Revenue Memorandum

Circular No. 55-2011

Subject:
When to reckon the redemption period
on foreclosed property to clarify 3rd
paragraph, page 2 of
Revenue
Memorandum Circular No. 58-2008.

3rd paragraph, page 2 of RMC

58-2008:

For purposes of reckoning the oneyear redemption period, in the case

of individual mortgagors, or the
three-month redemption period for
juridical persons/mortgagors, the
same shall be reckoned from the
date of the confirmation of the
auction sale which is the date when
the certificate of sale is issued.

Santos vs. Register of Deeds,

L-26752, March 19,1971:

.the period of redemption begins to

run not from the date of sale but from
the time of registration of the sale in the
Office of the Register of Deeds

Resolution of the Supreme Court

under Administrative Matter
(A.M.) No. 99-10-05-0):

 Procedure in Extra-Judicial Foreclosure of

Mortgage
To take effect on September 1, 2001
Item 2(e): Natural persons: ..redemption
within a period of one (1) year from date
of registration of the certificate of sale
with the Registration of Deeds.
8

 Juridical persons: ..shall have the right

to redeem the property until but not
after, the registration of the certificate
of foreclosure sale which in no case
shall be more than three (3) months
after foreclosure whichever is earlier..

Eligio P. Mallari vs GSIS and the

Provincial Sheriff of Pampanga,
G.R. No. 157659, January 25,
2010:

10

.we clarify that the redemption

period envisioned under Act 3135 is
reckoned from the date of registration
of the sale, not from and after the date
of sale, as the text of Act 3135 shows.

11

Other legal bases:

Garcia vs. Ocampo, et al.

Agbulos vs. Alberto
Salazar, et al. vs. Meneses et al.

12

Reyes vs. Noblejas, et al.

Rosario, et al. vs. Tayug Rural Bank
Inc.
Campillo vs. PNB
Reyes vs. Manas, et al.

13

Redemption Periods:
A.Natural Persons (judicial or extrajudicial
foreclosure)
- Within one (1) year after registration
of
the certificate of sale with the
Registration of Deeds.
14

B.

Juridical
Persons
(extrajudicial
foreclosure) Whichever comes earlier
between:
a.

Anytime before registration of the

certificate of sale with the Register
of Deeds;

15

b.

Within
three
(3)
months
after
registration of certificate of sale with
the Registration of Deeds. Registration
of certificate of sale must not be more
than three (3) months after foreclosure.

16

Taxes to be paid:
(Mortgagee banks, quasi-banks and
trust companies are considered the
statutory sellers in the foreclosed real
properties)

17

Capital Gains Tax

capital
asset
Mortgagor):

(Foreclosed
of
the

- Becomes due within thirty (30) days

following the expiration of the
redemption period.
18

Creditable Expanded Withholding

Tax (Foreclosed ordinary asset of
the Mortgagor):
- Shall be due and paid within ten (10)
days following the end of the month in
which the redemption period expired.

19

Value-Added Tax (Revenue Regulations

No. 4-2007):
- Must be paid by the mortgagor on or before
the 20th or 25th day, whichever is applicable,
of
the month following the month when the
right
of redemption prescribes.
20

Documentary Stamp Tax:

- Return shall be filed and paid
within
five (5) days from the end of the
month when the redemption
period
expires.

21

NOTE:
All taxes due on the foreclosure
sale must be based on the bid
price of the highest bidder
pursuant to Revenue Regulations
No. 4-99.
22

Venue for filing of the returns

and payment of taxes: (whether
large or non-large taxpayer
pursuant to RR- 5-2209)

23

CGT, EWT, DST

- Location of the foreclosed property.
VAT
- RDO where the VAT-registered
mortgagor is registered.
24

Revenue Memorandum
Circular No. 48-2011
Subject:
Imposition of Documentary Stamp Tax
on Inter-Office Memo covering advances
granted by an Affiliated corporation.

25

Legal Basis:
En Bank Supreme Court Decision in the
case of CIR vs. Filinvest Development
Corp. (G.R. Nos. 163653 and 167689
dated July 19, 2011)

26

DST
on
loan
agreements
and
promissory
notes, now Sec. 179 (then Sec. 180) of
the Tax Code:
- P1.00 for every P200
27

Notes:
1. Only one (1) DST shall be imposed on
either loan agreement, or promissory
notes issued to secure such loan,
whichever will yield a higher tax. (Sec.
179 of Tax Code).

