Consolidated Provisions to Simplify and Streamline the Procedures and Requirements Relative to the Availment of the Tax Exemptions and Incentives Granted to the Participating Private Entities Under Republic Act No. 8525 or the “Adopt-a-School Act of 1998” Republic Act No. 12063 or the “Enterprise-Based Education and Training (EBET) Framework Act”, and the Tax Code.
Section 1. Scope – It is the policy of the State to institute various programs that encourage private entities to help or assist in upgrading and modernizing educational institutions in the Philippines.
Therefore, pursuant to Sections 244 and 245 of the National Internal Revenue Code 1997, as amended, (Tax Code), the following Regulations are hereby promulgated to consolidate provisions of Revenue Regulations (RR) No. 10-2003 and Section 294 (C) (2) and (4) of the Tax Code, in order to ensure the efficient and effective implementation of the tax incentives granted under Sections 5 and 6 of RA No. 8525, Sections 19 and 20 of RA No. 12063 and Tax Code.
Section 2. Incentives to registered export and domestic enterprises under Section 294 (C)(2) and (C)(4) of the Tax Code. – Registered export and domestic market enterprises are allowed to deduct:
In availing of the above incentive, the Applicant shall attach to its ITR the Certification from the DepEd or CHED or TESDA and a Sworn Declaration issued by Applicant or its authorized officer as to the amount of the expenses being deducted and that the Applicant has the requisite qualifications to avail of the incentives.
The applicant shall keep the official invoices and other supporting documents to support the expenses for purposes of BIR post-audit.
Section 3. Incentive granted to private entities under RA No. 8525, as implemented by RR No. 10-2003 (Adopt-a-School Program). –
Section 4 Incentives granted to Technical-Vocational Institutions (TVIs) implementing a registered Enterprise-Based Education and Training (EBET) Framework under RA No. 12063.
Section 5. Valuation of the assistance/contribution or donation made by private entities to educational institutions covered by these Regulations. – The assistance, contribution or donation made by private entities covered by these Regulations shall be valuated as follows:
Section 6 Rules on availment of tax exemptions and incentives – In preparing the ITR, Applicants shall indicate the legal basis of the exemption and incentives availed of (i.e., RA No. 8525, RA No. 12063 or Section 294 (C)(2) and (4) of the Tax Code) on the “Special Allowable Itemized Deductions” field of the ITR.
In addition, the availment of the above tax exemptions/incentives shall be mutually exclusive and shall bar the Applicant’s availment of any similar incentives granted by other general or special laws, rules or regulations.
Section 7. Role of the government agencies granting incentives – Government agencies granting incentives covered in these Regulations shall provide the BIR a master list of entities with granted/cancelled incentives which contains the information needed in the audit investigation/verification by the concerned investigating office of the BIR through the Audit Information, Tax Exemption and Incentives Division, within twenty (20) days following the close of each taxable quarter. The form of the master list/matrix that will be submitted by the concerned parties shall be prescribed in a separate issuance.
Section 8. Conduct of Post audit of the BIR. – Pursuant to Section 235 of the Tax Code and RR No. 12-2018, any provision of existing laws, rules or regulations to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascetaining compliance with the condition under which they have been granted exemptions or tax incentives and their tax liability, if any.
Section 9. Transitory Provision – Upon effectivity of these Regulations, any pending request for tax exemption with the BIR relating to the availment of the above incentives shall be deemed approved, provided at the Applicant has all the requisite to qualify for the incentives. Moreover, the concerned Applicant shall submit the documentary requirements mandated under these Regulations to the BIR during audit to determine its compliance with the above provisions. Failure to comply shall result to disallowance of claimed expenses and tax exemptions.
Section 10. Separability Clause – If any provision of these Regulations is declared invalid by a competent court, the remainder of these Regulations or any provision not affected by such declaration of invalidity shall remain in force and effect.
Section 11. Repealing Clause – The provisions of any regulations, rulings or orders, or portions thereof which are inconsistent with the provisions of these Regulations are hereby revoked, repealed or amended accordingly.
2024 BAR EXAMINATIONSCIVIL LAWSEPTEMBER 8, 20248:00 AM – 12 NOON
1.
Carlos and Chloe scheduled their intimate wedding on September 4, 204 at 7:00 p.m. in Manila. Chloe purchased from Angelica a gold wedding ring with engraving “Love, Carlos” for PHP 1,000,000. Angelica promised to deliver the ring on or before the wedding day. On September 1, 2024, a weather bulletin warned that super typhoon Enteng will enter the country within three days. On September 4, 2024 at 6:00 a.m., typhoon Enteng and the enhanced southwest monsoon caused massive flooding that rendered major roads in Manila impassable to all kinds of vehicles. Angelica failed to deliver the ring in time for Carlos and Chloe’s wedding which pushed through despite the typhoon. Angelica delivered the ring the following day after the flood subsided. Chloe filed against Angelica a complaint for damages. Angelica denied liability and argued that typhoon is a fortuitous event. Chloe replied that typhoon is not a fortuitous event because its arrival was earlier announced. In any event, the typhoon will not exempt Angelica because of her negligence and default. Angelica was negligent when she failed to pay attention to the forecast and was in default when she delivered the ring after the wedding. Is Angelica liable for damages due to default complying with her obligation? Explain.
2.
Viada and Blanco are best friends. In July 2024, Blanco sold to Castan a parcel of land registered in Viada’s name. Blanco signed the deed of absolute sale in behalf of Viada and pretended as his agent. In August 2024, Viada executed a special power of attorney (SPA) authorizing Blanco to sell the identical parcel of land. Blanco executed a deed of absolute sale in favor of Sanchez Roman who was aware of the prior conveyance of the same land to Castan. Thereafter, Castan learned of the subsequent transaction between Blanco and Sanchez Roman. Castan then filed against Sanchez Roman an action for annulment of sale. Castan argued that Sanchez Roman is in bad faith becuase of his knowledge of the prior sale. Sanchez Roman countered that the sale between Blanco and Castan is void for lack of Viada’s consent. Castan replied that the subsequent issuance of the SPA of Blanco ratified any defect in their transaction. Who between Castan and Sanchez Roman has a better right over the parcel of land? Explain.
3.
Alice and Shiela occupied a parcel of land which they inherited from their parents. In 2003, Alice executed an affidavit of self-adjudication over the property and was issued a certificate of title solely under her name. In August 2024, Sheila discovered that she was excluded from the certificate of title. Shiela filed against Alice an action to reconvey the land based on implied trust. Shiela alleged continuous actual possession of the property and deprivation of share as compulsory heir. Alice countered that the prescriptive period to reconvey real property based on an implied trust is 10 years reckoned when she repudiated the trust in 2003 upon the issuance of certificate of title in her name. Thus, Shiela’s action for reconveyance filed only in 2024 had already prescribed. Is Sheila’s cause of action to recover her share in property from Alice already prescribed? Explain.
4.
In 2017, Maloi leased her real property to Sheena for a period of 10 years with rental escalation clause which reads: “For the first five years, the rental rate shall be PHP 10,000.00 per month subject to 10% increase for the succeeding years.”. In 2020 Sheena assigned to Colet her rights through postdated checks but were dishonored for having been drawn against a closed account. Maloi charged Colet with the crime of estafa. On the other hand, Maloi demanded from Sheena the unpaid rentals and stipulated increase in rent but was refused. Sheena denied liability and argued that her obligation was already extinguished when Colet substituted her as lessee. Sheena added that Maloi accepted rental payments from Colet. Did novation extinguish Sheena’s obligation under the contract of lease? Explain.
5.
Primo, a French national and permanent resident of Canada, executed in the Philippines a holographic will which he entirely wrote, dated and signed. Primo enumerated in the will various real and personal properties situated in the Philippines, France, and Canada. Primo bequeathed the properties in the Philippines to his parents, the properties in France to his siblings, and the properties in Canda to his wife and children. In 2024, Primo suffered a heart attack and died in Australia while attending a conference. Primos was survived by his wife, two children, parents, and three siblings. What laws shall govern the formalities of Primo’s holographic will, the distribution of his estate, and the qualifications of his heirs? Explain.
6.
In 2021, Jesse and Celeste got married. After a year, Jesse took all their savings and abandoned Celeste for his paramour Diana. Jesse asked Diana to quit her job. Diana hesitated because she has no money and is drowning in debts. Yet, Jesse promised to provide for all of Diana’s needs. Jesse and Diana then lived together. The following day, Jesse and Diana bought a brand-new car. The vehicle was exclusively registered under Diana’s name. Celeste learned of the purchase and filed an action to recover the vehicle from Diana. Celeste claimed that Jesse is still her lawful husband, and that the car is part of their community property. Diana countered that she and Jesse are co-owners of the vehicle. Can Celeste recover the vehicle from Diana? Explain.
7.
Lloyd had a long-time crush with his childhood friend Miggy. Lloyd always dreamed of building a family with Miggy but Philippine laws disapprove of same-sex marriages. Lloyd then migrated and established a career in Sweeden. After several years, Lloyd applied for naturalization and was granted Swedish citizenship. Lloyd underwent gender-affirming surgery to resemble the woman gender identity. Lloyd also changed his sex from “male” to “female” and his name from “Lloyd” to “Laida” pursuant to Swedish law. Thereafter, Laida returned to the Philippines and married Miggy. Is the marriage between Miggy and Laida valid? Explain.
8.
In 1990, Monica was born during the marriage of her parents Anton and Steph. In 2024, Monica discovered that a certain Patrick signed as the father in her birth certificate. Monica looked for Patrick and was informed that he passed away a year earlier. Monica learned that Patrick was Steph’s last boyfriend before she married Anton. Thereafter, Monica filed a complaint for partition of Patrick’s estate. Monica claimed that she is the non-marital child of Patric and Steph. Monica submitted her birth certificate where Patrick recognized her as his daughter. The heirs of Patrick opposed the complaint and argued that Monica is presumed the legitimate child of Anton and Steph pursuant to Article 164 of the Family Code which states that “children conceived or born during the marriage of the parents are legitimate.” The heirs of Patrick also invoked the rule that only the father can impugn the legitimacy of the child. May Monica impugn her own legitimacy in an action for partition? Explain.
9.
Zion purchased a condominium unit from Hammered Homes Realty (HHR) for PHP 10,000,000.00. Zion paid a down payment of PHP 2,000,000.00 while the balance of PHP 8,000,000.00 is payable for a period of 80 months at PHP 100,000.00 monthly installments. Zion started paying the monthly installments on April 15, 2022. Due to financial difficulties, Zion started to default on his payments from June 15, 2924. Zion paid PHP 1,800,000.00 total monthly installments. On August 15, 2024, Zion received a notarized letter cancelling the contract to sell. Zion then went to the office of HHR to claim the cash surrendered value of his payments pursuant to Republic Act No. 6552 entitled “Ready Installment Buyer Act” or the Maceda Law. Is Zion entitled to cash surrender value? Explain.
10.
Caloy died with a net estate of PHP 240 million, survived by his:
(1) father – Cesar;
(2) spouse – Grace;
(3) legitimate children – Teddy and Bobbie;
(4) illegitimate child – Rebreb; and
(5) sisters – Alex and Gabbie.
In his will, Caloy instituted Rebreb as the sole heir. How much can Rebreb receive from Caloy’s estate? Explain.
11.
Rico mortgaged a parcel of land to Maris as security for a loan. In the mortgage contract, Rico appointed Maris as attorney-in-fact for the purpose of selling the land in case of default in the payment of loan. Rico failed to pay his obligation. Maris then purchased the land from Rico through a deed of absolute sale. Later, Rico questioned the mortgage contract because it violates the prohibition against pactum commisorium. As such, the subsequent sale is also void. Is the sale between Rico and Maris valid? Explain.
12.
Kiko leased a parcel of land to Jackie from January to December 2024 or for a period of one year. In July 2024, Kiko sent to Jackie a letter which reads: “I am giving you the first opportunity to buy the leased property for PHP 1,000,000.00. You have until the expiration of the lease contract within which to decide.” Immediately, Jackie informed Kiko that she will buy the leased property for PHP 800,000.00. Kiko did not reply to Jackie. In August 2024, Jackie learned that Kiko sold the leased property to Bogs for PHP 800,000.00. Aggrieved, Jackie filed an action against Kiko and Bogs to rescind their contract of sale. Jackie claimed that the sale transaction violated her right of first refusal, and that she must be allowed to buy the property at a similar price of PHP 800,000.00. Can Jackie rescind the contract of sale between Kiko and Bogs for the alleged violation of her right of first refusal? Explain.
13.
