocuments submitted by clients of the of ce or agencies.

2. The responsible of cer or employee shall acknowledge receipt by writingor printing clearly thereon his/her name, the unit where he/she isconnected, and the time and date of the receipt.

3. The receiving of cer shall perform a preliminary assessment of therequest.

4. All applications or requests shall be acted upon by the assigned of cer oremployee within 5 working days in the case of simple transactions, and 10working days in case of complex transactions, from the date of receipt ofthe application or request.

5. The maximum time prescribed above may be extended depending on thenature of the frontline services requested or by the mandate of the of ceor agency under unusual circumstances.

6. The period for the delivery of the frontline services shall be indicated inthe Citizen’s Charter in case of an extension.

7. The of ce or agency concerned shall notify the requesting party inwriting of the reason for the extension and the nal date of release of thefrontline service/s requested.

8. No application or request shall be returned to the client withoutappropriate action. In case of disapproval, the of cer or employee whorendered the decision shall send a formal notice to the client within 5working days from receipt of the application or request, stating the reasonfor the disapproval and the list of speci c requirement/s which the clientfailed to submit.

9. Any denial of request for access to government service shall be fullyexplained in writing, stating the name of the person making the denial andthe grounds for the denial.

10. The number of signatories shall be limited to 5 and shall represent theof cers directly supervising the of ce or agency concerned.

RMC No. 80-2012 mandates allrevenue of cials and employeesperforming “frontline services” toadhere strictly to the Anti-Red Tape Act

of 2007.



8 Tax Bulletin

11. Heads of of ces and agencies which render frontline services shall adoptappropriate working schedules to ensure that all clients who are withintheir premises prior to the end of of cial working hours are attended toand served even during lunch break and after regular working hours.

12. All of cers transacting with the public shall be provided with an of cialidenti cation card which shall be visibly worn during of ce hours.

13. Each of ce or agency shall have a public assistance/complaints desk in alltheir of ces.

• The following shall constitute violations of RA No. 9485 with the correspondingpenalties:

1. Light Offense

a. Refusal to accept application and/or request within the prescribedperiod or any document submitted by the client;

b. Failure to act on an application or request or failure to refer backto the client a request which cannot be acted upon due to lack ofrequirement/s within the prescribed period;

c. Failure to attend to clients who are within the premises of the officeor agency concerned prior to the end of official working hours andduring lunch break;

d. Failure to render frontline services within the prescribed period on anapplication and/or request without due cause;

e. Failure to give the client a written notice on the disapproval of theapplication or request;

f. Imposition of irrelevant additional documents other than thosementioned in the first notice.

2. Penalties for light offense shall be as follows:

a. First Offense – 30-day suspension without pay and mandatoryattendance in Values Orientation Program

b. Second Offense – 3-month suspension without payc. Third Offense – dismissal and perpetual disqualification from public

service

• A Grave Offense pertains to the xing or colluding with xers in considerationof economic gain/advantage. The penalty is dismissal and perpetualdisquali cation from public service.

BSP Issuances

BSP Circular No. 775 dated November 28, 2012

• Section X105.11 of the Manual of Regulations for Banks (MORB) shall read asfollows:

“At least ten percent (10%) of the capital of banks in which foreign bankshave invested under Subsection X105.1a and b, shall be listed in thePSE within 3 years from the date of effectivity of Circular No. 775 datedNovember 28, 2012. For foreign banks that subsequently invest throughthe aforementioned modes, the 3-year period shall be reckoned from thedate of receipt of the BSP’s approval of the investment.”

Circular No. 775 de nes “ReasonablePeriod of Time” in relation to therequirement on the listing of shares inthe PSE under Section 3 of RepublicAct (RA) No. 7221, dated May 18,1994.



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• This Circular shall take effect 15 days following its publication either in theOf cial Gazette or in a newspaper of general circulation.

[Editor’s Note: Circular No. 775 was published in Business Mirror on December 4,

2012.]