28

2. In case where no formal loan agreements or

promissory notes have been executed to
cover credit facilities, DST shall be based on
the amount of drawings or availments of the
facilities, which may be evidenced by
credit/debit memo, advice or drawings by
any form of check or withdrawal slip.

29

3. DST may also be based on instructional

letters as well as journal and cash
vouchers evidencing the advances.

30

Revenue Regulations
No. 16-2011
Subject:
Increasing the Threshold Amounts for
Sale of Residential Lot, Sale of House
and Lot, Lease of Residential Unit and
Sale or Lease of Goods or Properties or
Performance of Services covered by
Section 109 (P), (Q) and (V) of the Tax
Code of 1997, thereby amending
Certain Provisions of RR No. 16-2005.
31

FROM
Sale of Residential Lot

TO

P1,500,000.0
0
P1,919,500.00

Sale of House and Lot

2,500,000.00
Lease of Residential Unit
10,000.00
Sale or Lease of goods or
Properties or the performance
of services

1,500,000.00

3,199,200.00
12,800.00
1,919,500.00

32

Revenue Regulations
No. 18-2011
Subject:
Increasing
Providing
penalties
for
Violation of the Requirement that Output
Tax on the Sale of Goods and Services
Should be Separately Indicated in the
Sales Invoice or Official Receipt.

33

Legal Bases:
1.Section 113(B)(2)(a) - The amount of
tax shall be shown as a separate item in
the invoice or Receipt;

34

2. Section 264(a)- Any person who, being

required under Section 237 (Issuance of Receipts
or Commercial Invoices),issues receipts
or invoices that do not truly reflect and/or
contain all the information required to be shown
therein,.for each act or omission be
punished by a fine of not less than One
Thousand pesos (P1,000)but not more than
Fifty Thousand pesos (P50,000) and suffer
imprisonment of not less than two (2)
years but not more than four (4) years;
35

3.Answer to Question No. 16 of Revenue

Memorandum Circular No. 62-2005 - How
is the Value-Added Tax presented in the
receipt/invoices? The amount of the tax shall
be shown as a separate item in the invoice or
receipt.

36

Legal Bases for Imposition of

Penalties:

37

1. Section 264(a) of the Tax Code of 1997:

Any person who, being required under Section 237
(Issuance of Receipts or Commercial Invoices),
issues receipts or invoices that do not truly
reflect and/or contain all the information required
to be shown therein,.for each act or
omission be punished by a fine of not less
than One Thousand pesos (P1,000)but not
more than Fifty Thousand pesos (P50,000)
and suffer imprisonment of not less than two
(2) years but not more than four (4) years.
38

2.

Section 2 of Revenue Regulations No.

18-2011:

39

Failure or refusal to comply with the

requirements in Section 1 hereof shall,
upon conviction, for each act or omission,
be punished by a fine of not less than One
Thousand Pesos (P1,000) but not more
than Fifty Thousand Pesos (P50,000) and
suffer imprisonment of not less than two
(2) years but not more than four (4) years.
40

Notes:
1.If the sale is exempt from VAT, the term
VAT-exempt sale shall be written or
printed prominently on the invoice or
receipt, otherwise, the sale shall become
taxable and the issuer shall be liable to
pay the VAT thereon. The purchaser on
the other hand shall be entitled to claim
an input tax credit on the purchase.
41

2. If the sale is subject to zero percent (0%)

VAT, the term zero-rated sale shall be
written or printed prominently on the invoice
or receipt, otherwise, the sale shall become
taxable and the issuer shall be liable to pay
the VAT thereon. The purchaser on the other
hand shall be entitled to claim an input tax
credit on the purchase.