Klyde and his predecessors-in-interest had been in open, continuous, exclusive and notorious possession and occupation of a 10-hectare agricultural land of the public domain under a bona fide claim of ownership since 1995. In 2015, the property had been declared alienable and disposable. In 2020, Klyde applied for registration of the lot. The Register of Deeds denied the application because Klyde did not occupy the property since time immemorial or before June 12, 1945. Is the Register of Deeds justified in denying the registration of the property in favor of Klyde based on lack of occupation since time immemorial? Explain.
14.
In 2015, Sergio and Calista got married. In 2019, Sergio started complaining about his recurring and severe migraines. Sergio then left without informing Calista his whereabouts. Eventually, Calista fell in love with her best friend Albert. In 2024, Calista filed a summary proceeding to declare Sergio presumptively dead so she can marry Albert. Calista alleged that Sergio’s only known relative is his brother, Robert, who lives in Cotabato City. Calista wrote to Robert and asked him about Sergio. Robert replied that he does not have any idea where to find Sergio. Calista also tried to inquire from Sergio’s friends but to no avail. Thus, Calista honestly believed that Sergio is already dead. Is Calista’s petition for declaration of presumptive death meritorious? Explain.
15.
Ginny arrived at Star Viva Hotel (SVH) and entrusted the ignition key of her vehicle to parking attendant Marco, who in turn, issued a valet parking customer claim stub. After parking the vehicle, Marco placed the ignition key inside a safety box. Ginny proceeded to the hotel lobby to check in. At midnight, the hotel security officer informed Ginney that her vehicle was carnapped. Ginny filed against SVH an action for damages for the loss of the vehicle. In its answer, SVH denied responsibility for any loss or damage to vehicles in the parking area since the valet parking service is a special privilege given for the convenience of the hotel guests. Is SVH liable for the loss of Ginny’s vehicle? Explain.
16.
In 2021, Kynan was born to live-in parents Popoy and Basha. After a year, Popoy and Basha parted ways due to irreconcilable differences. Basha worked as a market vendor to support Kynan and often left him in the care of his maternal grandmother. Popoy occasionally sent money for Kynan’s needs. Later, Basha had a discreet romantic affair with her best friend Helen. In 2024, Popoy filed a case for the sole custody of Kynan and alleged that Basha is an unfit mother. Popoy argued that Basha’s lesbian relationship is not conducive to the proper moral development of Kynan. Basha countered that she is able to take care of and provide for Kynan despite her meager income. Are there compelling reasons to deprive Basha of Kynan’s custody? Explain.
17.
Lennon made a last will and testament which contained two simple dispositions, to wit: “First, I am leaving one-half of my estate in favor of the poor…. Second, I am leaving one-half of my estate in favor of my soul….” Lennon named Atty. Manresa as executor and instructed him to carry out the provisions of his will. In 2024, Lennon died single and childless. Thereafter, Lennon’s will was presented for probate. The siblings of Lennon opposed the probate of the will and claimed his entire estate through intestate succession. The siblings of Lennon argued that his testamentary dispositions are void because the first is in favor of an unknown person while the second is for a beneficiary without civil personality. Are the dispositions in Lennon’s will void? Explain.
18.
Sharon owned a parcel of land adjoining the sea with flat terrain at the center and elevated rocky northern part. Sharon executed a written instrument where she donated the portion with flat terrain to Nichloas who accepted it in the same instrument. After the survey, Nicholas discovered that the land described in the deed of donation refers to the rocky northern portion. However, Sharon already died without correcting the mistake. Nicholas asked the heirs of Sharon to execute an amended deed of donation over the flat terrain but was refused. Nicholas filed against the heirs of Sharon an action for reformation of instrument to reflect the real intention of the parties. May the trial court compel the heirs of Sharon to reform the instrument and execute an amended deed of donation? Explain.
19.
On July 5, 2024, Odrey and Jeboy executed a notarized agreement for the sale of real property which reads: “Odrey agrees to sell Lot 0416 to Jeboy for a total consideration of PHP 1,000,000.00. Upon full payment of the purchase price, Odrey will execute a deed of absolute sale in favor of Jeboy.” The following day, Jeboy recorded the instrument with the Register of Deeds. On August 5, 2024, Odrey and Lorenz executed a notarized document over the same parcel of land which reads: “for and in consideration of PHP 1,000,000.00, receipt of which is hereby acknowledged, Odrey hereby sells, transfers, and conveys and by these presents sold, transferred, and conveyed Lot 0416 to Lorenz.” The deed between Odrey and Lorenz was not registered. Later, Jeboy discovered the transaction between Odrey and Lorenz. Jeboy invoked the rules on double sale and argued that he has a better right because he is the first registrant in good faith. Will the rules on double sale apply? Explain.
20.
Alan, a mall security guard, negligently shot Kazuto, a customer who died on the spot. The heirs of Kazuto filed an action for damages against Alan, for his own negligence, and his employer, Ryota Security Agency (RSA), for failure to observe diligence in the selection and supervision of its employees. In due course, the trial court ruled that both Alan and RSA are negligent and ordered them to pay damages in favor of the heirs of Kazuto, to wit:
FOR THE REASONS, the complaint for quasi-delict is GRANTED. Alan is civilly liable to pay the heirs of Kazuto PHP 1,000,000.00 actual damages, PHP 500,000.00 moral damages, and PHP 500,000.00 exemplary damages. Ryota Security Agency, as employer, is subsidiarily liable to pay the award of damages in case of the employee’s insolvency.
The award of damages shall earn interest at the rate of 12% from filing of the complaint until finality of the decision.
SO ORDERED.
Did the trial court properly impose the civil liabilities of Alan and RSA? Explain.
Implementing the amendments Introduced by Republic Act No. 11976, Otherwise Known as the “Ease of Paying Taxes Act”, on the Relevant Provisions of Title IV – Value-Added Tax (VAT) and Title V – Percentage Tax of the National Internal Revenue Code of 1997, as amended (Tax Code)
Amendments – The following words, phrases, or actions shall now be uniformly applied to the provisions affected under Revenue Regulations (RR) No. 16-2005 and its subsequent amendments:
Specific Amendments to Sale or Exchange of Service Under Section 108 of the Tax Code. – Section 4.108-1, 4.108-4, and 4.108-6 of RR No. 16-2005, as amended, shall now be read as follows:
“SEC. 4.108-1. VAT on the Sale of Services and Use or Lease of Properties. – Sale or exchange of services, as well as the use or lease of properties, as defined in Section 108(A) of the Tax Code shall be subject to VAT, equivalent to twelve percent (12%) of the gross sales (excluding VAT).”
“SEC. 4.108-4. Definition of GrossSales. – ‘Gross sales’ refers to the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services during the taxable period for the services performed for another person which the purchaser pays or is obligated to pay to the seller in consideration of the sale, ,barter, or exchange of services that has already been rendered by the seller and the use or lease of properties that have alredy been supplied by the seller, excluding VAT and those amounts earmarked for payment to third (3rd) party or received as reimbursement for payment on behalf of another which do not redound to the benefit of the seller as provided under relevant laws, rules or regulations: Provided, that for long-term contracts for a period of one (1) year or more, the invoice shall be issued on the month in which the service, or use or lease of properties is rendered or supplied.”“SEC 4.108-6. Allowable Deductions from Gross Selling Price. – In computing the taxable base during the quarter, the following shall be allowed as deductions from gross sales:
Specific Amendments to VAT-Exempt Transactions – Section 4.109(B)(cc) of RR No. 16-2005, as amended, shall now be read as follows:
“SEC. 4.109. VAT-Exempt Transactions.
Specific Amendments to Tax Credits. – Section 4-110-9 of RR No. 116-2005, as amended, is hereby added for the output VAT credit on uncollected receivables:“SEC 4.110-1. Credits for Input Tax – SEC. 4.110-9. Output VAT Credit on Uncollected Receivables – A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agreed upon period to pay: Provided that, tthe seller has fully paid the VAT on the transaction: Provided further, that the VAT component of the uncolleted receivables has not been claimed as allowable deduction under Section 34(E) of the Tax Code.
Uncollected Receivable refers to sales of goods and/or services on account that transired upon the effectivity of these Regulations which remain uncollected by the buyer despite the lapse of the agreed period to pay.
To be entitled to VAT credit, the following requisites must be present:
In case of recovery of uncontrolled receivables, the output VAT pertaining thereto shall be added to the output VAT of the Taxpayer during the period of recovery.
These rules do not amend the conditions on the deductibility of bad debts expenses in the income tax returns as provided in RR No. 25-02.”
SECTION 6. Specific Amendments to Claims for Refund/Tax Credit Certificate of Input Tax – The entire Section 4.112-1 of RR No. 16-2005, as amended, is hereby amended to read as follows:
“SEC. 4.112-1. Claims for Refund/Tax Credit Certificate of Input Tax. –
SECTION 7. Transitory Provisions.
SECTION 8. Administrative Provision. – Separate RR shall govern the provisions of the EOPT Act covering Sections 113, 235, 236, 237, 238, 242 and 243 of the Tax Code particularly invoicing requirements, bookkeeping and accounting requirements, registration, filing, and payment including period to be given to the taxpayers to reconfigure machines and systems adjustments as a result of the shift from cash to accrual basis pursuant to the EOPT Act.
SECTION 9. Separability Clause. – If any of the provisions of these Regulations is subsequently declared invalid or unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.
SECTION 10. Repealing Clause. – All other issues and rules and regulations or parts thereof which are contrary to and inconsistent with any provisions of these Regulations are hereby repealed, amended, or modified accordingly.
SECTION 11 Effectivity. – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR official website whichever comes first.
AN ACT INTRODUCING ADMINISTRATIVE TAX REFORMS, AMENDING SECTIONS 21, 22, 51, 57, 58, 76, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 128, 200, 104, 229, 235, 236, 237, 238, 241, 242, 245, 248, AND 269; AND REPEALING SECTION 34(K) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
SECTION 1. Title – This Act shall be known as the “Ease of Paying Taxes Act”.
SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State:
SEC. 3. Section 21 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: ” SEC. 21. Sources of Revenue and Classification of Taxpayers. –
SEC. 3. Section 21 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
SEC. 4. Section 22 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
” SEC. 22. Definition. – When used in this Title:xxx(KK) The term ‘filing of return’ shall refer to the act of accomplishing and submitting the prescribed tax return, electronically or manually, to the Bureau of Internal Revenue, or through any authorized agent bank or authorized tax software provider, as required under this Code or as prescribed under existing rules and regulations.
(LL) The term ‘payment of tax’ or ‘remittance of tax’ shall refer to the act of delivering the amount of tax due or withheld, either electronically or manually, to the Bureau of Internal Revenue, or through any authorized tax software provider, as required under this Code or as prescribed under existing rules and regulations.”
SEC. 5. Section 34(K) of the National Internal Revenue Code of 1997, as amended, is repealed, and the succeeding paragraph is renumbered accordingly.
SEC. 6. Section 51 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 51. Individual Returns. –
SEC. 7. Section 56 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows;
“SEC. 56. Payment and Assessment of Income Tax for Individuals and Corporations. –
SEC. 8. Section 57 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 57. Withholding of Tax at Source. –
(A) xxx
(B) xxx
(C) Tax-free Covenant Bonds. – xxx
The Department of Finance shall review, at least once every three (3) years, regulations and processes for the withholding of creditable tax under this Code, and direct the Bureau of Internal Revenue to amend rules and regulations for the same, should it be found during the review that the existing rules, regulations, and processes for the withholding of creditable tax under this Code adversely and materially impact the taxpayer: Provided, That micro taxpayers shall not be required to withhold taxes under Subsection (B) of this Section.” (the Underlined Portion Vetoed by the President: See Veto Message)
SEC. 9. Section 58 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 58. Returns and Payment of Taxes Withheld at Source. –
(A) Quarterly Returns and Payments of Taxes Withheld. – Taxes deducted and withheld under Section 57 by withholding agents shall be covered by a return and paid to, either electronically or manually, except in cases where the Commissioner otherwise permits, any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.
xxx
(C) Timing of Withholding Taxes. – The obligation to deduct and withhold the tax arises at the time the income has become payable.
(D) Annual Information Return. – xxx
(E) Income of Recipient. – Income upon which any creditable tax is required to be withheld at source under Section 57 shall be included in the return of its recipient but the excess of the amount of tax so withheld over the tax due on his return shall be refunded to him to be provisions of Section 204; if the income tax collected at source is less than the tax due on his return, the difference shall be paid in accordance with the provisions of Section 56.
Claims for tax credit or refund of any creditable income tax which was deducted and withheld on income payments shall be given due course only when it is shown that the income payment has been declared as part of the gross income and the fact of withholding is established. Claims for tax credit of any creditable income tax deducted and withheld in the previous period can still be creditable in the subsequent calendar or fiscal year: Provided, that the same had been declared in the tax return where the corresponding income is reported.