BSP Circular No. 776 dated December 7, 2012

• Subsection X268.3 of the MORB is amended to include a paragraph after itemh and immediately before the provision on the requirements on micro nancefacilities, as follows:

“For newly merged or consolidated banks, a temporary line not exceeding50% of its adjusted net worth as of latest date may be granted for a periodof 180 days while awaiting the required reports/data from the appropriate

Supervision and Examination Sector Department, renewable for another180 days or until such time that the required reports/data are madeavailable, whichever comes earlier, subject to the following conditions:

a. Compliance with the requirements cited under Items e and f, and otherguidelines issued by the DLC; and

b. One of the merging or consolidating banks has CAMELS compositerating of at least 3 and minimum CAR of 10% based on the latestavailable SDC data.

xxx”

• The above provision shall not limit the Monetary Board from grantingrediscounting line incentives to merged/consolidated banks pursuant toSubsection X108.3 of the MORB.

• This Circular shall take effect on December 7, 2012.

[Editor’s Note: Circular No. 776 was published in the Manila Standard Today onDecember 7, 2012.]


• Subsection X151.7 of the MORB is amended as follows:

“Subsection X151.7 – Opening of Banking Offices.

xxx

Approved branches with unexpired periods to open as of June 17, 2012,the effectivity date of Circular No. 759 dated May 30, 2012, shall be giventhree (3) years to open, reckoned from their original dates of MonetaryBoard approval and shall not be subject to any extension.”

• The amendment shall take effect 15 calendar days following its publicationeither in the Of cial Gazette or in a newspaper of general circulation.

[Editor’s Note: Circular No. 777 was published in the Manila Bulletin on December19, 2012.

Circular No. 776 amends SubsectionX268.3 of the MORB to include aprovision on the grant of temporaryrediscounting lines to newly merged orconsolidated banks.

Circular No. 777 amends SubsectionX151.7 of the MORB on the Opening of

Approved but Unopened Branches.



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• The quali cation requirements provided under Item “c” under SubsectionX233.9 of the MORB are amended to read as follows:

“Subsection X233.9 Long-term negotiable certi cates of time deposit (LTNCTD)

xxx

c. Pre-qualification requirements

The issuing bank shall be held accountable for ensuring thecontinuous compliance by its chosen participant-FIs with thequalification requirements prescribed by the BSP.

As such, the issuing bank shall make a careful and diligent evaluationof the parties whom it shall engage to act as underwriter/arranger,registry bank, selling agent and market maker of its LTNCTDs.

The following qualification requirements shall be strictly complied withprior to and on a continuing basis by the issuing bank and FIs engagedto act as underwriter/arranger, registry bank, selling agent and marketmaker while the LTNCDs of the issuing banks remains outstanding.

(1) Issuing bank

xxx

(4) Selling agent

It must be an FI with dealership or brokering license.

(5) Market maker

xxx

(c) It must be an FI with dealership or brokering license; and

xxx”

• Item “p” of Subsection X233.9 is amended by adding “Section 36” to theprovision of RA No. 7653 referred to in the rst paragraph and by adding thefollowing paragraph at the end of Item “p”, as follows:

“FIs not supervised by the BSP acting as selling agent and/or marketmaker of LTNCTDs and/or its concerned directors/of cers that are foundto violate the rules and regulations in the performance of their functions/responsibilities shall be subject to the provisions of Section 36 of RANo. 7653 and shall, likewise, be referred to the Securities and ExchangeCommission for appropriate action.”

• The opening paragraph of Item 4 of Annex T of Circular Letter No. CL-2009-042 dated May 14, 2009 is amended to read as follows:

“Certi cation signed by the president (or of cer of equivalent rank) andchief compliance of cer of the issuing bank stating compliance of the

Circular No. 778 amends thequali cation requirements of sellingagents and/or market makers of Long-Term Negotiable Certi cates of Time

Deposits (LTNCTDs) and/or UnsecuredSubordinated Debt (UnSDs).



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following parties with their respective pre-quali cation requirements underSubsection X233. 9 of the MORB.”