42

Revenue Regulations
No. 1-2012
Subject :
Requiring the Mandatory Submission of
Quarterly Summary List of Sales and
Purchases
(SLSP)
by
All
Vat
Registered
Taxpayer
Thereby
Amending Section 4.114-3 of Revenue
Regulations No. 16-2005, as amended.
43

Section 4.114-3 of RR No. 16-2005:

- Submission of Quarterly Summary List of
Sales and Purchases (SLSP)
- With threshold amount at more than
P2,500,000.00
quarterly
total
Sales/Receipts (net of VAT) for SL
- With threshold amount at more than
P1,000,000.00 quarterly total purchases
(net of VAT) for SLP
44

Section 2 of RR No. 1-2012:

- Threshold amounts are removed

45

Section 3 of RR No. 1-2012:

- magnetic form 3.5 inch floppy diskettes shall
refer to Compact Disc-Recordable (CDR)

46

Who are exempt from submission of

Summary List of Sales (SLS)?
- Operators of supermarkets and department stores,
retailers selling direct to consumers, hotels,
restaurants, lending investors, pre-need companies,
non-life insurance and common carriers

47

shall still submit Summary List of Purchases (SLP)

Please see Section 1 of Revenue Regulations No. 1397

48

Penalty provision for failure to

submit the name of each buyer or
seller/supplier of goods and
Services:
-

constitute a single act or omission punishable by law.

49

Payment of penalty shall not relieve the subject taxpayer from submitting the aforesaid
names of buyers and sellers of goods and services to be contained in Summary Lists of
Sales and Purchases

50

Other legal bases for the imposition

of penalties for non-submission of
SLSP:
- Section 5 of RR No. 8-2002-(failure to supply
the required information for each buyer or seller of
goods and services shall constitute a single act or
omission punishable by a fine of P1,000 each but
shall not exceed P25,000.00 during a taxable
year)

51

Item IV (9) of Revenue Memorandum Order No. 42003-(an administrative penalty of P1,000.00 of each
failure but not to exceed the aggregate amount of
P25,000.00 for all failures during a taxable year shall be
imposed)

52

Item III (2) of Revenue Memorandum Order No. 12-2009

(upon submission of the required Summary Lists in compliance
with the Subpoena Duces Tecum, the concerned taxpayer shall
be required to pay a compromise penalty of P10,000.00)

53

Item IV (11) of Revenue Memorandum Order No.

4-2003-(the imposition of any of the penalties under
the Tax Code of 1997 and the compromise of the
criminal liability on such violations, shall not in any
manner relieve the violating taxpayer from the
obligations to submit the required documents)

54

Revenue Memorandum
Circular No. 7-2012
Subject:
Circularization of BIR Ruling No. 023-10
dated August 4, 2010 on the Capital Gains
Tax and Documentary Stamp Tax liability
of a non-stock, non-profit organization on
its disposition of real property. (Sale of a
real property of the Mary Immaculate
Development Foundation, Inc.)
55

Issue:
Is a non-stock, non-profit corporation exempt
from paying capital gains tax on the basis of
Section 30 of the Tax Code?

56

Ruling:
The sale of MIDFI of its real property is
subject to capital gains tax based on the
gross selling price or current fair market
value as determined in accordance with
Section 6 (E) of the Tax Code of 1997,
whichever is higher.
57

BIR Ruling No. 4562011 dated November

16, 2011:
Facts:
1. A Co. is a domestic corp. classified
as one of the top 20,000 private
corporations;

58

2. It purchased goods and services

from a supplier and pays them
through a credit card;
3. The supplier collects payment from
the credit card company, which in
turn collects from A Co.

59

Issue No. 1:
Is A Co. required to withhold 1% or 2%
EWT on payments to supplier upon
presentation of the credit card?

60

Ruling:
No, the cardholder purchased the goods or
services from a supplier on credit. No
payment is made at the time of purchase.

61

Issue No. 2:
Is A Co. required to withhold 2% EWT on
interest payment and/or service fee and other
charges imposed by the credit card company?

62

Ruling:
Yes, it is required to withhold 2% EWT being
a corporation belonging to top 20,000 private
corporations.

63

Issue No. 3:
Is the credit card company required to
withhold any tax on payments to the
suppliers of A Co.?

64

Ruling:
Yes, it shall withhold 1% tax on 50% of the
gross amounts paid to any business entity,
whether natural or juridical, representing
sale of goods or services made by the
business entity to the cardholder.

65

Revenue Regulations N0. 22010

Optional Standard Deduction

Individuals (all except a non-resident alien)

- 40% of Gross Sales or Gross Receipts

Domestic Corporations
Foreign Corporations
- 40% of Gross Income

and

Resident

66

A.If GPP availed of itemized deductions:

Partners may claim the same

But partners are only allowed deductions

not claimed by GPP

Also, partners are not allowed to claim

OSD

67

B.If GPP avails of OSD, the partners can no

longer claim further deductions, meaning,
both itemized and OSD.