All taxes withheld pursuant to the provisions of this Code and its implementing rules and regulations are hereby considered trust funds and shall be maintained in a separate account and not commingled with any other funds of the withholding agent.
(F) Registration with Register of Deeds. – xxx.”
SEC. 10. Section 76 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 76. Final Adjustment Return. – xxx
In case the corporation is entitled to a tax credit or refund of the excess income taxes paid during the year, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry over and apply the said excess income tax paid against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor: Provided, That in case the taxpayer cannot carry over the excess income tax credit due to dissolution or cessation of business, the taxpayer shall file an application for refund of any unutilized excess income tax credit, and the Bureau of Internal Revenue shall decide on the application and refund the excess taxes within two (2) years from the date of the dissolution or cessation of business.”
SEC. 11. Section 77 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 77. Place and Time of Filing and Payment of Quarterly Corporate Income Tax. –
(A) Place of Filing. – Except as the Commissioner otherwise permits, the quarterly income tax declaration required in Section 75 and the finals adjustment return required in Section 76 shall be filed, either electronically or manually, with any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.
(B) Time of Filing the Income Tax Return. – The corporate quarterly declaration shall be filed, either electronically or manually, within sixty (60) days following the close of each of the first three (3) quarters of the taxable years. The final adjustment return shall be filed on or before the fifteenth (15th) day of April, or on or before the fifteenth (15th) day of the fourth (4th) month following the close of the fiscal year, as the case may be.
(D) Liability for Payment. – The estate tax imposed by Section 84 shall be paid, either electronically or manually, by the executor or administrator before delivery to any beneficiary of his distributive share of the estate. Such beneficiary shall to the extent of his distributive share of the estate, be subsidiarily liable for the payment of such portion of the estate tax as his distributive share bears to the value of the total net estate.
SEC. 15. Section 103 of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:
“SEC. 103. Filing of Return and Payment of Tax. –
(B) Time and Place of Filing and Payment. – The return of the donor required in this Section shall be filed, either electronically or manually, within thirty (30) days after the date the gift is made, and the tax due thereon shall be paid, either electronically or manually, at the time of filing. Except in cases where the Commissioner otherwise permits, the return shall be filed and the tax paid, either electronically or manually, to any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.”
SEC. 16. Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby
“SEC. 106. Value-Added Tax on Sale of Goods or Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a valued-added tax equivalent to twelve percent (12%) of the gross sales of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor.
(1) xxx
(a) xxx
(b) xxx
(c) xxx
(d) xxx
(e) xxx
For the purposes of this Section, the term ‘gross sales’ means the total amount of money or its equivalent value in money which the purchaser pays or is obligated to pay to the seller in consideration of the sale, barter or exchange of the goods or properties, excluding the value-added tax. The excise tax, if any, on such goods or properties shall form part of the gross sales.
(D) Sales Returns, Allowances and Sales Discounts. – The value of goods or properties sold and subsequently returned or for which allowances were granted by a VAT-registered person may be deducted from the gross sales for the quarter in which a refund is made or a credit memorandum or refund is issued. Sales discount granted and indicated in the invoice at the time of sale and the grant of which does not depend upon the happening of a future event may be excluded from the gross sales within the same quarter it was given.
(E) Authority of the Commissioner to Determine the Appropriate Tax Base. – The Commissioner shall, by rules and regulations prescribed by the Secretary of Finance, determine the appropriate tax base in cases where a transaction is deemed sale, barter or exchange of good or properties under Subsection (B) hereof, or where the gross sales is unreasonably lower than the actual market value.”
SEC. 17. Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and collected, a value-added tax equivalent to twelve percent (12%) of the gross sales derived from the sale or exchange of services, including the use or lease of properties.
For purposes of this Section, the term ‘gross sales’ means the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services during the taxable quarter for the services performed for another person, which the purchaser pays or is obligated to pay to the seller in consideration of the sale, barter, or exchange of services that has already been rendered by the seller and the use or lease of properties that have already been supplied by the seller, excluding value-added tax and those amounts earmarked for payment to third (3rd) party or received as reimbursement for payment on behalf of another which do not redound to the benefit of the seller as provided under relevant laws, rules or regulations: Provided, That for long-term contracts for a period of one (1) year or more, the invoice shall be issued on the month in which the service, or use or lease of properties is rendered or supplied.
(B) Transactions Subject to Zero Percent (0%) Rate. –
(C) Sales Allowances and Sales Discounts. – The value of services rendered for which allowances were granted by a VAT-registered person may be deducted from the gross sales for the quarter in which a refund is made or a credit memorandum or refund is issued. Sales discount granted and indicated in the invoice at the time of sale and the grant of which does not depend upon the happening of a future event may be excluded from the gross sales within the same quarter it was given.”
SEC. 18. Section 109 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 109. Exempt Transactions. –
The following transactions shall be exempt from the value-added tax:
(CC) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales do not exceed the amount of Three million pesos (P3,000,000): Provided, That the amount herein stated shall be adjusted to its present values using the consumer price index, as published by the Philippine Statistics Authority (PSA) every three (3) years.”
SEC. 19. Section 110 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 110. Tax Credits. –
(A) Creditable Input Tax. –
(1) Any input tax evidenced by a VAT invoice issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax:
(a) Purchase or importation of goods:
(i) For sale; or
(ii) For conversion into or intended to form part of a finished product for sale including packaging materials; or
(iii) For use as supplies in the course of business; or
(iv) For use as materials supplied in the sale of service; or
(v) For use in trade or business.
(b) Purchase of services on which a value-added tax has accrued.
(D) Output VAT Credit on Uncollected Receivables. – A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agree upon period to pay: Provided, That the seller has fully paid the VAT on the transaction: Provided, further, That the VAT component of the uncollected receivables has not been claimed as allowable deduction under Section 34(E) of this Code.
In case of recovery of uncollected receivables, the output VAT pertaining thereto shall be added to the output VAT of the taxpayer during the period of recovery.”
SEC. 20. Section 112 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 112. Refunds of Input Tax. –
(B) Cancellation of VAT Registration. – A person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Section 106(C) of this Code may, within two (2) years from the date of cancellation, apply for the issuance of a tax credit certificate or cash refund for any unused input tax which may be used in payment of his other internal revenue taxes or apply for refund for any unused input tax.
(C) Period within which the Refund of Input Taxes shall be Made. – In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That for this purpose, the VAT refund claims shall be classified into low-, medium-, and high-risk claims, with the risk classification based on amount of VAT refund claim, tax compliance history, frequency of filing VAT refund claims, among others: Provided, further, That medium- and high-risk claims shall be subject to audit or other verification processes in accordance with the Bureau of Internal Revenue’s national audit program for the relevant year: Provided, finally, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial within the ninety (90)-day period.
In case of full or partial denial of the claims for tax refund, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the ninety (90)-day period, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part
of any official, agent, or employee of the Bureau of Internal Revenue to act on the application within the ninety (90)-day period shall be punishable under Section 269 of this Code.
(D) Manner of Giving Refund. – Refunds shall be made upon warrants drawn by the Commissioner or by his duly authorized representative without the necessity of being countersigned by the Chairperson, Commission on Audit, the provision of the Administrative Code of 1987 to the contrary notwithstanding: Provided, That refunds under this paragraph shall be subject to post audit by the Commission on Audit, only the taxpayer shall be liable for the disallowed amount without prejudice to any administrative liability on the part of any employee of the Bureau of Internal Revenue who may be found to be grossly negligent in the grant of refund.”
SEC. 21. Section 113 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. –
(A) Invoicing Requirement. – A VAT-registered person shall issue a VAT invoice for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter or exchange of services.
(B) Information Contained in the VAT Invoice. -The following information shall be indicated in the VAT invoice:
(1) A statement that the seller is a VAT-registered person, followed by the seller’s Taxpayer Identification Number;
(2) The total amount which the purchased pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax: Provided, That:
(a) The amount of the tax shall be shown as a separate item in the invoice;
(b) If the sale is exempt from the value-added tax, the term ‘VAT-exempt sale’ shall be written or printed on the invoice;
(c) If the sale is subject to zero percent (0%) value-added tax, the term ‘zero-rated sale’ shall be written or printed on the invoice;
(d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice shall clearly indicate the breakdown of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoices. Provided, That the seller may issue separate invoices for the taxable, exempt, and zero-rated components of the sale.
(3) xxx
(4) In the case of sales in the amount of One thousand pesos (P1,000) or more where the sale or transfer is made to a VAT-registered person, the name, address and Taxpayer Identification Number of the purchaser, customer or client.
(C) xxx
(D) Consequence of Issuing an Erroneous VAT Invoice. –
(1) If a person who is not a VAT-registered person issues an invoice showing the person’s Taxpayer Identification Number, followed by the word ‘VAT’:
(a) The issuer shall, in addition to any liability to other percentage taxes, be liable to:
(i) The tax imposed in Section 106 or 108 without the benefit of any input tax credit; and
(ii) A fifty percent (50%) surcharge under Section 248(B) of this Code;
(b) The VAT shall, if the other requisite information required under Subsection (B) hereof is shown on the invoice, be recognized as an input tax credit to the purchaser under Section 110 of this Code.
(2) If a VAT-registered person issues a VAT invoice for a VAT-exempt transaction, but fails to display on the invoice the term “VAT-exempt sale’, or clearly provide a breakdown of the VAT-exempt sale as provided for under paragraph B(2)(d) herein, the issuer shall be liable to account for the tax imposed in Section 106 or 108 as if Section 109 did not apply.
(3) If a VAT-registered person issues a VAT- invoice to another VAT-registered person with lacking information required under Subsection (B) hereof, the issuer shall be liable for noncompliance with the invoicing requirement, however, the VAT shall still be allowed to be used as input tax credit on the part of the purchaser pursuant to Section 110 of this Code if the lacking information do not pertain to the amount of sales, amount of VAT, name and Taxpayer Identification Number of both the purchaser and issuer/seller, description of goods or nature of services, and the date of transaction.
xxx.”
SEC. 22. Section 114 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 114. Return and Payment of Value-Added Tax. –
(A) In General. – Every person liable to pay the value-added tax imposed under this Title shall file. Either electronically or manually, a quarterly return of the amount of his gross sales within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer: Provided, however, That VAT-registered persons shall
pay, either electronically or manually, the value-added tax on a monthly basis: Provided, finally, That beginning January 1, 2023, the filing and payment required under this Subsection shall be done within twenty-five (25) days following the close of each taxable quarter.
(B) Where to File the Return and Pay the Tax. – Except as the Commissioner otherwise permits, the return shall be filed with and the tax paid, either electronically or manually, to any authorized agent bank, revenue District Office through Revenue Collection Officer, or authorized tax software provider.
SEC. 23. Section 115 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 115. Power of the Commissioner to Suspend the Business Operations of a Taxpayer. – The Commissioner or his authorized representative is hereby empowered to suspend the business operations and temporarily close the business establishment of any person for any of the following violations:
(a) In the case of a VAT-registered Person. –
(1) Failure to issue invoices;
(2) Failure to file a value-added tax return as required under Section 114; or
(3) Understatement of taxable sales by thirty percent (30%) or more of is correct taxable sales for the taxable quarter.
SEC. 24. Section 116 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT). – Any person whose sales are exempt under Section 109(CC) of this Code from the payment of value-added tax and who is not a VAT-registered person shall pay, either electronically or manually, a tax equivalent to three percent (3%) of his gross quarterly sales: Provided, That cooperatives shall be exempt from three percent (3%) tax herein imposed: Provided, further, That effective July 1, 2020 until June 30, 2023, the rates shall be one percent (1%).”
SEC. 25. Section 117 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages. – Cars for rent or hire driven by the lessee; transportation contractors, including persons who
transport passengers for hire, and other domestic carriers by land for the transport of passengers (except owners of bancas and owners of animal-drawn two-wheeled vehicle), and keepers of garages shall pay a tax equivalent to three percent (3%) of their quarterly gross sales.
The gross sales of common carriers derived from their incoming and outgoing freight shall not be subjected to the local taxes imposed under Republic Act No. 7160, otherwise known as the Local Government Code of 1991.”
SEC. 26. Section 118 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 118. Percentage Tax on International Carriers. –
(A) International air carriers doing business in the Philippines on their gross sales derived from transport of cargo from the Philippines to another country shall pay a tax of three percent (3%) of their quarterly gross sales.
(B) International shipping carriers doing business in the Philippines on their gross sales derived from transport of cargo from the Philippines to another country shall pay a tax equivalent to three percent (3%) of their quarterly gross sales.”