• The documentary and quali cation requirements prescribed under Items “a” to

“c” of Subsection X119.4 of the MORB are amended to read as follows:

“Subsection X119.4 Public issuance of unsecured subordinate debt.

a. Application for authority

xxx

(3) The application shall be accompanied by:

xxx;

(i) A certi cation signed by the president (or of cer of equivalentrank) and chief compliance of cer of the issuing bank statingthe compliance of all parties to the UnSD transaction with therespective pre-quali cation requirements prescribed under Item“c” of Subsection X119.4.

b. Additional requirements for the issuance of UnSD

xxx

c. Requirements for other parties involved

The issuing bank shall be held accountable for ensuring thecontinuous compliance by its chosen participant-FIs with thequalification requirements prescribed by the BSP.

As such, the issuing bank shall make a careful and diligent evaluationof the parties whom it shall engage to act as underwriter/arranger,registry bank, selling agent, market maker and public trustee of itsUnSDs.

The following qualification requirements shall be strictly complied withprior to and on a continuing basis by the issuing bank and FIs engagedto act as underwriter/arranger, UnSD registry, selling agent, marketmaker and public trustee while the UnSDs of the issuing bank remains

outstanding.

(1) Underwriter/Arranger

xxx

(3) Selling agent

(a) It must be an FI with dealership or brokering license.

xxx

(4) Market maker

(a) It must be an FI with dealership or brokering license.

xxx



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• Subsection X119.13 of the MORB is amended to read as follows:

“Subsection X119.13 Sanctions .

“Without prejudice to the other sanctions prescribed under Section36 and 37 of RA No. 7653 and the provisions of Section 16 of RA No.8791, sanctions shall be imposed on BSP-supervised FIs for failure tocomply with the provisions of this Section and for non-disclosure ormisrepresentation of information, as follows:

a. On the issuing bank

xxx

b. On the underwriter/arranger

(1) Disquali cation from being appointed as underwriter/arranger forthree (3) years; and

xxx

g. On the responsible officer - xxx

FIs not supervised by the BSP acting as selling agent and/or marketmaker of UnSDs and/or its concerned directors/officers that are foundto violate rules and regulations in the performance of their functions/responsibilities shall be subject to the provisions of Section 36 ofRA No. 7653 and shall, likewise, be referred to the Securities andExchange Commission for appropriate action.”

• This Circular shall take effect 15 calendar days following its publication eitherin the Of cial Gazette or in a newspaper of general circulation.

[Editor’s Note: Circular No. 778 was published in the Malaya Business Insight onDecember 21, 2012.]

Court Decision

Joel C. Mendez vs. People of the Phil ippinesCourt of Tax Appeals (En Banc ) EB Crim. No. 014 promulgated December 11, 2012

Facts:

Based on a con dential letter-complaint alleging non-issuance of of cial receipts,the BIR issued a Letter of Authority and investigated Petitioner Dr. Joel C. Mendez(Mendez) for taxable years 2001, 2002, and 2003. As Mendez failed to submitthe required documents despite several notices, the investigation proceeded using“Third Party Information” and the “Best Evidence Obtainable Rule” under Section5(B), in relation to Sections 6(A) and (B), of the Tax Code.

Issuance of an assessment is notnecessary before criminal prosecution.A subpoena duces tecum is not acondition precedent for the BIR toresort to the best evidence obtainable.





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We welcome your comments, ideas andquestions. Please contactMa. Fides A. Balili via e-mail [email protected] or attelephone number 894-8113 andMark Anthony P. Tamayo via e-mail [email protected] orat telephone number 894-8391.

SyCip Gorres Velayo & Co.6760 Ayala Avenue, Makati City,PhilippinesTelephone: (632) 891-0307Fax: (632) 819-0872

© 2012 SyCip Gorres Velayo & Co.All Rights Reserved.FEA no. 1000055

SGV & Co. maintains of ces in Makati,Cebu, Davao, Bacolod, Cagayan de Oro,Baguio, General Santos and Cavite.

For an electronic copy of the Tax Bulletinor for further information about TaxServices, please visit our websitewww.sgv.ph

Expiry date: no expiry

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Tax Bulletin - December 2012