OCT

2016

Q U A L I T Y A S S U R A N C E B U L L E T I N

Revenue Memorandum Circulars (RMCs)

RMC 104-2016 Implementing Rules and Regulations of Republic Act

(RA) No. 10524 (An Act Expanding the Positions Reserved for Per-

sons with Disability)

RMC 105-2016 Amends certain provisions of RMC No. 76-2007 rela-

tive to the submission of mandatory requirements for one-time

transactions involving transfer of real property

BUREAU OF INTERNAL REVENUE (BIR)

SECURITIES AND EXCHANGE COMMISSION (SEC)

SEC Advisory

Transfer of the CRMD to the PICC

SUPREME COURT/COURT OF TAX APPEAL

Supreme Court: PAGCOR Licensees and Contractees Exempt from

Income Tax

Court of Tax Appeal: Non-observance to the 15-day period to protest

PAN and issuance of the FAN prior to the taxpayer receipt of PAN

violates its right to due process

Issue 2016-4 Page 2

Implementing Rules and Regulations of Republic Act (RA) No. 10524 (An Act Expanding the

Positions Reserved for Persons with Disability)

Issued on October 28, 2016 circularizes the Implementing Rules and

Regulations (IRR) of Republic Act (RA) No. 10524 (An Act Expanding

the Positions Reserved for Persons with Disability, Amending for the

Purpose RA No. 7277, as Amended, otherwise known as the Magna

Carta for Persons with Disability).

At least one percent (1%) of all regular and non-regular positions in

all government agencies shall be reserved for Persons with Disabili-

ties (PWDs). Should there be a fraction in coming up with a sum of at

least 1% of the total plantilla positions in a government agency, the

same shall be considered as one (1) position reserved for persons

with disability.

Government agencies that are currently employing PWDs with at

least 1% of the total positions shall be considered compliant with the

IRR. However, nothing in this rule shall prevent compliant agencies

from hiring more PWDs, nor shall allow them to diminish the number

of currently employed and qualified persons with disability. In cases

where no qualified PWD applies for the available position, the con-

cerned agency has the option to hire non-PWD applicant.

Private corporations with more than one hundred (100) employees

are encouraged to reserve at least one percent (1%) of all positions

for PWDs. However, nothing in this rule shall prevent private corpo-

rations with less than 100 employees from hiring PWDs. In private

corporations, the participating employer is required to post specific

job description of a position in its public advertisements for employ-

ment.

In both government agencies and private corporations, the fitness of

a PWD shall be initially determined by the appointing officers/

employer on the basis of the qualification standards established for

the position. In government agencies, PWDs appointed to non-career

positions including casual employees, must meet the requirements

prescribed by the qualification standards except civil service eligibil-

ity, unless the positions are covered by special laws such as RA No.

1080, otherwise known as “An Act Declaring the Bar and Board Ex-

aminations as Civil Service Examinations.”

In employing a PWD, the appointing officer shall always be guided by

the Civil Service Rules (for government agencies) and labor laws (for

private agencies).

Employment and Department of Health as to his disability, skills and

qualifications.

Private corporations which are employing PWDs shall be entitled to

incentives as stated under Section 8 (a) and (b) of Magna Carta for

Persons with Disability. Private entities that employ PWDs either as

regular employee, apprentice or learner, shall be entitled to an addi-

tional deduction from gross income equivalent to twenty-five percent

(25%) of the total amount paid as salaries and wages to PWDs: pro-

vided, however, that such PWD are under their employ. Provided,

further, that the PWD is accredited with the Department of Labor and

The BIR shall enforce Section 4 of Rule II in the IRR of RA 7277, to

wit:

Private entities that employ PWD who meet the required skills

or qualifications either as a regular employee, apprentice or

learners, shall be entitled to an additional deduction from their

gross income equivalent to twenty-five percent (25%) of the

total amount paid as salaries and wages to PWDs; and

Private entities that improve or modify their physical facilities in

order to provide reasonable accommodation for PWDs shall be

entitled to an additional deduction from their net income, equiv-

alent to fifty percent (50%) of direct cost of the improvements

or modifications. This Section, however, does not apply to im-

provements or modifications of facilities required under B.P. Blg.

344.

Amendment on certain provisions of RMC No. 76-2007 relative to the submission of manda-

tory requirements for one-time transactions involving transfer of real property

Issued on October 28, 2016

amends certain provisions

of RMC No. 76-2007 relative

to the submission of manda-

tory requirements for one-

time transactions involving

transfer of real property.

Certified true copy of the

original Certificate Authoriz-

ing Registration (CAR) (copy

of the Register of Deed)

pertaining to the transfer of

property prior to the issu-

ance of Original/Transfer

Certificate of Title (OCT/TCT) of Condominium Certificate of Title

(CCT), or certification issued by the Registry of Deeds indicating the

serial number of the CAR, date of issuance of CAR, the Revenue

District Office Number of the district office that issued the CAR, the

name of Revenue District Officer who signed the CAR, the type of

taxes paid and the amount of payment per tax type shall no longer

be required in the processing of one-time transactions involving

transfer of real property and the issuance of electronic CAR (eCAR).