SEC. 27. Section 119 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 119. Tax on Franchises. – Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross sales of a preceding year do not exceed Ten million pesos (P10,000,000), subject to Section 236 of this Code, a tax of three percent (3%) and on gas and water utilities, a tax of two percent (2%) on the gross sales derived from the business covered by the law granting the franchise: Provided, however, That radio and television broadcasting companies referred to in this Section shall have an option to be registered as a value-added taxpayer and pay the tax due thereon: Provided, further, That once the option is exercised, said option shall be irrevocable.
SEC. 28. Section 120 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 120. Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines. –
(A) Persons Liable. – There shall be collected upon every overseas dispatch, message or conversation transmitted from the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication equipment service, a tax of ten percent (10%) on the amount billed for such services. The tax imposed in this Section shall be payable by the person paying for the services rendered and shall be paid to the person
rendering the services who is required to collect and pay the tax within twenty (20) days after the end of each quarter.
(B) Exemptions. – The tax imposed by this Section shall not apply to:
(1) Government. – Amounts billed for messages transmitted by the Government of the Republic of the Philippines or any of its political subdivisions or instrumentalities;
(2) Diplomatic Services. – Amounts billed for messages transmitted by any embassy and consular offices of a foreign government;
(3) International Organizations. – Amounts billed for messages transmitted by a public international organization or any of its agencies based in the Philippines enjoying privileges, exemptions and immunities which the Government of the Philippines is committed to recognize pursuant to an international agreement; and
(4) News Services. – Amounts billed for messages from any newspaper, press association, radio or television newspaper, broadcasting agency, or newstickers services, to any other newspaper, press association, radio or television newspaper broadcasting agency, or newsticker service or to a bona fide correspondent, which messages deal exclusively with the collection of news items for, or the dissemination of news item through, public press, radio or television broadcasting or a newsticker service furnishing a general news service similar to that of the public press.”
SEC. 29. Section 128 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 128. Returns and Payment of Percentage Taxes. –
(A) Returns of Gross Sales or Earnings and Payment of Tax. –
(1) Persons Liable to Pay Percentage taxes. – Every person subject to the percentage taxes imposed under this Title shall file, either electronically or manually, a quarterly return of the amount of the person’s gross sales, or earnings and pay, either electronically or manually, to any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider, the tax due thereon within twenty-five (25) days after the end of each taxable quarter: Provided, That in the case of a person whose VAT registration is cancelled and who becomes liable to the tax imposed in Section 116 of this Code, the tax shall accrue from the date of cancellation and shall be paid in accordance with the provisions of this Section.
(2) Person Retiring from Business. – Any person retiring from a business subject to percentage tax shall notify the nearest internal revenue officer, file, either electronically or manually, the person’s return and pay, either electronically or manually, the tax due thereon within twenty (20) days after closing the business.
(B) Where to File. – Except as the Commissioner otherwise permits, every person liable to the percentage tax under this Title shall file, either electronically or manually, a consolidated return for all branches or places of business with any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.
SEC. 30. Section 200 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 200. Payment of Documentary Stamp Tax. –
(A) In General. – The Provisions of Presidential Decree No. 1045 notwithstanding, any person liable to pay documentary stamp tax upon any document subject to tax under Title VII of this Code shall file a tax return, either electronically or manually, and pay, either electronically or manually, the tax in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner.
(B) Time for Filing and payment of the Tax. – Except as provided by rules and regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner, the tax return prescribed in this Section shall be filed, either electronically or manually, within ten (10) days after the close of the month when the taxable document was made, signed, issued, accepted, or transferred, and the tax thereon shall be paid, either electronically or manually, at the same time the aforesaid return is filed.
(C) Where to File. – Except in cases where the Commissioner otherwise permits, the aforesaid tax return shall be filed, either electronically or manually, with and the tax due shall be paid, either electronically or manually, trough any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.
SEC. 31. Section 204 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. –
The Commissioner may –
(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty as provided under Section 229 of this Code: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund: Provided, further, That the Commissioner shall process and decide the refund under this provision within one hundred eighty (180) days from date of submission of complete documents in support of the application filed: Provided, furthermore, That should the Commissioner deny, in full or in part, the claim for refund, the Commissioner shall state the legal and/or factual basis for the denial: Provided, finally, That failure on the part of any official, agent, or employee of the Bureau of Internal Revenue to process and decide on the application within the one hundred eighty (180)-day period shall be punishable under Section 269 of this Code.
A tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue tax, excluding withholding taxes, for which the taxpayer is directly liable. Any request for conversion into refund of unutilized tax credits may be allowed, subject to the provisions of Section 230 of this Code: Provided, That the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the appropriate revenue officer for verification and cancellation: Provided, further, That in no case shall a tax refund be given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made.
SEC. 32. Section 229 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 229. Recovery of Tax Erroneously or Illegally Collected. – No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until claim for refund or credit has been duly files with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed unless there is a full or partial denial of the claim for refund or credit by the Commissioner or there is a failure on the part of the Commissioner to act on the claim within the one hundred eighty (180)-day period under Section 294 of this Code: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return
upon which payment was made, such payment appears clearly to have been erroneously paid.
In case of full or partial denial of the claim for tax refund, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred eighty (180)-day period, appeal the decision with the Court of Tax Appeals.”
SEC. 33. Section 235 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 235. Preservation of Books of Accounts and Other Accounting Records. -All the books of accounts, including the subsidiary books and other accounting records of corporations, partnerships, or persons, shall be preserved by them for a period of five (5) years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entry was made in the books of accounts. The said books and records shall be subject to examination and inspection by internal revenue officer: Provided, That for income tax purposes, such examination and inspection shall be made only once in a taxable year, except in the following cases:
SEC. 34. Section 236 of the National Internal Revenue Code of 1992, as amended, is hereby further amended to read as follows:
“SEC. 236. Registration Requirements. –
(A) Requirements. – Every person subject to any internal revenue tax shall register once, either electronically or manually, with the appropriate Revenue District Office:
(1) Within ten (10) days from the date of employment, or
(2) On or before the commencement of business, or
(3) Before payment of any tax due, or
(4) Upon filing of a return, statement or declaration as required in this Code.
The registration shall contain the taxpayer’s name, place of residence, business, and such other information as may be required by the Commissioner in the for prescribed therefor: Provided, That the Commissioner shall ensure the availability of registration facilities to all taxpayers including those who are not residing in the country: Provided, further, That the Commissioner shall simplify the business registration and tax compliance requirements of self-employed individuals and/or professionals.
(B) Registration of Each Type of Internal Revenue Tax. – Every person who is required to register with the Bureau of Internal Revenue under Subsection (A) hereof shall register each type of internal revenue tax for which he is obligated, shall file a return, either electronically or manually, and shall pay, either electronically or manually, such taxes, and shall update such registration of any changes in accordance with Subsection (D) hereof.
(C) Transfer of Registration. – In case a registered person decides to transfer the place of business or head office or branches, it shall be the person’s duty to update the registration status by merely filing, either electronically or manually, an application for registration information update in the form prescribed therefor: Provided, however, That if the transfering registered person is subject of an audit investigation, the Revenue District Office which initiated the audit investigation shall continue the same.
(D) Other Updates. – xxx
(E) Cancellation of Registration. –
(1) General Rule. – The registration of any person shall be cancelled upon mere filing, either electronically or manually, with the Revenue District Office where he is registered, an application for registration information update in a form prescribed therefor. However, this shall not preclude the Commissioner of the Internal Revenue or his authorized representative from conducting an audit in order to determine any tax liability;
(2) Cancellation of Value-Added Tax Registration. – A VAT-registered person may cancel the registration for VAT if:
(a) The person makes a written or an electronic application and can demonstrate to the Commissioner’s satisfaction that the gross sales for the following twelve (12) months, other than those that are exempt under Section 109(A) to (CC), will not exceed the threshold as provided in Section 109(CC); or
(b) The person has ceased to carry on the trade or business, and does not expect to recommence any trade or business within the next twelve (12) months.
The cancellation of registration will be effective from the first day of the following month.
(F) Persons Required to Register for Value-Added Tax. –
(1) Any person who, in the course of trade or business, sells, barters or exchanges goods or properties, or engages in the sale or exchange of services, shall be liable to register, either electronically or manually, for value-added tax if:
(a) The person’s gross sales for the past twelve (12) months, other than those that are exempt under Section 109(A) to (CC), have exceeded the threshold as provided in Section 109(CC); or
(b) There are reasonable grounds to believe that the gross sales for the next twelve (12) months, other than those that are exempt under Section 109(A) to (CC), will exceed the threshold as provided in Section 109(CC).
(2) Every person who becomes liable to be registered under paragraph (1) of this Subsection shall register, either electronically or manually, with the appropriate Revenue District Office, as determined by the Commissioner. If he fails to register, he shall be liable to pay the tax under Title IV as if he were a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered.
(G) Optional Registration for Value-Added Tax of Exempt Person. –
(1) Any person who is not required to register for value-added tax under Subsection (F) hereof may elect to register, either electronically or manually, for value-added tax with the Revenue District Office that has jurisdiction over the head office of that person.
(2) Any person who elects to register under this Subsection shall not be entitled to cancel his registration under Subsection (E)(2) for the next three (3) years.
For purposes of Title IV of this Code, any person who has registered value-added tax as a tax type in accordance with the provisions of Subsection (B) hereof shall be referred to as a “VAT-registered person” who shall be assigned only one taxpayer Identification Number.
(H) Supplying of Taxpayer Identification Number. –
Any person required under the authority of this Code to make, render or file a return, statement or other document shall be supplied with or assigned a Taxpayer Identification Number which the person shall indicate in such return, statement or document filed, either electronically or manually, with the Bureau of Internal Revenue for proper identification for tax purposes, and which the person shall indicate in certain documents, such as, but not limited to, the following:
In cases where a registered taxpayer dies, the administrator or executor shall register, either electronically or manually, the estate of the decedent in accordance with Subsection (A) hereof and a new Taxpayer Identification Number shall be supplied in accordance with the provisions of this Section.
In the case of a nonresident decedent, the executor or administrator of the estate shall register, either electronically or manually, the estate with the Revenue District Office where the executor or administrator is registered: Provided, however, That in case such executor or administrator is not registered, registration off the estate shall be made with the Taxpayer Identification Number supplied by the Revenue District Office having jurisdiction over the executor or administrator’s legal residence.
xxx.’
SEC. 35. Section 237 of the National Internal Revenue Code of 1992, as amended, is hereby further amended to read as follows:
“SEC. 237. Issuance of Sales or Commercial Invoices. –
(A) Issuance. – All persons subject to an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services rendered valued at Five Hundred pesos (P500) or more, issue duly registered sale or commercial invoices showing the name, Taxpayer Identification Number, date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, That the amount herein stated shall be adjusted to its present values every three (3) years using the consumer price index, as published by the Philippines Statistics Authority: Provided, further, That the seller shall issue sale or commercial invoices when the buyer so requires regardless of the amount of transaction: Provided, however, That if the sales amount per transaction is below the threshold, the seller will issue one (1) invoice for the aggregate sales amount for such sales at the end of the day: Provided, further, That the aggregate sales amount at the end of the day is at least Five hundred pesos (P500): Provided, finally, That VAT0registered persons shall issue duly registered sale or commercial invoices regardless of the amount of the sale and transfer of merchandise or of services rendered.
SEC. 36. Section 238 of the National Internal Revenue Code of 1992, as amended, is hereby further amended to read as follows:
“SEC. 238. Printing of Sales or Commercial Invoices. – All persons who are engaged in business shall secure free of charge from the Bureau of Internal Revenue an authority to print sales or commercial invoices before a printer can print the same.
No authority to print sales or commercial invoices shall be granted unless the invoices to be printed are serially numbered and shall show, among other things, the same, Taxpayer Identification Number and business address of the person or entity to use the same, and such other information that may be required by the rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
All persons who print sales or commercial invoices shall maintain a logbook/register of taxpayers who availed of their printing services. The logbook/register shall contain the following information:
(1) Names, Taxpayer Identification Numbers of the persons or entities for whom the sales or commercial invoices were printed; and
(2) Number of booklets, number of sets per booklet, number of copies per set and the serial numbers of the invoices in each booklet.”
SEC. 37. Section 241 of the National Internal Revenue Code of 1992, as amended, is hereby further amended to read as follows:
“SEC. 241. Exhibition of Certificate of Payment at Place of Business. – The certificate or receipts showing payment of taxes issued to a person engaged in business shall be kept continuously exhibited in plain view in or at the place where the business is conducted; and in case of a peddles or other persons not having a fixed place of business, shall be kept in the possession of the holder thereof, subject to production upon demand of any internal revenue officer.”
SEC. 38. Section 242 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 242. Continuation of Business of Deceased Person. – When any individual who has registered a business dies, and the same business is continued by the person or persons interests in his estate, no additional payment shall be required for the residue of the term which the tax was paid: Provided, however, That the person or persons interested in the estate should, within thirty (30) days from the death of the decedent, submit to the Bureaus of Internal Revenue of the regional or Revenue District Office inventories of goods or stocks had at the of such death.