68

Reasons:
1. Partners share is treated as Gross Income
in the Tax Code, not Gross Receipts or
Gross Sales.

69

2. 40% OSD for an individual taxpayer is

mandated to be deducted not from gross
income but from his gross sales or gross
receipts.

70

3. The OSD claimed by GPP in lieu of the

itemized deduction will answer for both
the items of deduction allowed for the GPP
and its partners.

71

Note:
If a partner derives other income from
business, trade or practice of profession,
he can claim either itemized or OSD for his
other gross income.

72

Itemized
if GPP availed of itemized deductions,
partner may claim the same for both his
partnership income and other income.

73

OSD
If GPP opted to use OSD, the partner may claim the
same but only for his other gross income.

74

The election to avail either OSD or

itemized deductions is irrevocable for the
taxable year once the intention is signified
in his return, otherwise, he/it shall be
considered as having availed himself of
the itemized deduction.

75

irrevocable means, it cannot shift from

itemized deductions to OSD and viceversa but it can amend his/its itemized
deductions by increasing or decreasing
these deductions.

76

However, when OSD is availed of, he can

no longer amend his/its return for obvious
reason that the 40% rate is fixed.

77

 Individual claiming OSD is no longer

required to submit Financial Statements
Corporation claiming OSD is still required
to submit Financial Statements

78

 In the filing of Quarterly Income Tax

Returns, an individual or a Corporation
may opt to use itemized deductions or
OSD.

79

 A taxpayer who avails of OSD in his 1st

Quarter Income Tax Return shall use OSD
for the rest of the quarters including his
Final Income Tax Return.

80

 A taxpayer who avails of the itemized

deduction in his 1st Quarter Income Tax
Return shall use the same for the rest of
the quarters including his Final Income
Tax Return.

81

 Any taxpayer who is required but fails to

file the quarterly income tax return for the
first quarter shall be considered as having
availed of the itemized deductions option
for the rest of the quarters, including
his/its Final income tax return.

82

Revenue Memorandum
Order No. 26-2011
Subject:
Tax Treatment of Separation
Benefits

83

Tax Code Provision: Sec. 32 (B)(6)(b)

Any amount received by an official or employee
or by his heirs from the employer as a
consequence of separation of such official or
employee from the service of the employer
because of death, sickness or other physical
disability or for any cause beyond the
control of the said official or employee shall
be excluded from the gross income and shall be
exempt from income tax regardless of age or
length of service.
84

Two (2) Requirements for Employee

Benefits to be tax-free:
1. The official or employee is separated from
the service of the employee due to death,
sickness, or other physical disability
or for any cause beyond the control
of the said official or employee;

85

2. The official or employee or his heirs

receives any amount from the
employer
on
account
of
such
separation.

86

A. For separation
sickness
or
disability:

due to death,
other
physical

Instead of a confirmatory ruling, the

Regional
Director
issues
a
Tax
Exemption Certificate.

87

B. For separation due to other causes

beyond the control of the said
official or employee:
A ruling shall continue to be
processed by the Law Division in the
National Office.

88

Documentary Requirements:
(To be submitted to the RDO where the
employer is originally registered)

89

1. Letter request from the Official/Employee

(or by his heirs) or the Employer for the
exemption of separation benefits from
income tax and withholding tax;
2. Death Certified True copy of the Death
Certificate;

90

3. Sickness/Physical Disability:
a. Affidavits to be executed by the employers
physician or the employees attending
physician AND the Head of Office/Entity or
his representative, attesting to the fact that
the retiring/separated official or employee
is suffering from a serious illness or physical
disability that affects the performance of his
duties and endangers his life, if he
continues working;
91

b. Clinical Record of the official/employee

concerned indicating the history of
illness/physical disability and initial
diagnosis; and

92

c. Laboratory examination confirming the

illness suffered by such official/employee
or medical certificate confirming the
physical disability of the official/employee.

93

NOTE:
The BIR is not precluded from requiring
additional
documents
to
prove
entitlement to tax exemption under the
prevailing circumstances.