The said document shall be submitted for OCT/TCT/CCT issued start-

ing 2007, in case the Register of Deeds fails annotate the information

contained in the CAR.

Issue 2016-4 Page 3

Company Registration and Monitoring Divi-

sion (SEC) Transfer

In Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue

(G.R. No. 212530 dated August 10, 2016), the Supreme Court ruled

that:

1. All contractees and licensees of PAGCOR, upon payment of 5%

franchise tax, shall be exempt from all other taxes, including cor-

porate income tax from the operation of casinos; and

2. All contractees and licensees of PAGCOR shall pay corporate in-

come tax on income from other related services.

As Republic Act (R.A.) No. 9337 took effect on November 1, 20015,

Section 27(C) of NIRC of 1997 was amended excluding PAGCOR from

the enumeration of government-owned or controlled corporations

(GOCCs) exempt from paying income tax. This led to a case of PAGCOR

vs. BIR where PAGCOR questioned the validity of the R.A. 9337. How-

ever, upon articulation of Section 1 of R.A. 9337, amending Section 27

(C) of the NIRC of 1997, it was proved to be valid and constitutional.

Consequently, RMC No.33-2013 dated April 17, 2013 was issued de-

claring that PAGCOR together with its contractees and licensees are

now subject to income tax under NIRC of 1997, as amended in addition

to the 5% franchise tax of its gross revenues under Section 13(2)(a) of

PD No. 1869.

This matter was elevated to Supreme Court for certiorari asserting that

in PD No. 1869, as amended by R.A. 9487, contractees and licensees

of PAGCOR are exempt from all kinds of taxes except the 5% franchise

tax on its gross gaming revenue which has been not repealed in the list

of tax exempt entities under the NIRC.

The court through Justice Diosdado M. Peralta, categorically followed

the PAGCOR Charter (PD 1869, as amended by R.A. No. 9487) that

despite the amendments of NIRC of 1997, aforementioned Charter

remains in effect. Thus, gaming operations will be subject to a 5%

franchise tax only in lieu to all other taxes, including income tax; and

all income from other related services will be subject to income tax.

Logically, all contractees and licensees of PAGCOR shall likewise be

subjected and pay taxes as the PAGCOR does.

Supreme Court: PAGCOR Licensees and Con-

tractees Exempt from Income Tax

The Company Registration and Monitoring Division (CRMD) of the SEC

will be transferred to the PICC in November 2016.

There will be a suspension of CRMD operations in the SEC main build-

ing, as follows:

In line with the said suspension, CRMD transactions may be done by

the following satellite offices:

All CRMD’s operations at the SEC Main Office (Mandaluyong City) will

be available at the Ground Floor, Secretariat Building, PICC, Pasay

City.

Court of Tax Appeal: Non-observance to the 15-day period to protest PAN and issuance of the

FAN prior to the taxpayer receipt of PAN violates its right to due process

On October 14, 2016, Commissioner of Internal Revenue (CIR) vs.

Apex Chemical Corporation (CTA Case No. 8698), the Court of Tax

Appeal (CTA) favor Apex as it ruled:

“Non-observance of the 15-day period to protest the

Preliminary Assessment Notice (PAN) and the issu-

ance of Final Assessment Notice (FAN) prior to the

taxpayer’s receipt of the PAN violates its right to due

process.”

Issues raised before the CTA (1) Whether Apex is not required to sub-

mit additional documents to support its request for reinvestigation; (2)

Whether the assessment for deficiency Value Added Tax (VAT) for the

3rd quarter of taxable year 2007 had already prescribed; and (3)

Whether Apex is liable for deficiency income tax, VAT and Expanded

Withholding Tax (EWT) for the year ended December 31, 2007. Apex

Likewise asserts that the assessment is void due to non-observance of

its right to due process.

Upon ascertaining the facts by the CTA in the Division, it was then

found that the FAN has been issued ahead of the protest to the PAN

where the PAN has been issued by the respondent (CIR) on December

17, 2010 and received by the petitioner (Apex) on January 13, 2011,

to which the petitioner filed its protest on January 26, 2011. While on

January 7,2011, respondent issued a Formal Demand (FD) and its

FANs, which were received by the petitioner on January 17, 2011 and

protested t by the latter on February 16, 2011.

This results to void the assessments to

Apex by the CTA for failure of the CIR

to observe the 15-day period of Apex

to file a protest to PAN, and for issuing

the FANs where the PAN is yet to re-

ceived by Apex.

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Floyd C. Paguio

Managing Partner

This bulletin is a compilation of relevant issuances, rulings and memoranda from various government agencies to en-

hance the technical skills of the professional staff of Paguio, Dumayas and Associates, CPAs and is not intended to re-

place the original issuances of the related government agencies.

Ken John B. Asadon

Senior Tax Specialist

Kiersty Dianne Y. Dela

Cruz

Senior Auditor