The requirement under this Section shall also be applicable in the case of transfer of ownership or change of name of the business establishment.”
SEC. 39. Section 243 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“Section 243. Removal of Business to Other Location. – Any registered business may, subject to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be removed and continued in any other place without the payment of additional tax during the term for which the payment was made.”
SEC. 40. Section 245 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 245. Specific Provisions to be Contained in Rules and Regulations. – The rules and regulations of the Bureau of Internal Revenue shall, among other things, contain provisions specifying, prescribing or defining:
(i) The manner in which tax returns, information and reports shall be prepared and reported and the tax collected and paid, as well as the conditions under which evidence of payment shall be furnished the taxpayer, and the preparation and publication of tax statistics, and publication of information required to be published pursuant to any laws, rules, and regulations, For purposes of publication, the Bureau of Internal Revenue may make use of any electronic means of publication in the Official Gazette, or its official website;
(j) The manner in which internal revenue taxes, such as income tax, including withholding tax, estate and donor’s taxes, value-added tax, other percentage taxes, excise taxes and documentary stamp taxes shall be paid, either electronically or manually, through the collection officers of the Bureau of Internal Revenue or through duly authorized agent banks which are hereby deputized to receive payments of such taxes and the returns, papers and statements that may be filled by the taxpayers in connection with the payment of the tax: Provided, further, That notwithstanding the other provisions of this Code prescribing the place of filing of returns and payment of taxes, the Commissioner may, by rules and regulations, require that the tax returns, and papers and statements and taxes of large taxpayers be filed and paid, respectively, through any authorized agent banks, or with any Revenue District Office through Revenue Collection Officer or authorized tax software provider: Provided, further, That the Commissioner can exercise this power within six (6) years from the approval of Republic Act No. 7646 or the completion of its comprehensive computerization programs, whichever comes earlier: Provided, finally, That separate venues for the Luzon, Visayas and Mindanao areas may be designated for the filing of tax returns and payment of taxes by said large taxpayers.”
SEC. 41. Section 248 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 248. Civil Penalties. –
(A) There shall be imposed, in addition to the tax required to be paid, a penalty equivalent to twenty-five percent (25%) of the amount due, in the following cases:
(1) Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on the date prescribed; or
(2) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment; or
(3) Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code or rules and regulations, or the full amount of tax due for which no return is required to be filed, on or before the date prescribed for its payment.
xxx”
SEC. 42. Section 269(j) of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
“SEC. 269. Violations Committed by Government Enforcement Officers. -Every official agent, or employee of the Bureau of Internal Revenue or any other agency of the Government charged with the enforcement of the provisions of this Code, who is guilty of any of the offenses herein below specified shall, upon conviction for each act or omission, be punishable by a fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment of not less than ten (10) years but not more than fifteen (15) years and shall be likewise suffer an additional penalty of perpetual disqualification to hold public office, to vote, and to participate in any public election:
(j) Deliberate failure to act on the application for refunds within the prescribed period provided under Section 112 and Section 204 of this Act.
SEC. 43. Digitalization of Bureau of Internal Revenue Services. – In order to improve the performance and efficiency in the delivery of its services, the BIR shall adopt an integrated digitalization strategy by providing automated end-to-end solutions for the benefit of taxpayers. For this purpose, the BIR shall:
(a) Adopt an integrated and automated system for accepting and facilitating basic tax services such as registration, Taxpayers Identification Number issuance and validation, filing of returns, submission of supporting documents as attachments, and payment of taxes as well as fines, surcharges, or penalties;
(b) Immediately take measures to set up electronic and online systems that will make the means of exchanging data and information between offices, departments, authorized agent banks and other pertinent units secure, efficient, and seamless;
(c) Streamline procedures by adopting automation and digitalization of BIR services to minimize face to face transactions, and to facilitate efficient delivery of services to taxpayers; and
(d) Build up its technology capabilities, including the creation of data centers, data repositories, basic messaging and electronic mail facilities, encryption systems and cyber-security systems.
SEC. 44. Ease of Paying Taxes and Digitalization Roadmap. – The BIR shall develop an Ease of Paying Taxes (EOPT) and digitalization roadmap that will provide for the programs and projects to be implemented to ensure ease of compliance of tax laws, rules and regulations, including but not limited to the adoption of simplified tax returns, streamlining of tax processes, reduction of tax or documentary requirements, and digitalization of BIR services as provided under Section 40 of this Act: Provided, That in developing this roadmap, the BIR shall prioritize taxpayers who are considered as micro and small taxpayers for purposes of this Act, in terms of streamlining tax procedures and documentary requirements according to taxpayers size and capacity to comply: Provided, further, That the BIR shall ensure the accessibility of its various services to different
taxpayers particularly micro and small taxpayers so as to improve tax compliance, and enhance taxpayers convenience.
The BIR shall submit an annual report on the EOPT and the digitalization roadmap to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) as provided under Section 290 of the NIRC, as amended.
Sec. 45. Special Concessions for Certain Taxpayers. – The following concessions shall be made available to micro and small taxpayers for purposes of this Act:
(a) The Income Tax Return (ITR) required under Section 51 of the NIRC shall consist of a maximum of two (2) pages in paper form or electronic form;
(b) A reduced rate of ten percent (10%) for civil penalties as provided under Section 248 of the NIRC, as amended;
(c) A fifty percent (50%) reduction on the interest rate imposed under Section 249 of the NIRC, as amended.
(d) A reduced fine a Five hundred pesos (P500) as penalty for failure to file certain information returns as provided under Section 250 of the NIRC, as amended; and
(e) A reduced compromise penalty rate of at least fifty percent (50%) for violations of Sections 113, 237, and 238 of the NIRC, as amended.
SEC. 46. Applicability of Data Privacy Principles. – The processing, recording, transmission and storage of all personal data under this Act shall be in accordance with Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012”, and other laws on disclosure of information to the public in adherence to the principles of transparency, legitimate purpose and proportionality.
SEC. 47. Implementing Rules and Regulations. – Within ninety (90) calendar days from the effectivity of this Act, the Secretary of Finance, after due consultation with the Bureau of Internal Revenue, and the private sector, shall promulgate the necessary rules and regulations for its effective implementation.
SEC. 48. Transitory Clause. – Taxpayers are hereby given six (6) months from the effectivity of the implementing revenue regulations to comply with the amendments to Title IV on the Value-Added Tax and Title V on the Other Percentage Taxes of the NIRC, as amended.
SEC. 49. Separability Clause. – If any provision of this Act is declared unconstitutional, the remaining parts or provisions not affected thereby shall remain in full force and effect.
SEC. 50. Repealing Clause. – All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended or modified accordingly.
SEC. 51. Effectivity. – This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.
Approved,
(Sgd.)
JUAN MIGUEL F. ZUBIRI
President of the Senate
FERDINAND MARTIN G. ROMUALDEZ
Speaker of the House of Representatives
This Act is consolidation of House Bill No. 4125 and Senate Bill No. 2224, was passed by the House of Representatives and the Senate of the Philippines on September 27, 2023.
RENATO N. BANTUG JR.
Secretary of the Senate
REGINALD S. VELASCO
Secretary General of the House of Representatives
Approved: January 5, 2024
FERDINAND ROMUALDEZ MARCOS JR.
President of the Philippines
1. Santos Hauling Incorporated (SHI) dismissed its drivers and helpers after discovering that they were committing anomalous transactions involving the sale of excess broilers and crates, without the knowledge and consent of SHI. The drivers and helpers filed a complaint for illegal dismissal against SHI. In its defense, SHI presented as evidence the affidavits of co-employees narrating the alleged anomalous transactions in detail. May the drivers and helpers be dismissed on the bases of these affidavits? Explain your answer.
2. Mara met Ange, Louise, and Sam at a coffee shop one afternoon. Maria promised she could send the three of them to work as bartenders in Scotland in exchange for P100,000 each. Ange, Louise, and Sam immediately agreed and gave the money to Maria. Upon receipt of the placement fees, Maria used the money to buy a luxury bag and posted it on her Instagram page. Ange, Louise, and Sam followed up on their employment in Scotland, but Maria stopped replying to them. After six months of waiting, Ange, Louise, and Sam filed a complaint for Illegal Recruitment in Large Scale against Maria. During Trial, Ange, Louise, and Sam testified and presented a certification from the Department of Migrant Workers stating that Maria was neither licensed nor authorized to recruit people for employment. On the other hand, Maria claimed that she was not the one who recruited them but a certain Rashid, the president of the placement agency where Maria supposedly worked. Is Maria guilty of Illegal Recruitment in Large Scale? Explain.
3. Lipad Pinoy (LP), a licensed local recruitment agency, deployed Mutya for its principal, Alab Construction (AC), for a two-year project in Dubai. Mutya had been on the job for one year when, for unknown reasons, AC and LP terminated their agency agreement. Thereafter, AC failed to pay the salary of Mutya. Upon her return to the Philippines, Mutya sued both LP and AC for unpaid salaries and damages. May LP be held liable together with AC? Explain.
4. Bangko Norte (BN) implemented an “Exogamy Policy”, which prohibits employees from marrying their co-employees. Specifically, the policy states that when two of its employees marry each other, one of them must sever his or her employment immediately. Clara, who was fired as an account specialist, married her co-worker Ibarra, a loan specialist. Subsequently, BN terminated the employment of Clara but retained Ibarra. Clara argued that the policy should not apply to her since she was employed prior to its effectivity, and that said policy violates the Labor Code. She also pointed out that BN did not explain why it was her, and not Ibarra, whose employment was terminated. Since BN refused to reinstate her, Clara filed a complaint for illegal dismissal. Will the complaint of Clara prosper? Discuss
5. In computing the 13th month pay of its employees, Liwayway Company (LC) includes as basis not only the regular base pay but also the cash value of unused vacation and sick leaves. LC had been implementing this method for two years when it suddenly announced that the method was erroneous and would therefore be discontinued. May LC lawfully discontinue using this method? Explain.
6. Roman, an employee of Baltazar Company (BC), was reported to have fallen asleep during work hours and that he smelled of marijuana. BC coordinated with Bibo Health Clinic, a facility accredited by the Department of Health, to conduct random drug testing on its employees. Roman tested positive during both the screening and confirmatory tests. BC asked Roman to explain why he should not be sanctioned and dismissed. Roman denied that he used drugs and claimed that a colleague who bore a grudge merely framed him. Unsatisfied with his explanation, BC sent Roman a notice of termination. Was the dismissal of Roman valid? Explain briefly.
7. Arnel, a 55-year-old seafarer who worked on board different foreign vessels, went to the office of the Social Security System (SSS) to avail of his retirement benefits. However, he found out that his contribution had not been paid by his principal employer, Pancho Lines (PL). When Arnel demanded an explanation from PL, the latter replied that it was not obligated to cover his SSS membership since he was hired abroad and covered by another insurance provider. Is PL correct? Discuss your answer.
8. Araro Federation applied for registration as a federation in the agricultural sector. It has under its membership a mix of five rank-and-file unions and five supervisory unions. One of the rank-and-file unions and one of the supervisory unions both belong to the same establishment, Ani Corporation (AC). AC opposed the application for registration citing the legal prohibition against the commingling of rank-and-file and supervisory employees. Is the opposition of AC meritorious? Explain briefly.
9. Lazara Corporation (LC) and Lazara Employees Union (LEU) forged a collective bargaining agreement (CBA). During the freedom period, a certification election was conducted where LEU lost to Samahan ng Manggagawa sa Lazara (SML), a rival union in the same establishment. SML then sent a letter to LC demanding for renegotiation of the existing CBA. LC refused to renegotiate the CBA claiming its validity for two more years. SML filed a notice of strike against LC on the ground of Unfair Labor Practice for the alleged refusal of the latter to comply with its duty to bargain collectively. Is the notice to strike meritorious? Explain briefly.
10. Adarna Manufacturing Company (AMC) and Adarna Employees Union (AEU) entered into collective bargaining negotiations but reached an impasse. AEU then filed a notice of strike before the National Conciliation and Mediation Board, which immediately conducted conciliation meetings to avert the strike. Fifteen days after the filing of the notice, and despite the conciliation proceedings. AEU staged a strike with the participation of 50% of its members. Is the strike legal? Briefly explain.