94

Processing of Request for issuance of Tax

Exemption:
1. Submit all the documentary requirements to
the Officer of the Day for evaluation of the
completeness of the required documents;

95

2. If found incomplete, the Officer of the Day

shall issue a Notice to Comply indicating
the number of days within which to submit
the missing documents;

96

3. If after the lapse of the period given in

the Notice to Comply, the applicant has
not submitted the documents required, a
Notice of Archiving shall be issued;

97

4. If found complete, the Officer of the Day

forwards the application together with the
pertinent supporting documents to the
Revenue District Officer who shall evaluate the
same for a period of 5 days from receipt of the
application, afterwhich, the complete set of
documentary requirements is transmitted to
the Legal Division for evaluation proper and
preparation of appropriate action.

98

Effect of Tax Exemption:

1. The separation benefits shall be
included in the gross income of the
employee and shall be exempt from
income tax.
2. The separation benefits shall
exempt from withholding tax.

be

99

Note:
Other income received prior to
separation shall be subject to tax.

100

Revenue Regulations
No. 10-2011
Subject:
Amending Certain Provision of
Revenue Regulations No. 16-2005

101

Under RR 16-2005:
The VAT shall not apply to goods or
properties intended for sale or for
use in the course of business
(including those held for lease) when
there is change of control of a
corporation.
102

Under RR 10-2011:
The exchange of goods or properties
including real estate properties used
in business or held for sale or lease
by the transferor, for shares of stocks
of the transferee, whether resulting in
corporate control or not, is subject to
VAT.
103

NOTE:
No gain or loss is recognized during the
exchange,
however,
when
these
properties are later sold, the same shall
now be determined for purposes of
payment of withholding tax and DST.

104

Revenue Memorandum
Circular No. 36-2011
Subject:
BIR Ruling on Socialized Housing under
RA 7279

105

House and Lot Package:

Shall not exceed P400,000
Lot only:
Shall not exceed P160,000 (40% of
P400,000)
106

Memorandum of CIR
dated May 26, 2011
Subject:
Non-processing of refunds from
taxpayers receiving purely
compensation income

107

Revenue
Memorandum Order
No. 41-2011
Subject:
Consolidating
and
Enhancing
the
Guidelines and Procedure in Identifying,
Handling, Closing and Monitoring
Real /Actual and Invalid Stop-Filer Cases.

108

Revenue
Memorandum Order
No. 41-2011
Subject:
Consolidating
and
Enhancing
the
Guidelines and Procedure in Identifying,
Handling, Closing and Monitoring
Real /Actual and Invalid Stop-Filer Cases.

109

A penalty of Two Hundred Pesos

(P200.00)
for
individual
taxpayers and One Thousand
Pesos (P1,000.00) for corporate
taxpayers shall be imposed for
non-filing of a no-payment return;

110

If a corporation has already ceased

operation and was unable to file a nopayment return, the penalty shall be
Two Hundred Pesos (P200.00) only;

111

The penalties shall be imposed for

non-filing of the requisite returns
shall be on a per tax return, per
return period basis;

112

Refrain from using BIR Payment Form

No. 0605 for the purpose of paying the
appropriate tax due and/or penalties
attendant to unfiled tax returns. The
taxpayer shall be notified to accomplish
and file the correct BIR tax form
corresponding to the tax type that gave
rise to the corresponding stop-filer case;
113

Before accepting the payment of

penalty for non-filing of returns,
the RDO shall require the taxpayer
to submit the following:

114

a.

If the reason is No Operation

Sworn Statement of the taxpayer and
Certification
from
the
Barangay
Chairman or from the Business Permit
Division of the concerned LGU that the
taxpayers business has already ceased
operations;

115

b.

If
the
reason
is
Temporary
Suspension of operations Duly
notarized
taxpayers
Certification/Declaration, for individuals,
or duly notarized Secretarys Certificate
and copy of Board Resolution for
temporary suspension of operations, for
corporations;
116

Revenue
Memorandum Circular
No. 3-2012
Subject:
Tax Implications of General Professional
Partnership

117

Under
RR.
No.
2-98,
the
withholding
of
creditable
withholding tax prescribed in these
Regulations shall not apply to
income payments made to General
Professional Partnerships because
the entity is not subject to income
tax.

118

It is the individual partners who shall

be subject to income tax, and
consequently, to withholding tax, in
their
separate
and
individual
capacities. Each partner shall report
a gross income his distributive share,
actually or constructively received,
in the net income of the partnership.
119

Drawings,
advances,
sharings,
allowances, stipends and the like are
subject to 15% expanded withholding
tax (EWT) if payments to partner for
the
current
year
exceeds
P720,000.00, otherwise, 10%.
120

121