11. In 2011, Amer and Raj worked as welders on board the barges of Magiting Shipping Company (MSC), which later changed its corporate name to Perlas Corporation (PC). In 2018, PC verbally dismissed Amer and Raj from employment. Thus, they jointly filed a complaint for illegal dismissal against PC, which countered that it already had a separate and distinct personality from MSC. It also alleged that both complainants were not its regular employees as they were merely helpers brought in by its own regular employees on certain occasions when urgent repairs were required for its barges. The Labor Arbiter (LA) held that there was an employer-employee relationship between the parties based on on Article 295 [280] of the Labor Code since Amer and Raj: 1) were engaged to perform activities which are usually necessary or desirable in the usual business or trade of PC; and 2) have rendered at least one year of service. Was the LA correct in using Article 295 [280] as the basis? Explain briefly.
12. On May 15, 2022, Marina International Shipping (MIS) hired Felipe as a bosun on board its vessel for a period of nine months. On July 30, 2022, Felipe joined his vessel of assignment. On October 31, 2022, he was repatriated due to medical reasons and was immediately referred by MIS to its company-designated physician for treatment and monitoring. On May 31, 2023, the company-designated physician pronounced Felipe fit to resume sea duties. Is MIS obligated to rehire Felipe? Explain briefly.
13. Sampaguita University (SU) hired Farah as Instructor I in the College of Education on a contractual or part-time basis beginning the first semester of school year 2015-2016. In 2018, SU appointed Farah as Instructor II. SU informed her that she will attain regular status on the condition that she obtain a master’s degree by May 31, 2022, otherwise, her employment will either be terminated or considered as contractual or part-time. When Farah failed to secure the required educational qualification within the allotted time, SU classified her as a part time-time faculty effective June 1, 2022. On April 30, 2023, SU notified Farah that they will no longer be renewing or extending her contract as part-time faculty upon its expiration. Farah thus filed a complaint for illegal dismissal. Will her complaint prosper? Discuss your answer.
14. Eduardo owns a licensed company that supplies janitorial and messengerial aides to various businesses, including Gloria Restaurant (GR). The tools and supplies used by the janitors and messengers are supplied by the clients who also train the workers and monitor their performance. Their minimum wages are paid by the clients through Eduardo. After two years of working in GR, the janitors and messengers joined the union there to receive the same benefits as the directly hired employees of GR. Can the janitors and messengers legally join the union? Discuss.
15. Ulan Airlines (UA) hired Salve as a cabin crew in 2010. Due to her hard work and spotless service record, she was eventually promoted to senior purser, a position imbued with trust and confidence. In 2023, after a flight from Sydney to Manila, management received a report that Salve and other cabin crew alighted from the aircraft with two cups of instant noodles and a can of soda, which were part of the in-flight provisions for passengers. The items were confiscated and the cabin crew were required to explain why those items were in their possession. In her written explanation, Salve claimed that the cups of instant noodles were purchased with her own money and that it was another flight attendant who admitted to taking the can of soda. After investigation, UA still terminated her employment on the grounds of serious misconduct and loss of trust and confidence. Was Salve validly dismissed? Discuss briefly.
16. Rajah Management (RM), the authorized local placement agency of Sultan Group (SG), posted a job listing for project manager based in Qatar. Silang applied for the position. After RM forwarded the documents of Silang to SG for the processing of her work visa, SG sent a tourist visa notice instead of a work visa. Six months into her two-year contract, Silang was repatriated by SG with instructions to apply anew for deployment under a work visa. RM directed Silang to undergo a pre-employment medical examination. When it was discovered that she has uncontrolled diabetes, SG terminated her employment. Thus, Silang filed a complaint for illegal dismissal against SG and RM. SG argued that the disease of Silang was a valid cause for dismissal. Is the contention of SG correct? Discuss.
17. University of San Lazaro (USL) hired Dolores to work as a credit and collection officer in its accounting department. Based on its audit reports, USL found several anomalous transactions within the accounting department, resulting in a shortage of P2 million. Dolores went on leave during the audit, but later tendered her resignation. After its investigation USL terminated the employment of Dolores and filed a criminal case against her. Dolores subsequently filed a complaint for illegal dismissal against USL, which claimed that Dolores had voluntarily resigned. Will the complaint of Dolores prosper? Explain.
18. In 2012, Magbanua Hotel (MH) hired Josefa and assigned her to the food and beverage department. For six consecutive years, Josefa worked five days a week. However, in 2018, MH, suddenly and without explanation, reduced the regular workdays of Josefa to two days per week, resulting in the reduction of her take-home pay. Josefa this filed a complaint for constructive dismissal. In belying her claim, MH insisted that there could be no constructive dismissal because Josefa still continued reporting for work even during the pendency of the case. Was Josefa constructively dismissed? Decide with reasons.
19. Consolacion in a Hong Kong-based, Filipino flight attendant of Hiroshi Airlines (HA), a Japanese airline licensed to do business in the Philippines. She was dismissed from employment as she was accused of stealing wine bottles and cheese from the Melbourne-bound aircraft of HA. Consolacion then instituted a complaint for illegal dismissal and money claims against HA with the Labor Arbiter (LA). In its defense, HA asserted that the LA had no jurisdiction to hear the dispute as the incident occurred in a foreign jurisdiction and involved a foreign entity. Does the LA have jurisdiction over the case? Explain.
20. The employees of Bonifacio Memorial Hospital (BMH), who are union officers and members of BMH Nurses Association, stated a strike to protest the failure of BMH to provide them with adequate personal protective equipment and sufficient hazard pay. What legal remedy can BMH avail of to immediately enjoin the strike as well as ensure the proper protection of the life and health of its patients? Explain your answer.
September 17, 2023 (8:00 P.M. – 12:00 P.M.)
1. As an incentive for Filipino nurses to remain or be employed in the Philippines, the “Ang Nars Incentives Act of 2023” was approved by the President. The law allows children of any nurse to be enrolled in any private tertiary institution without need of taking any entrance examination provided the child maintains the required passing average grade each year. A 70% tuition waiver for each child shall be extended by the institution and 50% of the tuition waiver may be creditable to any national taxes owed by the institution to the government. Is the law constitutional? Explain briefly.
2. Sulu Second District Representative Alfonso died during the second year of his term. House Speaker Rodil then designated Sulu First District Representative Midas as the legislative caretaker for the remaining period of the term of Alfonso. Upon the prodding of majority of the constituents of the Sulu Second District who are invoking their right to representation, the members of the party of Alfonso filed a petition before the Supreme Court for the issuance of a writ of mandamus to compel Rodil to call for a special election in their district. Will the petition prosper? Explain.
3. In the 2022 elections, the formidable tandem of Priscilla and Teodoro ran for and won as President and Vice-President, respectively, of the Republic of the Philippines. On her 15th month in office, President Prescilla suddenly resigned due to health reasons, paving the way for Vice-President Teodoro to assume office as President. President Teodoro then nominated incumbent Senator Angel, who was President of the Philippines from 2010 to 2016, to take his place as Vice-President. Voting separately and by the vote of a majority of all the members of both Houses of the Congress, Senator Angel was confirmed, and henceforth assumed office as the Vice-President. In the coming 2028 elections, may both President Teodoro and Vice-President Angel legally run for President of the Philippines? Explain your answer briefly.
4. In a fresh attempt by the President to seek a just and lasting peace with the Kapisanan ng Malayang Pilipinas (KMP), a Government Negotiating Paner (GNP) was constituted to explore options to end the internal armed conflict in the country. After months of negotiations, the GNP and KMP leadership agreed on the crucial provision in the chapter on Transitional Justice of the Agreed Framework, which states: ”The Parties hereby recognize the need to arrive at genuine criminal justice. Towards this end, the GNP shall make the appropriate representation with the Senate and House of Representatives aimed at the passage of an amnesty law”. The Philippine Constitution Association questioned the provision as unconstitutional for encroaching on the clemency power of the President. On the other hand, the Office of the Solicitor General argued that the present case does not present a justiciable controversy. Who is correct? Explain your answer.
5. Section 1, Article IV on Bangsamoro Parliament Electoral Tribunal of the Proposed Electoral Code of the Bangsamoro Autonomous Region for Muslim Mindanao states: “Section 1. Creation and Jurisdiction. – The Bangsamoro Parliament shall have an Electoral Tribunal which shall be the sole judge of all contests relating to the election, returns, and qualifications of the members of the Parliament.” Is the proposed provision constitutional? Explain.
6. Hector, a government employee, asked Ignacio to take the Police Officer I Examination in his behalf. Upon investigation, the Civil Service Commission (CSC) observed that the picture of Hector and signature in the application form and seat plan were not identical wit those found in this Personal Data Sheet. Thus, the CSC concluded that Hector conspired with Ignacio by allowing the latter to impersonate him and found him guilty of dishonesty, meting out the penalty of dismissal. Hector appealed his dismissal to the Court of Appeals. He argued that the CSC has been divested of its authority and jurisdiction to conduct investigations and render administrative decisions based on alleged anomalies in police entrance and promotional examinations after the effectivity of Republic Act No. 8551 or the Philippine National Police Reform and Reorganization Act. The law transferred the power to administer and conduct entrance and promotional examinations to police officers from the CSC to the National Police Commission based on the standards set by the latter. Is Hector correct? Explain.
7. Professor Chiara, a natural-born Filipino citizen, is a resident expert on global military affairs at the National Defense College where she taught for 12 years. In 2017, she was tenured as a faculty member at the leading miliary academy in the United Kingdom (UK). In April 2022, she was granted British citizenship. Having learned of the renowned expertise of Professor Chiara, the President invited her to return to the Philippines to be appointed as National Security Adviser. Upon her appointment, Professor Chiara took her oath of allegiance to the Philippines and renounced her allegiance to the UK. Not satisfied with these actions, Ramon, the spokesperson of a non-governmental organization monitoring national security affairs, demanded that Professor Chiara renounce her British citizenship. Is Ramon correct? Explain.
8. A public transport bus was stopped by the police at a checkpoint. All make passengers were asked to disembark while all female passengers were requested to remain seated. Paul, a police officer, then boarded the bus and upon cursory inspection, noticed a suspicious bulging black bag at the rear of the bus. Paul lifted the back and found it to be heavy for its size. Severino, the owner of the bag and a non-paying passenger, consented to have it opened and it was revealed that the bag contained a firearm and a live grenade. When Severino failed to produce proof of his authority to carry firearms and explosives, he was arrested and eventually charged with Illegal Possession of Firearms and Explosives. Severino now contends that the search was unreasonable and unconstitutional as it was done without a search warrant. Is Severino correct? Explain.
9. For purposes of the investigation of work-related misconduct, the Presidential Management Staff (PMS), searched the office computer of its employee, Zenaida, without the consent of the latter and without a search warrant. The personal files of Zenaida stored in the computer, which were seized during the search, were eventually used by the PMS as evidence of misconduct. Zenaida was accordingly dismissed from service. Zenaida now comes to you for advice claiming that the search was unconstitutional for being violative of her right to privacy and right against unreasonable searches and seizures. Provide your legal advice with reasons.
10. The Secretary of the Department of Education (DepEd) issued Department Order (DO) No. 35 providing guidelines for teaching good manners and right conduct in all primary educational institutions. As part of the materials to be used during the sessions, the handbook for instructors contains a chapter on “Values from Religious Traditions and Indigenous Cultures”. The DepEd will provide the handbooks, but educational institutions shall be free to adopt the contents of the handbook in accordance with their respective mission and vision. Attendance at the sessions shall be compulsory for all students. Concerned parents and teachers questioned DO No. 35 before the Supreme Court as being violative of the establishment clause and their primary right and duty to rear their children. Are the parents and teachers correct? Explain briefly.
11. The property of Anne was expropriated by the government for public use more than ten years ago without proper expropriation proceedings and without payment of just compensation. Since then, the value of the Philippine peso has greatly depreciated, while the inflation rate has substantially increased. Anne now contends that in the interest of justice and fair play, the inflation rate and the depreciated value of the peso should be taken into consideration in the computation and payment of her long-delayed just compensation. Is Anne correct? Explain briefly.
12. Ricardo, a third-year law student, was subjected to custodial investigation for the crime of Rape. He was duly informed by the police of his right to remain silent and his right to have counsel of his choice if he could afford one, and if not, he could be provided with one. Ricardo proudly informed the arresting officer that he is perfectly aware of his right, being a law student, and that he is voluntarily waiving them. He then proceeded to issue a written statement truthfully detailing his participation in the crime of Rape. During trial, his written statement was presented as the primary evidence of his guild. Atty. Alexander, counsel for Ricardo, promptly and vociferously objected to the presentation and admissibility of his written statement on the ground that Ricardo executed it without assistance of counsel. Is the objection justified and tenable? Explain briefly.
13. Maasikaso Water Company (MWC), a private concessionaire, entered into a 25-year concession agreement in 2009 with the Metropolitan Waterworks and Sewerage System (MWSS) for the delivery of water supply, wastewater, and sanitation services in the City of Manila. In 2019, residents of Manila filed a complaint against MWC with the Department of Environment and Natural Resources Pollution Adjudication Board for violation of the Clean Water Act (CWA). The residents alleged that the severe flooding in Manila and worsening pollution in Manila Bay had been due to the failure of MWC to provide for adequate sewage and/or septage treatment facilities, as mandated under the concession agreement. MWC countered that the primary duty to construct sewage and/or septage treatment facilities rests upon the local government unit (LGU) under Section 7 of the CWA, which states: “Each LGU shall appropriate the necessary land, including rights-of-way/road access to the land for construction of the sewage and/or septage treatment facilities”. MWC thus maintained that it must be absolved from any form of liability considering that the City of Manila clearly failed to comply with Section 7 of the CWA. Is MWC correct? Explain.
14. Lorenzo was re-elected as Mayor of Roxas City for his third consecutive term in the 2022 local elections. In 2023, Lorenzo was administratively charged before the Office of the Ombudsman (OMB) for acts committed during his second term. Lorenzo moved to dismiss the complaint before the OMB on the ground that his re-election to a third term effectively exonerated him from the administrative charge pursuant to the condonation doctrine. Is Lorenzo correct? Explain briefly.
15. Filed before the House of Representatives were Articles of Impeachment against the Chief Justice Urduja for corruption, betrayal of public trust, and culpable violation of the Constitution. After a heavy publicized trial, the Senate, sitting as Impeachment Court, rendered a judgment removing Urduja from her position, with the additional penalty of disqualification to hold any other public office. However, during the pendency of the criminal, administrative, and civil cases subsequently filed against her, Urduja died due to health complications. The heirs of Urduja filed a petition before the Supreme Court for the release of her accrued retirement benefits and other gratuities as a member of the Judiciary. Senate President Francisco opined that the petition of the heirs of Urduja should be denied in view of her removal by impeachment. Is Francisco correct? Decide with reasons.
16. Bea filed a civil case for collection of a sum of money for non-payment by the province of Cagayan of various hospital supplies it purchased from her, as evidenced by invoices duly received and signed by its authorized representatives. After Bea completed the presentation of her evidence, the province moved to dismiss the case on the ground that the primary jurisdiction over her month claim belongs to the Commission on Audit (COA), as it arose from a series of procurement transactions with the province. The trial court dismissed the case on the ground that jurisdiction over the case lies with the COA. Bea argued that the trial court erred since a collection suit is within the jurisdiction of the courts and the province belatedly invoked the doctrine. Is Bea correct? Explain.
17. Congress enacted a law providing for mandatory biometrics voter registration. The Commission on Elections (COMELEC) then issued resolutions implementing said law and further providing that registered voters who fail to submit their biometrics for validation by the last day of filing of application for registration for the May 2025 elections shall be deactivated. Consequently, those who fail to be validated, those without biometrics data, or those who have incomplete biometrics data will be deactivated and shall not be allowed to vote. A petition for certiorari and prohibition was filed before the Supreme Court assailing the constitutionality of the law and the COMELEC resolutions, on the ground that biometrics validation constitutes an additional and substantial qualification not contemplated by the 1987 Constitution, because noncompliance therewith results in voter deactivation. Will the petition prosper? Explain briefly.
18. Gerardo, a public official, filed a certificate of candidacy for the position of Representative of the lone legislative district of this province. Despite such filing, Gerardo continued to occupy his public office since, according to his lawyer, he can only be considered resigned from public office upon the commencement of the campaign period for local officials. What is the effect of the filing of certificate of candidacy by Gerardo? Explain.
19. The island of Coron belongs to the province of Palawan. The Bureau of Local Government Finance certified that the average annual income of the island of Coron based on the 1991 constant prices was P82,696,433.23. Based on the latest Census of Population and Housing conducted by the Philippine Statistics Authority, the population of Coron is 371,576, while its land area is 802.12 square kilometers as certified by the Land Management Bureau. Republic Act No. 222 was enacted by Congress creating the province of Coron Island and was approved by the President. Thereafter, a plebiscite was held which yielded 69,943 affirmative votes and 63,502 negative votes. Is the creation of the province of Coron Island consistent with the requirements under Section 10, Article X of the 1987 Constitution and Section 461 of the Local Government Code? Explain briefly.
20. Bartolome is the Deputy Chief of Mission of the Embassy of Argentina. One week before the expiry date of the appointment of Bartolome in the Mission, he went on a three-day vacation in Brazil, a country known for its rich biodiversity and abundant natural resources. Determined to carry along a precious gift to his wife, Bartolome packed into his luggage a protected species of orchid found only in Brazil. Sniffing dogs at the Rio de Janeiro International Airport sensed something in this checked-in luggage, drawing the attention of airport officials. When asked to open the luggage, Bartolome presented his diplomatic identification and refused to submit to any inspection. Airport official informed him of the penal sanctions for transporting illegal items suspected in any luggage. May Bartolome validly invoke diplomatic immunity and inviolability of this personal luggage? Explain briefly.
I
Lebron, a Makati resident, obtained a Php 350,000.00 loan from a bank secured by a real estate mortgage (REM) over his lot located in Quezon City with an assessment value of Php 500,000.00. Lebron failed to pay despite written demands. The bank intends to file an action for judicial foreclosure of the REM,
Where should the action for judicial foreclosure of the REM be filed in which court? Explain briefly.
II
Asya, Inc. sued Kobe a resident of Bukidnon. To serve summons, the sheriff waited in the lobby of Makati Hotel (MH), where Kobe stays whenever he is in Manila. The sheriff failed to serve the summons Kobe left the hotel for an emergency. Hours later, the sheriff asked the front desk about Kobe’s whereabouts and his room number. The hotel refused to disclose on grounds of confidentiality. The sheriff tried again the next day, but Kobe was in a conference until midnight. So, the following, day the sheriff left the summons and a copy of the complaint with MH’s chief security officer (CSO), even as the CSO refused because Kobe had already checked you by then. The sheriff thereafter filed his return, stating the dates, times and places of his attempts, the name of the CSO, and the fact that the complaint was served with the summons. When Kobe did not file an Answer, Asya, Inc. moved to declare him in default.
Was there a valid substituted service of summons? Explain briefly.
III
Ten days after service if summons, defendant Kay filed a motion to dismiss the complaint for collection of sum of money against her on the ground of improper service of summons, on the basis of which the court did not acquire jurisdiction over her person.
If you were the judge, how would you rule? Explain briefly.
IV
[This item has two questions.] Attorney Woo, the new-hired lawyer of a law firm, booked Samurai Express, a duly accredited courier within the National Capital Judicial Region, to serve a copy of a motion for reconsideration to Attorney Han, counsel of the adverse party, whose office is in the City of Manila Attorney Hann moved to deny the motion for failure to contain a written explanation as to why the motion was not served personally.
(a) Was the motion for reconsideration properly served? Explain briefly.
(b) What shall be considered as proof of service of the motion? Explain briefly.
V
Jimuel filed against his wife Jewel a petition for the declaration of nullity of their marriage, alleging as ground therefor Jewel’s psychological incapacity under article 36 of the Family Code. The court denied the petition for insufficiency of the evidence presented at the trial. Much later, Jimuel filed again a petition against Jewel for the declaration of nullity of their marriage. This time, the basis of Jimuel’s petition was the absence of a marriage license at the time their marriage was celebrated. Upon Jewel’s motion, the court dismissed the petition on the ground of res judicata by virtue of the judgment in the first suit.
Was the denial of the petition on the ground of res judicata proper? Explain briefly.
VI
Isol, Inc. supplies rotisserie chicken products to the grocery section of shopping malls. It conducts kitchen operations in refurbished house located in Palanan, a residential neighborhood. Rona, a resident of Palanan, filed an action against Isol, Inc to enjoin the operation of its kitchen on the ground that it emits intolerable odors and violates laws on waste disposal. In the same action, Rona also seeks to have Isol, Inc.’s business permit revoked because an industrial facility is not allowed by the law to be located in a residential neighborhood and Isol, Inc. failed to comply with sanitary inspection and other procedural and health requirements. In the complaint Rona filed, she likewise prayed for the issuance of a writ of preliminary injunction (WPI) to stop the kitchen operations during the pendency of the case. Isol, Inc in its verified answer, strongly opposed the prayer for WPI considering the huge financial disaster that it will suffer if the writ were to be issued, especially in light of the possibility that the suit could continue to be pending for more than a year.
Based on the foregoing may the WPI prayed for already be issued? Explain briefly.
VII
Is a prior determination of the status as a legal heir in a separate special proceeding a prerequisite to an ordinary civil action seeking the protection and enforcement of ownership right heir vested by the law of succession? Explain briefly.
VIII
Namjoon, a Korean national, and Regine, a Filipina were married in Makati City on February 14, 2012. Unfortunately, their relationship shortly turned sour and ended with a divorce by mutual agreement in South Korea. The local court in Korea granted the divorce. Wanting to marry her new boyfriend Taehyung, Regine filed a petition of the foreign decree of divorce in the Regional Trial Court (RTC) of Cebu where she resides.
The Office of the Solicitor General (OSG) opposed the petition contending that the proper remedy is a special proceeding for cancellation or correction of entries in the civil registry under Rule 108 of the Rules of Court, which can only be filed in the RTC of Makati where the marriage was celebrated and recorded in the Civil Registry of Makati.
Is the OSG’s contention tenable? Explain briefly.
IX
Notting Hill Corp. filed an action for forcible entry against the ten occupants of a parcel of land it owns. After the summary proceedings the Municipal Trial Court (MTC) rendered judgment against the ten defendants filed a notice of appeal, but failed to file a supersedeas bond to stay the judgment to vacate. Upon Notting Hill Corp.’s motion, the MTC issued a writ of execution. When Hugh, the sheriff, was implementing writ of execution, he discovered that the land was occupied by a number of families who all claimed that they were legitimate lessees of the ten defendants. Julia, one of the lessees, pleaded with Hugh, beseeching: “I’m just a lessee, standing in front of a sheriff, asking him to me stay in my home.”
May Hugh implement the writ of execution against the lessees? Explain briefly.
X
An Information for Murder was filed against the accused Demo and Onyok. It reads:
“That on or about the 9th day of March 2008, in the City of Las Piñas, Philippines and within the jurisdiction of this Honorable Court, the above, named accused, conspiring and confederating together and both of them mutually helping and adding each other; without justifiable motive, with intent to kill and with treachery and abuse of superior strength, did then and there knowingly, unlawfully and feloniously attack, assault and use personal violence upon one Angel Rosario, by then and there repeatedly hitting and beating his head with a baseball bat, thereby inflictive upon the later mortal injury which caused his death.
Contrary to law”
The accused filed a motion to quash on the ground that the Information does not conform substantially to the prescribed form.
Is the accused correct? Explain briefly.
XI
Cain was indicated under an Information charging him with the crime of Murder. He was caught by the police in flagrante delicto as the incident happened in a public place with many witnesses present. Videos of the incident were also posted online which the judge was able to watch.
During his arraignment, Cain pleaded guilty to the crime charged. The Regional Trial Court (RTC) accepted the plea because it was made voluntarily and with full understanding of the consequences. The RTC directed the Prosecution to present evidence to prove Cain’s guilt. However, the prosecution failed to present any evidence during the scheduled hearing. The RTC then ruled and found Cain guilty beyond reasonable doubt based solely on his plea of guilt.
Was Cain’s conviction proper? Explain briefly.
XII
Enumerate and describe three warrants that may be issued by the courts pursuant to the Rule on Cybercrime Warrants.
XIII
Ricky, while driving his Maerati, smashes into the Toyota Vios of Dante. Immediately after the incident, Ricky offers to pay the value of the Toyota Vios. Dante still sued Ricky criminally for Reckless Imprudence because Ricky’s wayward and speedy driving. During trial, Dante was called as a witness to testify Ricky’s offer to compromise as an admission of guilt. Ricky’s counsel objected.
If you were the judge, how would you rule on the objection? Explain briefly.
XIV
Klaus was drinking in front of his rented apartment when he suddenly heard a gunshot which came from inside the apartment owned by Luther. Klaus then saw Igor, a neighbor, going down the stairs and leaving the scene holding a gun. Klaus also witnessed Luther fall from the stairs with blood oozing from his chest. Vanya, Luther’s daughter, also rushed to Luther when he fell.
During Igor’s trial for Murder, Vanya testified and presented a flash drive containing the closed-circuit television (CCTV) footage of the scene. Said footage showed a man appearing to be Igor, armed with a gun, proceeding up the stairs and entering Luther’s apartment. In the video, the same man was seen hastily leaving the premises. Vanya further testified that she was the one who transferred to the flash drive video footage from the barangay-owned CCTV that was located outside their apartment.
When the footages were played in court and an enlarged screenshot was presented, Vanya identified the shooter as Igor. The defense objected on the ground that Vanya was not the recorder of the video footages.
Are the (CCTV) footage admissible as electronic evidence? Explain briefly.
XV
In a case for Estafa, the presecution offered the photocopy of the acknowledge receipt signed by the accused showing personal receipt of the sum of money from the private complainant to prove the amount of damage. Accused objected to the offer of the photocopy on the sole ground that it is a mere reproduction of the original in violation of the original document rule. The court overruled the accused’s objection and admitted in evidence the photocopy of the acknowledgement receipt.
Did the court err in admitting the photocopy? Explain briefly.
Kotse Corp. operates a mobile phone application “Kotse PH” that allows users to book private cars in demand to their destination, and matches them with nearby available “driver-partners.” The destination is only made known to the driver-partners when the users boarded the vehicle. Kotse Corp. has an accreditation process for its driver-partners who are required to submit bio-data, professional driver’s license, and negative drug test result, as well as pass an exam on road safety. After accreditation, the driver-partners are free to choose their own work hours but Kotse Corp. requires them to complete at least a total 40 hours per week or else the driver’s share in the fare will be reduced. The fare is determined by the application software depending on distance, time, and the demand for rides. The fare is paid by the user or passenger through the application and Kotse Corp. remits the driver’s share of 75% of the fare every two weeks. Kotse Corp. keeps 25% as its commission. The drivers-partners are evaluated by the user or passenger through a five-star rating system. Driver-partners who consistently have an average rating of two-star or below may be removed from Kotse Corp‘s roster of driver-partners. The driver-partners use their own vehicles, pay for fuel, and secure their own vehicle insurance.
Is there an employer-employee relationship between Kotse Corp. and its driver-partners? Explain briefly.
[This item has two questions.] Krys is a daily paid factory worker who is required to render eighth hours of work per day. Two days ago, he rendered only seven hours of work as he arrived late in the morning. Yesterday, Krys worked for nine hours as he was required to assist in the processing of perishable goods. His supervisor, Rudy, told Krys that he would not get any overtime pay as his work for nine hours yesterday was meant to offset the one hour shortfall in his work the day before.
Cristina, a new-hire of Sterling Corporation (Sterling), was made to join Starling Corporation Employees Union (SCEU) in compliance with the union shop provision in the collective bargaining agreement (CBA) between SCUE and Sterling. At the request of SCUE, Sterling started deducting union dues from Cristina’s salary and remitting the same to SCUE pursuant to the CBA provisions. Cristina protested, claiming that she has not authorized the deduction in writing.
Is Cristina’s claim valid? Explain briefly.
Due to Bitoy’s repeated sexual advances toward his co-worker Diego, Diego went to the Personnel Manager to report Bitoy’s behavior. The Personnel Manager started a disciplinary action case against Bitoy. In his written explanation, Bitoy denied the allegation of sexual advances. He also pointed out that sexual harassment only pertains to a superior-subordinate relationship, where the perpetrator is the superior and the victim is the subordinate. Since Diego is not his subordinate, as they are co-workers with the same rank, Bitoy cannot be subject to disciplinary action.
Is Bitoy’s contention correct? Explain briefly.
Marino, a seafarer, was engaged as an oiler on board Searena Corporation’s oil tanker vessel. After ten executive contracts, with each contract having a duration of eight months and the last one ending in December 2021, Marino decided it was time to enjoy his hard-earned money, and disembarked from the vessel upon the expiration of his employment contract. In April 2022, he felt excruciating pain in his groin. He went to a doctor and was diagnosed with acute hernia. The doctor also determined that the hernia was caused by repeated heavy lifting because of his work as an oiler.
As a result, Marino filed a case against Searena Corporation before the Labor Arbiter, claiming total and permanent disability under the POEA Standard Employment Contract.
Searena Corporation raised in its position paper that Marino is barred from filing the case as he did not raise any complaints during the term of his employment, and within three days from his arrival in the country after his last employment.
If you were the Labor Arbiter, rule on Searena Corporation’s defense. Explain briefly.
Sonic Build Corp. employed Leo and Dan in its cement factory and assigned them the tasks of, among others, directing and supervising rank-and-file employees. Leo and Dan are required to ensure that such employees obey company rules and regulations, and recommend to the company’s Human Resource Department any required disciplinary action against erring employees. There is only one union representing rank-and-file employees.
May Leo and Dan join the union? Explain briefly.
Two legitimate labor organizations (Union Jack and Union Jill) are competing to become the first sole and exclusive bargaining agent (SEBA) in Maharlika Company. The unions agree to a consent election without involving the Bureau of Labor Relation (BLR). Union Jack gamers an overwhelming majority of the valid votes cast during the consent election. Negotiation for a collective bargaining agreement (CBA) commences, and while this is ongoing, a third union, Union Jumble, files with the BLR a petition for certification election seeking certification as the SEBA in Maharlika Company. Union Jack opposes the petition, arguing that no petition for certification election can be filed within one year from the consent election, and during the CBA negotiation.
Is Union Jack correct? Explain briefly.
Julian was hired by Index Agency, a licensed manpower and recruitment corporation, which had a Service Agreement with Kainan Resto, a fast food restaurant, for the provision of ancillary and support services. Index Agency assigned Julian to work at Kainan Resto as a cashier and counter clerk, whose duties involved taking customer orders, receiving payments, preparing food orders, and serving food to customers.
Julian was accused of short-changing a customer during one transaction. He was immediately dismissed from service by the manager of Kainan Resto. Julian filed a complaint for illegal dismissal against Index Agency and Kainan Resto. In its defense, Kainan Resto argued that Julian was not its employee but of Index Agency, given that Index Agency is a licensed manpower corporation.
Is Kainan Resto Correct? Explain briefly.
Sigaw Corp., a media entity, produces television shows. To streamline its processes, it created a database of camera crew and sound engineer whom it usually engages for its television shows. Sigaw Corp. pays them only “talent fees” each time they are engaged for a show. After several years of this set up, the camera crew and sound engineer filed a complaint for regularization against Sigaw Corp. before the Labor Arbiter. On the other hand, Sigaw Corp., claims that they are not regular employees but independent contractors or talents because they are engaged and paid for their specific technical skills.
Rule on the complaint. Explain briefly.
[This item has two questions.] As Human Resource Manager of a five-star hotel, you were told in confidence by several fearful employees in the housekeeping department that Joy, the head of housekeeping, was a harsh disciplinarian who would pinch the ears of her staff or rap their heads to drill instruction on the proper way to clean and tidy up the hotel rooms. One day, the assistant housekeeper urgently called you to the supply room of the hotel, where you found housekeeping staff Erika and Patricia slumped on the floor with bloody faces. The assistant housekeeping reported that she saw Joy beat up Erika and Patricia with a mop for allegedly stealing complimentary toiletries for guests. Erika and Patricia were hospitalized for a couple of days due to the injuries they sustained.
Trixie is a science/researcher in the academe, specializing in vaccine research particularly messenger ribonucleic acid (mRNA) technology. At the start of the pandemic in 2020, Trixie was hired by AZ Corp. to help formulate and produce a vaccine against COVID-19. The employment contract provides:
“You shall not work for whatsoever capacity, either as an employee, agent, or consultant with any person, anywhere in the Philippines, whose business is in direct and indirect competition with the company during the period of this contract, and for a period of ten (10) years from date of resignation or suspension from the company. Violation of this stipulation shall make you liable for liquidated damages in the amount of Php 5,000,000.00“
Trixie was able to successfully produce the vaccine and for which AZ Corp. paid her Php 5,000,000.00. Thereafter, Trixie resigned from AZ Corp. and returned to her work in the academy. AZ Corp. filed a complaint for damages in the amount of Php 5,000,000.00 against Trixie for violation of the above stipulation in her contract.
If you were the judge, rule on the validity of the stipulation. Explain briefly. (5 points )
Discuss and differentiate between the procedural requirements in termination of employment for (i) just and (ii) authorized causes. Explain briefly.
Non-stock corporations or foundations in the Philippines may be formed for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, such as trade, industry, agricultural, and like chambers, or any combination thereof.
Certain accredited non-stock, non-profit corporations in the Philippines are exempt from income tax on donations, grants, and gifts provided they are:
To set up a non-stock non-profit corporation in the Philippines, you must first be registered with different government agencies. This article might be a help to your generous and big heart, having in mind the welfare of the less fortunate, or just want to start a non-stock non-profit corporation.
Incorporators
Incorporators shall be not less than five (5) in number but not more than fifteen (15) and the majority of whom are residents of the Philippines. Resident or non-resident aliens (foreigners) can be incorporators of a non-stock corporation, provided that the majority of the incorporators are residents of the Philippines.
Basic requirements for registration with the Securities and Exchange Commission (SEC)
The documentary requirements of the Securities and Exchange Commission (SEC) in the Philippines are as follows:
There is no fixed amount of contribution required but only such reasonable amount as the incorporators and trustees may deem sufficient to enable the corporation to start operation, except in the case of foundations which must have a minimum contribution of at least One Million Pesos (P1,000,000.00).
Additional requirements:
Once an application was submitted, the SEC evaluator will review the initial drafts for seven (7) working days and will email that the application is preapproved. After signing and uploading the generated forms, SEC will send another email if the application was approved and qualified for payment and you will receive a payment assessment form that should be paid within 45 days. Once paid, the digital COI will be received, and the original documents together with proof of payment will be submitted to the SEC office within 60 days from the date of incorporation in order to claim the original Certificate of Incorporation.
Registration with the BIR
The non-stock non-profit corporation must be registered with the BIR within 30 days from the date of Incorporation and obtain a Tax Identification Number (TIN), registration of book of accounts, and official receipts or invoices. Certain registration fees and taxes will be paid.
If you wish to be tax-exempt, non-stock non-profit corporations in the Philippines are required to secure a BIR Tax Exemption Ruling.
Business Permits and Licenses
Non-stock non-profit corporations must also be registered in the Local Government unit (LGU) where the principal office address of the company is located and secure the business permit, barangay clearance, sanitary permit, fire safety inspection certificate, and other clearances in order to go operational. Certain registration fees will be paid.
Employer Registration
Employers for non-stock non-profits are required to be registered with Social Security System, Philippine Health Insurance Corporation, and Home Development Mutual Fund for the benefit of their employees.
The annualization of compensation is a crucial procedure used by employers in the Philippines to calculate the correct tax due or refund of employees at year-end or during the separation of employees from the company. This procedure is used to ensure fair taxation and an accurate calculation of the withholding tax on compensation. It reduces income fluctuations, minimizes tax fraud, and fosters fair tax obligations by distributing income and deductions over the entire course of the year, regardless of the actual pay period, to accurately estimate taxpayers’ tax obligations.
In this article, we will delve into why annualizing payroll is important in the Philippines.
In the Philippines, a lot of workers have irregular revenue patterns where they get bonuses, commissions, or overtime compensation at various times of the year. By averaging out the earnings over the entire course of the year, annualizing payroll provides a solution to these revenue swings. It gives a more realistic picture of a person’s yearly income, enabling the proper estimation of tax liabilities.
By preventing people from abusing their tax obligations, annualizing payroll provides fair taxes. Without annualization, taxpayers might be able to earn a lot of money in a brief period and then do nothing for the rest of the year to avoid paying higher tax rates. Annualization makes the tax burden more evenly distributed and ensures fair taxation by considering all revenue for the year.
By appropriately deducting taxes from employees’ salaries, employers play a critical role in annualizing payroll. Employers can calculate the right amount of tax to withhold from each pay period by annualizing it, considering the employee’s projected yearly income. By reducing the possibility of underpaying or overpaying taxes, this strategy ensures compliance with tax laws and calculates the proper withholding tax or refund of employees.
Payroll annualization makes it easier for both employers and employees to remain compliant with Philippine tax laws and regulations. Employers can correctly record and submit the right amount of taxes to the Bureau of Internal Revenue (BIR), avoiding fines or legal concerns. Employees who have their salary annualized are better able to comprehend their tax liabilities.
Therefore, annualizing payroll is an essential procedure that properly equates withholding taxes and adheres to the tax rules. Annualization reduces income swings and prevents tax fraud by dividing income and deductions over a full year. It allows for precise tax deductions from employee pay and makes it easier to comply with tax laws. Payroll must be annualized, and both employers and employees must be aware of this fact to maintain the Philippines’ tax system’s fairness, transparency, and compliance.
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Revenue Regulations No. 003-2026
Revenue Regulations No. 002-2026
SEC Memorandum Circular No. 10 Series of 2026
Revenue Regulations No. 001-2026
SEC MEMORANDUM CIRCULAR NO. 9 – 2026 Filing of Annual Financial Statements and General Information Sheet
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